When you are transitioning from one employer to another or leaving the workforce entirely for retirement, a 401(k) savings account can be your saving grace. This account is a retirement plan sponsored by an employer that allows employees to save and invest money for their retirement. The plan has been popular with many workers because the money invest in it is tax-deferred, meaning you can defer paying taxes on it until you start withdrawing the money. However, President Joe Biden is now threatening the returns of 401(k) savings accounts, risking millions of workers' comfortable retirement.
Inflation and rising interest rates mean many future retirees could earn less than they had thought. This is due to the fact that the returns of 401(k) savings accounts tend to be more conservative than other invest. This means that the returns on these accounts may not keep up with Inflation and rising rates, leaving retirees with less money than they had planned for. This could put many retirees in a difficult financial situation, as they may not have enough money to cover their basic expenses.
The Biden administration is looking into ways to make 401(k) savings accounts more attractive to invest. The administration is proposing to increase the amount of money that can be contributed to a 401(k) account, and to also reduce fees associated with the accounts. The goal of these changes is to make the accounts more beneficial for future retirees, as well as to encourage more people to save for retirement.