Financial Planning Newsletter February 2020
February 27, 2020
It is no secret that most Americans are unprepared for retirement. Most retirees cannot maintain their standard of living on just their Social Security benefits alone. Americans know that they will have to supplement these benefits, most often with an employee sponsored retirement plan like a 401(k). Unfortunately, data from the Bureau of Labor Statistics shows that only 55 percent of the adult population participate in such plans. Even more worrying is that those who do have retirement accounts are not funding them sufficiently. The financial services firm Vanguard found that in 2019, the average 401(k) balance for those 65 or older was just $58,035.
In an effort to address this retirement crisis, congress passed the Setting Every Community Up for Retirement Enhancement—or SECURE—Act late last year. The bill aims to increase access to retirement accounts and ensure that older Americans’ retirement savings will go farther. As the name implies, the act has implications for “every community,” from new workers just entering the workforce to those nearing retirement. The plan impacts not just how workers prepare for their own retirement, but how they care for their families as well, whether they are new parents or older Americans setting up an estate plan. Given the far-reaching nature of the law, it is important that you meet with an advisor to ensure that you are taking advantage of the new opportunities the law affords and that any existing plans conform to the new standards. Here are a few of the key elements of the new law.