Retirement in America is changing, with many people living and working longer, although one fintech expert told the McKnight’s Business Daily that she believes the reforms likely to be sought by President-elect Joe Biden may help make retirement saving possible for more Americans.
“Under his presidency, Biden plans to expand the earned income tax credit, which as it stands isn’t available to workers over 65,” said Rhian Horgan, founder and CEO of Kindur, a fintech company dedicated to helping baby boomers feel prepared moving into retirement. “This would go a long way toward helping the growing number of people choosing to work part-time before transitioning into retirement.”
She noted that Biden also supports an increase in Social Security benefits to widows and widowers and a $5,000 tax credit to family caregivers, a “welcome recognition” of the enormous financial burden faced by many Americans caring for their aging parents.
Horgan also is a strong advocate for The Securing a Strong Retirement Act of 2020, which would further delay the age at which Americans are required to take money from an IRA, allowing savers to extend the benefit of tax deferrals. It also raises the cap on catch-up contributions from $6,500 to $10,000, encouraging Americans to put away more as they approach retirement, she noted.
“Our current system of tax deferral means that consumers with higher incomes are benefiting from higher tax savings than those with lower incomes,” she told McKnight’s Business Daily. For example, someone who makes $100,000 as a single individual and taxed at 24% who puts 10% of their earnings in a 401(k) would benefit from $2,400 in tax savings. Those earning $50,000 a year and putting away the same 10% would see a tax savings of $600.
“Biden’s new plan would provide a universal credit, allowing consumers earning $50,000 to see their tax savings increase to $1,300,” she said.