Extreme Personal Finance Show

401k Access Crisis: Half of Workers Have No Retirement Plan and What's Being Done About It | 094

• Chris Luger

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 12:25

Half of American Workers Have No 401(k). Trump Just Made a Big Promise | 094

Subscribe to the newsletter at moshpit.heavymetal.money


During his record-breaking 2026 State of the Union address, President Trump made a surprising announcement that most financial media buried under the tariff headlines: he proposed giving roughly 56 million American workers without an employer-sponsored retirement plan access to a government-backed account modeled after the Federal Thrift Savings Plan, with a federal matching contribution of up to $1,000 per year.

In this episode, Chris breaks down what we actually know, what we definitely don't know yet, and what it all means for your retirement right now.


What's Covered in This Episode

  • Why roughly half of all American workers still have zero access to an employer-sponsored retirement plan with matching contributions, and why that's a bigger deal than most people realize
  • A plain-English breakdown of the Federal Thrift Savings Plan (TSP) and why it's actually a solid model: lower fees, simple investment options, and straightforward matching
  • How the SECURE 2.0 Act of 2022 already included a "Saver's Match" provision offering eligible lower-income workers up to $1,000 in federal contributions starting in 2027, and why this announcement sounds a lot like that
  • The unanswered questions: income limits, funding sources, implementation timeline, and how this interacts with existing law
  • A quick history lesson on the MyRA program, a similar starter retirement account that was quietly cancelled in 2017
  • What you should be doing right now, whether you have an employer plan or not
  • Traditional and Roth IRA options available today, including 2025 contribution limits


Resources Mentioned


Key Takeaway

Don't wait for Washington to build your financial future. The tools already exist. Start using them now.


Contact Chris:

https://heavymetal.money

https://www.facebook.com/MoneyHeavyMetal

https://x.com/MoneyHeavyMetal

⁠https://www.instagram.com/heavy_metal_money⁠

https://www.tiktok.com/@heavymetalmoney

email: chris at heavymetal.money


Contact Chris:
https://heavymetal.money

https://www.instagram.com/heavy_metal_money/

https://www.youtube.com/@heavymetalmoney

https://www.facebook.com/chrisluger

email: chris at heavymetal.money

SPEAKER_00

President Trump promises caves for everyone. This week on the Extreme Personal Finance Show. All right, so President Trump announced a plan to provide a government-backed retirement account modeled after the Federal Thrift Savings Plan, or TSP, to workers without an employer-sponsored option. The plan would include a federal matching contribution of up to$1,000 per year. So get this. So Tuesday, a couple weeks ago, on the 24th, President Trump was delivering the State of the Union address, the longest address in history, at one hour and 47 minutes. He covered a lot of stuff. He covered things like tariffs, the Supreme Court, the stock market multiple times. But right in the middle of everything, he said something that made me kind of take notice. He mentioned something about retirement savings plans for roughly half of American workers who currently don't have access to one through their employer. And I was like, what? Really? So over half of American workers today still don't have access to a retirement plan with employer matching, right? With employer matching contributions. And this is something that I want to make sure we talk about because I, when I was working throughout my career, I always had access to an employer-sponsored retirement plan, right? That account, they had matching contributions. And I forget that there's a lot of people out there that don't have that. And I want to make sure that we address that because I I forget, right? I I absolutely understand I'm taking that for granted. So there are a lot of, you know, there's part-time workers, gig workers, service industry workers that don't have access to this type of plan. So I want to make sure that we do cover this because, again, I just forget about it. And so when we talk about half of American workers don't have access to that, that's like that's huge. That's like a whole like systemic failure. And I it was important enough to make it into that union address. So I want to break down like what was talked about, what we know so far, and what it means for all of us, and what we don't know, which you know, there's a lot we don't know as well. And first, let's actually look at the quote specifically, like directly from the speech. So what he said, and I quote, half of all American workers still have no access to a retirement plan with matching contributions from their employer. To remedy this gross disparity, my administration will give those oft-forgotten American workers access to the same type of retirement plan offered to every federal worker. We'll match your contribution with up to$1,000 each year. End quote. Now I know a lot of people are gonna say, oh, well, it's only$1,000. Well, it's a thousand dollars you wouldn't have gotten otherwise, right? So, in a nutshell, this is a government-backed retirement account modeled after the federal thrift savings plan, open to workers who currently have no employer-sponsored option. And we're gonna get to that thrift savings plan here in just a minute. But the government would also chip in up to$1,000 per year to match your own contributions. For some of those people living paycheck to paycheck, you know, I mean, I I'm guilty of it too, that I talk about all the time, oh, just max out your 401k. I say it all the time. People often say their whole lives, oh, just ma you know, max out your 401k. Well, for those people who don't have it, it's like a big deal, right? And so this is the underlying problem here that you know I think we're trying to solve, and that is the retirement gap is very real. The retirement savings crisis in America is generally bad, right? I had a previous blog post talking about how BlackRock CEO warned that that Americans haven't saved nearly enough to sustain themselves through retirement. Now he put the number people think they need at around$2.1 million. I think that's not necessarily the case, but that that's what he mentioned in this letter. And he went on to say that he doesn't think almost no one is close to that. So we talk about this all the time here at Heavy Metal Money and on the podcast. We talk about how the old playbook of just save 15% and you'll be fine, right? I've had Brian Muller, financial advisor Brian Muller on the show multiple times, and we talked about how that old playbook is gone, right? Because it has been obliterated by the reality of rising costs everywhere, right? Rising housing costs, healthcare costs, child care costs, and the stagnant wages that just have never kept up. The idea that half of the working population may be entirely missing out on that employer-sponsored retirement plan makes that even worse, right? So a traditional 40K plan lets employees contribute a portion of their paycheck pre-tax and up to a certain percentage, employers then typically match those contributions. So that employer match is basically free money. And yes, it's one of the most powerful wealth-building tools available to us regular people. And 50% of the workers don't have access to it. It's crazy. And that's the gap that President Trump was referring to in that address. And I think it's a real gap. It's a real one. So let's look at how this kind of would work. And it appears as though, again, it's modeled after this Federal Thrift Savings Plan or TSP, which is a retirement vehicle available to federal government employees or like the military. And it's actually a pretty solid plan. It has lower fees, simple investment options, and straightforward contribution matching. Now, extending something like this to workers in the private sector who currently have nothing, I think it's pretty awesome. Now, there's also a relevant existing law that's worth looking at here. So going back to the Secure 2.0 Act passed back in 2022, it already created something called a savers match. Now, this was set to take effect in 2027 under the Secure 2.0 Act for lower income workers. They'd receive federal government contribution of up to 50% on$2,000 in retirement savings. Well, what's that work out to? It works out to a maximum of$1,000, right? Now the income cutoff for that match is roughly around$20,000 for single or$41,000 if you're married, and then it phases out for those earning more than that. So this, you can see that this that the recent announcement lines up pretty closely with what's already going to happen under this existing law. So whether this version of the plan builds on what's existing there in the secure 2.0 framework, or if it replaces it, or is something else entirely is still kind of up in the air. We really don't know. Now, there wasn't any mention on specifics during the address, as well as where the money would be coming from, right? Like where in the federal budget are we going to fund this money as well. And that kind of matters, right? Now, I am, I want this to work. I really, really do. But I want to also be cautiously skeptical, too. Because if you're a gig worker, part-time employee, a server, a contractor, maybe you're someone that just works for a small business who can't afford to offer a 401k to their employees or having a tax-advantage retirement account, the federal matching can be huge. Compound interest cares more about your starting age than your starting salary. Remember, getting people into the game earlier is everything. But that's where I put my like skeptical hat on, right? Because good financial education means asking some of those hard questions, right? Like, first, the details basically are non-existent right now, right? There's no specifics on income limits beyond what has already been talked about in the Secure 2.0 Act, right? Um, there's no clarity on how the program gets funded. There's really no timeline beyond just next year. These type of announcements typically have a long history of generating hype and applause, but we got to look at actually generating legislation to make these things happen. And second, we already know there's a version of this coming, right? Because we just talked about the existing law, the savers match, is scheduled for 2027. So if this announcement is largely just a rebranding or relaunching of what Congress already passed, that's fine. But I think us as voters, we need to know that as well. And again, if we remember going all the way back to Trump's first term, we actually saw the cancellation of the MyRA or MIRA program, which was a similar starter retirement account introduced under President Obama, which drew only about 30,000 participants before being shut down in 2017 over cost concerns. So a new version of this type of program would need some structure behind it, right? Some improvements and real commitment so that it doesn't avoid the similar thing, right? Just gets shut down. And so what it means for you right now, well, as we leave here today, if you currently have a 401k through your employer, nothing changes, right? Nothing changes in the immediate term. Keep contributing, especially if your employer has a match. The match is the closest thing you'll get to free money that exists in personal finance. And I really do think you should try to capture as much of that as you possibly can. If you don't have access to an employer plan, you have options right now, regardless of what happens with any new legislation. We have traditional or Roth IRAs. These let you contribute. I think in 2025 it was like$7,000. Um, and then for over$50, we have catch-up contributions. We also have that savers match in 2027 that we already talked about that provides those tax benefits for lower income earners who contribute to retirement accounts. So please understand we don't have to wait for government announcement to start building your future. So the bottom line here, I really do think that retirement savings gap in this country is real and it has been somewhat ignored. And I think the idea of giving workers without employer plans access to some sort of tax-advantaged account with federal matching, it it kind of accelerates that program and funds it properly, then this may reach those people who really need it most. I think it would generally be good news for tons of Americans out there who have been left out of this wealth-building equation. Now, is this is this the only thing that you should have? Probably not, right? But it is a start. It is getting you started. And as always, don't just wait for Washington to build your financial future, right? Learn the rules. Use the tools that already exist and start now. The best time to plant a tree was 20 years ago, right? The second best time is today. So again, thank you so much for joining us today. I really do appreciate it. Please like and subscribe where you get your podcasts and on YouTube. And we'll see you next time on the Extreme Personal Finance Show. See ya.