This year is shaping up to be a good one for more Americans to achieve retirement readiness, and that's something to celebrate.
For one thing, plan sponsors are expected to move forward on initiatives to improve participants' financial health that had been sidelined as more pressing concerns related to the global pandemic took precedence. Look for initiatives to help participants deal with onerous student debt, set up emergency savings accounts and better manage household budgets.
Secondly, the passage of the SECURE Act in late 2019 makes the decision a lot easier for plans to consider offering in-plan insurance products, such as annuities, to ensure retirement income — about the closest thing in the DC world to a traditional pension. The law also is expected to help employers join what's known as a pooled employer plan, which are rolling out this year. That will help more Americans gain access to a workplace defined contribution plan and save for retirement.
There's also reason to hope that lawmakers will pass another bipartisan retirement security package in 2021. A bill introduced last year in the House contains a number of provisions, including automatically enrolling workers upon becoming eligible to participate in a retirement plan and making sure that participants who change jobs don't lose track of savings left behind in the former employer's plan. One of the bill's sponsors, Richard Neal, D-Mass., said in a statement to Pensions & Investments that he expects the Securing a Strong Retirement Act will quickly advance in 2021.
A successful retirement has long been defined as a three-legged stool, with a pension, personal savings and Social Security all working together to produce a stable outcome. Traditional pensions, sadly, have become more rare as sponsors increasingly move to freeze such plans, a development that has undermined financial security.
But with these three other developments — financial wellness, retirement income and potential new legislation — expected to come into sharper focus in 2021, we think there's reason to believe that the new year will create more opportunities for many Americans to better their retirement prospects.