How Biden’s new bill could help you save more for retirement

FeaturedMoneyRetirement

Written by:

 

The last lingering sense of bipartisanship was on display last week in Congress. In a nearly unanimous vote, the House of Representatives passed a bill that could help Americans save more money before they retire. On the other hand, Biden proposed a student loan bill that could see criticism from both sides of the aisle.

 

Biden’s federal budget proposal requests billions of dollars for education. While a large chunk of that would go towards K-12 schools, Biden hopes to use a portion of that to expand student loan resources.

______________________

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.

______________________

 

 

 

 

His proposal didn’t mention the student loan forgiveness he promised during his campaign, nor did it mention extending the May 1 pause on student loan payments. It did, however, suggest improvements for Income-Driven Repayment and Public Service Loan Forgiveness programs and increased customer support resources.

 

Unlike Biden’s budget proposal, the Secure Act 2.0 is already making significant progress. Approved by the House of Representatives, it will be going to the Senate next. Writers at the Washington Post believe that the Senate might tweak the bill, but it could still be made into law this year.

 

The bill would expand 401(k) benefits for part-time employees, let Americans save for longer by raising the minimum distribution age, and more.

 

Both pieces of legislation have the potential to help a lot of people, but like anything in life, neither is totally perfect.

Securing your taxes, not your savings

What’s supposed to help Americans save might just raise their tax bills.

 

The retirement bill will be changing the minimum withdrawal age for retirement accounts. Currently, people over the age of 72 are required to start withdrawing money from their retirement savings. The Secure Act 2.0 would gradually move the minimum to 75 over the next decade.

 

This gives people more time to work and save money before they have to start making withdrawals. And initially, Brookings Institution fellow Mark Iwry told the Wall Street Journal, “It feels like a tax cut.” Iwry also used to oversee national retirement policies while at the U.S. Treasury Department.

 

Having more time to save up is important, but once someone is required to make their withdrawals, pulling out larger sums of money in a shorter amount of time can mean higher taxes.

 

According to the Wall Street Journal, IRA specialist Ed Slott said that the increased minimum age for withdrawals “sounds better than it is.” Really, the age increase helps financial service organizations make more money since accounts with higher balances tend to pay more in fees.

 

The bill was written with another sad truth in mind: it’s harder for Americans to retire.

 

Rep. Kevin Brady, a co-sponsor of the bill said that with “Americans working longer, we want them to keep saving longer.”

 

The Secure Act 2.0 will do more than just raise the minimum age. If passed, it would:

  • Allow ages 50+ to contribute an extra $6,500 per year to a 401(k)
  • Allow ages 62-64 to contribute an extra $10,000 per year to a 401(k)
  • Make part-time employees eligible for 401(k)s after two years instead of three
  • Require businesses to automatically enroll employees in new 401(k) or 403(b) plans
  • Allow retirement plan sponsors to offer cash or other incentives for signing up
  • Create a national Retirement Savings Lost and Found Database

Legislatures made this bill profitable for the government as well. Starting in 2023, anyone over the age of 50 who makes extra payments to their 401(k)s will have to start making those payments to a Roth Individual Retirement Account. This will force people to give up the tax deductions they would get from a 401(k), generating about $36 billion in tax revenue.

Almost $3 billion for customer service

Before beginning his term as president, Biden promised to cancel $10,000 in undergraduate student loan debt per borrower. While he has provided some debt relief, he gave it to targeted groups rather than the broader population.

 

Based on his budget proposal, he probably won’t be doing it any time soon.

 

His proposal requests $88.3 billion for educational resources. The budget proposes a number of things for higher education – like doubling the Pell Grant award and providing more funding for HBCUs – but it doesn’t mention any student loan debt forgiveness.

 

When it comes to loans, Biden is asking to provide an additional $2.7 billion in funding for the Federal Student Aid office, Business Insider reports.

 

The additional funds would:

  • Revamp student loan providers’ customer support
  • Improve Income-Driven Repayment and Public Service Loan Forgiveness programs
  • Aid borrowers who have to switch loan providers due to theirs shutting down

Many have complained about hours-long wait times when calling student loan customer support, so extra help is definitely needed.

