GOP Tax Plan Fails to Reform Regressive Retirement Tax Breaks
September Unemployment Report for Workers Over 55
Today the Bureau of Labor Statistics reported a 3.2% unemployment rate for workers age 55 and older in September, a rate unchanged from August. While this aggregate number is low, the reality is that many older workers have low-paying jobs that don’t provide retirement savings coverage.
It’s no surprise that older workers have little retirement savings ($12,000 on average). This is despite the $180 billion in tax breaks a year to encourage people to save for retirement. That’s because these tax breaks are highly regressive, giving 66% of the benefits to those in the top 20% of the income distribution – who are likely to save without incentives — while the 35% of near-retirees without retirement plans get nothing.
Tax incentives are a key driver of retirement plan coverage and adequacy. In the midst of a retirement crisis, changing the timing of retirement tax breaks does nothing to increase coverage or make the distribution of incentives more equitable.