Secure Act 2.0: How women’s financial security will be affected by new legislation

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US House’s approval of Secure Act 2.0 should benefit all retirees if the bill becomes law, but it could give a particular boost to women, who have been disproportionately affected by the COVID-19 pandemic. 19.

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The bill — full name: The Securing a Strong Retirement Act — passed the House in late March by a 414-5 vote and now needs to be approved by the Senate, CNBC reported. It builds on the first Secure Act, which was passed in 2019.

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Among the new provisions is a requirement that employers automatically enroll eligible workers in 401(k) plans at a rate of 3% of pre-tax pay, which would increase each year until the employee contributes 10% of His salary. Secure Act 2.0 would also make changes to how much savers can contribute if they are nearing retirement and when retirees must withdraw money from their accounts.

To understand how these changes might impact women, it helps to understand the challenges they face in retirement compared to men. In a recent column for The Hill, Cindy Hounsell — president of the Women’s Institute for a Secure Retirement (WISER) — noted that, on average, women have less retirement income than men. Additionally, only about one in three women (31%) are saving for retirement, according to a TIAA survey.

“The pandemic has exacerbated this problem,” Hounsell wrote. “Between February 2020 and January 2022, nearly 2 million women left the workforce to care for a loved one. The lost wages and savings for many of them will be difficult, if not impossible, to make up for.

Secure 2.0 solves the problem by extending the age at which retirees are required to start withdrawing money from their 401(k) and other retirement savings accounts. Under current laws, you must start making withdrawals at age 72. Secure 2.0 would move the age to 75.

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The benefit Hounsell sees is that it allows people to continue working into their 70s to catch up on their retirement savings – a particular benefit for women who have had to leave the workforce during COVID and have not been able to contribute to retirement accounts.

Another benefit of Secure 2.0, she said, is a student loan provision designed to help indebted Americans save for retirement. Many borrowers are young women who have had to choose between loan repayment and retirement contributions. Secure 2.0 would allow employers to match an employee’s 401(k) account against their student loan repayments.

Secure 2.0 would also provide a small employer tax credit that would qualify military spouses for their retirement plans within two months of hiring, provide a matching or non-optional contribution to the plan, and ensure that spouses benefit 100% of all employer contributions within the same time frame. It would also benefit women because they make up the majority of military spouses, according to Hounsell.

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Finally, Secure 2.0 would help alleviate a major concern for many women — outliving their savings — by making it easier for employers to offer a later annuity payment option in a 401(k) or similar plan. Because women generally outlive men, they might choose a source of income that will be available later in life.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has earned him awards from the North Carolina Press Association, Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.

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