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We analyze a new policy that would
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create automated retirement savings
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accounts that would really impact about
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56 million low-income Americans by
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2030. And the program is fully funded
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using existing tax expenditures that we
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have on retirement accounts that
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currently benefit higher income
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households. in particular, higher income
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households today get to deduct their
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contributions to 401k, 403b type plans
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on a traditional 401k basis or use a
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Roth deduction. And so what we're saying
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is let's use that same money but set up
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automated accounts for lowincome
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households. And so the revenue effects
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on the government is going to be the
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same. It's not going to be additional
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costs. a lower-income household starting
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at age 25 today will have about 200,000
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of retirement savings by the time
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they're retired. What we know from a lot
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of research is that as you get rid of
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the tax adjustment for higher income
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households for 401k plans, it doesn't
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impact their retirement saving that
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much. But for low-income households, it
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would dramatically increase their
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retirement savings. What this will also
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mean is that they won't have to rely as
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much on the government for social
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security, Medicare or Medicaid. Also
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means something that's bequetable,
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something that we've heard a lot from
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low-income households, especially in the
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black and Hispanic community saying that
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we want to have assets that we can lead
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to our errors, lead to our kids, help
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with the down payment of a home, things
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like that.
