How Trump's 'Big Beautiful Bill' May Reshape Gen-Z Retirement Strategies?

Forbes

a day ago

How Trump's 'Big Beautiful Bill' May Reshape Gen-Z Retirement Strategies?
The 'Big Beautiful Bill,' formally known as H.R. 1, entitled ''An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14.'' is a policy bill that includes tax policy changes, retirement benefit modifications, and broad fiscal reforms aimed at reducing federal spending and revising how the government administers key programs, including retirement savings and public services.
The bill includes changes to how retirement savings work, which could have lasting effects on younger generations, many of whom are already facing various financial stressors, such as economic uncertainty, student debt, and high housing costs. Since Trump's policy bill proposes changes to a critical tactical and strategic tool for building retirement savings, this article will explore how the repeal of automatic enrollment requirements and the introduction of new savings tools could influence Gen-Z's ability to build long-term financial security, including addressing the disparities faced by many younger workers of color within the current system.
What Is The 'Big Beautiful Bill'?
H.R. 1 is a comprehensive legislative package that includes tax reforms, spending cuts, and rollbacks of several initiatives from the previous administration. Among the bill's provisions are key changes to retirement policy, including the repeal of certain provisions of the SECURE 2.0 Act and the introduction of new "Trump Accounts."
The SECURE 2.0 Act, passed in 2022 with bipartisan support, expanded retirement plan access by requiring automatic enrollment for eligible workers and increasing contribution opportunities. H.R. 1 specifically repeals Section 103(e) of SECURE 2.0, removing the auto-enrollment requirement for employer-sponsored plans. Additionally, the bill proposes the creation of 'Trump Accounts,' a new savings tool designed for minors. These accounts are designed to promote early saving habits, but they come with restrictions on withdrawals and investment options.
What Does Trump's Policy Bill Mean For Gen-Z's Retirement?
Trump's policy bill includes a repeal of Section 103(e) of the SECURE 2.0 Act of 2022, which would otherwise have required new retirement plans to automatically enroll eligible workers starting in 2025. This change removes a key federal mandate that aimed to make retirement savings more accessible through employer-sponsored plans, placing the responsibility back on the individual.
For the generation currently between 13 and 28 years old, better known as Gen-Z, Trump's policy bill represents a shift in retirement policy that places more responsibility on the individual. The removal of auto-enrollment provisions could reduce participation in retirement savings plans, especially among younger workers who may not take proactive steps to enroll. As highlighted in Vanguard's 2025 report, automatic enrollment designs are rooted in behavioral finance and have been shown to promote saving behaviors, particularly among those who may lack knowledge about retirement, have limited planning skills, or tend to procrastinate. "Some employees are not active, motivated decision-makers when planning for retirement,' according to the report and often default to inaction. The report adds that, in traditional voluntary enrollment plans, 'doing nothing' results in no participation, whereas automatic enrollment reframes the saving decision, making participation the default outcome.
Marc Russell, financial educator and founder of BetterWallet, noted, "H.R. 1 could pose long term challenges for Gen-Z's retirement security, despite the fact that this generation is showing strong financial instincts early on." Gen-Z is a generation known for thinking about financial well-being as a balancing act between maintaining peace of mind and accumulating savings in the bank account. And despite being one of the most exposed to financial education generations, they still face significant challenges. According to Intuit Prosperity Index 2025, "Sixty-nine percent of respondents say today's financial environment makes long-term planning feel out of reach, and 68% aren't sure they'll ever be able to retire."
While financial prosperity may be on the mind of future generations, learning how to navigate the system just as you enter the workforce can be overwhelming, and retirement talks take a backseat as you try to manage a new lifestyle, rent, student loans, and many other changing factors at the same time. "Benefits feel like a side note,' Russell adds. 'Auto-enrollment helps fill that gap by making sure retirement contributions start happening in the background, even before you fully understand what a target date fund is. It sets the foundation early, which makes a huge difference in the long run."
He also emphasized the uneven playing field that many younger workers of color face in the current system. 'Black and Brown graduates face a different starting line,' he said. 'According to Brookings, Black college graduates owe, on average, $25,000 more than their white peers just four years after graduating. That debt burden delays saving, delays homeownership, and increases the likelihood of supporting family members financially. Add in reduced access to employer-sponsored retirement plans, and you have a formula that makes it extremely difficult to build wealth.'
Trump's policy is a lengthy legislation that also discusses cutting some federal support, such as Medicaid, nutrition assistance, and student loan protections, which are crucial to understand in order to grasp the full extent of the behavioral impact the bill could have on the saving behavior of younger generations.
Trump Accounts And New Retirement Opportunities?
The bill's proposed 'Trump Accounts' aim to encourage early financial literacy and wealth-building by establishing tax-deferred investment accounts for minors born between 2025 and 2028. While the concept of seeding investment early is generally positive, realizing its full benefits will require a strong pairing of financial education and systemic support to ensure a broad and equitable impact.
Russell noted that while Trump Accounts are 'well-intentioned in theory, [However] their design is not there yet. Unlike Roth IRAs or 529 plans, Trump Accounts do not offer tax-free growth or flexible withdrawal options, and they limit investments to U.S. equity index funds, excluding international diversification.'"Restricting the account to one slice of the market introduces unnecessary concentration risk and limits its long-term growth potential," he adds.
Trump's policy bill also includes provisions aimed at expanding access to retirement savings for small business employees and independent workers. By enhancing the Saver's Credit and broadening the types of contributions that qualify, including ABLE account deposits and voluntary employee contributions, H.R. 1 could help increase participation among Gen-Z workers in the gig economy or at startups who lack access to traditional employer-sponsored retirement plans. Linda Jensen, founder of Heart Financial Group & Increase Business Profits, notes that provisions like eliminating federal income taxes on tips and overtime could increase take-home pay for younger workers, allowing more flexibility to contribute to Roth IRAs, HSAs, or other long-term vehicles. 'Predictability in tax policy empowers younger earners to build financial strategies with confidence,' Jensen said. She adds that while tools like Health Savings Accounts (HSA) and the proposed Trump Accounts offer long-term tax advantages, 'the potential upside won't materialize unless Gen-Z takes action.'
