Saving Incentives for Low- and Middle-Income Families: Why is the Saver's Credit Not More Effective?

Abstract

This paper uses data from the largest tax preparer in the United States to estimate the impact of the "saver’s credit," aUSfederal program providing financial incentives to encourage retirement savings, on the decision to contribute to an IRA. It finds significant, but very modest, effects. This is contrasted with results from a field experiment showing much larger impacts of clearly presented matching incentives. Various explanations are discussed for why the saver’s credit is not more effective.

Keywords: Saver's Credit

JEL Classification: H00, H31, C93, D14