Trump’s Retirement Savings Plan: A Closer Look at the Proposals and Their Flaws

President Donald Trump and Congress are pushing initiatives to help Americans save more for retirement. At the household level, saving is the foundation of financial security and the seed capital for a better retirement. At the economy-wide level, savings fund investment that expands the capital stock, raises wages, and grows the economy. A society that does not save is a society slowly consuming its future.

Any politician advocating for increased savings deserves consideration. But what should such a proposal include? The first step is removing government-created barriers to savings, such as a Social Security system that disincentivizes saving and a tax code that taxes savings twice—as both income and investment returns. Addressing the national debt, which threatens inflation and erodes the value of existing savings, would also help.

However, this is not the approach taken by Trump’s new executive order. The order directs the Treasury to launch TrumpIRA.gov, a portal where workers without employer-sponsored retirement plans can shop for private accounts. Some may qualify for a federal Saver’s Match of up to $1,000 per year.

The details remain vague, but a bipartisan bill currently before Congress provides insight. The Retirement Savings for Americans Act would automatically enroll workers earning below the national median income in new retirement accounts and offer government matching contributions. According to RAND Corporation research, roughly 63 million workers would be eligible for these accounts, and 42 million would qualify for the match.

Bipartisan support for the idea is growing. Wall Street firms see potential new customers, progressives advocate for expanded government involvement in retirement, and some conservatives view it as a step toward Social Security privatization. However, skepticism is warranted.

Is the Saver’s Match a Trump Innovation?

The Saver’s Match is not a Trump innovation. It was established by the 2022 SECURE 2.0 Act under former President Joe Biden. Trump’s executive order merely accelerates its rollout and expands its visibility.

The cost of such a program would be substantial. Romina Bocca of the Cato Institute wrote in The Washington Post that if modeled after the bipartisan bill, low-income workers with existing retirement accounts could receive up to $1,000 in matching funds starting in 2027, at a cost of $9.3 billion to federal taxpayers through 2032. Expanding eligibility and automatically enrolling workers without existing accounts would be far more expensive, with some projections estimating a price tag of $285 billion over the first decade alone.

That’s real money added to a federal balance sheet already strained by a Social Security system facing roughly $28 trillion in long-term shortfalls.

The Deeper Problem: Misreading Savings Behavior

Beyond fiscal concerns, the proposal’s backers may misread the savings behavior of the households they aim to help. Decades of economic research consistently show that low-income households are not failing to save due to a lack of incentives. Instead, they face structural barriers, such as stagnant wages and high living costs, which make saving difficult regardless of matching contributions.