3 Trends That Could Change Your Retirement Plans in 2020
According to Market Watch, the Secure Act went into effect on Jan. 1, 2020. This will change retirees’ approaches to saving for retirement, in addition to the way that they contribute, spend or give away their assets. This is in addition to recent changes in health savings strategies and income earning strategies.
Currently, not all people view retirement as a top priority. Other expenses, such as student loans and childcare costs dominate household finances. Furthermore, many have not enrolled in their workplace retirement plans. The US savings gap alone is expected to be $137 trillion. The savings gap is the difference between what people have saved versus what they should have saved. As you can see, this is not a pretty picture. Here is what financial advisers predict will happen this year with regard to Americans’ retirement savings:
1. More love for Roth accounts
The passing of the Secure Act may result in an increase of Roth accounts. Under the Secure Act, non-spousal inheritors will need to withdraw all of an inherited account’s assets within 10 years, which could create higher tax consequences in a shorter time frame. Roth accounts are funded with after-tax dollars, and are therefore withdrawn tax-free.
2. Using a Health Savings Account for the long haul
Health Savings Accounts are tax-advantageous accounts that allow workers to save, invest and withdraw their money tax-free, if used for qualified medical expenses. They’re also a beneficial tool for retirement savings, and many predict that more Americans will use them as such.
3. Less of a traditional retirement
The days of people working until they’re 65 and then moving to a sunny state are long gone for many Americans, who will likely work well into their late 60s and early 70s, if even just part time, some advisers predict.. Many people have not saved enough for a full retirement at this point, and understand Social Security alone will not provide enough income to maintain their desired lifestyle.
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