Uncle Sam wants you to save for retirement

Virginians who lack access to workplace retirement plans may soon find it easier to set aside funds for their golden years thanks to a new federal program that’s designed to broaden access to retirement savings accounts.

In late April, President Donald Trump signed an executive order that will establish by early 2027 a new website, TrumpIRA.gov, where people can find information about and compare low-cost individual retirement accounts (IRAs). Also beginning next year, people who meet set income specifications could qualify for a new federal saver’s match of up to $1,000 on IRA contributions that will be deposited directly into their IRA account.

It’s notable, although hardly unprecedented, for the federal government to take a proactive role to address the current retirement savings gap, Virginia-based financial advisers say. The federal government’s latest push related to retirement savings access doesn’t create new types of investment accounts but rather focuses on raising awareness of the options that largely existed already.

That distinction points to a “glaring issue” regarding the retirement readiness of millions of Americans, says Ryan Torguson, a wealth adviser, portfolio manager and partner with VWG Wealth Management in Vienna, a division of Hightower Advisors.

“At the heart of it, the executive order is addressing a need that’s not been addressed previously,” Torguson says. “Anything that promotes savings where there’s no access or not a lot of knowledge of access is beneficial.”

President Trump’s executive order builds upon previous bipartisan efforts — notably, the SECURE 2.0 Act of 2022 — that are intended to help Americans better prepare financially for their futures.
Census Bureau figures show that 41 million Americans don’t have access to an employer- provided retirement plan, while an AARP study puts that number closer to 57 million. And once Americans do qualify for Social Security, estimates indicate that between 14% and 39% of seniors rely solely on these checks for their monthly income.

Such dynamics appear all the more untenable amid what’s rapidly becoming a precarious future for this program, as both the Social Security Administration and Congressional Budget Office project that retirement benefits may run out in 2032.

Federal intervention

With that crisis looming, some skeptics may question whether the latest federal efforts can really move the needle. A new website might rouse interest in IRAs — though they’ve long been a viable alternative for workers who lack workplace plans — but can a federal match reserved strictly for lower-income Americans spur them to set aside precious dollars for retirement?

Indeed, the federal government has a solid track record of changing behavior through even small nudges. A tweak as simple as automatic enrollment — which is now mandated for most plans since the enactment of the SECURE 2.0 Act — results in a big surge in 401(k) participation rates and “exerts a powerful influence on employee saving outcomes,” according to findings from the National Bureau of Economic Research.

While a lot of details still need to be worked out, any federal policy efforts that encourage people to plan for retirement are “exciting” and worth celebrating, says Joe Montgomery, managing director of investments at The Optimal Service Group of Wells Fargo Advisors in Williamsburg. “If it gets people to think a little more about the long-term, that alone is a benefit.”

The federal government is making a significant change in how it incentivizes Americans to save for retirement. That’s because the saver’s match that was enacted as part of the SECURE 2.0 Act will replace the saver’s credit, a nonrefundable tax credit that was offered as a tax break for people who made eligible retirement contributions.

Beginning Jan. 1, 2027, eligible Americans will be matched on 50% of their annual contributions, up to a maximum match of $1,000, and the money will be deposited directly into their IRA. Of course, any time free money is involved, strict rules apply: The matching rate phases out for single filers with an adjusted gross income starting at $25,000 and for joint filers starting at $40,000, while taxpayers will incur penalties for early withdrawals.

While many workers are accustomed to receiving a match on their contributions from employers, a match from the federal government “almost sounds too good to be true,” Torguson notes. And, he worries, it may be as the income thresholds are so strict that eligible taxpayers would need to contribute $2,000, which amounts to 8% of their adjusted gross income, just to qualify for the maximum match of $1,000.

Small steps

Still, the prospect of any amount of free money may be enough to encourage some people to start saving for retirement with whatever cash they can spare, Montgomery says. “It’s hard to pass that up if you’re eligible,” he adds. “Anytime you’re given the opportunity to put away someone else’s money to your benefit, that’s probably something you want to look at pretty seriously.”

What’s more, Americans have long demonstrated that they respond to the incentive of a match on contributions offered by their employers, says Robert Brokamp, a certified financial planner, senior retirement advisor and financial planning expert at The Motley Fool in Alexandria. In fact, workers often zero in on the necessary contribution amount to reap the full match, he says.

The prospect of the federal government matching contributions may likewise incentivize people, Brokamp says. “That will nudge some people to participate in an IRA who might not have otherwise.”
Details about the saver’s match were spelled out in the SECURE 2.0 Act, along with how the Treasury Department would be tasked with increasing public awareness. But Trump’s executive order did take a step in a new direction by establishing a website, TrumpIRA.gov, and there are fewer details about what that will entail.

Rather than providing these accounts, the website will direct people to a list of IRA providers and allow them to filter and compare options based on cost, quality and investment options. The website is slated to officially launch on Jan. 1, 2027.

Since the website is a work in progress and there are scant details about the criteria that will be used to determine which IRA providers will be highlighted and, as importantly, which will not, it’s tricky to predict its usefulness, Brokamp says. What’s more, the website’s name alone could prove to be divisive.
“Because it has the name TrumpIRA, it will attract some people to it and it will drive some people away,” Brokamp says.

In addition, it remains to be seen what type of investing guidance will be provided on TrumpIRA.gov and whether specific types of investments will be highlighted or not, notes Torguson. Unlike 401(k) plans that offer limited options, people can choose from a much broader array of investments in an IRA — though more choice isn’t always beneficial.

“The average investor doesn’t need to be looking at private investments in their IRA that are relatively risky,” Torguson says.

Saving in Virginia

In addition to efforts at the federal level to encourage Americans to save for retirement, Virginia also has a state-facilitated program that similarly focuses on the retirement savings gap. Since 2023, state law has required that eligible employers must participate in RetirePath Virginia if they don’t offer a retirement savings plan for employees.

Come July, more small businesses in the state will receive notice that they need to offer a qualified retirement plan, certify an exemption or register for RetirePath Virginia. This program addresses a “separate, but adjacent need” to the latest federal push to promote retirement savings access as both efforts target workers who don’t have access to a 401(k) plan through their employer, Brokamp says.
In either case, however, workers miss out on the benefits of a 401(k), which include a significantly higher contribution limit — $24,500 versus only $7,500 for an IRA for people under the age of 50 — and the possibility of an employer match.

While efforts at both the state and federal level to expand access to retirement accounts are important, a workplace retirement plan is still superior and serves as a “big determinant of whether someone is saving for retirement or not,” Brokamp says. That’s why employees should also feel empowered to push their employers to offer something better, he adds.

“If you work for a company that generally cares about its employees and you’re not thrilled with the plan, advocate and everyone will benefit,” Brokamp says.

While both Torguson and Montgomery say they occasionally encounter clients who don’t have access to a workplace retirement plan, they’re far more likely to address something altogether different about retirement awareness: how parents can help their kids start saving before they fly the coop.

“That’s always a fun one,” Montgomery says of the conversations he has with parents about opening a custodial Roth IRA to help their kids start saving for retirement with money they earn from babysitting, lawn-mowing or the like.

Torguson says he likewise recommends that his clients help their kids get a jumpstart on saving as soon as they start collecting a paycheck. “If they put money in a Roth IRA at a very young age, it will grow tax-free for life, and the power of compounding is really highlighted,” he adds.

Whether it’s conversations with clients or new government programs that raise awareness, encouraging people to start thinking about retirement even sooner is ultimately going to be good for their future, Torguson says. And knowing how prepared they are for retirement is better than not knowing at all, Montgomery adds.

“For most people, it doesn’t matter where the decimal point or comma is; it’s all about peace of mind,” he says.