MONEY: However you feel about their creator, TrumpIRAs are sorely needed.
As a progressive economist, I wrote a paper in 2021 with a generally conservative colleague, Kevin Hassett, who now directs the National Economic Council in the Trump White House. We agreed then on the basic arithmetic of the American retirement crisis. We still do. That’s why people like him and people like me can all say: Trump’s executive order establishing TrumpIRAs, signed last month, is simply the right move for American workers.
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Trump’s executive order targets the most fundamental failure in this system: access. Roughly 56 million American workers have no employer-sponsored retirement plan — no account to contribute to, no match on offer from their employers, no on-ramp to the capital markets that have built wealth for everyone else.
The order establishes a federal retirement account — TrumpIRA.gov — paired with a refundable $1,000 annual government match and automatic enrollment. That last part matters enormously. The research Hassett and I conducted found that automatic enrollment paired with a government match substantially increases participation among low- and moderate-income workers. When saving is the default and the government matches your first dollar, people save. A worker earning $40,000 who contributes $1,000 annually and receives a $1,000 match, over 40 years at a 6% real return, retires with more than $310,000 in today’s dollars. Most of that is compound growth. Getting workers into the market early is the entire intervention.
It’s a good plan — and it’s always nice to see a progressive who doesn’t suffer from TDS. A near-miracle, really.