Retirement bills in Congress could alter 401(k) plans

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Retirement bills in Congress could alter 401(k) plans
More small companies would be encouraged to offer retirement savings plans to their employees as well as annuities that would allow workers to turn a portion of their savings into a source of guaranteed income under a new bill being considered by Congress, according to this article on The Wall Street Journal. Although a slim congressional election-year calendar and partisan tensions over tax policy await the bill, financial services companies and activists are supporting the proposal. “It is something that could actually move the needle on retirement security,” says an advocate.
Key retirement changes to watch for
Lawmakers are mulling a second tax package as well as other proposals that would make changes to the country's retirement saving system, according to this article on Fox Business. One of these proposals is a bill that would make Multiple Employer Plans accessible to workers, while the tax package would enable workers to boost their retirement savings. “We are looking at ways where it’s easier for families to save earlier in life and more over time, whether it’s for health care or for retirement. We think America is not a nation of savers; we want it to be,” says a lawmaker.

When delaying retirement can pay off
A survey by the Transamerica Center for Retirement Studies has found that more than 50% of workers intend to continue working past the age of 65 and delay retirement, with 8% of the responding saying they don't plan to retire at all, according to this article on CBS Moneywatch. Although delaying retirement can help secure their golden years, clients should have a financial plan to ensure they will have an income stream after they retire. "Your plan should always be the traditional plan: Start saving early, save as much as you can," says a financial adviser.

Bonds or annuities: What's the best way to generate retirement income?
Clients who want to create an income source in retirement have the option of investing in "fixed income" assets such as annuities and bonds, according to this article on Forbes. However, investors will be better off having annuities instead of bonds to generate retirement income, experts say. “Income annuities outperform bond funds as a retirement income tool because they offer mortality credits,” says an expert.

How to choose the right target-date retirement fund
Clients who invest in a target-date fund are advised to update their retirement target date, as they may have changed their goals or can enhance their investment outcome with a customized fund portfolio, according to this article on Consumer Reports. Those who are considering a TDF should pick a fund with lower fees and a glide path that fits their goals. A TDF is recommended for clients who are starting to invest for retirement, but they should consider building their own portfolio once they have amassed a sizeable nest egg.

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