 

The pause on student loan payments is scheduled to end on May 1 and Biden hasn’t said he will extend that date again. And in his budget, he doesn’t request money for broader student loan debt relief.

 

But some people are speculating that he plans to do so in the future. Biden’s budget proposal suggests that all student loan forgiveness be tax-exempt. In most cases, student loan forgiveness is treated as income and therefore taxed by the IRS. If Biden’s budget is passed as is, that would be eliminated for all borrowers.

 

Some experts say that Biden should either extend the pause on loan payments or forgive student loan debt. Business Insider says the chair of the Senate education committee, Patty Murray, is one of those people.

 

“Everything we are asking to be done can be done at an administrative level,” Murray said. “That is the quickest way to get this moving. And we are encouraging them, asking them, begging them to please do that.”

 

This article originally appeared on Debt.com and was syndicated by MediaFeed.org.

More from MediaFeed:

The best county for retirees in every state

 

Retirement may be the time to move closer to family or put down new roots in a warm climate. Helping make that decision a bit easier is an index of the best places to retire in each of the 50 states, which was created by 24/7 Wall St.

Suggesting locales from Alaska’s majestic Kenai Peninsula to Arizona’s desert Pima County, the index weighed health costs, taxes and housing expenses, all significant for retirees likely to be living on fixed and reduced incomes.

“Because of the medical, social, and financial consequences of entering old age, life can change dramatically in retirement,” said 24/7 Wall St.

Among the best spots were Arkansas’ Baxter County in the Ozark Mountains; Chaffee County in the Colorado Rockies; and Park County, Wyoming, home to Yellowstone National Park.

Lovers of sun and sand could find a haven on the beaches of Delaware’s Sussex County, Florida’s Sarasota County or Beaufort County, South Carolina, and fishing fans might opt for Louisiana’s Jefferson Parish on the Gulf of Mexico or the lakes and ponds of Cumberland County, Maine.

The index took into consideration health factors such as the number of medical professionals per capita and access to exercise opportunities. Economic factors included median home values, the monthly cost of living and state and local taxes.

It only considered counties where the 65-and-over population grew at least as fast as the rest of the nation and was larger than the national average.

Demand for retirement locales will only grow bigger. The U.S. Census Bureau says by 2035, the number of adults age 65 and over will hit 78 million and outnumber children under age 18.

 

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

 

Christoph Strässler / Flickr

 

When it comes to retirement planning, our thoughts usually jump straight to finances. Do I have enough saved in my 401k? How will I manage healthcare costs? When should I start collecting Social Security?

All valid concerns, for sure. But Eric Thurman, author of Thrive in Retirement: Simple Secrets for Being Happy for the Rest of Your Life, says money is just one key factor to consider as you transition to this new life stage.

“Many people expect to live ‘happily ever after’ in retirement but haven’t thought much about how that will occur,” he says. He lists these areas as focus points for a happy retirement.

 

monkeybusinessimages/istockphoto

 

Thurman points to two key factors for keeping your mind healthy in retirement — cognitive strength and mental health. He says there are lots of options for maintaining a strong brain as you age, and he doesn’t think crossword puzzles and card games are enough. “You need to stretch. You need to be learning a foreign language or a musical instrument — something that’s forcing you to develop new skills,” he says.

Appreciating or creating art might help too. One study found that artistic activities boosted cognitive function in older people. And another study found that people predisposed to Alzheimer’s disease who were intellectually active delayed the start of the disease by nine years.

Your mental health needs attention, too. Thurman says that the unresolved hurts and losses that can surface in retirement may need attention. “If you’re raising children and busy with your career you can get distracted all of the time. Once you’ve got a lot of free time you can ruminate,” he says.

Counseling, support groups, or grief recovery programs could help. “Don’t let your mind be captive to old wounds that keep coming up,” he says.

 

simonapilolla/istockphoto

 

Your retirement years won’t be nearly as happy if you’re frail and unhealthy.Thurman thinks some people stop taking care of their health as they age because they may not realize how much longer they are likely to live. By 2050, a projected 19 million people in the US will be age 85 or older.

He encourages people to think about themselves in the future: “If you get to be 90, what kind of a 90-year-old do you want to be? Do you want to be stuck in a chair, or need help or a walker to get around? Or do you want to be able to do anything you want to do?”

