U.S. Reps. Terri Sewell, AL-07, and Lloyd Smucker, PA-11, and U.S. Senators John Hickenlooper, D-CO, and Thom Tillis, R-NC, introduced the Retirement Savings for Americans Act, bipartisan legislation to help low- and middle-income Americans build wealth and save for retirement. The bill would establish a new program that gives eligible workers access to portable, tax-advantaged retirement savings accounts. If passed, the RSAA would allow the federal government to match contributions for low- and middle-income workers, with the match beginning to phase out at median income.
“Every Alabamian and every American should be able to retire with dignity after a lifetime of work,” said Rep. Sewell. “Democrats and Republicans alike recognize the urgent need for Congress to address the gaps in our retirement system and make it easier for low- and middle-income workers to save for retirement. I am proud to once again work with my House and Senate colleagues on both sides of the aisle to advance the Retirement Savings for Americans Act which would level the playing field for working families and build a stronger economy for all Americans.”
“Too many hard-working Americans are not able to prepare financially for retirement. Over half of working employees lack access to the tax-advantaged retirement benefits that many higher-income earners take advantage of to save. Additionally, as the workforce continues to innovate and more Americans become categorized as ‘gig workers,’ the reliance on traditional employer-sponsored plans causes too many workers to slip through the cracks. Hard-working Americans deserve a modern pathway to find financial security in their retirement. I am proud to join in this bipartisan and bicameral effort to advance the Retirement Savings for Americans Act, to help millions of Americans save for their retirements. I will continue to advocate for policies which help hard workers live their American Dream, including a well-earned and financially stable retirement,” said Rep. Smucker.
“Americans who work hard their entire lives deserve to retire with dignity,” said Sen. Hickenlooper. “This bill helps low-income workers enjoy a secure retirement and fulfill their American dream.’’
“Roughly 50 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.”
A study by the National Council on Aging found that 80 percent of aging Americans are struggling financially or are at risk of financial insecurity, and therefore, not prepared to retire. In a new ranking of the world’s retirement systems, the U.S. scored a C+, mainly because the current system works well for white collar workers but fails gig workers and blue collar workers. If trends continue, inadequate retirement savings will cost state and federal governments a combined $1.3 trillion in increased spending by 2040.
The Retirement Savings for Americans Act 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 percent 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 percent automatic contribution (as long as they remain employed) and up to a 4 percent 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.
The RSAA enjoys broad support. View a full list of endorsements here.
Bill text is available here.
