Trump’s universal 401(k) architect on why lower-income people distrust retirement accounts: ‘they want to know what the catch is’

The Trump administration wants to change that. At Tuesday’s State of the Union, President Donald Trump announced a plan to bring retirement savings accounts to the 54 million American adults who don’t have employer-backed retirement plans. Economists have estimated that a plan like Trump’s would help the poorest 25% of Americans save between $138,000 and $610,000 for their retirement. 

Workers who never had a retirement savings plan have long been suspicious of programs like this for good reason, said Teresa Ghilarducci, a professor of economics at The New School, who was one of the economists behind the development of Trump’s plan. 

“Many of the [low-income earners] that I’ve talked to really want me to sit down and explain how it worked for them, because they’ve just been excluded from a system like this for their whole careers,” Ghilarducci, who has studied retirement security for 42 years, told Fortune. “They want to know what the catch is.” 

Even as the proposed accounts are a major step toward more financial security for low-income Americans, there are obstacles to the program’s success. 

Americans have already seen the fallout of a retirement program for low-income workers. In 2015, President Barack Obama launched the MyRA program (for My Retirement Account), but eligible workers faced barriers like the surprisingly difficult act of enrolling. Studies show that participation in retirement plans increases by 50% when employees are automatically enrolled. Though the enrollment process was fairly simple–you had to go to a website, check a box, and then you would be enrolled—after two years, the Department of Treasury shuttered 30,000 newly opened accounts after determining it wasn’t cost-effective. 

That distrust is warranted, Ghilarducci said. “For the third of workers, their money is safer in a shoe box under the bed than it is in an IRA” because of monthly fees. 

While Ghilarducci argues that all eligible workers should be automatically enrolled, which is not currently part of Trump’s plan, the new program has a fundamental difference to Obama’s, she said. The administration will match savings up to $1,000 each year, providing a necessary incentive to enroll. 

“If you have systems where low-income people get a direct match, and they can actually see their money grow in any significant way, participation goes way up,” she said. 

Is it enough money? 

A BlackRock survey of 1,000 registered voters found that on average, people think they need about $2.1 million to retire comfortably. The average balance of 401(k) was $144,400 in Q3 of 2025, according to Fidelity Investments, or less than 7% of what people believe they need. 

“Almost no one is close” to that amount, BlackRock CEO Larry Fink said in a letter to shareholders last year. 

A younger Baby Boomer herself, Ghilarducci said she’s seen how the retirement system hasn’t delivered for many Americans. 

“I honestly thought that we would have a much more expanded private sector plan and bigger social security benefit by the time I’m retiring, and I’ve just watched the system get worse and worse,” she said. According to the Economic Innovation Group, 78.7% of full-time workers in the lowest-earning decile don’t have access to retirement plans, compared to just 18.2%in the highest-earning decile. 

Ghilarducci believes that low-income workers need a bigger match than $1,000 each year and said she hopes Congress will pass a more generous match for workers. 

“This is an architecture, a design, where they have the best chance of putting some money in their accounts early in their life, keep it there and then,” she said. “When you do that, you take advantage of the magic of math, because compound interest kind of takes over for the workers’ contribution.”