Financial Trauma And The Importance Of Default Systems
Many Gen-Z workers (particularly those from lower-income or historically marginalized backgrounds) enter adulthood with a sense of financial trauma, often shaped by past recessions, their parents' experiences with money, navigating pandemic-era disruptions, or managing student debt. This trauma can manifest as financial avoidance or anxiety about long-term planning.
According to Credit One Bank, 59% of Gen-Z report feeling stressed or anxious about their financial situation, and only 35% feel financially empowered. Societal expectations also contribute to financial trauma. A staggering 72% of Gen-Z say societal norms such as the pressure to own a home or maintain a certain lifestyle worsen their financial anxiety, a rate far higher than that reported by baby boomers (48%).
Without default systems like auto-enrollment, these individuals may not engage with retirement savings at all, also due to avoidance as a trauma response. Removing this mechanism could unintentionally widen generational and racial retirement gaps, despite well-intentioned alternatives like tax credits.
Shannah Game, a Certified Financial Planner, trauma of money specialist, and author of Unraveling Your Relationship with Money, emphasized the emotional impact 'Money stress is already a thing for Gen-Z. This legislation just ups the stakes. It's time to double down on financial literacy so they can navigate higher taxes, inflation, or benefit changes with confidence.' She identified two major stress triggers in this context: uncertainty and ripple effects. 'Anytime we see legislation with a massive price tag,' she noted, 'there's a good chance it could mean higher taxes in the future or changes to benefits like Social Security. For a generation already juggling student debt, high living costs, and anxiety about housing affordability, the idea of their safety nets being less reliable just adds another layer of pressure.'
Game also highlighted how this uncertainty shapes Gen-Z's perception of traditional systems. 'If they think Social Security might not be there for them—or not in the way it is today—they're more likely to question how much they should save, when they can retire, and even if retirement as we know it is realistic. That could lead to analysis paralysis or, worse, putting off investing because it feels out of reach.'
Financial trauma may be one of the leading behavioral nudges that impact how consumers interact with money, often influencing whether they engage with long-term financial planning at all. This trauma is frequently shaped by the individual burden of navigating complex systems that create barriers to successful participation in the economic system. When the system supports individuals, particularly those who may not be financially literate enough to override their subconscious trauma responses, the outcomes are significantly more positive. Default systems, such as automatic enrollment, are one such support, nudging participation and helping to bypass the hesitation and anxiety that financial trauma can cause.
'The average American doesn't start investing until their early 30s, often because of uncertainty or inertia. But the gap between when someone starts earning income and when they begin investing can be incredibly expensive. For example, if someone invests $200 per month starting at age 22, they could have over $500,000 by age 65 (assuming 8% annual growth). If they wait just 10 years and start at 32, that number drops to around $225,000. That 10-year delay can cost them more than half their future value.' Russell said.
Dr. Jovan Jackson, president and senior financial advisor at Good News Financial & Investment Advisors, added, 'In my experience, early financial struggles and economic pressures have led many younger individuals to adopt a 'live for today' mindset. With the rising cost of living and student debt burdens, retirement often feels like a distant and almost unattainable goal. As a result, long-term planning gets deprioritized, and saving for the future can seem less urgent or even out of reach.'
Tackling and overcoming financial trauma is more successful when well-designed systems minimize friction and enhance accessibility. These structures can be vital support mechanisms for younger workers dealing with economic instability and uncertainty. For Gen-Z, re-establishing or strengthening default pathways that simplify navigating the financial landscape may be crucial to prevent the lasting impacts of financial trauma or structural barriers from undermining their long-term retirement security.
What Can Gen-Z and Younger Generations Do To Best Prepare For Retirement?
While the 'Big Beautiful Bill' does not eliminate retirement savings opportunities, it reshapes the framework through which many young workers engage with long-term financial planning. To successfully navigate retirement under the current administration, Gen-Z individuals may want to consider various aspects as early as possible:
Financial Education: When the responsibility for the financial future falls heavily on the individual, a strong and early financial education becomes essential. Increase understanding of financial tools, including Roth IRAs, compound interest, contributions to retirement as a side job, and employer match programs.
Automation: Where possible, set up automatic transfers into savings or retirement accounts to simulate the effects of auto-enrollment and make it part of your financial planning.
Early Contributions: Begin saving early, even in small amounts, to take advantage of compounding over time. Dedicate part of your monthly budget to contribute to retirement.
Tax Optimization: Use the Saver's Credit and maximize any available employer-sponsored plan benefits.
Community Engagement: As recognized, Gen-Z's unique strength is discussing money like no previous generation, which can reduce financial shame and improve long-term financial outcomes. This is the time to leverage this strength to talk about different money moves and financial tools. Support local and state policies that promote inclusive access to retirement plans.
While Trump's policy bill, H.R. 1 or 'Big Beautiful Bill,' does not eliminate retirement savings opportunities, it reshapes the framework through which many young workers engage with long-term financial planning. The removal of federally mandated auto-enrollment, despite its proven effectiveness in raising participation and deferral rates—especially among younger generations—may slow the retirement readiness gains achieved over the past few years. For Gen-Z, particularly those from underserved backgrounds, understanding these changes and responding proactively will be key to securing a stable financial future.