EIG Media Contact: Reuben Francis | [email protected]
Washington, D.C. – The Economic Innovation Group applauds the reintroduction of the Retirement Savings for Americans Act (RSAA), an effort to expand access to retirement savings for millions of low- and moderate-income workers led by Senators Thom Tillis (R-NC) and John Hickenlooper (D-CO), and Representatives Lloyd Smucker (R-PA-11) and Terri Sewell (D-AL-7).
“The Retirement Savings for Americans Act would create a healthier retirement system, a more financially secure workforce, and a stronger economy for all Americans,” said EIG President and CEO John Lettieri. “By ensuring that all workers — regardless of their employer or income — have the opportunity and incentives to build long-term financial security, the RSAA would boost the wealth of the working class and significantly reduce the strain on the social safety net. EIG is proud to have worked closely with Senators Hickenlooper and Tillis and Representatives Smucker and Sewell on this important legislation, and we applaud them for their bipartisan leadership on behalf of American workers.”
The U.S. tax-advantaged retirement savings system is one of the most powerful wealth-building tools available, yet millions of working Americans are excluded from its benefits. The latest data shows that 53 million American workers – 41.4 percent of full-time working Americans – do not have access to retirement plans, 43.5 percent do not participate, and 49.9 percent do not receive an employer match.
This access gap is even more severe for low-income workers — a staggering 74.8 percent of full-time workers in the lowest-earning decile lack access to a retirement plan.
The RSAA would close the retirement savings gap by providing a portable, tax-advantaged savings option for private sector workers left out of the current system. Modeled after the highly successful Thrift Savings Plan (TSP) for federal employees, the RSAA would automatically enroll full-time and part-time workers without access to a workplace retirement plan into an American Worker Retirement Plan. It includes targeted federal matching contributions to support low- and moderate-income workers, rewarding work and encouraging long-term financial security.
The legislation builds upon the recommendations of a 2021 EIG white paper by a bipartisan pair of economists, Teresa Ghilarducci and Kevin Hassett. A recent RAND analysis found that the RSAA could pay for itself within 20 years by reducing the need for other social programs.
“Too many working Americans are struggling to save and invest to secure their standard of living when they choose to retire or are forced to retire,” said Professor Teresa Ghilarducci, a labor economist at the New School and leading expert on retirement security. “The Retirement Savings for Americans Act would equip millions of low- and moderate-income workers to build a nest egg for themselves and for future generations, leading to a stronger economy for all Americans in the process.”
“Lawmakers today are searching for bold ideas to support and empower American workers—and especially low-income workers. The Retirement Savings for Americans Act is just such an idea,” said Kevin Hassett, speaking in 2023 as a Distinguished Visiting Fellow at the Hoover Institution. “This legislation would put millions of American families on the path to financial security and help them build intergenerational wealth.”
Key features of the RSAA include:
- Automatic Eligibility and Enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be immediately eligible for an account, and they would be automatically enrolled at 3 percent of their income. They could choose to change their withholding or opt out entirely at any time. Independent and gig workers would also be eligible.
- Matching Contributions: Low- and moderate-income workers would be eligible for up to a 5 percent matching contribution via a refundable federal tax credit. This would be deposited directly into the employee’s retirement account and would begin to phase out at median income.
- Portability: Accounts would remain owned by workers throughout their lifetimes, and workers would be able to stop and start contributions as they desire or as their eligibility allows. They are in complete control.
- Employee Ownership: The accounts would be the property of the worker and their assets could be passed down to future generations.
- Investment Options: Much like the current TSP, 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. The accounts would be managed by private asset managers chosen through a competitive process.
To learn more, explore a summary of the legislation, read the full bill text, or view the Congressional press release.
About the Economic Innovation Group (EIG)
The Economic Innovation Group (EIG) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, EIG produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.
