The administration of Donald Trump has presented a plan to introduce a new, federal retirement account with a government match, aimed at tens of millions of Americans not covered by employer-sponsored plans like 401(k). The proposal assumes the government will match citizens' savings, up to $1,000 annually. The initiative immediately met with sharp criticism from experts and media, which recall that a similar program, myRA, ended in spectacular failure during President Barack Obama's tenure. Questions are also arising about the feasibility of funding the project and whether it duplicates provisions of the already passed, bipartisan SECURE 2.0 Act.

New plan for "forgotten workers"

President Donald Trump announced the intention to introduce a federal retirement plan for people employed in small businesses that do not offer traditional, employer-sponsored 401(k) plans. The program is to be modeled on the Thrift Savings Plan used by federal civilian and military employees. Its goal is to reach an estimated 54 million Americans who currently lack access to such savings.

Government match up to $1,000

The central element of the proposal is a government match on citizens' savings. For every dollar deposited by a participant into their individual account, the federal government would match that amount. The maximum annual match is to be $1,000. According to reports, the funds would be invested in low-interest Treasury bonds, and the account would be portable when changing jobs.

Predecessor's failure - the myRA program

Experts and media, such as Bloomberg, immediately point to the historical failure of the very similar myRA program, introduced by the Barack Obama administration in 2014. That program, also aimed at low-income individuals and offering safe Treasury bonds, was closed in 2017 after gathering only $34 million in deposits from about 20,000 people. High operational costs and low interest rates meant it failed to attract the masses.

Conflict with existing laws and state programs

Trump's proposal conflicts with two existing realities. First, many of its elements seem to duplicate provisions of the SECURE 2.0 Act from 2022, which provides for the introduction of a federal "Saver's Match" program starting in 2027. Second, several states, like California, Oregon, and Illinois, have already launched their own mandatory retirement savings programs for private-sector workers, raising questions about jurisdiction.

Financial and executive challenges

The plan faces fundamental obstacles. It is unclear how it would be funded, especially in the context of the high budget deficit. Furthermore, to implement it, the Trump administration would likely have to issue complex executive orders or convince Congress to pass new legislation, which is a challenge in a politically divided environment. Critics also point out that the poorest citizens often lack financial surpluses for saving.

President Donald Trump's administration has presented a proposal to create a new federal retirement account, which is to cover millions of Americans lacking access to traditional employer-sponsored plans. The key element of the project is the promise of a 1:1 government match on citizens' savings, with an annual limit of $1,000. The idea, which Trump called a program for the "forgotten workers," is to be modeled on the Thrift Savings Plan available to federal employees. According to White House estimates, the initiative could affect up to 54 million people. The American retirement system is based mainly on three pillars: federal Social Security, employer-sponsored retirement plans (401(k)), and individual accounts (IRA). Since the 1980s, with the decline in popularity of traditional, defined-benefit plans, the main burden of responsibility for saving for old age has shifted to individuals, contributing to deepening wealth inequalities. The reaction from the expert community and financial media to the announcement was immediate and largely skeptical. Bloomberg stated in an article headline that "Trump's Retirement Proposal Already Failed -- Under Obama," referring to the unsuccessful myRA program. That program, launched in 2014 by the Barack Obama administration, offered similar premises: safe, government bonds for low-income individuals without access to workplace plans. It ended, however, in a humiliating failure, gathering only about 20,000 participants and $34 million before being closed in 2017 due to high administrative costs and negligible interest. „Trump's Retirement Proposal Already Failed -- Under Obama” (Trump's Retirement Proposal Already Failed -- Under Obama) — Bloomberg BusinessCritics point out that the low interest rates offered by government bonds were and remain unattractive compared to other forms of investment, which was the main reason for myRA's failure. A similar problem could affect Trump's new plan. Furthermore, doubts arise about its originality. Many elements of the proposal, including the concept of a government match, seem to overlap with provisions of the already passed bipartisan SECURE 2.0 Act from 2022. That act provides for the introduction of a federal "Saver's Match" program precisely in 2027, which would also offer a match on contributions for lower-income individuals. An additional complication is the fact that several U.S. states, such as California, Oregon, Illinois, and Colorado, did not wait for a federal initiative and introduced their own state-run programs for automatically enrolling private-sector workers in retirement accounts. The question thus arises about jurisdiction and potential conflicts between federal and state regulations. Another challenge is the issue of funding. Details regarding the source of funds for government matches have not been disclosed, raising concerns in the context of the record-high U.S. budget deficit. The implementation of the plan is also in question. The Trump administration announced it wants to implement it via executive orders, which would allow bypassing Congress. However, such a path would likely face legal challenges, especially regarding the allocation of funds, which usually requires legislative approval. Regardless of the obstacles, the proposal fits into the broader debate about retirement security in the U.S. and growing inequalities in this area. It also shows political will to address the problem, even if the means to solve it raise doubts among experts and recall previous failures.

Mentioned People

  • Donald Trump — President of the United States, author of the proposal for a new federal retirement account.
  • Barack Obama — Former President of the United States, under whose administration the myRA program was introduced.