Even if you’ve covered all of the retirement planning bases – such as income generation, taxes, and inflation – there are still items to consider that could impact your future financial security. One of these is new legislation.
For instance, the SECURE Act (Setting Every Community Up for Retirement Enhancement) of 2019 enhanced various rules around retirement saving, such as eliminating the age limit on traditional IRA contributions and raising the required minimum distribution (RMD) age. Now Congress is considering the SECURE Act 2.0.
This could also prompt changes in RMDs, as well as penalties for not taking such withdrawals. Other SECURE Act 2.0 provisions center around early withdrawals from retirement plans and “catch-up” contributions. With that in mind, you may wonder if the SECURE Act 2.0 could help or hinder your retirement.
What are the Provisions of the SECURE Act 2.0?
When passed in 2019, the initial SECURE Act did a number of things in an attempt to help Americans retire more comfortably. These included:
- Allowing certain part-time employees to participate in employer-sponsored retirement plans.
- Pushing back the age for traditional IRA and retirement plans required minimum distributions from 70 ½ to 72.
- Giving the thumbs up for 401(k) plans to offer annuities (which in turn could help retirees from outliving their income while it is still needed).
As a companion bill, the SECURE Act 2.0 – also referred to as the Securing a Strong Retirement Act – expands upon the original act by:
- Increasing the annual “catch up” contribution amounts in employer-sponsored retirement plans to $10,000 for participants who are age 62 through 64.
- Pushing the required minimum distribution age back even further, to 73 in 2022, to 74 in the year 2030, and to age 75 in 2033.
- Exempting investors/retirees who have less than $100,000 in retirement savings from having to make required minimum distributions at all.
- Allowing employers to offer matching retirement contributions to employees who are paying off their student loans.
- Providing a searchable national “lost and found” registry for missing retirement funds.
Yet, while there appears to be some enticing items in this new proposed act, for those who are already retired, it may not necessarily be of much help.
How Can You Generate a Long-Lasting Income in the Future?
With longer life expectancy today, it is important to ensure that you not only generate income in retirement, but that this cash flow will continue for as long as you need it. But a volatile stock market and low-interest rate environment can make it difficult to keep your money safe while at the same time accessing enough funds to live on.
One potential solution is an annuity. These financial vehicles can provide a reliable stream of income for either a pre-selected period of time, or even for the remainder of your lifetime… and funds that you have in an IRA (Individual Retirement Account) and/or employer-sponsored retirement plan can be used to fund an annuity.
But even though a stream of lifetime income from an annuity can help to alleviate the fear of running out of cash flow, it is essential to keep in mind that not all annuities are exactly the same. That is why it is recommended that you work with an annuity specialist before you make a commitment to one.
At Annuity Gator, we focus on educating individuals, families, and financial professionals on how annuities work, and where they may – or may not – fit within an overall retirement plan. So, if you would like to discuss your short- and long-term objectives with an Annuity Gator retirement income specialist, feel free to contact us directly by calling (888) 440-2468 or via email through our secure online contact form. We look forward to helping you create a more secure financial future for yourself and those you love.