Saver’s Match provides big incentive for 401(k) contributions
Low-income workers are highly likely to contribute more to their 401(k)s under a forthcoming provision of the Secure 2.0 Act that will provide matching contributions from the government.
When asked, 90 percent of people who have accounts said they would likely bump up their contributions in order to get more of the Saver’s Match, according to the results of a survey published Tuesday by Retirement Clearinghouse and Boston Research Technologies. Further, nearly 74 percent of those without accounts said they would likely start participating in their plans as a result of the Saver’s Match.
“It’s got this incentive in it. You have to have saved. You have to have made contributions to a retirement plan,” Retirement Clearinghouse CEO Spencer Williams said.
The Saver’s Match, which will go into effect in 2027, could have a multiplier effect, as it not only encourages people to sign up for accounts and contribute more but also makes them more likely to receive employer matches as well as the federal government match, Williams said. That would disproportionately benefit younger, low-income workers, who are more likely to be Black or Hispanic, according to the report. Having accounts funded earlier in an individual’s working years means that the money has more time to build through compounding, with the potential result being a significant boost to retirement security for some workers.
The survey data come from a sample in February of more than 5,300 people ages 18 to 60 who have income levels that would qualify them for the Saver’s Match.
The Saver’s Match is replacing the Saver’s Credit, which has not been used extensively by the workers it was designed to help.
“There are so few people who could actually take advantage of the
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