Retirement Planning

Boosting retirement savings for all: It’s in the tools

August 27, 2025

Starting in 2027, a new federal retirement savings program known as the Saver’s Match could boost retirement outcomes for lower income Americans. The Saver’s Match replaces the current Saver’s Credit, which offers eligible savers a tax credit for contributing to a defined contribution plan or an individual retirement account (IRA), with a government match. A recent Morningstar® analysis of the Saver’s Match found potential benefits for increased retirement account balances across all categories of eligible savers, especially: women, Black and Hispanic Americans, and workers in industries prone to lower retirement-income savings such as agriculture and retail. 

Saver’s Match: How it works

The Saver’s Match offers eligible lower income workers an up to 50% match on the first $2,000 of qualified retirement contributions, with a maximum of $1,000 per person per tax year. Individuals with a modified adjusted gross income of $20,500 or less qualify for the entire match, with the match phasing out above $35,500 for single filers. Joint filers with a modified adjusted gross income of $41,000 or below qualify for the full match, which phases out at $71,000. The phaseout ranges will be adjusted for inflation after 2027.

 

Morningstar simulations show that eligible Gen Z and millennial savers could see retirement balances grow by as much as 12% on average — a meaningful impact on long-term financial security.

Who’s eligible? Gen Z and millennial household Saver’s Match eligibility by race and ethnicity

Source: Morningstar, The Impact of the Saver’s Match on Retirement Wealth, 2025

Toward parity: Reducing retirement savings disparities

Building on research from the Collaborative for Equitable Retirement Savings, Morningstar highlights persistent disparities in retirement balances — even after adjusting for salary and tenure. While it doesn’t address wage disparities or systemic barriers, the research underscores the potential for behavioral changes and tools like the Saver’s Match to reduce disparities in retirement savings.

 

Awareness of retirement savings gaps can position financial professionals to better serve diverse client needs. Tools and strategies that may benefit all clients include:

 

  • Limiting early withdrawals: Highlight the inordinate impact of preretirement withdrawals on retirement savings and encourage clients to consider alternatives to early withdrawals.

  • Motivating with options: Offer clients visualizations of how much more can be saved by increasing 401(k) contributions.

  • Emphasizing education: Share resources such as ICanRetire®, which can provide valuable guidance to clients on best practices in retirement savings.

  • Presenting new tools: Note that the Saver’s Match is just one promising feature of SECURE 2.0. Clients can also benefit from automatic enrollment and increased catch-up contribution limits.

 

For all clients, the immediate benefits of making higher 401(k) contributions, limiting preretirement withdrawals and utilizing catch-up programs can be key to successful retirement savings. Additionally, tools could be shared with clients to inspire confident, educated planning. 

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