With approximately 10,000 Baby Boomers turning age 65 every day, the retirement landscape is broadening. Yet, with low savings rates and longer life expectancy, the concern about running out of money in retirement continues to be top of mind for many retirees, as well as those who are saving for that time in their lives.
How the SECURE Act Continues to Change Retirement
With a goal of preventing older Americans from outliving their savings, the Setting Every Community Up for Retirement Enhancement Act of 2019 – also commonly known as the SECURE Act – made significant provisions aimed at increasing access to tax-advantaged retirement accounts.
In addition, this legislation:
- Pushed back the age for required minimum distributions from 70 ½ to 72
- Allowed owners of traditional IRA accounts to continue making contributions indefinitely
- Mandated non-spouse beneficiaries of IRA accounts to complete distributions within 10 years
- Allowed annuities in 401(k) plans
Should the SECURE Act 2.0 pass, additional retirement-related provisions would be made, including:
- Automatic enrollment with an employee pre-tax contribution of 3% in 401(k), 403(b), and SIMPLE IRA plans that are established after 2021
- Increase in required minimum distribution age to age 73 in 2022, 74 in 2029, and 75 in year 2032
- Additional amount of “catch-up” contributions for those who are age 50 and older
- More favorable provisions for part-time employees in employer-sponsored 401(k) plans
- Retirement plan contributions that are tied to student loan repayments
- Creation of a national database for tracking retirement plan accounts of missing participants
- Allowance of after-tax (Roth) contributions for SIMPLE IRA and SEP IRA plans
With the retirement, financial, and economic landscape continuing to change over time, it is likely that even more updates, changes, and additions will be implemented again in the future.
While the provisions of the original and the proposed updated SECURE Acts make it easier for investors and retirees to count on assets and income for the long term, there could still be “gaps” in your future income.
If this is the case, an annuity could be the answer. These financial vehicles are designed for paying out income either for a preset period of time, or even for the remainder of your lifetime – no matter how long that may be.
Does an Annuity Fit in with Your Retirement Plans?
While annuities can provide you with an income stream that you cannot outlive, there are many different types of annuities, and they can come with a myriad of “fine print.” So, it is recommended that you discuss your short- and long-term objectives with an annuity specialist before you commit to purchasing one.
If you’d like to learn more, contact us here at Annuity Gator. Our mission is to educate consumers (and financial advisors) about how annuities work, and whether or not they may be right given particular goals.
You can reach us for a no-cost, no-obligation consultation by calling (888) 440-2460 or by sending us an email to our secure online contact form. We look forward to helping you create your ideal retirement.