The past few years have shown America’s volatility in almost every asset class. That means it’s harder to be consistent in retirement investing. However, that doesn’t make it any less important. Now, more than ever, investors should be aware of trends and news that can affect their retirement saving. Here are some of the latest events in the retirement world that may change your strategy.
President Biden and Retirement Accounts
Media reports that many investors are rolling over into a Roth IRA due to fears of increasing tax rates. For the average worker, these fears are unfounded as the President has stated that he won’t raise rates on anybody earning under $400,000 per year. However, there are places where the President’s new tax plan can affect lower tax brackets as well. Find out more about these situations on Kiplingers.
Social Security Will Not Cover It
Investors are generally favorable about making contributions to their retirement accounts, as they know that Social Security will not cover their living expenses. Currently, the average Social Security check in 2021 is estimated to come in at $1,543. And that number is not expected to rise any time soon. Although Social Security payments get a bump every year via COLA (Cost of Living Adjustment), the bump is relatively small. In 2021 COLA will be just 1.3%. You can find out more about the COLA calculation here.
The IRS Wants To Keep You Financially Safe
Every year the IRS publishes its “Dirty Dozen” list which details the most pressing areas where people should stay vigilant. This year the list will focus on pandemic-related scams, personal information cons, fake charities and senior/immigrant fraud, and illegal schemes for taxpayers. You can find the full IRS list here.
State Sponsored Retirement Plans
An increasing number of states have begun offering state sponsored retirement plans. These are plans that they are mandating employers to offer their employees (if they don’t have an existing plan currently in place.) The most recent states to adopt mandatory retirement plans are Connecticut, Maryland and New Jersey. For general information about state-based plans, visit the National Conference of State Legislatures.