Working Americans first became aware of the Saver's Match when it was introduced as the eventual replacement for the Saver's Credit under the SECURE Act 2.0 of 2022.
Starting with the 2027 tax year, qualified individuals who participate in an employer-sponsored retirement plan or contribute to an IRA will receive a 50% federal matching contribution of up to $1,000 (or $2,000 if married and filing jointly), which is deposited directly into their account.
But new industry research published by Morningstar demonstrates that it has the potential to accomplish more than many expected as far as closing the nation's retirement savings gap.
Single women, Black Americans and Hispanic Americans will likely benefit the most, according to Morningstar's projections. To be eligible for a Saver's Match federal matching contribution, taxpayers must not only contribute to an employer-sponsored retirement plan or IRA, but also earn an adjusted gross income of up to $35,000 if single or married but filing taxes separately, $53,250 if filing as head of household, or $71,000 if married or filing jointly.
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Morningstar found that 43% of single women will qualify for the Saver's Match, as opposed to 35% of single men and 30% of couples — and that single women will likely see a larger percentage increase in retirement income than others as a result of Saver's Match contributions.
In addition, Morningstar's calculations reveal that 48.9% of Hispanic American households and 43.5% of non-Hispanic Black American households, will qualify for a full or partial Saver's Match contribution — higher percentages than for non-Hispanic other and non-Hispanic White households.
And, crucially, Morningstar's projections show that Black Americans who qualify for the Saver's Match will likely accumulate more income for retirement across all behavioral scenarios than their counterparts in other racial and ethnic groups. Such scenarios include those who experience no behavioral change in retirement-saving, those who are new savers and those who are active savers.
If Morningstar's calculations are correct, then the Saver's Match program will help our country make great strides toward filling the gaps in retirement income for women and minorities.
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These results build on industry research findings published in April 2024 predicting that 89.9% of eligible retirement-savers are either very likely or somewhat likely to increase their contributions to employer-sponsored retirement plans in order to obtain a larger matching contribution.
The findings, from a survey undertaken by Retirement Clearinghouse, LLC and Boston Research Technologies, indicated that 93.6% of Black savers and 92.3% of Hispanic savers would contribute more to their employer-sponsored plans if they could receive a federal matching contribution. Another key finding is that 78.2% of Hispanic Americans and 76.9% of Black Americans who do not participate in an employer-sponsored plan would do so if their employer offered one in order to obtain the Saver's Match contribution.
Plan sponsors and recordkeepers can play an important role in educating participants about how the Saver's Match can potentially increase the income they can enjoy in retirement. And that's just by itself. When eligible savers take advantage of the Saver's Match in addition to harnessing auto portability to automatically transport their under-$7,000 401(k) savings accounts to their current employers' plans at the point of job-change, they can save even more for retirement.
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Retirement Clearinghouse research shows that if auto portability were to be adopted by sponsors and recordkeepers nationwide, an estimated $1.6 trillion in additional savings would be preserved in our country's retirement system over a 40-year period. That $1.6 trillion would include $744 billion in extra retirement income for 98 million minorities, with 30 million Black Americans preserving an additional $216 billion in savings for retirement.
In the meantime, plan sponsors and recordkeepers can prepare campaigns to inform as many participants as possible, especially women and minorities, what the Saver's Match and additional programs for increasing their retirement income can do for them and their families.
