Bipartisan, bicameral Retirement Savings for Americans Act would make saving for retirement reliable, real, and attainable for American workers
WASHINGTON – Today, U.S. Senators John Hickenlooper and Thom Tillis, and Representatives Terri Sewell and Lloyd Smucker introduced the Retirement Savings for Americans Act, a bipartisan, bicameral bill to improve retirement security and financial well-being for low- and middle-income American workers. Specifically, the bill would establish a new program that gives eligible workers access to portable, tax-advantaged retirement savings accounts. It would also offer federal matching contributions for low- and middle-income workers, with the match beginning to phase out at median income.
“Too many Americans are working their entire adult lives only to reach retirement and find they don’t have enough saved,” said Sen. Hickenlooper. “Helping people save is an easy, efficient way to cut income inequality while making sure all workers get the retirement they’ve earned.”
“Roughly 40 million Americans lack access to an employer-sponsored retirement plan, which represents a significant roadblock to achieving financial security for their retirement,” said Sen. Tillis. “The Retirement Savings for Americans Act tackles this real problem by establishing a pathway for savings for Americans lacking retirement options.”
“Every Alabamian and every American should be able to retire with dignity after a lifetime of work,” said Rep. Sewell. “This critical, bipartisan legislation would address serious gaps in our retirement system and make it easier for low- and middle-income workers to save for retirement. I was proud to work with my House and Senate colleagues on both sides of the aisle to advance this commonsense bill which would level the playing field for working families and build a stronger economy for all Americans.”
“I appreciate the opportunity to advance meaningful bipartisan legislation to assist hardworking Americans save for their retirement. Our legislation, the Retirement Savings for Americans Act, will create a pathway for millions of Americans to find financial security in their retirement. I look forward to continuing to advance this legislation in the next Congress and building upon the successes of SECURE 2.0 to help Americans become financially secure in their retirements,” said Rep. Lloyd Smucker.
“Far too many Americans are unprepared for retirement. The Retirement Savings for Americans Act would tackle serious gaps in the U.S. retirement system that have hindered millions of workers from saving for a more certain and secure future,” said Economic Innovation Group President and CEO John Lettieri. “By incorporating a range of proven features, this innovative legislation would greatly expand market access to high quality retirement plans and target savings incentives to workers who need them most. The result would be a healthier retirement system, a more secure workforce, and a stronger economy to the benefit of all Americans. EIG is proud to have worked closely with Senators Hickenlooper and Tillis and Representatives Sewell and Smucker on this important legislation, and we applaud them for their bipartisan dedication to empowering American workers.”
As many as six in ten workers lack access to an employer-sponsored retirement plan. and roughly half of households are at risk of taking a cut to their standard of living in retirement.
Full text of the bill is available here.
“The Retirement Savings for Americans Act would provide millions of hard-working Americans with a direct stake in the growth and prosperity of our economy,” said Kevin Hassett, former chairman of the Council of Economic Advisers and distinguished visiting fellow at the Hoover Institution. “This legislation represents a unique opportunity to fix major shortcomings in the U.S. retirement system and build bottom-up wealth in a manner that rewards work and strengthens faith in the basic fairness of our economic system.”
“Too many Americans are struggling to meet their savings goals and secure a comfortable standard of living in retirement,” said Professor Teresa Ghilarducci, a labor economist at the New School and leading expert on retirement security. “The Retirement Savings for Americans Act takes critical steps to address gaps in federal retirement policy and ensure that low- and moderate-income workers are equipped to build a nest egg for themselves and for future generations.”
The bill contains the following provisions:
- Eligibility and Auto Enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be eligible for an account, and they would be automatically enrolled at 3% of their income. They could choose to increase or decrease their withholding, or opt out entirely at any time. Independent workers (including gig workers) would also be eligible.
- Federal Contribution: Low- and moderate-income workers would be eligible for a 1% automatic contribution (as long as they remain employed) and up to a 4% matching contribution via a refundable federal tax credit. This would begin to phase out at median income.
- Portability: Accounts would remain attached to workers throughout their lifetimes, and workers would be able to stop and start contributions at will.
- Private Assets: The accounts would be the property of the worker and the assets could be passed down to future generations to help them build wealth and financial security.
- Investment Options: Much like the current Thrift Savings Plan, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds.