Senior Speak

by Margaret Waage

When President Biden signed into law the ‘Setting Every Community Up for Retirement Enhancement’ (SECURE 2.0 Act) December 29,2022, aspects of the law changed and it’s advantageous to know more about it and how it affects you.

The initial SECURE Act of December 2019 sought to make it easier for small businesses to set up retirement plans for their workforce. A contributing catalyst for the legislation was to address a looming retirement crisis in the U.S.

A 2021 Bureau of Labor Statistics report showed high levels of job movement for the “typical person born between 1957 and 1964.” This amounts to 57 million Americans that do not have the option to save for retirement at work, according to the AARP Public Policy Institute.

Numerous gaps in employment also means gaps in employer-sponsored retirement savings plans. Additionally, when people move from job to job, the chance of cashing out a portion of savings increases, resulting in a lost opportunity for the money to earn compounded gains. Additionally, a 10% tax penalty is applied, and the nest egg gets reduced even more.

With underfunded or no retirement accounts this large contingent of Americans that includes freelancers and gig economy workers, makes the prospects of being able to retire unreachable.

Here are highlights of the recent updates:

• Increasing the age for the start date of required minimum distributions to age 73 (previously 72) in 2023, age 74 in 2029, and 75 in 2033, giving money       more time to grow.

• Currently if you are 50 or older you can make catch-up contributions to your retirement plan up to certain limits. With Secure 2.0, 2022 the limits are           increased beginning in 2025 to $10,000 or 50 percent more than the regular amounts, which is a higher catch-up limit at four ages: 60,61,62 and 63.               After 2025, those amounts will be indexed for inflation.
• Expanding the automatic enrollment period in retirement plans. According to Fidelity, “The legislation requires businesses adopting new 401(k) and             403(b) plans to automatically enroll eligible employees, starting at a contribution rate of at least 3%, starting in 2025. It also permits retirement plan             service providers to offer plan sponsors automatic portability services, transferring an employee's low balance retirement accounts to a new plan when           they change jobs. This change could be especially useful for lower-balance savers who typically cash out their retirement plans when they leave jobs,           rather than continue saving in another eligible retirement plan. The legislation requires businesses adopting new 401(k) and 403(b) plans to                           automatically enroll eligible employees, starting at a contribution rate of at least 3%, starting in 2025. It also permits retirement plan service providers to       offer plan sponsors automatic portability services, transferring an employee's low balance retirement accounts to a new plan when they change jobs. The       change could be especially useful for lower-balance savers who typically cash out their retirement plans when they leave jobs, rather than continue               saving in another eligible retirement plan.”
• Elimination of the additional tax on corrective distributions of excess contributions. Corrective distributions happen when a company must return a               portion of the contributions made by "highly-compensated employees" (HCEs). Highly compensated employees are those who own 5% or more of the        company or will have earned more than $125,000 in 2019.

Schwab lists these additional provisions:

• Employers will also have the option to allow employees to create "rainy-day funds" in their retirement plan. Individuals would then be able withdraw up       to $1,000 from the plan penalty- and tax-free for emergencies. The provision addresses a concern that spiked during the pandemic, when employers saw       a big increase in the number of employees who were tapping their retirement accounts to cover unexpected expenses.
• Beginning in 2024, employers have the option to match student loan payments with a contribution to the employee's retirement plan account. The goal         is to help workers who are burdened by student loans and can't afford to contribute to their retirement plan by ensuring that they are accumulating some       retirement savings even as they pay down their loan.
• Victims of domestic abuse can withdraw up to $10,000 penalty-free from their retirement plan account.
• Individuals can withdraw up to $22,000 from an employer-sponsored plan or an IRA for federally declared disasters.

• Individuals can roll up to $35,000 from a 529 to a Roth IRA in the name of the student beneficiary. The 529 account must have been in existence for at

• Long-term part-time workers will become eligible for their company's retirement plan after two consecutive years with at least 500 hours of service.             Current law requires three years of service.
• The creation of a "retirement savings lost and found" national database that would help individuals find their benefits if they changed jobs, or if the               company they worked for moved, changed its name, or merged with a different company.

Working with a fiduciary, or financial advisor is a good strategy for savings and wealth building. For those nearing retirement, it’s recommended you meet with your financial advisor to go over the best course of action to take for your situation for tax purposes.

At Senior Speak Life Stories, nine seniors shared their ‘senior’ stories and retirement living strategies. If you are interested in participating or contributing, contact me today!

Guest blog post by Claire Wentz

While it’s usually an emotionally and often physically challenging process, downsizing can be a refreshing change of pace. Not only does it simplify your life, but can help you thrive, live safely and comfortably through every stage of your life.

Although the COVID-19 pandemic and its aftermath have upended the lives of millions of Americans and changed how the real estate and moving industries operate, you can still downsize right now. Below, you will find advice on how to navigate the process of downsizing in these challenging times.

Selling Your Home - If you need to sell your home before you make any other moves in your downsizing process, you can. While things have changed due to the pandemic, people are still buying homes. Of course, much of the process looks different right now. In some cases, home tours, inspections, appraisals, and closings are being done virtually/electronically. However, some aspects of the process remain the same. You will still need to take steps toward boosting the appeal of your home and make necessary repairs.

Decluttering Your Belongings - Better Homes & Garden notes decluttering your belongings is a good first step when you downsize. Go through each room in your home and put each item into one of three piles: keep, toss, or store. Allow yourself to reminisce about sentimental items; you can even make an event out of it by inviting family members over to reminisce and help you declutter. As you’re sorting through your belongings, determine what to do with the items you won’t be able to take with you to the new home. Options to consider include selling, donating, recycling, and/or putting items in a storage unit. Even with the COVID-19 pandemic happening, people across the country are still downsizing. Be sure to hire a good real estate agent to help you through the processes of selling and buying a home, and consider working with a professional moving company. Finally, take your time while decluttering, and determine what to do with the items you can’t take with you.

Buying the Right Home - As with selling a home, buying a home looks a bit different since the pandemic. You can view properties via 3D walkthroughs, virtual open houses, and video-chat tours, all of which can prove invaluable when you’re trying to find the perfect home while self-isolating. It’s still important to have a trusted agent working by your side as you look for your new home. Your agent should be able to point you in the right direction in an online home search, and they should know what to look for when it comes to your everyday needs. If you’re an older buyer and this next home is where you want to age in place, you will need to make sure it fits your current and future needs. Seniors Matters suggests looking for a home with an age-appropriate layout, and if there are parts about the home that are not accessible, make sure that modifications can be made.

Before looking at homes, you’ll want to make sure you know how much you can spend, so include the cost of modifications in your home-buying budget. It’s typically best to get preapproved for a mortgage so you can move quickly if you find the ideal home and so sellers know you’re a serious buyer. To learn more about the different types of loans available and what you may qualify for, visit the websites of a few different mortgage lenders to find out which provider works best for you.

If you’re unsure of which neighborhood you want to reside in, consider renting a vacation home for a week or so to see if the area measures up to your needs and the activities you enjoy. This is a good practice to let you figure out if the prospective neighborhood is right for you.

Hiring Professional Movers - Although restrictions are being lifted, many moving companies are still taking strict precautions in how they work, such as limiting the number of team members on each project, wearing gloves and masks, and disinfecting their equipment. Hiring professional movers can make your entire downsizing process go much more smoothly. Your total cost will depend on several factors, such as how far you’re moving, how many belongings you’re taking, and how quickly you need your belongings delivered.

At Senior Speak Life Stories, nine seniors shared their ‘senior’ stories and retirement living strategies. If you are interested in participating, contact us today!