A new analysis from Morningstar quantifies the long-run impact of the Saver’s Match—a provision in SECURE 2.0 set to take effect in 2027—and finds it could help boost retirement savings for Americans by $2.03 trillion at retirement age.
Earlier this year, Morningstar researchers simulated retirement outcomes with and without the program under four behavioral scenarios, using the Morningstar Model of U.S. Retirement Outcomes to focus on the percentage gain in wealth at retirement for eligible savers. The results showed that many Gen Z and millennial savers could see a double-digit increase in wealth by retirement age.
In a July 30 Morningstar article by Spencer Look and Jack VanDerhei, a new analysis extends the prior work by quantifying the long-run impact of the Saver’s Match on retirement wealth in dollars.
Look and VanDerhei based this analysis on the fourth behavioral scenario from their earlier work, which reflects eligible individuals starting to save or saving more to take advantage of the program.
“In total, we estimate that the Saver’s Match program could help generate $2.03 trillion in additional retirement wealth, in real terms at each individual saver’s retirement age (which we assume is 65),” the authors write. “This figure reflects the accumulation of the individual’s contributions and the federal match over decades. If we instead focus on the program’s impact in today’s dollars, the estimated increase is $761 billion.”
The Saver’s Match, enacted as part of the SECURE 2.0 Act of 2022, represents a significant improvement over its predecessor, the Saver’s Credit. While the Saver’s Credit comes in the form of a tax credit on a tax return, the Saver’s Match will be deposited directly into the individual saver’s account.
Starting in 2028, eligible individuals, based on their 2027 tax returns, can receive a federal matching contribution of up to 50% on the first $2,000 annual contributions to workplace retirement plans or IRAs, with a maximum match of $1,000 per tax year. Eligibility is based on modified adjusted gross income, with benefits phasing out at a modified adjusted gross income of $35,500 for single filers and $71,000 for joint filers.
The goal of the Saver’s Match is to provide an additional incentive to encourage Americans to save for retirement—particularly ones who may not otherwise prioritize doing so. In 2024, the Employee Benefit Research Institute (EBRI) found that 21.9 million Americans could be eligible to receive the matching retirement plan contribution.
Morningstar’s earlier research also found specific groups, like single women, non-Hispanic Black Americans, and Hispanic Americans could also see greater benefits due to qualification factors. Each of these groups are eligible for the match more so than other demographics, which could potentially act as a solution to the retirement savings gap, Morningstar suggests.
For example, 43% of single women qualify for the program, compared to 35% of men and 30% of couples. Close to half (49%) of Hispanic households are eligible to participate in the program, while 44% of Non-Hispanic Black households also qualify.
Ultimately, Morningstar found that the best outcomes would occur when workers change their savings behavior in response to the program. This included scenarios in which nonsavers began to save and when active savers contributed more. New and active savers who developed a higher probability in contributing more to retirement had a notable boost in their mean and median averages.
SEE ALSO:
• Saver’s Match Could Solve the Retirement Savings Gap: Morningstar
• The Saver’s Match and Auto Portability: A Powerful Combination
• 22 Million Could Be Eligible for 2027 Saver’s Match