Trump Proposes New Retirement Plan for Workers Without 401(k)s

Retirement security has become an increasingly urgent issue for many American workers, particularly those who lack access to traditional workplace savings plans.

During his State of the Union address, President Donald Trump introduced a proposal aimed at expanding retirement options for millions of employees who have long been outside the 401(k) system. The idea centers on government backed contributions designed to help workers begin building savings, while also sparking a broader conversation about how Americans prepare for life after their careers.

A Proposal Targeting the Retirement Coverage Gap

The plan includes a government contribution designed to encourage workers to start saving. Under the proposal described in the speech, eligible workers could receive a federal match of up to $1,000 each year depending on how much they contribute and their income level.

The proposal builds on the “Savers Match” program created under the SECURE Act, which is scheduled to begin in 2027. The program allows the federal government to match 50 percent of a worker’s retirement contribution in accounts such as IRAs or workplace plans including 401(k) and 403(b) accounts. Individuals earning less than $35,500 and couples earning under $71,000 may qualify for the full or partial match through a federal tax credit that is deposited into their retirement account.

The proposal comes at a time when many Americans remain unprepared for retirement. A report from the National Institute on Retirement Security found that the typical American worker has less than $1,000 saved for retirement.

By expanding access to retirement accounts, the administration framed the plan as an effort to help workers who have historically been left out of traditional workplace savings systems.

Why Millions of Workers Lack Retirement Plans

One of the biggest reasons for low retirement savings in the United States is simple access. Roughly half of American workers do not have a retirement plan offered through their employer. Without that option, saving regularly can become difficult.

Workplace plans such as 401(k)s have long been the main way people build retirement savings. These plans allow workers to contribute a portion of their paycheck automatically, often with an employer match that increases the total amount saved.

However, many smaller businesses do not offer retirement plans. Some employers say the administrative costs and setup requirements make it difficult to provide these benefits, especially for companies with fewer employees.

When workers do not have automatic payroll deductions, saving often becomes less consistent. Research has shown that participation rates increase significantly when workers are automatically enrolled through their jobs.

Teresa Ghilarducci, a labor economist at The New School, has noted that expanding retirement plan access could help close this gap. When workers are automatically included in savings programs, participation among lower and moderate income households tends to rise.

In many cases, the issue is not whether people want to save for retirement. It is whether they have an easy and reliable way to do it.

How the Federal Match Could Work

The proposal highlighted in the president’s speech is closely tied to the federal Savers Match program, which is expected to begin in 2027. The program is designed to encourage saving among lower and middle income workers by offering a government contribution to their retirement accounts.

Under the plan, the federal government would match 50 percent of a worker’s retirement savings contribution. The maximum contribution would be $1,000 for individuals and $2,000 for married couples filing jointly.

Instead of working like a typical tax deduction, the match would come in the form of a federal tax credit that is deposited directly into a qualifying retirement account. Supporters say this structure helps workers see the benefit immediately in their savings.

Eligibility focuses on households with modest incomes. Individuals earning less than $35,500 per year and couples earning under $71,000 could qualify for a full or partial match depending on their income and contributions.

Matching contributions have long been one of the most effective ways to encourage retirement saving. Employer matches in traditional 401(k) plans have shown that workers are far more likely to participate when additional contributions are added to their savings.

The federal match is intended to create a similar incentive for workers who do not have access to employer sponsored plans.

State Programs Already Testing Similar Ideas

Several states have already introduced programs designed to help workers save for retirement when their employers do not offer plans. These programs are often called auto IRA systems.

States such as Oregon, California, Colorado, Connecticut, Illinois, Maryland, and Virginia have launched programs that automatically enroll eligible workers into retirement savings accounts.

Under these systems, employers that do not provide their own retirement plan must enroll employees into a state facilitated IRA program. Contributions are taken directly from paychecks, usually starting at about 3 percent to 5 percent of income.

Many programs slowly increase the contribution rate over time. In some states, the amount rises by one percentage point each year until it reaches about 10 percent of income unless the worker decides to opt out or adjust the amount.

According to the Pew Charitable Trusts, these programs have already helped expand access to retirement savings. By the end of 2025, more than one million workers had opened accounts through state run systems.

John Scott, who directs the retirement savings project at Pew, has said that automatic enrollment makes it much easier for workers to begin saving because the process happens directly through payroll.

The growth of these programs has helped shape the conversation around national retirement savings policies.

A Step in a Larger Retirement Conversation

Economists say expanding access to retirement savings could help millions of workers who currently have limited opportunities to build long term financial security. Teresa Ghilarducci of The New School has noted that government matching contributions can increase participation among lower income workers, particularly when saving is simple and automatic.

Still, retirement security in the United States depends on more than workplace savings alone. Social Security remains the primary source of income for many retirees, with about half of seniors relying on it for at least half of their income. Because of this, policies that expand access to retirement accounts are often seen as one part of a broader effort to strengthen financial stability for future retirees.