Opinion: How Your Retirement Savings Can Benefit from Recent Market Changes and New Legislation
Many people generally understand that most Americans don’t have enough saved for retirement, but the actual data can still shock the conscience. Nearly half of Baby Boomers have no retirement savings to speak of and a whopping 94% plan on Social Security being their only source of income in retirement.
At the close of 2019, Congress acted to address the needs of a workforce that is underprepared for retirement without relinquishing too much tax revenue. Behold, the SECURE (Setting Every Community Up for Retirement) Act: a revenue-neutral, good-but-not-great piece of legislation that takes aim at significant retirement savings issues but ultimately results in minor tweaks around the edges of the problem. The recent stock market sell-off and subsequent legislation like the CARES (Coronavirus Aid, Relief and Economic Security) Act have also enabled savers, investors and retirees to take advantage of specific strategies as well.
Though these pieces of legislation may not offer the ultimate solutions for retirement savings, they do have several perks and a few drawbacks that will impact financial strategies going forward.
The main benefits of the SECURE Act include delaying Required Minimum Distributions (RMD) to age 72, which will enable Americans to keep money in pre-tax accounts longer for continued growth; opening the door for older people to continue contributing money into a retirement account if they are still working; enabling smaller companies to collaborate on more deluxe 401(k) plans; and allowing young borrowers to use investable funds in a college savings account to pay down student loans. Through the CARES Act, Congress allowed retirees to postpone their RMDs for this year, though it may be advantageous to take funds out of a taxable account while account values are lower...
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