You may see a new figure on your 401(k) statement in the near future. In December of last year, President Trump signed the SECURE Act, which stands for Setting Up Every Community for Retirement Enhancement. The bill’s goal was to make it easier for Americans to save for retirement.
One of the provisions in the bill changes the way 401(k) administrators report account balances to participants. At some point soon, your statement will not only include your account’s balance, investment performance, and other traditional information, but it will also include a projection of your future monthly income.
The change is designed to give you another perspective into your progress toward retirement. It’s often difficult to estimate your readiness by looking at a lump sum amount. However, if that lump sum is translated into monthly income, you may get a better idea of whether you’re on track to meet your goals.
If you aren’t on track, the good news is you can take action. Below are two steps you can take to enhance your retirement income:
Increase your contributions.
In 2020, you can contribute up to $19,500 to your 401(k). If you are age 50 or older, you can contribute an additional $6,500, bringing your total potential contribution to $26,000.1
Of course, you may not be able to contribute that much this year. Even a modest increase can have an impact on your savings and your future retirement income. One strategy is to gradually increase your contributions over time. Start by increasing your contribution by 1% each year. Eventually, you’ll be contributing the maximum amount.
Guarantee your income.
Another strategy you could implement is to guarantee your future income. There are several different tools available that can provide you with an income stream that is guaranteed for life, regardless of how long you live or how the market performs in the future.
One of the ways to do this is by rolling your 401(k) balance into an IRA after you leave your employer. IRAs often have a broader menu of investment options than a 401(k). Inside an IRA, you may be able to utilize annuities and other vehicles that provide guaranteed retirement income. A financial professional can help you roll your old 401(k) balances into an IRA and implement the right strategy for your needs and goals.
Ready to boost your retirement income? Let’s talk about it. Contact us today at First Fidelity Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20021 - 2020/4/22
Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term, tax-deferred vehicles designed for retirement and contain some limitations.
Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.
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