The Saver's Credit: Expanding Retirement Savings for Middle- and Lower-Income Americans

  • March 01, 2005
  • By William G. Gale, J. Mark Iwry, and Peter R. Orszag

The Saver's Credit is the first and so far only major federal legislation directly targeted at promoting taxqualified retirement savings for middle- and lower-income workers. Although this is an important step, several options are available to improve the design, not the least of which is the credit's scheduled expiration at the end of 2006.The first section of the paper provides background on the evolution and design of the Saver's Credit. The second section discusses the rationale behind the Saver's Credit and the role of such a credit in the retirement income security system as a whole. The third section examines empirical data and models of the revenue and distributional effects of the Saver's Credit. The fourth section discusses measures that would expand the scope and improve the efficacy of the Saver's Credit. 

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