The U.S. tax-advantaged retirement savings system is one of the most powerful wealth-building tools available, yet millions of working Americans are excluded from its benefits, according to the EIG. The group’s latest data shows that 53 million American workers – 41.4% of full-time working Americans – do not have access to retirement plans, 43.5% do not participate, and 49.9% do not receive an employer match. 

This access gap is even more severe for low-income workers — a staggering 74.8% of full-time workers in the lowest-earning decile lack access to a retirement plan.

The RSAA would close the retirement savings gap by providing a portable, tax-advantaged savings option for private sector workers left out of the current system, according to the EIG. Modeled after the highly successful Thrift Savings Plan (TSP) for federal employees, the RSAA would automatically enroll full-time and part-time workers without access to a workplace retirement plan into an American Worker Retirement Plan. It includes targeted federal matching contributions to support low- and moderate-income workers, rewarding work and encouraging long-term financial security. 

Another strong supporter of the new RSAA bill is President Trump’s newly-appointed Director of the White House National Economic Council, Kevin Hassett, who served during the first two years of the Trump Administration. Hassett co-wrote the Economic Innovation Group’s white paper with Professor Teresa Ghilarducci, Inclusive Wealth-Building Initiative, which was the basis for the RSAA legislation. His white paper and the RSAA bill are supported by the Economic Innovation Group, a billionaire-backed think tank advocating for radical reform of the retirement system.

“Lawmakers today are searching for bold ideas to support and empower American workers—and especially low-income workers. The Retirement Savings for Americans Act is just such an idea,” said Hassett. “This legislation would put millions of American families on the path to financial security and help them build intergenerational wealth.”

A recent RAND analysis found that the RSAA could pay for itself within 20 years by reducing the need for other social programs.

“Too many working Americans are struggling to save and invest to secure their standard of living when they choose to retire or are forced to retire,” said Professor Ghilarducci, a labor economist at the New School and leading expert on retirement security. “The Retirement Savings for Americans Act would equip millions of low- and moderate-income workers to build a nest egg for themselves and for future generations, leading to a stronger economy for all Americans in the process.”

Related: Congress reintroduces ‘portable’ federally-run retirement plan bill for private sector workers

Key features of the RSAA include:

Automatic eligibility and enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be immediately eligible for an account, and they would be automatically enrolled at 3% of their income. Independent and gig workers would also be eligible. 
Matching contributions: Low- and moderate-income workers would be eligible for up to a 5% matching contribution via a refundable federal tax credit. This would be deposited directly into the employee’s retirement account and would begin to phase out at median income. 
Portability: Accounts would remain owned by workers throughout their lifetimes, and workers would be able to stop and start contributions as they desire or as their eligibility allows.
Employee ownership: The accounts would be the property of the worker and their assets could be passed down to future generations. 
Investment options: Much like the federal Thrift Savings Plan, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds. The accounts would be managed by private asset managers chosen through a competitive process.