Nearly 22 million Americans are expected qualify for the Saver’s Match provision in SECURE 2.0, which will take effect in 2027. New research shows the program holds strong potential to be a “force multiplier” in the battle to help America’s under-saved and under-served workers improve their prospects for a secure retirement in at least three measurable ways.
“Awareness of the Saver’s Match Program could provide a strong motivation for workers who aren’t saving for retirement to begin saving, and those who are saving to save more.”
Retirement Clearinghouse’s Spencer Williams
These include stimulating more savings through federal matching contributions, incentivizing more contributions from existing savers, and boosting participation in the retirement system from non-savers.
Under the Saver’s Match Program scheduled to replace the Saver’s Credit for tax years following 2027, 89.9% of eligible retirement-savers are very likely (45.9%) or somewhat likely (43.9%) to contribute more to their employer-sponsored retirement plans to receive a larger matching contribution. This is one of the key findings of a new study undertaken by Retirement Clearinghouse, LLC and Boston Research Technologies, “How the Saver’s Match Could Promote Financial Inclusion: A Survey-Driven Analysis of the Saver’s Match Program.”
“The survey we undertook with Boston Research Technologies reveals that awareness of the Saver’s Match Program could provide a strong motivation for workers who aren’t saving for retirement to begin saving, and those who are saving to save more,” said Spencer Williams, Founder, President, and CEO of Retirement Clearinghouse. “Today’s mobile workforce, and especially low-income and minority participants, responded that they are likely to take full advantage of the incentives embedded in the Saver’s Match Program to boost their retirement savings.”
The research found the Saver’s Match Program could encourage better retirement-saving behaviors among those who do qualify, as well as those who don’t currently qualify, for the Saver’s Match:
- In addition to the 89.9% of eligible savers who would be very or somewhat likely to contribute more to receive a larger matching contribution, 73.5% of people who are not saving for retirement indicated they would be very likely (26.8%) or somewhat likely (46.8%) to begin saving to receive a program-matching contribution.
- According to survey data, consistent with Employee Benefit Research Institute(EBRI) analysis, an additional 8.5 million non-savers for retirement could become savers in order to receive matching contributions under the Saver’s Match Program.
Boon for minority savers
In addition, the survey found Black and Hispanic savers would benefit from the Saver’s Match Program at higher-than-average rates.
- Black and Hispanic savers who participate in employer-sponsored retirement plans represent 25.6% of eligible Saver’s Match Program savers—higher than the overall 18.6% of workers who participate in defined contribution plans. However, these minority savers have lower retirement savings account balances and lower household incomes than their White counterparts.
- The study found that 93.6% of Black savers and 92.3% of Hispanic savers would contribute more to their retirement plans if they could receive a federal matching contribution, as compared to 89.1% of White savers.
- Among non-savers, 78.2% of Hispanic Americans and 76.9% of Black Americans would be more likely to participate in a defined contribution plan if their employer offered one, in order to receive a federal matching contribution.
“The results of the study clearly show that the Saver’s Match can have a substantial impact on the target populations’ retirement-saving behaviors,” said Warren Cormier, CEO of Boston Research Technologies. “The findings also show that a sizeable element of the target population tends to be highly mobile, particularly during the first six weeks of the tax-filing season, potentially creating operational challenges in delivering the Saver’s Match to the qualified account.”
About the Saver’s Match
The Saver’s Match Program, which is scheduled to replace the Saver’s Credit for tax years after 2027, enables qualified individuals participating in an employer-sponsored retirement plan or contributing to an IRA to receive a 50% federal matching contribution up to a maximum of $1,000 (or $2,000 if married and filing jointly), which is deposited directly into the taxpayer’s plan or IRA.
In order to qualify for the Saver’s Match federal matching contribution, taxpayers must make contributions to an employer-sponsored retirement plan or IRA and have an adjusted gross income of $71,000 or below if married and filing jointly, $53,250 or below if filing as head of household, or $35,000 or below if single or married but filing separately.
About the survey
Retirement Clearinghouse and Boston Research Technologies conducted a survey of 3,061 workers between ages 18 and 60 who had 2023 income levels and tax-filing status that would qualify them for a Saver’s Match federal matching contribution. Of these 3,061 workers, 1,667 were retirement savers in 2023, and 1,394 were not.
Download the survey-driven analysis here: https://info.rch1.com/savers-match-survey-analysis.
SEE ALSO:
• America’s Mobile Workforce Meets Their Saver’s Match
• 22 Million Could Be Eligible for 2027 Saver’s Match
• Most Workers Unaware of Saver’s Credit—and Especially Eligible Ones
• 4 Retirement Initiatives Vital to Closing the Racial Wealth Gap