A new survey-driven analysis of the Saver’s Match enacted under the SECURE 2.0 Act finds that the program has the potential to be a “force multiplier” in helping lower-to-middle income Americans boost their retirement savings prospects.
More specifically, the analysis conducted by Boston Research Technologies (BRT) and Retirement Clearinghouse (RCH) reveals that the program can help the under-saved and under-served workers in at least three measurable ways, including:
- 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 program, which is scheduled to replace the Saver’s Credit for tax years beginning after 2026, nearly all (90%) of eligible retirement-savers are very likely (46%) or somewhat likely (44%) to contribute more to their employer-sponsored retirement plans to receive a larger matching contribution.
In addition, nearly three-quarters (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.
The BRT and RCH researchers further note that, consistent with an analysis by the Employee Benefit Research Institute (EBRI), their survey data finds that an additional 8.5 million non-savers for retirement could become savers in order to receive matching contributions under the Saver’s Match.
“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,” noted 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 findings are based on a survey of over 3,000 American workers who would meet the qualifications to be eligible for the Saver's Match. The resulting paper describes the characteristics of these savers, examines the behavioral impacts of the program, and describes challenges the program may face in administering millions of annual matching contributions.
Demographic Findings
The analysis also finds that Black and Hispanic savers would benefit from the Saver’s Match program at higher-than-average rates.
For instance, Black and Hispanic savers who participate in employer-sponsored retirement plans represent more than a quarter (25.6%) of eligible Saver’s Match program savers—higher than the overall 18.6% of workers who participate in defined contribution (DC) plans. Yet, these minority savers have lower retirement savings account balances and lower household incomes than their White counterparts.
Against that backdrop, 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 a slightly smaller percentage of White savers (89%).
Among non-savers, 78% of Hispanic Americans and 77% of Black Americans—in order to receive a federal matching contribution—would be more likely to participate in a DC plan if their employer offered one.
Mobile Workforce Challenges
Meanwhile, one of the operational challenges of administering the program could come from the fact that many of the eligible savers are highly mobile.
According to the research, 15% of eligible employed savers had less than one year of tenure at their current employer, as of Jan. 1, 2024. In addition, 8.6% of eligible savers had changed jobs and 4% had become unemployed since Jan. 1 of this year.
“The results of the study clearly show that the Saver’s Match can have a substantial impact on the target populations’ retirement-saving behaviors,” observed 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.”
The survey was conducted among 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, while 1,394 were not.
To download “How the Saver’s Match Could Promote Financial Inclusion: A Survey-Driven Analysis of the Saver’s Match Program,” visit https://info.rch1.com/savers-match-survey-analysis.
About the Saver’s Match
The Saver’s Match, which is scheduled to replace the Saver’s Credit for tax years beginning after 2026, 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.
To qualify for the Saver’s Match, 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. The thresholds are to be indexed after 2027.