You don’t have to train for a marathon, or eliminate cookies and potato chips. Just boosting the intensity of what you already do and adding more nutritious foods to your diet can help you stay fit and healthy.

 

interstid/istockphoto

 

“I have a friend who is a psychiatrist who says that the number one health issue in the U.S. and the world is loneliness,” Thurman says. “We can have hundreds of followers on Instagram or Facebook and not have that personal human contact necessary for wellbeing. We aren’t good about that.”

He says employment patterns in the last generation or two have increased isolation, since it’s more common for people to relocate for work and live further away from their families.

According to the National Institute on Aging, social isolation and loneliness are linked with high blood pressure, heart disease, obesity, reduced immune system function, anxiety, depression, cognitive decline, and Alzheimer’s disease.

 

jacoblund/istockphoto

 

Population: 203,360

65 and over %: 19.0% (15th of 67 counties)

Est. monthly expenses for family of 2: $4,343.67 (2nd out of 67 counties)

Median home value: $182,000

 

Chris Pruitt / Flickr

 

Population: 57,961

65 and over %: 14.8% (5th of 29 borough)

Est. monthly expenses for family of 2: $5,341.27 (14th out of 29 counties)

Median home value: $234,600

 

Christoph Strässler / Flickr

 

Population: 1,007,257

65 and over %: 18.1% (7th of 15 counties)

Est. monthly expenses for family of 2: $3,876.65 (14th out of 15 counties)

Median home value: $166,300

 

Gillfoto / Flickr

 

Population: 41,093

65 and over %: 30.5% (1st of 75 counties)

Est. monthly expenses for family of 2: $3,478.55 (39th out of 75 counties)

Median home value: $124,400

 

Sweetmoose6 at en.wikipedia / Public domain

 

Population: 18,724

65 and over %: 25.8% (4th of 58 counties)

Est. monthly expenses for family of 2: $4,201.70 (32nd out of 58 counties)

Median home value: $228,900

 

Ken Lund / Flickr

 

Population: 18,818

65 and over %: 24.1% (10th of 64 counties)

Est. monthly expenses for family of 2: $4,197.89 (37th out of 64 counties)

Median home value: $313,200

 

Jeffrey Beall / Flickr

 

Population: 897,417

65 and over %: 16.2% (4th of 8 counties)

Est. monthly expenses for family of 2: $4,257.11 (8th out of 8 counties)

Median home value: $235,300

 

almdesign/pixabay

 

Population: 215,551

65 and over %: 25.2% (1st of 3 counties)

Est. monthly expenses for family of 2: $4,249.98 (3rd out of 3 counties)

Median home value: $242,900

 

Nicholas A. Tonelli / Flickr

 

Population: 404,839

65 and over %: 34.8% (4th of 67 counties)

Est. monthly expenses for family of 2: $4,156.50 (19th out of 67 counties)

Median home value: $215,300

 

Ebyabe / Flickr

 

Population: 11,173

65 and over %: 33.6% (1st of 159 counties)

Est. monthly expenses for family of 2: $4,103.24 (49th out of 159 counties)

Median home value: $197,900

 

John Trainor / Flickr

 

Population: 196,325

65 and over %: 18.5% (1st of 5 counties)

Est. monthly expenses for family of 2: $4,848.14 (5th out of 5 counties)

Median home value: $316,000

 

W Nowicki / Flickr

 

Population: 10,104

65 and over %: 24.6% (6th of 44 counties)

Est. monthly expenses for family of 2: $3,917.45 (11th out of 44 counties)

Median home value: $256,000

 

Charles Knowles from Meridian Idaho, USA / Wikipedia

 

Population: 198,134

65 and over %: 16.1% (80th of 102 counties)

Est. monthly expenses for family of 2: $3,979.79 (66th out of 102 counties)

Median home value: $136,100

 

Larry D. Moore / Flickr

 

Population: 61,581

65 and over %: 16.1% (57th of 92 counties)

Est. monthly expenses for family of 2: $3,990.13 (6th out of 92 counties)

Median home value: $158,100

 

Nyttend / Public domain

 

Population: 20,575

65 and over %: 18.7% (61st of 99 counties)

Est. monthly expenses for family of 2: $4,143.31 (8th out of 99 counties)

