海角大神

Twenty years ago, I turned 25 and earned my first raise. My older sister gave me some great advice: 鈥淲hen you get a raise always put some extra money into savings. Make it a habit. You鈥檒l never miss it.鈥� I turned into a saver, thanks to my sister.

Yet, the average 45-year-old woman is not saving nearly enough for retirement. According to a聽, if she maintains her saving pattern and wants to retire in 20 years with 70 percent of her current income, she could be short by about $268,000.

In part it鈥檚 because she鈥檚 likely to spend time out of the paid workforce caring for others. And she鈥檚 living longer. A聽聽by the financial services firm Vanguard shows that women tend to save at higher rates than men, and are more likely to participate in their employer鈥檚 tax-advantaged 401(k) plan, but they save less.

Could tax subsidies increase the amount women save? Does a tax-advantaged account, such as a 403(b), 401(k), or IRA, make much difference?

We don鈥檛 have great data on savings behavior in the US. But in 2013, Harvard鈥檚 Raj Chetty and John Friedman, together with Danish researchers S酶ren Leth-Petersen, Tore Olsen, and Torben Heien, studied 41 million observations on savings for the population of Denmark. They found that聽. In 2009, my Tax Policy Center colleague Eric Toder聽, though without the benefit of Chetty鈥檚 data.

Chetty and his colleagues identified two kinds of savers. About 15 percent of Danes, generally high-income people, are active savers who often take advantage of tax incentives by shifting funds from taxable to tax-free accounts, but don鈥檛 add to total savings. By contrast, 85 percent of Danes were passive savers who paid little attention to tax subsidies. But when required to contribute to a retirement plan, they鈥檇 cut their spending to do so. Of course, Danes are not Americans, and Denmark and the US don鈥檛 have identical tax laws.

I wondered what motivates American women to save so, with the help of Facebook, I asked 272 women friends, 鈥淒o you consider the tax consequences of saving for retirement?鈥� Amazingly, 39 responded鈥攔anging in age from their thirties to sixties, some married, some single, some with children, some without.

One woman answered, 鈥淪ort of. But in all honesty I don鈥檛 think of my retirement savings as real money. Otherwise, I鈥檒l spend it at Crate & Barrel.鈥� She sounded just like one of Professor Chetty鈥檚 passively saving Danes.

Nineteen women said that they do in fact consider the tax consequences of saving. One said her accountant encourages her to put more money each year into her tax-advantaged retirement account. But another said of tax incentives: 鈥淲e鈥檇 save for retirement without them.鈥�

Overall, nineteen women said they do not consider the tax consequences of saving. A few said they don鈥檛 make enough to save a sufficient amount for retirement, let alone consider its tax consequences. Another automatically contributes to her pension but not because of a tax incentive鈥攍ike another passively saving Dane?

Another said, 鈥淚 contribute a lot to my 401(k)鈥� but no, I don't really think about the taxes. I just fear a) not being able to retire (who knows what will happen in 30 years) and b) dying before I get to enjoy retirement.鈥�

And one friend quipped, 鈥淢y retirement plan is to die young.鈥� Bad idea.

My profoundly unscientific poll reaches no obvious conclusion about my female friends鈥� savings behavior: Half think about taxes when they save, half don鈥檛. And I don鈥檛 know whether my male friends think about the tax consequences of saving for retirement鈥� but now I鈥檓 curious.

Whether for men or women, tax subsidies for retirement savings in the US are inefficient. 海角大神 Weller and聽聽for the Center for American Progress and The New School聽聽are complex and disproportionately benefit higher-income earners or those with employer-based plans versus IRAs. Worse, they do little for those who need solid retirement savings the most: Lower-income households, communities of color,聽and single women.

These retirement savings tax breaks aren鈥檛 cheap. The聽聽that excluding net pension contributions and their earnings will be the second-largest tax expenditure in the federal individual income tax code over the next decade, reaching $1.9 trillion between 2014 and 2023.

So what鈥檚 this 45-year-old woman to think? TPC鈥檚 Bill Gale and AARP鈥檚聽 David C. John have suggested a series of policy changes that聽聽for low- and moderate-income households. That includes聽, which could help African Americans, Latinos, and women.

But from what I can tell, the surest way to increase a woman鈥檚 savings is to give her a nice raise鈥� and introduce her to my sister.

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