A new survey of American workers who would be eligible to receive a Saver’s Match federal matching contribution confirms the significant public policy benefits that the program could have in leveling the playing field for lower income savers – particularly for Black and Hispanic workers – while also finding that high levels of worker mobility could pose challenges in administering millions of annual matching contribution payments.
The Saver’s Match Program
Scheduled to replace the Saver’s Credit for tax years following 2027, the Saver’s Match is a cornerstone of the SECURE 2.0 Act, with a public policy goal of incentivizing more retirement savings, particularly among lower income Americans. When the program goes live in 2027, it could allow millions of qualified individuals participating in a workplace retirement plan or contributing to an IRA to receive an annual 50% federal matching contribution up to a maximum of $1,000 ($2,000 if filing jointly), deposited directly into the taxpayer’s retirement plan or IRA.
About the Study
Conducted in mid-February 2024, the survey (How the Saver's Match Could Promote Financial Inclusion: A Survey-Driven Analysis of the Saver's Match Program) was a collaboration between Boston Research Technologies (BRT) and Retirement Clearinghouse (RCH), polling over 3,000 workers who would be eligible to receive a federal matching contribution under the program.
Of 3,061 respondents who qualified based on income and filing status, 1,667 had saved during 2023, and 1,394 did not. Savers were asked a series of questions about the nature of their 2023 savings, their employment status and their retirement account(s) currently positioned to accept a matching contribution. Savers and non-savers were then provided information about the Saver’s Match program and were queried about how those matching contributions could influence their future savings behaviors.
Shaping Saving Behaviors
The most impactful finding of the study is the Saver’s Match program’s massive potential to positively influence saving behaviors:
- 89.9% of eligible savers indicated that they would be very likely or somewhat likely to contribute more to receive[i] a larger matching contribution.
- 73.5% of non-savers indicated that they would be very likely or somewhat likely to begin saving to receive a program matching contribution.
Falling on the heels of a 2/29/24 EBRI Issue Brief (Sizing the Market for the Saver’s Match) that pegged the number of eligible savers at 21.9 million, the BRT-RCH study combined survey responses with EBRI sizing data to estimate that 8.5 million incremental savers that could be added from the ranks of non-savers.
Targeting the Under-Saved
Given their qualification criteria, it’s no surprise that the Saver’s Match program will benefit lower-income Americans, and that’s exactly what the study found. However, when the survey examined race and ethnicity, it found a disproportionate impact of the program on Black and Hispanic savers.
When examining race & ethnicity, the survey found that Black and Hispanic savers:
- Were over-represented, vs. their overall participation levels in DC plans
- Were significantly younger and had lower household incomes and retirement savings balances than their White counterparts
- Would be more likely to contribute more, or if not presently saving, to begin contributing
Taken together, the survey data strongly suggests that Black and Hispanic savers will realize significant benefits from the Saver’s Match program, but additional program benefits analysis through retirement security simulation models (e.g., EBRI Retirement Savings Projection Model) would be a logical follow-on step.
Factoring in Mobility
Given the potential for 21.9 million savers to claim a federal matching contribution every year, saver mobility could have a significant impact on the program’s ability to route those contributions to a qualifying plan that is positioned to accept a matching contribution.
In the study’s third key finding, it was revealed that, during the first six weeks of tax filing season, eligible savers were highly mobile, with 8.6% changing jobs and an additional 3.9% becoming unemployed. The study speculated that this high mobility was likely due to high seasonal job-changing, a greater propensity to change jobs, and generally higher rates of unemployment for the lower income demographic.
Challenges posed by mobility were further reflected in the study’s fourth and final key finding. Asked a series of questions related to their ability to provide the IRS with accurate information about a qualifying target contribution account, only one in eight savers said they could readily identify a valid target contribution account.
Things are About to Get Real
Unlike hypothetical retirement savings public policy initiatives, the Saver’s Match is coming fast down the tracks, and when it arrives in 2027, things will get real for millions of American savers, as well as for the U.S. Treasury, who will administer the program.
If recent research from EBRI and the BRT-RCH survey is any indication, the program stands to deliver significant benefits for lower income savers and realize much of its public policy promise, so long as the operational challenges in handling millions of annual matching contributions can be met.