Who Benefits from Retirement Saving Incentives in the U.S.? Evidence on Gaps in Retirement Wealth Accumulation by Race and Parental Income

Taha Choukhmane, Jorge Colmenares, Cormac O'Dea, Jonathan Rothbaum and Lawrence Schmidt

No 32843, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: U.S. employers and the federal government devote the equivalent of 1.5% of GDP annually toward promoting defined contribution (DC) retirement savings. Using a new employer-employee linked dataset covering millions of Americans, we show that tax and employer matching incentives disproportionately benefit White and Asian workers compared to their similar-income Hispanic, Black, and American Indian or Alaska Native coworkers. Similarly, these incentives disproportionately benefit those with richer parents compared to those from lower-income families. Breaking the link between contribution choices and saving subsidies through revenue-neutral reforms could close up to one-third of the DC wealth gaps by race and parental income.

JEL-codes: D14 G5 H2 H31 J15 J32 (search for similar items in EconPapers)
Date: 2024-08
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