Don’t let a major pandemic in 2020 affect your retirement planning in 2021!
The global pandemic forced us to face uncertainty and inevitable challenges. Even though 2020 has been a difficult year, you can start your 2021 with a plan of action and be prepared for the new year.
Approximately 10,000 baby boomers arrive at the retirement age every day, if you are one of them, CKS Summit Group can help you reach a stress-free retirement with the best approach.
Because your financial stability is important to us, we want to make sure you are well informed of all the new trends and tips for 2021.
2021 Retirement Trends
Many Americans will leave the workforce early before their target retirement age. According to a new economic research from the SSRN and the Employee Benefit Research Institute (EBRI), between 53% and 63% of retirees will decide to anticipate their retirement. However, with the increase of those early retirements claiming, the phenomenon of “discourage workers” is around the corner. The direct consequence could influence the unemployment rate in the US and could push a more ferocious drop in the labor force.
Covid-19 has caused both emotional and financial instability. The pandemic has affected businesses and communities, and most of all employees and their financial situation. In 2021 there will be most likely an increase in financial wellness programs. The employer intends to raise the offerings of sponsored financial wellness for next year.
We already know that the pandemic has restricted in-person interactions and many businesses need to adapt to this change. The retirement world in 2021 will encounter a tremendous increase in virtual-based communications, virtual meetings, video calls, and so on. The post-pandemic “new normal” is virtual everything! The advantage of this new style of interaction is a quicker form of communication, however, a lack of familiarity with the technology for an older audience can build barriers between participants.
Besides, according to the e-disclosure rule of the Department of Labor (DOL), 2021 is the year where all paper-based transactions will be turned into electronic operations. The direct consequence will be an increase of auto-enrollment plans and default online procedures will take place very soon even in the retirement planning space.
Thanks to the CARES Act, RMD failures went from being a top-three defect in retirement plans to practically non-existent in 2020. Even if the CARES Act moratorium on RMDs is not extended, the SECURE Act escalation of the commencement age to 72 will make RMDs much less of a hassle going forward. In 2021 there is a possibility that additional legislation may further reduce RMD requirements.
Especially among small employers, the lack of employee coverage is a significant issue in the retirement plan space. We are expecting in 2021 a significant progress toward this through state auto-IRAs, increased coverage of part-time employees in 401(k)s as mandated by the SECURE Act, the decline in the number of small businesses, and shifting work patterns.
Planning your financial future for 2021 can be complex and confusing, but CKS Summit Group has the right tools and resources that can help you plan your financial wellness for the upcoming year. How?
- Understanding your retirement income options
- Prepare a health insurance strategy
- Maximize your health savings account (HSA) Contributions
At CKS Summit Group we can help you understand the best strategies for your retirement planning. You should start preparing early! Contact us here to get you started.
