President Donald Trump signed an executive order last week to expand access to retirement savings plans for workers other than employer-sponsored 401(k)s. Then he put a number on it: During an Oval Office event, Trump boasted that a participant in the program through TrumpIRA.gov could accumulate an estimated $465,000 nest egg.
In other words, they will be rich,” he says. “And there is something very good about that.”
Trump IRAs are certainly a step in the right direction for Americans who would otherwise not save for retirement, but Trump’s claim — especially coming from a man with a net worth of $6.5 billion — has raised eyebrows in the financial community.
Does retiring on less than half a million make him “rich”? Money asked retirement experts to check it out.
Retirement funds are relative. Being rich is not
From 1 Jan. 2027, workers without retirement plans should be able to use TrumpIRA.gov to research and enroll in what the White House calls “private company IRAs,” or individual retirement accounts. The platform will incorporate the Saver’s Match program established by the SECURE 2.0 Act in 2022 and will offer a 50% matching contribution of $1,000 to eligible employee IRAs.
The White House used the following example in an executive order: “A 25-year-old low-wage worker who saves about $165 a month and qualifies for a Saver’s Match of about $1,000 a year, at a 6% rate of return, could have about $465,000 by age 65.”
That would be an impressive achievement for a low-wage worker. But it’s hard to say whether $465,000 alone can provide a comfortable retirement, let alone make someone rich.
“It’s a great start,” said Kelly Regan, Girard’s vice president, Univest Wealth Division. “But think about what other sources of income they could have.”
That could be a pension, 401(k), pension or Social Security benefits. It is important for retirees to create a combined income strategy and not rely on just one account.
Mitch Hamer, founder and lead advisor at Intersecting Wealth, says that even with an additional source of retirement income, retirees who rely on Trump IRAs may not be able to make ends meet.
“It can work as part of a comprehensive income plan, but with a 5% withdrawal rate, $465,000 doesn’t even get you $25,000 in spending,” he says. “Assuming that amount is doubled with Social Security or some type of pension, one has to have a pulse on their values and their goals during retirement to make this work.”
Inflation and rising health care costs present major challenges
Rising costs and unexpected medical expenses are two of the biggest threats to the financial well-being of retirees. Over the decades, both would significantly reduce the actual value of the retirement nest egg the White House used in its example.
Assuming annual inflation of 3% – the historical average since 1914 – in 30 years, $465,000 will have the same purchasing power as $191,573.84 today. That’s a reduction of nearly 59% in inflation-adjusted terms.
“If you’re relying on your retirement assets for your daily living — your fixed expenses — this account will soon be depleted,” Regan said. “That won’t last long at $465,000, not to mention long-term health care costs.”
Even with its full purchasing power today, that amount would be difficult for a retiree to live on. Hamer warns that a $465,000 balance leaves very little margin for inflation, a health care shock or a long retirement into the 90s.
“If someone retires at age 67 with $465,000, the 4% rule indicates about $18,600 in first-year withdrawals,” Hamer said. “About $1,550 a month. It would be hard to call it a comfortable retirement.”
For context, the annual household income for Americans ages 65 to 74 was $65,149 last year, according to Fidelity. That’s about $5,400 a month.
Another concern about Trump IRAs is the relatively high expense ratios — administration, management and financial performance fees — that could erode balances. According to the executive order, the total cost rates will be limited to 0.15%. With a balance of $465,000, those costs can reach about $700 in the first year alone.
While low compared to mutual fund expense ratios, 0.15% is significantly higher than passively managed index fund expense ratios that investors with self-directed IRAs can achieve. The world’s largest exchange-traded fund — the Vanguard S&P 500 ETF — has an expense ratio of just 0.03%, which means it costs 80% less than the average expense ratio of Trump IRAs.
Can $465,000 Make You a Rich Retirement?
While Trump IRAs can contribute to a well-rounded retirement plan, it’s important to take what the president says with a grain of salt.
“There is no magic in this number,” Hamer said. “When someone hears $465,000 and thinks they’re set, they’re relying on a pretty good idea.”
Trump’s claim reflects the general disconnection of high-net-worth individuals from the everyday financial realities of the American people. The president’s net worth increased by $1.4 billion last year to $6.5 billion, according to Forbes, or 1,397,750% more than the amount he described as making retirees wealthy.
Meanwhile, survey results from Charles Schwab show that across all generations of adults, Americans believe that a net worth of $2.175 million qualifies a person to be wealthy. But according to the National Institute on Retirement Security, the average American worker has only $955 saved for retirement — a far cry from millionaire status, not to mention the several thousand Trump IRAs that could be valuable in three decades.
That shouldn’t detract from Trump’s IRA effort. Expanding the program’s reach to those who need it most could help ease the retirement crisis facing Americans. But prospective plan participants shouldn’t expect $465,000 in retirement savings to get rich — not today and certainly not in 30 years.
“For many retirees, $465,000 can make sense as an extra,” Hamer said. “Not a stone.”
