Following the demise of pensions for the majority of Americans, retirement planning is an activity many feel unprepared to handle. A bill circulating in Congress could ease that burden if it becomes law.
H.R. 1994, or the Setting Every Community Up for Retirement Enhancement (SECURE) Act, was introduced in the U.S. House of Representatives on March 29 and passed in a 417-3 vote on May 23. It was introduced in the Senate on June 3 and currently is under consideration.
The legislation is in response to the retirement savings crisis that’s been building for over a decade.
A 2018 study by Northwestern Mutual found that 1 in 5 Americans has no retirement savings at all, while 1 in 3 of those closest to retirement age has less than $25,000 saved, according to an Investopedia article.
Given longer life expectancies than previous generations, coupled with the rate of inflation, Investopedia recommends a minimum retirement account balance of $1 million by date of retirement.
Phil Mitchell, president at Kroon & Mitchell Integrated Tax and Investments in Grand Rapids, said existing statutes were designed for a reality that no longer exists and currently throw impediments in the paths of people looking to save.
“The old-school pensions are not there,” he said. “People need to save more, (which) is really the biggest challenge, (because) they don’t realize how much the company saved on their behalf for a pension.
“They don’t realize how much they actually need to save or how much they are undersaving. That’s why, at minimum, you want to take away some of the policy restrictions.”