Median home value: $161,500

 

Karen Noecker / Flickr

 

Population: 34,683

65 and over %: 18.4% (63rd of 105 counties)

Est. monthly expenses for family of 2: $3,864.68 (72nd out of 105 counties)

Median home value: $120,000

 

Steve Meirowsky / Flickr

 

Population: 99,258

65 and over %: 16.2% (73rd of 120 counties)

Est. monthly expenses for family of 2: $3,649.43 (57th out of 120 counties)

Median home value: $123,200

 

W.marsh / Flickr

 

Population: 437,038

65 and over %: 15.6% (25th of 64 parishes)

Est. monthly expenses for family of 2: $4,036.27 (19th out of 64 counties)

Median home value: $176,000

 

dbking / Flickr

 

Population: 289,173

65 and over %: 16.8% (15th of 16 counties)

Est. monthly expenses for family of 2: $4,721.10 (1st out of 16 counties)

Median home value: $259,400

 

Ken Lund / Flickr

 

Population: 51,559

65 and over %: 26.2% (2nd of 24 counties)

Est. monthly expenses for family of 2: $4,171.72 (16th out of 24 counties)

Median home value: $252,100

 

Famartin / Flickr

 

Population: 161,197

65 and over %: 15.3% (10th of 14 counties)

Est. monthly expenses for family of 2: $4,639.86 (9th out of 14 counties)

Median home value: $272,700

 

Massachusetts Office Of Travel & Tourism / Flickr

 

Population: 32,978

65 and over %: 20.2% (33rd of 83 counties)

Est. monthly expenses for family of 2: $3,849.82 (29th out of 83 counties)

Median home value: $171,100

 

Royalbroil / Flickr

 

Population: 5,270

65 and over %: 26.1% (2nd of 87 counties)

Est. monthly expenses for family of 2: $4,284.08 (23rd out of 87 counties)

Median home value: $241,400

 

Norstrem / Flickr

 

Population: 78,221

65 and over %: 15.7% (45th of 82 counties)

Est. monthly expenses for family of 2: $3,620.78 (65th out of 82 counties)

Median home value: $88,500

 

Dudemanfellabra / Flickr

 

Population: 999,539

65 and over %: 16.9% (79th of 115 counties)

Est. monthly expenses for family of 2: $3,897.75 (74th out of 115 counties)

Median home value: $181,100

 

 

Nicolas Henderson / Flickr

 

Population: 66,290

65 and over %: 16.6% (44th of 56 counties)

Est. monthly expenses for family of 2: $4,290.89 (9th out of 56 counties)

Median home value: $220,600

 

Robstutz / Flickr

 

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

:Ivan Nadaski / iStock

 

Population: 4,318

65 and over %: 26.7% (5th of 93 counties)

Est. monthly expenses for family of 2: $4,311.88 (41st out of 93 counties)

Median home value: $62,300

 

Ammodramus / Flickr

 

Population: 47,632

65 and over %: 25.4% (4th of 17 counties)

Est. monthly expenses for family of 2: $4,277.85 (9th out of 17 counties)

Median home value: $311,400

 

Patrick Nouhailler / Flickr

 

Population: 89,280

65 and over %: 18.8% (5th of 10 counties)

Est. monthly expenses for family of 2: $4,092.95 (6th out of 10 counties)

Median home value: $215,600

 

Jet Lowe / Public domain

 

Population: 125,717

65 and over %: 16.5% (4th of 21 counties)

Est. monthly expenses for family of 2: $5,346.02 (1st out of 21 counties)

Median home value: $393,800

 

JERRYE and ROY KLOTZ MD / Flickr

 

Population: 18,031

65 and over %: 17.2% (20th of 33 counties)

Est. monthly expenses for family of 2: $3,934.80 (4th out of 33 counties)

Median home value: $285,300

 

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

Aaron Zhu / Flickr

 

Population: 64,701

65 and over %: 20.3% (5th of 62 counties)

Est. monthly expenses for family of 2: $4,330.03 (23rd out of 62 counties)

Median home value: $192,800

 

Mobilus In Mobili / Flickr

 

Population: 252,268

65 and over %: 18.4% (49th of 100 counties)

