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The Secure Act 2.0: How To Save More Money For Retirement





Proverbs 13:11 Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. '

Finally some good news for those who are trying to save for retirement! The House of Representative just passed The Securing a Strong Retirement Act, H.R. 2954, also known as the Secure Act 2.0. This act aims to improve the retirement savings systems. Here are a few key takeaways of the proposal:

  • Required minimum distribution age will increase from 72 up to 75 by year 2032

  • If you are 62,63,or 64 your catch up provision will raise from $6,500 up to $10,000

  • Your employer can use your student loan payments as a match so you can pay down debt AND save for retirement!

This is a major victory for retirement savers of all ages, and their employers. Here are some break downs for different investors.


Student Debt Holders and Young Investors:


For years, student debt has been the wet blanket over the morale of most young investors. Unable to participate in their employers 401k match due to their prior obligations. Well, with this new proposal, you may still be able to receive that free money in the form of an employer match on your student loan payments. That means that your student loan payments will be treated as a traditional contributions into your retirement and your employer can match those funds up to their percentage thresholds.


With this potential change, employers will be able to deposit matches into a Roth 401k, which would provide potentially tax free distributions during retirement.


Pre-Retirees and Retired Investors:


The government is making it easier for you to save in your later years. Maybe you are a late saver. As it stands today, anyone age 50 or older, is entitled to a $1,000 additional catch up provision. If this passes the Senate and made into a law, then we may see an additional increase of $3,000 at ages 62,63, and 64. This change will raise the total contribution limits at those ages up to $10,000/year. Please click here to check the current contribution limits for your retirement plan.


But that's not all. Not only will you be able to contribute more, they are extending the time that you have to take it out. Currently at age 72, up from 70.5, you have to take a Required Minimum Distribution (RMD).


If they extend the ages, that means more time to allow your assets to grow without paying taxes on that money in that tax-qualified account.


Your Paycheck May Feel A Little Light:


One thing investors need to consider is that this proposal may mandate employers to automatically enroll eligible employees into their 401k program, starting a 3% and increase annually until it reaches 10%.


If you think this is an outrage. I would like you to reconsider and check out our article about the 2 Biggest Mistakes To Avoid Trying To Save For Retirement. You will be surprised the amount of people who leave that free money on the table.


Final Takeaway:


This act may have passed the House of Representative but it still needs to be passed by the Senate. Another thing to keep in mind is that there are similar bills being proposed with similar mandates. Therefore, we may see variations of these rules in the final law, if we see them at all. The thoughts are noble, and with inflation on the rise, ensuring that the American people are saving, will alleviate some pressure on government benefits in the future. Also, it will keep more money in your pocket, but you have to start planning for it.


Prayer:


Father God, may we continue to look for ways to glorify your name. May be think beyond our day to day finances and look for opportunities to secure our future. As you state in Provers, wealth increases when we gain it little, by little. And these changes will provide those little changes that will make a huge impact in our lives. It is in your name that we ask of these things. Amen.


Thank you for reading!


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About the blog:


Many Christians struggle with the seemingly conflicting views about our faith and the pursuit of financial gain. They were taught that poverty was piety and that a lack of money was the only way to truly detach themselves from the love of money. Our blog debunks some of those claims, teaches you that you can be rich and righteous, and at the same time fulfill your obligation to tithe and give to the less fortunate. We are dedicated to helping you become cheerful givers by organizing your personal finances, providing investment tips to help you create wealth, and encouraging you to create a gifting strategy that will make your family and God proud.


Meet the Author:



A.B. Ridgeway, MBA (info@abrwealthmanagement.com) is the owner and Christian Financial Advisor with A.B. Ridgeway Wealth Management. With a decade in the finance industry, his goal is to give believers clarity around the most confusing topic in the Bible, money, and tithing. A.B. Ridgeway helps tithing Christians become cheerful givers but unlocking their money-making potential, so they can prosper and be the great stewards of the wealth God has entrusted them with.


This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.



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