HOW RECENT POLICY CHANGES COULD IMPACT YOUR RETIREMENT PLANNING

If 2020 was a slog, 2021 has been a whirlwind.

With the turn of the decade came the transition of leadership to the Biden administration, ushering in a new era of retirement policy changes. As we approach the end of the President’s first year in office, changes abound. This is especially true when it comes to federal tax codes and retirement policies where there have been important pivots, changes and reversals, many with tax implications.

Understanding the changes on deductibility rules, taxable income, benefit plans, and simply put – your retirement future – is a must on any successful planner’s to-do list. When you factor in COVID-19’s impact on the finances of Americans of all ages, comprehending the policy pivots takes on fresh urgency with regards to financial decision making.

The Setting Every Community Up for Retirement Enhancement Act, commonly known as the SECURE Act, took effect in 2020, but some provisions won’t be in place for another year or more.

The act includes reforms that could make saving for retirement easier and more accessible for many Americans. Key provisions of the SECURE Act that help improve access and options with regards to lifetime income, including:

  • Expanding portability, increasing retirement plan options that protect against longevity risk, and requiring lifetime income disclosure.
  • Creating a new statutory safe harbor that brings clarity to how a plan sponsor can satisfy their fiduciary duties when selecting an annuity provider.

After the passage of the SECURE Act, an expansion of that legislation – SECURE 2.0 – has been proposed to further strengthen the original bill. Amongst a number of things, younger workers will want to know the ins-and-outs as it could help them start saving earlier, by making employer matches available to those paying off student loans while also granting older Americans more time to save, due to raised catch-up contribution limits and delayed required minimum distributions. And would give workers easier and better access to lifetime income from annuities.

What can you do to navigate current and future potential changes?

Speak with a financial professional. Trusted financial professionals are up to date on policy changes and will be able to give advice based on your financial situation. It’s best to work with someone who understands the nuances of the many choices available and can work with you to achieve your retirement goals. They can direct you towards the policy changes you should be taking advantage of and those you need to navigate through.

Utilize Resources on ProtectedIncome.org. The Alliance for Lifetime Income provides financial planning tools and resources to help you determine if your retirement savings are on track as well as suggestions on finding a financial professional that’s right for you.

For more guidance and information on how upcoming policy changes may impact your planning for retirement, watch our Your Money Map conversation with Lead financial planning Nerd at Kitces.com, Jeffery Levine and Jean Chatzky on the Alliance for Lifetime Income Facebook page.

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