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5 Government Policies Hurting Your Retirement Savings in 2019
Whether it’s through programs initially set up to help you in retirement, several current government regulations could have a negative impact on your retirement savings.
1. Social Security
The 2018 Social Security Administration’s Trustee Report estimates the fund will be depleted by 2034. To combat the shortfall, the government could end up cutting benefits, increasing the eligibility age or even raising taxes (or all of the above).
2. 401(k) plans
While 401(k) plans are an effective way to take advantage of compound interest, they’ve effectively replaced pension plans, and you’ll still have to pay taxes when you begin to withdraw your money.
3. Medicare
Medicare is in even worse shape than Social Security with trustees projecting that Medicare’s fund for paying costly hospital bills will be depleted by 2026. Studies show the average 65-year-old couple will need $220,000 to cover health care expenses in retirement, but most underestimate healthcare expenses and overestimate the help they will get from Medicare.
4. State and Local Pension Plans
State and local pension plans are in trouble, and reports show many don’t have the funding to pay employees who are depending on them. Pew Charitable Trusts analyzed data from fiscal year 2016 and reported in April that government pension plans are coming up short on their investment targets.
5. The Federal Deficit
The Congressional Budget Office reported in April that the U.S. is on its way to a $1 trillion budget deficit by 2020. Cutting spending is only one way to reduce it. The other way is increasing income -- or raising taxes -- which will affect your retirement accounts.
The Best Way to Protect Your Retirement Savings
Chances are, there are several highly qualified financial advisors in your town who can help you best navigate these policies and make sure your savings are allocated in a way that they’ll last longest. However, it can seem daunting to choose one.
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SmartAsset - copyright 2018
SmartAsset - copyright 2018