Most Americans have an ongoing fear of living beyond the money they’ve saved for their retirement years. And it’s not an irrational fear. There is, in fact, an actual lack of retirement preparedness among Americans, and it’s drawn the attention of Washington policymakers in recent years. According to the World Economic Forum: by 2050, the U.S. will face a $137 trillion retirement income gap (the difference between what savers need to have and what they’ve actually saved). If these projections are correct, retirees will outlive their savings by an average of eight to 20 years.1
To help address this problem, on December 29, 2022, President Biden signed the Consolidated Appropriations Act, 2023, which is wrapped into the larger bill, Securing a Strong Retirement Act (commonly called SECURE 2.0). This revised package of laws comes on the heels of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law near the end of 2019. (It’s a mouthful, isn’t it?)
The 2019 legislation altered the rules around saving and withdrawing money from your retirement accounts. Thew new2.0 Act addresses additional issues related to retirement savings, creating new flexibility and accessibility to help individuals plan for a more secure future.
While SECURE 2.0 contains dozens of provisions, the highlights include increasing the age at which retirees must begin taking Required Minimum Distributions (RMDs) from IRA and 401(k) accounts, changes to the size of catch-up contributions, making it easier to move retirement funds from employer to employer, and much more. This informative flyer from Putnam includes a helpful summary of all the new provisions and how they might impact you.
Rest assured, we have factored all of these changes into your long-term accumulation strategy. When you’ve had a chance to review the attached information, give us a call if you still have questions. We always want to be sure you’re knowledgeable and confident about your plan.
1. “Solving the global pension problem,” World Economic Forum