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Legislative bills

Bipartisan Retirement Savings for Americans Act Introduced to Enhance Financial Security for Low- and Middle-Income Workers

Strategic Insights

— 2 min read

United States Congresswoman Terri Sewell (AL-07) and Representative Lloyd Smucker (PA-11) have introduced the Retirement Savings for Americans Act, a bipartisan, bicameral bill aimed at improving retirement security and financial well-being for low- and middle-income American workers. The bill establishes a new program that provides portable, tax-advantaged retirement savings accounts with federal matching contributions for eligible workers.

The legislation aims to address serious gaps in the U.S. retirement system by making it easier for low- and middle-income workers to save for retirement. It offers a range of features, including eligibility and auto enrollment, federal contribution, portability, private assets, and investment options, designed to promote retirement savings and financial security.

Key Takeaways:

  • The Retirement Savings for Americans Act aims to provide a reliable, real, and attainable retirement savings option for American workers, particularly those lacking access to employer-sponsored retirement plans.
  • The bill establishes a new program offering portable, tax-advantaged retirement savings accounts with federal matching contributions for low- and moderate-income workers.
  • Eligibility is automatic for workers lacking access to an employer-sponsored retirement plan, with the opportunity to opt out or adjust contributions at any time.
  • Federal contributions include a 1% automatic contribution and up to a 4% matching contribution via a refundable federal tax credit, phasing out at median income.
  • Accounts remain attached to workers throughout their lifetimes, and workers can stop and start contributions as needed.
  • Investment options include low-fee lifecycle funds and index funds made of stocks and bonds.
  • The bill addresses the significant roadblock of approximately 40 million Americans lacking access to an employer-sponsored retirement plan.
  • The legislation complements the successes of SECURE 2.0 and aims to reduce income inequality by promoting retirement savings for qualified workers.

Statistics:

  • Around one-third of private-sector workers lack access to a workplace retirement plan.
  • Roughly half of households are at risk of taking a cut to their standard of living in retirement.
  • Approximately 40 million Americans lack access to an employer-sponsored retirement plan.
  • The bill aims to empower American workers by expanding market access to high-quality retirement plans and targeting savings incentives to those who need them most.

Sources:

  • United States House of Representatives Press Release, "Bipartisan Retirement Savings for Americans Act Introduced to Enhance Financial Security for Low- and Middle-Income Workers," December 8, 2022.
  • Economic Innovation Group Press Release, "EIG Commends Senators Hickenlooper, Tillis, Reps. Sewell and Smucker for Retirement Savings for Americans Act," December 8, 2022.

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