Earn $1,017,310 by Age 65
Lou Gehrig thought he was the luckiest man on Earth, but I think I got him beat.
I love my work so much that I plan on working until the day I die, which is why I danced a quick jig when Congress passed the SECURE Act.
SECURE stands for “Setting Every Community up for Retirement Enhancement.”
And if you’re like me and plan on staying productive during the last one-third of your life, the SECURE Act, which went into effect on Jan. 1, is going to save us tens of thousands of dollars.
The 3 Most Important Provisions Are…
No. 1 — Save More: The contribution limit for 401(k)s has increased from $19,000 to $19,500 and the catch-up contribution limit for savers aged 50 or higher will increase from $6,000 to $6,500. All totaled, you can now sock away as much as $26,000 a year into your 401(k) if you’re over 50 years of age.
If you saved $26,000 a year starting from age 50 and averaged a 10% annual return, you would accumulate $1,017,310 by age 65.
No. 2 — Postpone Distributions: This is the big one for me. Previously, individuals were required to begin taking distributions from their retirement accounts at age 70½. The amount you must withdraw each year is determined by dividing the balance of your account by your life expectancy as defined by the IRS.
The SECURE Act delays that mandatory distribution until age 72. This gives you additional time to grow your 401(k) and IRAs without being depleted by distributions and taxes.
No. 3 — Work Longer: People are living and working longer, and the SECURE Act eliminates the age cap for retirement plan contributions. As long as you are earning a paycheck, you can contribute to a 401(k) or IRA.
No Matter Your Age, You Should Take Advantage Now!
According to a study from two professors at Stanford and George Mason, delaying retirement by even one year will put more money in your pocket than saving an additional 1% over 30 years!
The SECURE Act includes several over provisions that make it easier for small businesses to offer retirement accounts. It provides tax incentives to set up automatic enrollment in retirement plans for its workers and offers lifetime income options for retirees looking for a monthly check for the rest of their lives.
If you’re in your 20s, 30s or 40s, you may not think these changes affect you. But believe me, time really does fly and you’ll be in my shoes sooner than you think.
How much have you saved for retirement?
The answer for most Americans give is “not enough,” and the new SECURE Act is a retirement gift horse that I hope you don’t overlook.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch