President Donald Trump is preparing to roll out a plan that would let Americans use money from their 401(k) retirement accounts to make down payments on homes, a move that has already drawn criticism from economists, warning it could backfire.
White House economic adviser Kevin Hassett confirmed the upcoming plan during a Fox Business Network interview on Friday.
“We’re going to allow people to take money out of their 401(k)s and use that for down payment,” Hassett said, noting that the full proposal would be officially announced by Trump at the World Economic Forum in Davos this week.
Hassett said they are still finalizing the details and working on “a simple” way to structure the plan so that it doesn’t negatively impact people’s long-term retirement savings.
“We’re still talking about the mechanics of it,” he added.
The proposal is part of Trump’s broader push to address housing affordability, a top concern heading into the 2026 midterms.
Mortgage rates remain high, and prices are still elevated in many markets, leaving first-time buyers on the sidelines.
Trump has also proposed banning institutional investors from buying single-family homes and instructing the Federal Housing Finance Agency to buy $200 billion worth of mortgage-backed securities issued by and Freddie Mac in an effort to bring down mortgage rates.
Schiff Slams the Plan
Economist and gold advocate Peter Schiff blasted the idea on X, accusing Trump of trying to keep inflated home prices from coming down to affordable levels.
“In his latest attempt to keep overpriced home prices from falling so that more people could afford them, Trump will soon unveil a plan to allow homebuyers to use their 401(k)s to fund down payments,” Schiff wrote.
“That way Americans can deplete their retirement savings to overpay for houses.”
Schiff’s criticism reflects broader concerns from financial experts who warn that encouraging Americans to dip into their retirement accounts could result in long-term financial harm, especially if home prices stagnate or fall.
Critics Say It Misses the Real Problem
While the White House sees the proposal as a way to unlock access to homeownership, many economists argue it addresses the wrong problem.
The housing market slowdown has been driven not only by high interest rates but also by a major lack of supply.
Lowering the cost of borrowing or unlocking more demand could make prices climb even higher without solving the core issue.
“Lower rates could increase demand for homes that, without more supply, would likely push prices higher,” the Reuters article noted, citing concerns among analysts and economists.
Even with inflation easing in some sectors, housing costs remain stubbornly high.
Consumer inflation data released by the Bureau of Labor Statistics this month showed housing inflation is still strong.
Retirement Savings at Risk
Critics also worry that the plan would encourage risky financial behavior, especially among younger Americans who haven’t built up substantial retirement savings.
While using a 401(k) might help some buyers afford a down payment, financial experts say it could set people back significantly in the long run.
Money taken out early misses years of tax-advantaged growth and could weaken future retirement security.
Currently, early withdrawals from a 401(k) often come with penalties and taxes, although the Trump administration may propose waiving or adjusting those rules under the new plan.
Still, the overall risk remains: Americans would be using retirement savings to buy into a historically unaffordable market.
More Proposals Coming
This housing plan is just one part of Trump’s broader economic strategy as he seeks reelection.
Alongside housing, he’s continued pressuring the Federal Reserve to slash its benchmark interest rate to boost lending and consumer spending.
Trump has also hinted at further economic measures to counter inflation and revive growth.
But with affordability out of reach for many, and supply still tight, the question remains whether these proposals will offer meaningful relief or simply shift financial risk onto individuals.
As Schiff put it: “Americans can deplete their retirement savings to overpay for houses.”
That quote is already fueling debate over whether the administration is solving the right problems, or just making them worse.
IMAGE CREDIT: “Peter Schiff” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.