Trump announces 401(k) plans with $1,000 match for workers whose employers don't offer them

By Jessica Hall

Trump sketches out a plan during his State of the Union address on Tuesday night

The median amount American workers have saved for retirement is $955.

The White House plans to create retirement-savings plans for workers who don't have access to one through their employer, offering up to $1,000 a year matching funds.

"Half of all of working Americans still do not have access to a retirement plan with matching contributions from an employer. To remedy this gross disparity, I'm announcing that next year, my administration will give these oft forgotten American workers ... access to the same type of retirement plan offered to every federal worker," Trump said during his State of the Union speech to Congress on Tuesday night. "We will match your contribution with up to $1,000 each year as we ensure that all Americans can profit from a rising stock market."

About 56 million Americans lack access to a retirement plan through their employer, according to AARP.

Trump's announcement comes as Americans are struggling to save for retirement. A recent report from the National Institute on Retirement Security found that the the median amount American workers have saved for retirement is $955 - which includes people who have nothing saved at all. Looking at workers who have some retirement savings, the median is $40,000. In addition, Social Security is facing insolvency in less than a decade if Congress doesn't act to shore up its finances: The trust fund that pays out retiree and survivor benefits is expected to be depleted by the fourth quarter of 2032, at which point Social Security benefits would be cut by about 20%. The current average Social Security check is $2,071 a month.

Read: Here's what America can learn from Germany, Japan and Sweden about how to save Social Security

Trump campaigned on lowering the high cost of living, but more than a year into his second term, he's facing criticism that his administration isn't doing enough to address affordability issues.

Read: Where Trump's affordability ideas stand ahead of his State of the Union

Last year he unveiled "Trump accounts," which are investment accounts for children under 18. Babies born between 2025 and 2028 are set to receive $1,000 in seed money for these accounts.

Kevin Hassett, the director of the National Economic Council, has long been a fan of recreating the government's Thrift Savings Plan - which is a retirement-savings plan for federal employees - for private-sector workers who don't have employer-sponsored plans.

In a 2021 paper, he and his co-author, economist and New School professor Teresa Ghilarducci, argued that making such a plan available to those without access to a retirement plan would boost not just individual workers' wealth but also the wealth of future generations.

"Reforms to provide more retirement plan access to less well-off families would not only increase the retirement security of millions of low-income Americans, but would also boost their overall wealth and allow them to pass it along to future generations, thereby helping close the wealth gap in the process," Hassett and Ghilarducci said in the paper.

Some critics questioned Trump's authority to fund the retirement accounts with matching funds.

"Americans are still waiting on their tariff rebate checks and DOGE dividend checks. Not only does the administration lack the fiscal authority to seed 401(k)s with a $1,000 taxpayer match, nor is this a good idea," Romina Boccia, director of budget and entitlement policy at the Cato Institute, said in an emailed statement after Trump's comments. "Americans need a simpler system of tax-advantaged savings via universal savings accounts, not more tax-advantaged accounts (i.e. Trump accounts) or related handouts."

Trump's moves related to retirement savings have also included an executive order he signed last year opening up 401(k)s to alternative assets such as private equity.

Opinion: Private equity and private credit may fit your 401(k) retirement plan - but here's what you need to know

In December, Trump said he was "very seriously" looking into Australia's retirement system for ideas to boost retirement savings in the U.S. Under Australia's primary retirement-savings system, known as "superannuation," employers are required to fund workers' savings accounts, which are invested in select funds. Employees can also make their own contributions.

Read: Trump likes Australia's retirement-savings program - but could it actually work in the U.S.?

-Jessica Hall

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02-24-26 2256ET