Est. monthly expenses for family of 2: $4,329.91 (37th out of 100 counties)

Median home value: $209,800

 

Warren LeMay / Flickr

 

Population: 11,574

65 and over %: 18.8% (33rd of 53 counties)

Est. monthly expenses for family of 2: $3,703.54 (51st out of 53 counties)

Median home value: $130,400

 

Andrew Filer / Flickr

 

Population: 1,257,401

65 and over %: 17.0% (43rd of 88 counties)

Est. monthly expenses for family of 2: $3,458.20 (78th out of 88 counties)

Median home value: $123,900

 

Pixabay

 

Population: 62,421

65 and over %: 15.2% (60th of 77 counties)

Est. monthly expenses for family of 2: $3,882.56 (64th out of 77 counties)

Median home value: $104,000

 

Kiddo27 / Flickr

 

Population: 363,471

65 and over %: 17.7% (23rd of 36 counties)

Est. monthly expenses for family of 2: $4,034.99 (29th out of 36 counties)

Median home value: $232,800

 

Visitor7 / Flickr

 

Population: 18,302

65 and over %: 20.1% (20th of 67 counties)

Est. monthly expenses for family of 2: $4,378.06 (16th out of 67 counties)

Median home value: $173,800

 

Jakec / Flickr

 

Population: 49,028

65 and over %: 19.1% (2nd of 5 counties)

Est. monthly expenses for family of 2: $4,451.59 (2nd out of 5 counties)

Median home value: $341,300

 

Angusdavis/Public Domain

 

Population: 179,316

65 and over %: 24.9% (3rd of 46 counties)

Est. monthly expenses for family of 2: $4,702.03 (1st out of 46 counties)

Median home value: $283,800

 

Ken Lund / Flickr

 

Population: 17,572

65 and over %: 15.6% (50th of 66 counties)

Est. monthly expenses for family of 2: $3,814.69 (62nd out of 66 counties)

Median home value: $173,400

 

Jeffrey Beall / Flickr

 

Population: 126,437

65 and over %: 17.1% (62nd of 95 counties)

Est. monthly expenses for family of 2: $3,609.55 (82nd out of 95 counties)

Median home value: $152,800

 

Brian Stansberry / Flickr

 

Population: 25,939

65 and over %: 28.7% (8th of 254 counties)

Est. monthly expenses for family of 2: $3,750.25 (125th out of 254 counties)

Median home value: $269,900

 

Larry D. Moore / Flickr

 

Population: 155,577

65 and over %: 19.9% (3rd of 29 counties)

Est. monthly expenses for family of 2: $4,040.76 (14th out of 29 counties)

Median home value: $240,300

 

Tony Webster / Flickr

 

Population: 36,054

65 and over %: 21.4% (2nd of 14 counties)

Est. monthly expenses for family of 2: $4,641.36 (10th out of 14 counties)

Median home value: $208,600

 

Daniel Case / Flickr

 

Population: 27,516

65 and over %: 15.2% (97th of 133 counties)

Est. monthly expenses for family of 2: $4,005.88 (73rd out of 133 counties)

Median home value: $226,200

 

AgnosticPreachersKid / Flickr

 

Population: 75,138

65 and over %: 17.6% (22nd of 39 counties)

Est. monthly expenses for family of 2: $3,839.28 (16th out of 39 counties)

Median home value: $256,400

 

Jon Roanhaus / Flickr

 

Population: 42,906

65 and over %: 20.2% (18th of 55 counties)

Est. monthly expenses for family of 2: $3,779.52 (54th out of 55 counties)

Median home value: $114,800

 

Jon Dawson / Flickr

 

Population: 73,427

65 and over %: 19.2% (28th of 72 counties)

Est. monthly expenses for family of 2: $3,754.34 (51st out of 72 counties)

Median home value: $127,700

 

TheCatalyst31 / CC0

 

Population: 29,276

65 and over %: 20.4% (5th of 23 counties)

Est. monthly expenses for family of 2: $4,269.06 (11th out of 23 counties)

Median home value: $236,200

This article originally appeared on Considerable.com and was syndicated by MediaFeed.org.

 

halfuur / Flickr

 

 

istockphoto / DisobeyArt

 

Featured Image Credit: DepositPhotos.com.

AlertMe