Applications are open now for the AARP Purpose Prize, which honors people 50+ who tap into life experience to build a better future. Find out more.
AARP Public Policy Institute
by Jennifer Erin Brown, National Institute on Retirement Security, David C. John, Public Policy Institute, September 25, 2017
Improving the Saver's Credit for Low- and Moderate-Income Workers
Millions of low- to moderate-income individuals have been unable to use the credit. The primary requirement to file for the credit is contributions to a qualified retirement plan. Among individuals whose income makes them eligible for the credit, many lack access to retirement accounts at work and cannot save through payroll deduction. For those individuals with the lowest incomes, not having a tax liability keeps millions of them from being able to use the credit as designed. In addition, by structuring the Saver’s Credit with steep drops in the credit rates, a taxpayer can lose a significant amount of the credit by earning just a single dollar in additional income.
The Saver’s Credit is woefully underutilized. From 2006 through 2014, between 3.25 percent and 5.33 percent of eligible filers claimed the credit, and the average value of the credit ranged from $156 to $174 over this time period.
A series of changes—some small and others more substantial—would enable more of the tax credit’s target population to benefit from the Saver’s Credit and build significant retirement resources. The most beneficial changes would be to restructure the credit into a match similar to the matching contribution some employers offer in their retirement savings plans and making the Saver’s Credit more like the Earned Income Tax Credit. Simplifying the tax-filing requirements would give low- and moderate-income individuals overall greater ease of use, helping them take advantage of a tax benefit that seeks to better balance the tax incentives for retirement across income levels.
Find the public policy institute content you are looking for by entering in search terms below.
Sign up for alerts on the latest research, events and videos on policy issues.
A State Scorecard on Long-Term Services and Supports for Older Adults, People with Physical Disabilities, and Family Caregivers
By 2030, one out of every five people in the United State will be 65-plus. Will your community be ready?
You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits.
Your email address is now confirmed.
You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age.
You can also manage your communication preferences by updating your account at anytime. You will be asked to register or log in.
In the next 24 hours, you will receive an email to confirm your subscription to receive emails
related to AARP volunteering. Once you confirm that subscription, you will regularly
receive communications related to AARP volunteering. In the meantime, please feel free
to search for ways to make a difference in your community at