The Saver’s Match, a new federal program set to start in 2027, could provide a significant boost to the retirement savings of millions of Americans. The program will replace the current Saver’s Credit and offer a 50% match on contributions up to $2,000 per year for those who qualify based on their income. Single taxpayers with an adjusted gross income of $20,000 or less, and joint filers making no more than $40,000, will be eligible for the maximum match of $1,000 annually.
Single filers earning between $20,000 and $35,000 can qualify for reduced contributions. According to Morningstar’s research, the Saver’s Match could potentially increase the retirement wealth of eligible Americans by 12%. Spencer Look, associate director of retirement studies at Morningstar, says, “It’s a great tool to help incentivize savings and build on the principles of behavioral finance.
Federal match to enhance retirement savings
Even if people only qualify for a partial match, this is free money to get from the government for retirement.”
The Saver’s Match is expected to benefit a wide range of people, including Gen Z, millennials, single women, and low-income employees. By offering federal matching contributions, the program aims to encourage more individuals to contribute to their retirement funds and help bridge the retirement savings divide.
Unlike the Saver’s Credit, which is non-refundable and only benefits those who owe taxes, the Saver’s Match will be available to all eligible taxpayers, regardless of their tax liability. This change is expected to make the program more accessible and beneficial to lower-income Americans who may not have owed taxes in the past. Experts believe that even modest contributions early on can make a significant impact on long-term investing results, thanks to the power of compounding.
As Look points out, “Seemingly small amounts of money may not feel like they’ll make a huge difference, but they do when they can compound and add up over time.”
The Saver’s Match is a provision of the broader SECURE 2.0 Act, which aims to enhance retirement security across the United States. With its implementation in 2027, the program has the potential to help millions of Americans save more for their retirement and ensure a more secure financial future.