Our daily roundup of retirement news your clients may be thinking about.
Congress is considering seven bills, which if passed, would help Americans improve their retirement prospects, according to this article on MarketWatch. One of the bills includes provisions that would enable workers to sock away emergency funds in a workplace savings program in which earnings would grow on a tax-free basis. “By giving the green light for employers to automatically enroll their workers into short-term savings accounts, this bill [the bipartisan Senate one] has the potential to spur much needed innovation, experimentation and uptake,” says an expert. Other efforts of the various bills include the following: To make it easier for small businesses to offer retirement plans; to let people contribute to traditional individual retirement accounts (IRAs) after they turn 70½ if they’re still working; to allow more workers to invest some of their 401(k) money in annuities to deliver guaranteed, steady retirement income for life; and to translate retirement savings into retirement income.

About 50% of seniors retired earlier than planned, with an average gap in actual and expected retirement ages of three years, according to this contributed article for The Wall Street Journal. To avoid this situation, clients are advised to have a realistic timetable, sock away more money than they feel they will need in retirement and make a "what if" projection, writes the expert. "Keep in mind that a retirement plan, while valuable, is only as good as its assumptions."
A study by Prudential Financial has found that 70% of Gen Xers and 51% of millennials are optimistic that they would receive their future retirement benefits from Social Security, according to this article on Motley Fool. Despite its financial woes, Social Security will be able to make benefit payouts in the future, as the payroll tax on earned income will continue to provide the needed revenue for the program. However, if lawmakers fail to act to address Social Security's financial hurdles, future retirees could see a significant reduction in their benefits.
Clients could still end up with a sizeable nest egg in retirement despite a student loan debt if they start saving early, writes a Forbes contributor. Clients who start saving early and make $18,500 in 401(k) contributions every year over a span of 20 years could retire with more than $5.3 million in savings, writes the expert. "Saving early takes full advantage of the power of compounding interest."