Have you reported on H.R. 1994, which passed the House of Representatives by an overwhelming vote of 417-3 before Memorial Day? Passage in the Senate seems practically guaranteed, given the House vote and three years of steady work by a bipartisan committee.
The “Secure” Act, as the legislation is known, would be the biggest change to retirement savings and security since 2006, when Congress allowed for automatic enrollment and target-date funds.
Recent studies continue to show that many Americans overestimate their ability to outlive their savings. In this year’s annual survey, the Employee Benefit Research Institute (EBRI) found that more Americans (82%) were confident about retirement than they were in 2018, but 58% had less than $100,000 saved for retirement. And only 10% have used a retirement calculator to estimate the income they will need in retirement, says Catherine Collinson, a leading researcher who heads the nonprofit Transamerica Institute and its Center for Retirement Studies.
If you’ve haven’t reported on this story, plan to spend some time this week looking into one or more of the Secure Act’s key measures, which aim to:
Guarantee a “pension paycheck” for life
This key feature addresses every aging American’s worst fear: outliving their money. Low-cost income annuities can help prevent that disaster, say retirement policy experts. Most (80%) 401(k) plan participants recently surveyed by EBRI said they would put some, or all, of their savings into such a choice that guarantees income for life.
But not all agree on the legislation’s current “safe-harbor” provision. The legislation would do a lot to address the issue, says J. Mark Iwry, who worked in the U.S. Treasury in the Obama and Clinton Administrations, where he was responsible for national retirement policy. The language is too broad and could allow in high-income annuities, which would wreak havoc on retirement security, counters Micah Hauptman at the Consumer Federation of America.
Talk to both for a balanced picture, then assemble a panel of readers across your news organization’s demographic and focus on what they know about low-income annuities.
Allow more small businesses to offer 401(k)s
Workplace retirement plans are the way most Americans save for retirement, but many small businesses don’t offer them because of cost. The legislation would allow unrelated businesses to participate in a multiple-employer plan, which would help them reduce costs.
The bill also offers tax credit as an incentive. Talk to a range of small businesses in your circulation area about this feature of the legislation and what they will do if H.R. 1944 passes. Aron Szapiro, director of policy research at Morningstar, is a good source to interview.
Raise the age on retirement account withdrawals
Figuring out your “RMD” (required minimum withdrawal) from a 401(K) or Individual Retirement Account (IRA) when you reach 70 1/2 is a complicated task for most Americans. The bill would raise the age for required withdrawals to 72, which would also allow the increasing numbers of those who work over 65 to keep contributing to retirement accounts. Interview IRA specialist Ed Slott.