5 Things the SECURE 2.0 Act changes about retirement

When it comes to setting up financial security for the future, most retirement plans need constant updating and rearranging to keep up with changing life circumstances. This is much more difficult than it looks, as the amount of financial options that exist can be overwhelming. Fortunately, the SECURE 2.0 Act, recently passed and set to go into effect in 2022, offers a handful of helpful and accessible changes to how retirement plans work and the options available to savers. Whether you’re new to retirement planning or a long-time financial researcher, here are five of the greatest changes the SECURE 2.0 Act makes to retirement plans.

Table of Contents

• 1. Are You Ready for Retirement 2.0?
• 2. How the SECURE 2.0 Act Upgrades Retirement Savings
• 3. Exploring the Five Ways the SECURE 2.0 Act Affects Retirement Planning
• 4. Taking Charge of Your Future with the SECURE 2.0 Act
• Q&A

1. Are You Ready for Retirement 2.0?

Retirement 2.0 is a term coined by financial and retirement experts to refer to the latest version of how to plan for the later years. Today, retirement looks much different than it did for prior generations and with the right planning, you can make the most of this unique stage of life.

• Analyze your budget and determine how much income and cash flow you need to sustain a comfortable retirement lifestyle.
• Evaluate your investments and create appropriate asset allocation models for retirement.
• Research retirement vehicles such as 401(k)s, IRAs and CDs and identify which one is right for you.
• Decide whether you want to continue living in your current home or downsize and/or relocate.
• Gather information on healthcare options and determine which plan offers the most comprehensive coverage at the best price.

Retirement 2.0 also involves getting creative to make the most of this unique time of life. Consider taking a part-time job in the field of a dream career, look into volunteer opportunities and take a look at the possibilities for travel and leisure. Join an organization or start a business. Take a class or learn a new skill.

Everyone’s retirement looks different, but with adequate planning and research, you’ll be ready to make the most of Retirement 2.0.

2. How the SECURE 2.0 Act Upgrades Retirement Savings

The SECURE 2.0 Act is a big step in helping individuals save for retirement — a critical component of financial independence. With this recent legislation, retirement savers will enjoy a variety of new benefits:

• Greater Access to Retirement Savings Accounts: The SECURE 2.0 Act expands the list of entities that can create workplace savings plans, making it easier for employers to create and maintain these accounts. It also allows for more workers to contribute to their retirement savings.
• Tax Incentives: To further incentivize saving for retirement, the act doubles the amount of catch-up contributions workers 50 and older may make to their employer-sponsored retirement plans or IRAs. It also increases the maximum available tax credit for retirement savers.

In addition, the SECURE 2.0 Act introduces new mandatory features for retirement savings plans. It requires employers to enroll their eligible employees in a retirement savings plan automatically, gives employees the right to set their own investments, and allows workers to keep their plans if they change jobs. All of these features will help retirement savers get the most from their savings.

3. Exploring the Five Ways the SECURE 2.0 Act Affects Retirement Planning

The SECURE 2.0 Act has made a lasting mark on retirement planning, introducing new and innovative benefits, options, and contributions. Here are five ways SECURE 2.0 has changed retirement planning:

• Tax Credits: The SECURE 2.0 Act encourages individuals to save for retirement by offering a tax credit of up to $500 for joint filers, or $250 for individual filers.
• Penalty-free Withdrawals: Under the new Act, you can withdraw up to $5,000 from your retirement account penalty-free when used for expenses related to the birth or adoption of a child. This applies to those who are younger than 59 and a half.
• Annuity Portability: Retiring employees can now move their annuities from 1 employer-sponsored plan to another with no withholding taxes, which is particularly beneficial to those who change jobs during retirement.
• Long-Term Care: To further incentivize long-term care savings, the Act increases the contribution limit for long-term care premiums to $15,000 per year, or $20,000 if the individual is over age 400
• Automatic Enrollment: Employers can now automatically enroll employees in an employer-sponsored retirement plan, unless the employee explicitly opts out.

From tax credits to automatic enrollment, the SECURE 2.0 Act has greatly impacted retirement planning and made it easier for individuals to plan for their long-term savings goals. Whether you’re just starting to save for retirement or need to make adjustments to your existing plans, it’s important to understand how the changes to retirement planning included in the SECURE 2.0 Act can benefit you.

4. Taking Charge of Your Future with the SECURE 2.0 Act

Your future is your responsibility, and you have the power to take control and shape it. The SECURE 2.0 Act provides you with the tools to make this possible. It includes the following key features:

• Boosts Retirement Savings: It lets you increase your retirement savings with catch-up contributions. If you’re over the age of 50, you can make catch-up contributions of up to $6,500 to a 401(k) plan or up to $3,500 to an IRA.
• Increases Automation & Portability: The Act strengthens the ability of individuals to save for retirement by enabling providers to automatically enroll workers into 401(k) plans. It also makes it easier for employees to transfer their savings to different job opportunities by creating a national framework for regulating portability.
• Empowers Long-Term Investing: The Act encourages individuals to invest for the long-term by providing greater access to annuities and other savings options. It also reduces the risks associated with retirement investing by increasing consumer protections through better regulation.

The SECURE 2.0 Act is a major step forward for personal financial freedom and security. Taking advantage of its features allows you to create and preserve a solid financial future for yourself.

Q&A

Q: What is the SECURE 2.0 Act?
A: The SECURE 2.0 Act, or Setting Every Community Up for Retirement Enhancement, is a new bill in the United States Senate that puts modernized retirement savings options into place. The goal is to make it easier for people to save for retirement and have more options for their retirement accounts.

Q: How will this act help retirement savers?
A: The SECURE 2.0 Act will make it easier for retirement savers in several ways. Some of the key updates include raising the tax credit for retirement contributions, allowing long-term part-time workers to participate in 401ks, and expanding savings option choices, like annuities.

Q: What age group will benefit most from the SECURE 2.0 Act?
A: Everyone will benefit from the SECURE 2.0 Act, however young individuals and families who are just starting to save for retirement are likely to benefit the most. The 401k eligibility for part-time workers may give them a chance to start saving earlier in life than they might have otherwise.

Q: How soon will the SECURE 2.0 Act take effect?
A: The SECURE 2.0 Act is currently still working its way through Congress and has not yet been passed. If it does pass, it is estimated that the majority of provisions will be in effect as early as 2021.

Q: What other initiatives support retirement savings?
A: The SECURE 2.0 Act is not the only initiative supporting retirement savings. In the United States, the federal government’s Thrift Savings Plan and the myRA program are two initiatives built to help Americans save for retirement more easily. Additionally, many state and local governments have retirement plans that workers can access to get started with their retirement savings.

When it comes to preparing for retirement, the SECURE 2.0 Act has something to offer for everyone. Whether you’re dreaming of a secure and enjoyable retirement, confronting financial obstacles, or looking for additional tax breaks, you can rest assured knowing that the SECURE 2.0 Act has strong protections and solutions for you. With tangible benefits, it’s no wonder why the Act is so popular – this is just the start of many important changes for retirement planning.