Trump touts retirement plan for low-income workers
The obvious weakness is that most low-income workers don't make enough money to contribute to a savings plaln
President Donald Trump used his 2026 State of the Union address to preview a new type of retirement savings account aimed at workers without access to pensions or 401(k)-style plans — a gap that affects tens of millions of Americans.
The proposal, outlined only in broad strokes, would create a new retirement account separate from Social Security and include a federal government match of up to $1,000 per year. Trump said the accounts could resemble the Thrift Savings Plan used by federal employees and military personnel.
“Half of all working Americans still do not have access to a retirement plan with matching contributions from an employer,” Trump said. “To remedy this gross disparity, my administration will give these often-forgotten American workers access to the same type of retirement plan offered to every federal worker.”
Advocates say expanding retirement access is overdue — but warn that execution will determine whether the idea helps workers or becomes another underused savings program.
The key problem low-income workers face is that they don’t make enough money to set aside even a modest amount of savings. As Trump described it, his proposal doesn’t appear to solve that crucial issue.
A coverage gap decades in the making
The retirement divide is stark. According to AARP, about 56 million workers lack access to an employer-sponsored retirement plan. The gap is most pronounced among:
Small-business employees
Lower-income workers
Workers of color
Nearly 80% of workers without workplace plans earn less than $53,000 annually. About 63% of Hispanic workers and 52% of Black workers lack employer-based retirement savings options.
“We know that Americans are much more likely to save when they have access to retirement savings options at work,” said Bill Sweeney, AARP’s senior vice president of government affairs, who said the group is waiting for details on Trump’s plan before taking a formal position.
Business size is a major factor. Roughly 78% of firms with fewer than 10 employees offer no retirement plan, leaving millions dependent on IRAs or nothing at all.
How the new accounts might work
While the White House has not released a formal proposal, an administration official described the concept as a “universal, portable” account that workers could keep across jobs.
The $1,000 annual match — dubbed the “Saver’s Match” — could potentially build on provisions in the 2022 SECURE 2.0 retirement law, which already expanded incentives for low-income savers.
If structured well, the accounts could address one of the most persistent failures of the U.S. retirement system: the heavy reliance on employer-sponsored savings vehicles.
“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,” said Teresa Ghilarducci, director of the Wealth Equity Lab at The New School.
Still unknown:
Eligibility rules
Enrollment mechanisms
Whether participation would be automatic
Investment options and fees
Those details could determine whether the plan meaningfully expands retirement savings — or joins a long list of underutilized tax-preferred accounts.
State programs offer a preview
In the absence of federal action, states have been experimenting with “work and save” programs that automatically enroll workers whose employers don’t offer retirement plans.
As of early 2026, about 1.2 million workers were enrolled in such programs across 20 states, according to AARP-backed research.
These state auto-IRA programs rely heavily on automatic enrollment — a feature behavioral economists say is critical to boosting participation. Without automation, many low-income workers never sign up.
A federal program without similar default enrollment could struggle to gain traction.
Social Security still dominates the debate
Trump paired the retirement-account announcement with a pledge to protect Social Security and Medicare — programs that remain the backbone of retirement income.
About 70 million Americans currently receive Social Security benefits, including roughly 54 million retirees. The average monthly retirement benefit stood at $2,019 as of January 2026.
But the program faces a looming funding crunch. The Social Security Administration’s chief actuary projects the retirement trust fund will be depleted in late 2032 absent legislative fixes. After that, benefits would automatically fall to about 80% of scheduled payments.
Trump did not address the shortfall in his speech, leaving unanswered how his administration would stabilize the program’s finances.
A new tax break for seniors
The president also highlighted a provision from the 2025 tax package known as the “One Big Beautiful Bill,” which created a temporary tax deduction for older Americans.
The measure allows people 65 and older to deduct up to $6,000 from taxable income through the 2028 tax year, depending on income thresholds. AARP supported the provision, which can reduce or eliminate taxes on Social Security benefits for some retirees.
But the deduction is temporary and does not resolve long-term solvency concerns for either Social Security or Medicare.
What consumer advocates are watching
For consumer advocates, the proposal’s biggest promise — and risk — lies in its details.
Potential upsides include:
A federal match for low-income savers
Portable retirement accounts across jobs
Expanded access for gig and part-time workers
But pitfalls could include:
Weak participation if enrollment isn’t automatic
High fees that erode savings
Overlap or confusion with existing IRAs
AARP signaled cautious optimism, saying it supports bipartisan efforts to expand retirement access, including proposals like the Retirement Savings for Americans Act and the Automatic IRA Act.
Data Box: U.S. Retirement Snapshot (2026)
Workers without workplace retirement plans: ~56 million (AARP)
Average Social Security retirement benefit: $2,019/month
Social Security beneficiaries: ~70 million Americans
Projected trust fund depletion: Late 2032
State auto-IRA enrollment: ~1.2 million workers in 20 states
Proposed federal match: Up to $1,000 annually