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Trump Vows Retirement Boost for Millions — Expert Questions His Fiscal Authority
56 million Americans without an employer-backed retirement saving plan, like a 401(k), could benefit from a proposal President Donald Trump made during Tuesday night’s State of the Union address, but one expert warns he may not have the authority to do so.
Declaring that he wanted to fix a “gross disparity” in America’s retirement system, as CBS News reported, Trump said that “half of all of working Americans still do not have access to a retirement plan with matching contributions from an employer.”
Trump appears to be using a plan provided to federal government employees, the Thrift Savings Plan, as the template for the new retirement accounts.
“The current retirement system effectively excludes millions of Americans who lack access to 401(k) and similar plans, according to a recent report from the National Institute on Retirement Security (NIRS),” CBS News noted. “The nonpartisan group found that most Americans without an employer-sponsored plan are unlikely to put any money away for retirement.”
These new plans would “ensure that all Americans can profit from a rising stock market,” Trump said.
Some financial experts lauded the idea.
“The time has come because so many people are now older and they realize the promise of the 401(k) just didn’t materialize,” retirement expert Teresa Ghilarducci, director of The New School for Social Research’s Wealth Equity Lab, told CBS News. “This goes much further than any other legislation in the last 45 years to get money into low-income workers’ retirement accounts.”
But one expert disagreed with Trump’s plan, and his authority to fund it.
“Not only does the administration lack the fiscal authority to seed 401(k)s with a $1,000 taxpayer match, nor is this a good idea,” Romina Boccia, director of budget and entitlement policy at the Cato Institute, told CBS News. “Americans need a simpler system of tax-advantaged savings via universal savings accounts, not more tax-advantaged accounts (ie Trump accounts) or related handouts.”
Meanwhile, according to Semafor, Trump’s plan may end up not even being his own.
“One option: resurrecting former President Barack Obama’s MyRA program, which Trump shuttered in 2017, citing high costs. Obama announced that plan, which eventually drew 30,000 participants, during his 2014 State of the Union.”
Image via Reuters
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