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 Savers 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 Savers 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 changessome small and others more substantialwould enable more of the tax credits target population to benefit from the Savers 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 Savers 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.
Job Loss, Health Problems Worsen Debt Among Adults 50+
A new AARP survey on debt among adults 50+ reveals that crises such as job loss, health problems, and the high cost of living can worsen debt problems.
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Three quarters of metro Chicago residents ages 45 and older are anxious they arent saving enough to live comfortably in retirement, AARP found.
AARP & the US Chamber of Commerce Present: Emergency Savings: Where We Are and the Way Forward
AARP and the U.S. Chamber of Commerce are excited to present a one-day, in-person conference titled Emergency Savings: Where We Are and the Way Forward.
Priority Issues for U.S. Women Age 45+
Reports on questions pertaining to the financial standing, security, and future of American women 45-plus, asked as part of AARP Research’s larger Vital Voices research.
