Bill Overview
Title: Retirement Protection Act of 2022
Description: This bill temporarily increases the contribution limits for certain retirement accounts. It also modifies the tax credit for contributions to certain retirement accounts (i.e., the Saver's Credit).
Sponsors: Rep. Schweikert, David [R-AZ-6]
Target Audience
Population: People contributing to retirement accounts
Estimated Size: 120000000
- Retirement plans are a common savings tool globally, impacting millions who contribute to them.
- The legislation impacts people who are actively saving for retirement, who have sufficient income to invest in retirement accounts.
- It affects individuals eligible for the Saver's Credit, which is a tax credit aimed at low to moderate-income individuals saving for retirement.
- The shift in contribution limits and credits will potentially impact both younger working adults planning long-term savings and older individuals nearing retirement age.
- Globally, retirement systems and investment in similar accounts differ, so those closely mirrored to US systems would be most parallel in terms of impact.
Reasoning
- The budget limits necessitate targeting a precisely defined population who will utilize the increased savings limits and the Saver's Credit.
- There are large segments of the population like teenagers, unemployed individuals, and very low-income groups like those living in extreme poverty who will not benefit from the policy.
- Given the focus on retirement savings accounts, it's important to include various age demographics since retirement saving spans across most of an individual's working life.
- It is vital to consider geographic diversity as costs of living and retirement savings behavior vary widely.
- Since the policy affects both existing savers and those newly taking advantage of increased limits, explore the spectrum ranging from diligent savers to hesitant initiators.
Simulated Interviews
Software Engineer (New York, NY)
Age: 32 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- This policy seems beneficial, I might consider maxing out my contributions to take advantage.
- It feels reassuring to have the possibility of contributing more as I haven't started saving early enough.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Public School Teacher (Austin, TX)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 15/20
Statement of Opinion:
- As a teacher, I'm glad for the increased limits which means I can save more with some tax advantages.
- The changes to Saver's Credit are necessary and welcome for people like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 8 | 5 |
Freelance Consultant (San Francisco, CA)
Age: 58 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Increased contribution limits are beneficial, but I'm already close to retirement so it has limited impact.
- I would have liked to see more focus on immediate retirement benefits rather than contribution limits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 3 |
| Year 10 | 3 | 2 |
| Year 20 | 3 | 2 |
Marketing Coordinator (Chicago, IL)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- I'm not sure if I can contribute much now, but it's good to know there'll be room to save more in the future.
- Policies like these highlight the importance of planning ahead for retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Registered Nurse (Seattle, WA)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 13/20
Statement of Opinion:
- This feels like a boost I needed to keep up with my retirement savings, given the increase in limits.
- I'd like to understand how these changes specifically impact my taxes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 8 | 7 |
Small Business Owner (Dallas, TX)
Age: 41 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Having expanded limits works well with my SEP IRA, helping me plan eventual business succession.
- It should drive more encouragement for people to plan financially if they can afford it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Graphic Designer (Miami, FL)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- The policy makes saving seem more appealing with added perks, though I feel like I have to start soon to benefit.
- It's pushed me to learn more about retirement planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Retired (Phoenix, AZ)
Age: 62 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- I doubt this impacts my situation directly since I'm not actively contributing much anymore.
- It may have been useful a decade ago.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Actor (Los Angeles, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- With my career's volatile income, contributing more some years is great.
- However, I'd need consistent income to fully take advantage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Engineer (Portland, OR)
Age: 49 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 11.0 years
Commonness: 8/20
Statement of Opinion:
- This act feels like it's tailored for people working on aggressive retirement plans.
- I'd have preferred additional benefits on post-retirement tax breaks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $5200000000 (Low: $4900000000, High: $5500000000)
Year 2: $5300000000 (Low: $5000000000, High: $5600000000)
Year 3: $5400000000 (Low: $5100000000, High: $5700000000)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Economic conditions including market volatility can affect how much individuals contribute, potentially altering the anticipated costs and tax impacts.
- Participation rates in retirement accounts could vary significantly based on employment rates and general financial wellness.
- There is potential for future legislation to adjust or repeal portions of the act, which would alter projections significantly.