Congress Did Its Part, Time For Financial Services Industry To Do Theirs

Millions of Americans do not save enough for retirement, not because they don’t want to, but because they face systematic obstacles to doing so. One such obstacle is a tax code rigged to benefit the highest earners. Congress took one small step (among other, ineffective steps) to fix this by creating a federal saver’s match starting in 2027 that will then replace the current Saver’s Credit, in the omnibus spending package that passed in December 2022. It is now incumbent on financial service firms as well as state governments to ensure that as many low-income and middle-income (LMI) savers targeted by this new match will have low-cost, low-risk retirement savings accounts when the new match goes into effect.

Large shares of Americans are unprepared for retirement. The Center for Retirement Research at Boston College estimates that, in 2019 – before the pandemic —, 49% of working-age households were at risk of sharp and painful spending cuts, once they reach retirement. This was close to the highest levels of 51% recorded in the wake of the Great Recession in 2010 and 2013.