Could the Saver’s Match help close the wealth gap in 401(k)s?

A new report by the Collaborative for Equitable Retirement Savings indicates that the forthcoming Saver’s Match program could significantly reduce racial and gender disparities in 401(k) balances.

CFERS, a joint initiative of the Aspen Institute Financial Security Program, the Defined Contribution Institutional Investment Association, and Morningstar Retirement, analyzed the potential impact of the Saver’s Match program, set to begin in 2027.

The program offers a 50 percent government match on the first $2,000 of retirement savings contributions, though eligibility will be determined based on an individual’s modified adjusted gross income.

The newly published analysis from CFERS simulated potential outcomes by considering various age groups, eligibility statuses, and behavioral assumptions across eight race and gender categories.

It found that eligible participants could see a substantial improvement in their retirement savings. For those aged 25 to 64, the projected increase in account balance-to-salary ratios at age 65 ranges from 21.4 percent to 33.7 percent, depending on filing status, eligibility, and behavioral assumptions.

Assuming participants ramp up their contributions in response to the program, the analysis shows gains for every demographic group.

“If participants changed their contributions due to Saver’s Match, it would have a profound impact on the average increase in their account balance/salary ratio at age 65, with every group seeing gains,” the report said.

The report notes that the results are even more positive for younger participants as they have more time to benefit from the program. Black women are expected to experience the greatest improvement in retirement outcomes, partially mitigating the disparities highlighted in a previous CFERS publication.

If Black women who are qualified for the program raise their contributions to max out the match, the report estimates their account balance-to-salary ratio at age 65 could increase from 9.0 percent to 21.5 percent​​. Black women who file jointly with spousal income would see the same expected increase, according to CFERS.

For eligible Black women who file as head of their household, the report estimates maximizing their contributions would result in a 27.4 percent in their account balance-to-salary ratio at age 65. The impact could be even more pronounced for Black women filing as single, with increases ranging from 19 percent to 33.7 percent.

Assuming employee contributions are increased to maximize the Saver's Match benefits, the report projects participants eligible for the program could see their account balance-to-salary ratio at age 65 rise by 4.3 percent to 27.4 percent.