In his State of the Union speech Tuesday night, President Trump vowed to give private-sector workers without an employer-sponsored retirement plan access to new tax-advantaged accounts similar to those for federal employees.
“My administration will give these often-forgotten American workers — great people, the people that built our country — access to the same type of retirement plan offered to every federal worker,” he said. “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.”
This type of plan was first authorized in 2022 with the passage of the SECURE Act. Some changes will be announced in the coming weeks, but no further action from Congress is needed, a White House spokesperson told Yahoo Finance.
The president’s pledge comes at a time when the typical American worker has less than $1,000 saved for retirement, according to a new report from the National Institute on Retirement Security.
One driving factor for that shortfall: Many workers lack access to employer-provided retirement plans. Roughly half of US workers don’t have workplace plans that divert money straight from their paycheck into a retirement account and frequently include a matching employer contribution.
President Trump delivers his State of the Union address to a joint session of Congress in the chambers of the US House of Representatives in Washington, D.C., on Feb. 24. (Nathan Posner/Anadolu via Getty Images) ·Anadolu via Getty Images
Trump’s proposal “may reduce the coverage gap affecting millions of low- and moderate-income workers,” Teresa Ghilarducci, a labor economist at the New School and the author of “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy,” wrote in an email. “Every worker should be covered by a retirement plan, in addition to Social Security, and enrolled automatically as they are in Social Security.”
Trump’s plan is based on the Savers Match program that is due to start in 2027.
Under that program, the federal government will make a matching 50% contribution to an eligible worker’s IRA or 401(k)/403(b) plan. The match — as much as $1,000 for individuals and $2,000 for couples — would come in the form of a federal tax credit. To be eligible for a full or partial match, individuals must earn less than $35,500; for couples, the limit is $71,000.
Ghilarducci, who has partnered with National Economic Council Director Kevin Hassett on developing solutions for the retirement savings dilemma, said a federal match “substantially increases participation among low- and moderate-income workers.”
“This executive action does not change the voluntary architecture that has produced large wealth gaps,” she cautioned.
Still, it’s a step. “This is one of the more substantial administrative interventions in recent decades to fix a substantial failure of our current system — the persistent coverage gap,” Ghilarducci said.
A growing number of states have passed laws in recent years to help workers save for retirement. These include Oregon, Colorado, Connecticut, Maryland, Illinois, California, and Virginia.
Currently, 20 states have enacted new programs for private-sector workers, and 17 of those states have auto-IRA programs. By the end of 2025, more than 1 million workers had opened accounts.
They require most private employers that don’t sponsor a savings plan of their own to enroll workers in a state-facilitated individual retirement account (IRA) at a preset savings rate — usually 3% to 5% of earnings — which is automatically deducted from paychecks. The plans typically ramp up an employee’s contribution by 1% each year until it reaches 10% unless an employee opts out.
“The state programs provide a simple, easy option so they can start saving quickly,” said John Scott, retirement savings project director at Pew Charitable Trusts.
Eligible businesses with 50 or fewer employees can qualify for a credit equal to 100% of the administrative costs for establishing their own workplace retirement plan.
“I’m excited that the president chose to highlight the importance of providing access to workplace savings plans to all working Americans and the idea of providing a form of government contribution,” Scott told Yahoo Finance after Tuesday’s speech.
“While we can’t make any judgments until we see the details of the proposal, these pronouncements as a whole are a step in the right direction,” he said.
Scott added, “Pew has worked very hard to extend workplace retirement savings opportunities at the state level. So, the President’s comments on improving retirement savings are appropriate and welcome.”
In his speech, the president gave merely a passing mention to the state of Social Security. “We will always protect Social Security, Medicare, Medicaid,” Trump said.
That’s too bad, because it’s a massive concern: Social Security’s reserves could vanish in seven years, according to the latest projection for the Old-Age and Survivors Insurance Trust Fund, outlined in the 2025 Social Security and Medicare Trustees annual report.
At that point, if no adjustments are made, the entitlement program’s trust fund will be able to pay out just 77% of benefits to seniors.
This issue is crucial and cuts to the core of Americans’ financial security in retirement. For about half of seniors, monthly Social Security benefits provide at least 50% of their income, and for about one in four seniors, they provide at least 90% of their income.
