Industry News

On May 26, 2022, the National Institute on Retirement Security (NIRS) released its report, The Missing Middle: How Tax Incentives For Retirement Savings Leave Middle Class Families Behind. The report focuses on current tax incentives and the effects on retirement security. NIRS examined the impact of various factors including marginal tax rates, retirement plan participation, and income distribution on retirement savings levels.

According to the report, the “level of income replacement from Social Security falls off far more quickly than private savings function to provide adequate retirement income for middle class workers…. The value of tax incentives for saving is much greater for those at higher income levels, who face higher marginal tax rates. These incentives are quite weak for much of the middle class.” It adds, “Solutions to these inequities should focus on increasing participation in the retirement savings system and ensuring working families also receive adequate incentives to save for retirement.”  

NIRS urges that policy changes may help to ensure that working Americans will have sufficient income to maintain their standard of living in retirement. Policymakers are encouraged to strengthen Social Security, increase access and participation in retirement plans, reform the deduction-based tax system, and ensure that tax breaks are directed at generating retirement income.

The report is available here.