A 401(k) plan is something that every adult knows about in the investing world. 401(k) plans are retirement funds that are company-sponsored, where a percentage of your paycheck goes to that account and your employer can match that amount. This money is usually invested in things like mutual funds, but active investors like to build their own portfolios with their 401(k) money. The money is withdrawn at retirement, which is when it’ll be taxed, to help senior citizens stay afloat after retirement.
Currently, there is a bipartisan bill that was passed by the House that looks to help boost 401(k)s. First, the bill looks to gradually increase the age at which people are forced to start withdrawing money from their account, bringing it up to 75 years old by 2033. This bill considers the trend of longer work years for today’s generation as people are starting to retire later. Along with this, workers 50 and older can contribute an extra $6,500 per year, and $10,000 dollars for 62, 63, and 64 year-olds. Multiple incentives are included to increase the number of workers with 401(k)s, including clauses regarding student loans. The bill looks to generate $36 billion, which would help not only the government but the retirees themselves. Economists say that the bill will help financially healthy Americans, but those who aren’t might be hurt as they withdraw early to help sustain themselves. This bill can help the social aspect of the United States while helping the economy, and it’s a good sign that it’s bipartisan.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.