President Donald Trump used his State of the Union address Tuesday night to unveil a new federal initiative aimed at helping workers who currently lack access to employer-sponsored retirement plans.
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Roughly 69 million workers, 55.5% of the U.S. workforce, lacked access to employer-provided retirement plans in 2021, according to an analysis of Bureau of Labor Statistics data conducted by the Economic Innovation Group, a bipartisan public policy organization.
The plan would create a government-backed retirement account for these workers and provide an annual federal match of up to $1,000, effectively extending a benefit long reserved for federal employees.
“Half of all working Americans still do not have access to a retirement plan with matching contributions from an employer,” Trump said during his State of the Union address. “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. 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.”
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Aiming to close the coverage gap
The proposal would model the accounts on the federal government’s Thrift Savings Plan (TSP), a low-cost, index-based defined contribution plan, a White House spokesperson told Axios.
The initiative expands on the bipartisan Secure 2.0 legislation passed in 2022, which introduced a “saver’s match” program for lower- and middle-income workers contributing to existing retirement accounts. Scheduled to take effect next year, the program will provide up to 50% in federal matching funds on the first $2,000 contributed annually by eligible savers, with individual income capped at $35,500 and joint income at $71,000.
Trump’s plan goes further by opening the door automatically to workers who currently have no workplace retirement plan. Eligible workers could opt into the program through their tax return, avoiding the process of opening IRAs on their own.
Teresa Ghilarducci, director of the Wealth Equity Lab at The New School, said in a statement that the plan is a significant, if incomplete, step toward addressing the current retirement crisis
“Expanding access is a meaningful step,” Ghilarducci said. “For decades, Congress has tolerated a system in which nearly half of full-time workers and most part-time and gig workers lack access to a workplace retirement plan. Addressing that coverage gap is not trivial.”
In a 2021 paper, Ghilarducci and co-author Kevin Hassett, director of the National Economic Council, argued that offering such a plan to workers without access to employer retirement accounts would increase not only their personal wealth but also the financial security 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,” Ghilarducci and Hassett wrote in the paper.
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Why the retirement gap matters
The coverage gap is substantial. Tens of millions of full-time private-sector workers lack access to employer-sponsored retirement plans. Coverage is even lower for part-time and gig workers.
The median retirement savings for all U.S. workers is just $955, according to a recent report from the National Institute on Retirement Security. Meanwhile, Social Security faces projected benefit cuts of roughly 20% starting in 2032 unless Congress intervenes.
For financial advisors, the new accounts could be both an opportunity and a disruption. A TSP-style plan would likely offer a limited menu of low-cost index and bond funds, simplifying investment choices while potentially reshaping how advisors interact with clients who currently fall outside traditional employer-based retirement systems.
John McGowan, a financial advisor at Carson Wealth in Pittsburgh, Pennsylvania, said the federal match could significantly boost retirement outcomes.
“Of course, we’d like to see more details on the plan, but it seems like a great opportunity for individuals to save for their future. Having the potential for a match would allow people to significantly increase their retirement savings over time, which could ultimately lower the reliance for people on Social Security as their sole income source in retirement,” McGowan said. “This means retirees can enjoy retirement rather than continue working into their twilight years.”
Industry groups offered cautious support. The American Retirement Association called it a meaningful step to promote savings among lower-income Americans, while the Investment Company Institute emphasized the importance of preserving the existing employer-based retirement system.
Bipartisan efforts in Congress have advanced similar proposals over recent years. The Retirement Savings for Americans Act (RSAA), introduced last April by Republican Rep. Lloyd Smucker of Pennsylvania, would establish the American Worker Retirement Plan.
Under the bill, the federal government would match contributions of up to 5% for low- and middle-income workers, including a 1% non-elective contribution and a 4% safe harbor match, with the benefit gradually phasing out as incomes approach the median level.
The RSAA has been brought before Congress three times. Democratic Sen. John Hickenlooper of Colorado first introduced the legislation in 2022 and reintroduced it in 2023, joined by Republican Sen. Thom Tillis of North Carolina.
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Structural challenges remain
Ghilarducci said that the “core weaknesses” of the U.S. retirement system remain intact, including regressive tax subsidies for retirement, voluntary savings, wage stagnation and the erosion of defined benefit pension plans.
“Workers are asked to shoulder market, financial and longevity risks that they are least equipped to manage,” she said.
“This development may represent a policy opening,” Ghilarducci added. “If policymakers engage constructively, the administrative framework could evolve into a legislated, progressive and secure universal system. But executive action cannot substitute for structural reform.”
If executed effectively, President Trump’s plan could represent one of the largest expansions of retirement savings access in decades and reshape how millions of Americans begin saving for retirement. Still, advisors like McGowan say that access is only one part of the problem.
“For this to work, education is crucial, so people understand the long-term benefits of savings in these plans,” he said.
