SECURE 2.0 Saver’s Match Would Help Make Retirement Savings More Inclusive

Generaltional Gap Employers EmployeesSECURE 2.0 includes a government saver’s match provision that would help boost retirement savings for many Americans, including those in specific demographics.  Set to take effect in 2027, the match is purported to help bridge the racial wealth divide in 401(k) plans.

So says a new report from the Collaborative for Equitable Retirement Savings, cited in a recent BenefitsPro article.  According to the report, released in early May, eligible 401(k) participants who receive the saver’s match could boost their account balance-to-salary ratios at age 65 by 3.1% to 10.5%, even without increasing their individual contributions.  If they maximize the government match by raising their contributions, their ratios could grow even more—from 4.3% to 27.4%, on average.  The account balance/salary ratio is the projected ratio of savers’ retirement account balances to their salary, noted Jack VanDerhei, director of retirement studies for the Morningstar Center for Retirement and Policy Studies, in the report.

Those eligible for the saver’s match would receive a 50% matching contribution up to an annual maximum of $1,000, deposited directly into their retirement accounts.  According to the report, “to be eligible for the saver’s match, individuals must have a modified 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.”

Black women stand to benefit most from the saver’s match, especially those aged 25-34, the report noted.  According to the report, “Black women between 25 and 34 who filed joint returns with no spousal income, for example, would see their account balance-to-salary ratios jump 10.5% at age 65, more so than say Hispanic women or Black men—or any of the five other groups—in the same age demographic filing joint tax returns.”  The study analyzed 180,684 active, saver’s match-eligible participants from eight groups in nine 401(k) plans, including Asian, Black, Hispanic, and white men and women.

The government saver’s match has the potential to make a significant impact on retirement savings and close disparities across racial and gender lines, making workplace retirement plans more inclusive across the board.  Employers interested in embracing another facet of diversity, equity, and inclusion (DEI) in their cultures should take note of this development to work on better tailoring retirement plans for the needs of their workforce.


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