U.S. employers and the federal government devote over 1.5% of GDP annually toward promoting defined contribution (DC) retirement saving. Using a new employer-employee linked dataset covering millions of Americans, we show that this system of saving incentives benefits White workers and those with richer parents more than their similar-income coworkers who are Black or Hispanic or from lower-income families. Breaking the link between contribution choices and saving subsidies—through revenue- neutral reforms—can close the gaps in DC wealth between Black and White workers, between Hispanic and White workers, and between those with the richest and those with the poorest parents by close to a third.
