At a Glance | February 17, 2022 Legislative Proposals Could Mitigate Racial Discrepancies in Retirement Income Adequacy 2 The combination of automatic contribution¹ provisions and an enhanced Saver’s Credit would have a significant positive impact. THE CURRENT OUTLOOK Assuming No Legislative Changes Are Implemented, Dramatic Differences in Retirement Shortfalls Are Projected EBRI’s Retirement Security Projection Model® has determined that the aggregate Projected Retirement Savings Shortfalls by Race (Ages 35–39) retirement savings shortfall for all U.S. households ages 35 to 64 was 3 Black Hispanic White Other $3.68 trillion. Focusing on the youngest age cohort in the $ 48k $ 43k $ 31k $ 42k study — those ages 35 to 39 — reveals dramatic differences in projected shortfalls by race. IMPACT OF LEGISLATIVE ACTION Modifications for Automatic Contribution Plan and Saver’s Credit Would Be Most Beneficial to Families Headed by Black Workers The greatest improvements when it comes to net retirement savings outcomes — which include Increase in Retirement Savings Net Outcomes With Legislation both decreased savings deficits and increased savings surpluses — + 75% would be experienced by Black and Hispanic workers. This is + 61% an important finding for those +49% searching for parity in retirement +45% security for American workers. 3 Black Hispanic White Other 1 Automatic Contribution Plan/Arrangement (ACPA). This proposal would generally require employers with more than five employees to maintain an automatic contribution plan/arrangement; however, sponsors with certain previous plans would be grandfathered. 2 Enhanced Saver’s Credit. This proposal would replace the current Saver’s Credit with a simple, 50 percent government match on contributions of up to $1,000 per year made to 401(k)-type plans and individual retirement accounts by individuals with incomes up to $25,000, couples with incomes up to $50,000, and heads of household with incomes up to $37,500. 3 Race/ethnicity categories are inferred from the Survey of Consumer Finances (SCF), where they are self-identified and include White, non-Hispanic; Black/African American; Hispanic; and other, which consists of those races/ethnicities not defined in the three prior categories, such as Asian Americans and those who identify as multiracial. SCF is at the family level, so the characteristics of the family head (or the reference person) are used to categorize the families. SOURCE: VanDerhei, Jack, “Impact of Various Legislative Proposals and Industry Innovations on Retirement Income Adequacy,” EBRI Issue Brief, no. 550 (January 20, 2022). © 2022 EBRI This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain any and all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org.