Millions Of Americans Could Get Up To $1,000 A Year Under New Retirement Match Program

A new federal retirement savings program could boost wealth by up to 12% for eligible Americans, with single women and minorities standing to gain the most, according to a Morningstar report last month.

The Saver’s Match program, launching in 2027, will replace the current Saver’s Credit and could benefit 21.9 million Americans, the Employee Benefits Research Institute reports. The program offers up to $1,000 in annual federal matching contributions for retirement savings.

Single taxpayers earning up to $20,000 annually, or joint filers making up to $40,000, can receive a 50% match on retirement contributions up to $2,000. Reduced benefits extend to single filers earning between $20,000 and $35,000.

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The program particularly benefits single women, who could see retirement wealth increases of up to 13.13%, according to Morningstar. Non-Hispanic Black and Hispanic Americans could experience gains of 14.57% and 12.10% respectively.

“It’s a great tool to help incentivize savings and build on the principles of behavioral finance,” Spencer Look, associate director of retirement studies at Morningstar Retirement, told CNBC. “Even if people only qualify for a partial match, this is free money to get from the government for retirement.”

The new program improves upon the current Saver’s Credit, which only 5.7% of taxpayers claimed in 2021, according to Internal Revenue Service data. Unlike its predecessor, the Saver’s Match doesn’t require tax liability to claim benefits.

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Workers in industries prone to retirement income shortfalls, including agriculture and retail, are projected to see larger wealth increases compared to other sectors. The program deposits matching funds directly into qualified retirement accounts.

Successful implementation will require coordinated promotion between the Treasury Department and retirement plan sponsors to reach eligible participants, Morningstar researchers said.

The long-term impact of the matching contributions could be substantial. A 22-year-old investing $2,000 annually with an 8% return could accumulate roughly $835,000 by retirement at age 67. Adding the maximum $1,000 match would increase the annual contribution to $3,000, potentially growing the retirement savings to $1.25 million.

“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,” Look told CNBC.

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