You may see a new figure on your 401(k) statement in the near future. In December of last year, President Trump signed the SECURE Act, which stands for Setting Up Every Community for Retirement Enhancement. The bill’s goal was to make it easier for Americans to save for retirement.
One of the provisions in the bill changes the way 401(k) administrators report account balances to participants. At some point soon, your statement will not only include your account’s balance, investment performance, and other traditional information, but it will also include a projection of your future monthly income.
The change is designed to give you another perspective into your progress toward retirement. It’s often difficult to estimate your readiness by looking at a lump sum amount. However, if that lump sum is translated into monthly income, you may get a better idea of whether you’re on track to meet your goals.
If you aren’t on track, the good news is you can take action. Below are two steps you can take to enhance your retirement income:
Increase your contributions.
In 2020, you can contribute up to $19,500 to your 401(k). If you are age 50 or older, you can contribute an additional $6,500, bringing your total potential contribution to $26,000.1
Of course, you may not be able to contribute that much this year. Even a modest increase can have an impact on your savings and your future retirement income. One strategy is to gradually increase your contributions over time. Start by increasing your contribution by 1% each year. Eventually, you’ll be contributing the maximum amount.
Guarantee your income.
Another strategy you could implement is to strategize with products that provide guaranteed income in retirement. The SECURE Act makes it easier for 401(k) plans to offer annuities as a strategy option. These vehicles often provide guarantees on retirement income.
For example, you may be guaranteed to withdraw a certain amount of income for life, regardless of how the markets perform or how long you live. That could help you minimize risk and protect your cash flow in retirement.
Ready to boost your retirement income? Let’s talk about it. Contact us today at Florida Retirement Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
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Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term, tax-deferred vehicles designed for retirement and contain some limitations.
Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.