Trump exploring new retirement savings plan and may address it in State of the Union – Semafor

Trump exploring new retirement savings plan and may address it in State of the Union – Semafor

Trump Explores Retirement Savings Policy Adjustments Amid Housing Market Debate

President Donald Trump has signaled potential revisions to retirement savings policies, including a proposal to allow 401(k) funds to be used for housing down payments, though his stance remains cautious. During an Air Force One press briefing on January 25, 2026, Trump stated he is "not a huge fan" of the idea, emphasizing that 401(k) accounts have surged in value—some by 80–90%— outpacing housing market gains. His comments contrast with earlier advocacy from Chief Economic Adviser Kevin Hassett, who had hinted at introducing the proposal during the upcoming State of the Union address according to reports.

The 401(k) housing down payment initiative faces significant political and regulatory hurdles. While first-time homebuyers under 59½ can currently withdraw up to $10,000 penalty-free from IRAs, similar rules for 401(k)s would require congressional action to amend tax laws. Critics warn that such a policy could undermine long-term retirement security, as early withdrawals risk lost compounding growth and repayment challenges. Financial advisor Ted Jenkin noted that a $50,000 withdrawal at age 35 could cost retirees $300,000–$400,000 in lost earnings.

Meanwhile, broader affordability measures proposed by Trump—such as banning institutional investors from purchasing single-family homes and capping credit card interest rates—have drawn bipartisan skepticism. Lawmakers like Rep. Ann Wagner (R-MO) and Sen. Thom Tillis (R-NC) question the feasibility and market impact of these policies. Industry groups, including banking associations, argue that credit card rate caps could restrict consumer access to credit.

As of Q3 2025, average 401(k) balances at Fidelity stood at $144,400, reflecting 9% growth year-over-year, amid strong stock market performance. However, critics argue that allowing 401(k) withdrawals for housing could disproportionately benefit a narrow segment of Americans while inflating home prices without addressing supply constraints.

With Congress deeply divided, the fate of Trump's affordability agenda remains uncertain. The administration's focus on balancing retirement security with housing accessibility will likely dominate debates in the coming months.