(WHTM) — With Americans living longer and inflation running high, many Americans don’t have the luxury of worrying about their retirement savings.
A new law passed at the end of last year has some important changes that could help improve the financial outlook for retirees.
The giant federal spending bill that President Biden signed into law back in December includes major changes that will make it easier for Americans to build a stronger retirement account.
“I think this is good news for so many individuals who are looking for different ways to save for retirement,” said Kemberley Washington, tax analyst at Forbes.
The SECURE 2.0 Act raises the age when holders of retirement accounts have to start taking money out of those accounts.
In January, the age rose from 72 to 73 and it will rise again to 75 in 2033.
“That gives your money a longer time to grow without the need to pull that money out,” said Washington.
Stay up to date on the latest from abc27 News on-air and on the go with the free abc27 Mobile app.
Next year, another new part of the law will allow employers to contribute money into the retirement accounts of employees who are making student loan payments.
“I think this is a big deal because some individuals who save or want to save for retirement may only be able to do it on a limited basis or not at all because they’re paying student loans,” said Washington.
In 2025, most private companies with 401k or 403b retirement plans will be required to automatically enroll new employees in those plans.
For workers who need help building an emergency fund, the new law may help with that too.
“If you’re someone who’s hoping, ‘Okay, I need a better way to save for emergencies,’ this could be the answer. So, what would happen going forward is that for an employer’s plan, such as a 401k, you’ll be able to set aside some money for emergency funds. The employer will also be able to match some of those funds,” said Washington.
The SECURE 2.0 Act will also make it easier for part-time workers to contribute to their employer’s retirement plan.