Saver’s Match Has Potential to Incentivize Retirement Savings for Lower-Income Americans

The Saver’s Match, which was created under the SECURE 2.0 Act of 2022, has the potential to incentivize workers—particularly those who are lower income—to save more for retirement, according to new research conducted by Boston Research Technologies and Retirement Clearinghouse. 

Nearly 90% of eligible savers indicated in the survey that they would be very likely or somewhat likely to contribute more to receive a larger matching contribution from the federal government through the Saver’s Match program, according to the report. 

Scheduled to replace the Saver’s Credit for the tax years following 2027, the Saver’s Match program allows qualified individuals participating in a workplace retirement plan or contributing to an IRA to receive a 50% federal matching contribution up to a maximum of $1,000 deposited directly into their retirement plan or IRA. 

To qualify for a federal matching contribution, taxpayers must make contributions to a retirement savings account or have an adjusted gross income of $71,000 or below if they are married and filing jointly, $53,250 or below if they are the head of household or $35,000 or below if they are single or married, filing separately. As incomes rise, there are phase-outs that reduce the total size of the federal contribution as savers approach their filing thresholds. 

Workers who are currently not saving for retirement indicated that they would be more likely to begin saving after hearing about the Saver’s Match program. According to BRT and Retirement Clearinghouse, 73.5% of non-savers said they would be very likely or somewhat likely to begin making contributions to receive a program matching contribution.  

The Employee Benefit Research Institute estimated that at least 21.9 million workers will qualify for the Saver’s Match and that about 8.5 million savers could be added from the ranks of non-savers. 

In addition, BRT and Retirement Clearinghouse found that Black and Hispanic Savers are likely to benefit disproportionately from the Saver’s Match. 

EBRI reported that Black and Hispanic savers eligible for the program’s matching contribution constitute 25.6% of eligible savers, whereas they only represent 18.6% of the general population of defined contribution participants.  

Black and Hispanic savers also tend to have significantly lower household incomes than their white counterparts, as 64.4% of Black savers and 42% of Hispanic savers have a household income of less than $50,000, the report found.  

In terms of retirement savings, Black and Hispanic savers who are eligible for the Saver’s Match tend to have lower retirement plan and IRA balances than their white counterparts. For example, 57.7% of Black savers and 48.4% of Hispanic savers reporting having workplace retirement savings plan balances of less than $25,000, as opposed to 40.8% of white savers.  

As a whole, BRT and Retirement Clearinghouse found that eligible savers are “highly mobile” and have a tendency to move from job to job. During the initial weeks of tax filing season—January to mid-February—of this year, 8.6% of eligible savers changed jobs and an additional 3.9% became unemployed. For those savers who are currently employed, about 15% reported tenure in their last job of less than a year. Tenure was also roughly split 50-50 between those with less than five years in their position and those with more five years. 

However, the Saver’s Match program may face challenges in routing matching contributions to valid, qualified accounts, the report found.  

When filing their taxes, only one in eight eligible savers said they could readily identify a valid target contribution account. For example, 81% of survey respondents said they do not know the required contribution routing information needed to receive a match, but they are contributing to an employer’s retirement plan.  

SECURE 2.0 requires that the U.S. Department of the Treasury increase public awareness of the matching contribution program. This will include:  

• Developing and distributing digital and print materials about the Saver’s Match, including materials for state-facilitated retirement savings programs; 
• Translating these materials into the 10 most commonly spoken languages in the U.S.; and 
• Making people aware of the potential penalties for withdrawing matching contributions before reaching retirement age. 

The Treasury must submit a report to Congress by July 1, 2026, summarizing its planned promotional efforts. 

BRT and Retirement Clearinghouse conducted their survey between February 5 and 17 of this year, which included responses from more than 3,000 retirement savers who would meet the qualifications to be eligible to receive a program matching contribution.