You need to review your estate plan regularly. There are various reasons for this. One is that governments may decide to change finance laws. This could affect the effectiveness of your current estate plan.
One recent change is the Setting Every Community Up for Retirement Enhancement (SECURE) Act. It came into force at the end of 2019.
Many Americans do not have enough saved for retirement
Putting money aside for the future can be challenging if you struggle to make enough for your present needs. A recent survey found a third of people reaching retirement age had less than $25,000 put aside. One-fifth of all adults had nothing at all put aside.
How does the SECURE Act aim to help people save for retirement?
Here are some of the key points of the SECURE Act:
- You can pay into IRAs longer: There was an age limit before. Now you can continue to pay in as long as you work.
- You can delay making withdrawals: The law raises the required distribution age to 72 years old. Previously it was 70 years and 6 months. This means your money has an extra year and a half to grow.
- You may be eligible to join a 401(k) if you work part-time: The law permits certain part-time workers to join these schemes. It also encourages small businesses to sign employees up for these schemes automatically.
The SECURE Act is not all good news, however. If you inherit an IRA, you must now withdraw it all within a 10 year period. Previously you could do it over a 20 year period. Because you will need to take out more each year, it could push you above the tax threshold when added to other income. It could mean you could pay more tax on your inheritance.
As with all changes, there will be winners and losers. Review your estate plan regularly to ensure you use rule changes to your advantage.