Discovery Your Money Personality Type & Take Control of Your Choices

May 17, 2023 | Vanguard Perspective

Money is much more than a medium of exchange for goods and services. Money reflects our personal values and the hard work we put into earning it. How we treat money, save it and spend it, is a reflection of our internal beliefs — our money mindset. When it comes to money, we all have strongly held beliefs, whether or not we realize it. Many of these beliefs grew out of childhood and come from lessons we learned from our families or picked up through life experiences. Why does mindset matter? Because understanding our internal beliefs helps us make smarter financial decisions and avoid the behaviors that damage financial health. So, how much do you know about your money mindset? Answer the questions below to discover more about your money beliefs and unlock key insights about your mindset and the behaviors holding you back from achieving your financial goals. FINANCIAL LESSON: Your Mindset is the Key to Financial Health What does the word "money" bring to mind? Are the associations positive or negative? Beliefs about money are complicated. It's a symbol of one's self: respect, love, freedom, control, power, worth, and much more (depending on the person). Having a healthy relationship with money and using it to create success require you to understand the beliefs and internal scripts driving your behavior. Trying to build strong financial habits without the right mindset is like driving down the highway with your emergency brake on. As a financial professional, I think about wealth in terms of the opportunities it offers and as a tool for good. But, I've realized that everyone who walks in my office doesn't view money the same way. For some people, money is uncomfortable and something they'd rather not think about. Others tie wealth to their definitions of success and self-worth. I don't think one mindset is better than the other. What's important is understanding your own beliefs and identifying how they drive your decisions and your behavior. If you can recognize the negative aspects of your money mindset, you can manage your emotions and fears better—and you can recognize and start to change bad habits. Identifying and changing negative behaviors associated with your mindset are key to making the best financial decisions. If you're looking to understand how to shift your money mindset and improve it, I'm here to help. One of the best services I can provide is that of a financial coach and accountability partner. I'd be happy to chat with you and shed more light on your money mindset. Give my office a call at (402) 502-1225 .

Let’s imagine you’re standing in front of two doors. You have two options. Open Door 1 and get an ELECTRIC SHOCK. Or choose the mystery behind Door 2 . Door 2 could be better or worse than Door 1, but you won't find out until you open it. What do you choose? Which door would you open? Most folks would open Door 1. (1) That's because most of us would rather have certain pain than gambling with the unknown. And that's true even if we have a 50-50 shot at getting something better, not worse, with Door 2. (1) Why? Because we crave certainty. We're calmer when we know what to expect — even if it's certain pain — because we can prepare for it. (1) With uncertainty, we're hyper-vigilant to the possibility of pain. We're constantly on edge, waiting for the ball to drop. (1) That's stressful and exhausting up until the moment we get certainty. And that waiting and worrying creates its own pain, no matter what outcome we get. (1) That's how uncertainty hijacks our mind and outlook. And that can backfire BIG time. How? It closes us off from the priceless opportunities that can come with uncertainty. And that means we miss the chance to take advantage of all the good that uncertainty can really do for us. So, what type of lemonade can we make from the lemons of uncertainty? Let's find out by looking at some of the incredible silver linings of uncertainty. 7 SURPRISING ADVANTAGES OF EMBRACING THE BRIGHT SIDE OF UNCERTAINTY 1. Uncertainty...Inspires New Thought The unknown can captivate us. It upsets our assumptions and expectations. And it makes us pay attention and think more deeply. That can get us to think outside of the box and open us up to new possibilities we wouldn't have considered otherwise. 2. Uncertainty...Builds Character With the unknown, our choices may be the ONLY things that are 100% in our control. That can really put our judgment, our values, and our beliefs to the test. And it gives us the opportunity to learn from novel experiences, take on new challenges, and truly grow. 3. Uncertainty...Gives Us a Reality Check Unexpected new situations can peel back our blinders and open our eyes to what's really going on. That can ground us, so we're not chasing rainbows. It also empowers us to recognize the difficulties we face, so we can actually work through them, instead of ignoring them and hoping they'll go away. 4. Uncertainty...Spotlights Our Priorities Big uncertainties mute the little worries and distractions in our lives. When we don't know what's coming next, we're forced to focus on what really matters. As we do, our priorities can be a comforting safety net to fall back on — and a roadmap that gives us direction to move forward with confidence. 5. Uncertainty...Makes Us More Resilient Every time we deal with uncertainty, we face novel challenges — and new chances to adapt, improvise, flex our skills, and endure. That can strengthen our mental game and keep us flexible when things go off course. It can also give us better strategies for bouncing back, solving problems, and persevering. (2) 6. Uncertainty...Makes Us Grateful When everything's up in the air and nothing feels certain, it's much easier to appreciate what we DO have — like our relationships, our health, or our career. The gratitude we have for those dependable joys can keep us positive and clear-headed in the face of uncertainty. And that can help us get better at dealing with it and taking advantage of its silver linings. (3) 7. Uncertainty...Adjusts Our Perspective Without surprises, we tend to roll along with life. Uncertainty can stop us in our tracks. It gives us a chance to pause, stand back, and look at the bigger picture. That can give us a fresh outlook and a big-picture perspective. It can also help us make better choices, no matter what type of uncertainty we're facing. (4) FINANCIAL LESSON: ENJOY A MORE FULFILLING LIFE BY LEARNING HOW TO DEAL WITH UNCERTAINTY BETTER Have you experienced any of those windfalls of uncertainty? Whether you have or not, you’ll have another chance to in the future. That’s because, like it or not, uncertainty is an unavoidable part of life. Big or small, those unknowns can pop up at any time. And they can make us unsure about our options, our choices, and our future. But it’s not all bad. Uncertainty can be wonderfully rewarding. In fact, like life, uncertainty can become what you make of it — and how you approach it can make ALL difference in what you get out of it. That’s why it pays for us to get better at living with uncertainty. If we can do that, the silver linings can become golden opportunities for us to grow and prosper. So, how do we approach uncertainty better? We can start by accepting it, instead of resisting it. And we can focus on the positive and check ourselves when we’re spiraling into the worst-case what-ifs. We can also turn to someone we trust for support and words of reason. Sincerely, Boston Independence Group Sources: 1 - https://www.psychologytoday.com/us/blog/the-right-mindset/202002/why-uncertainty-freaks-you-out (2020) 2 - https://www.mpi.org/blog/article/building-resiliency-in-uncertain-times (2020) 3 - https://www.health.harvard.edu/healthbeat/giving-thanks-can-make-you-happier (2021) 4 - https://knowledge.wharton.upenn.edu/article/perspective-taking-brain-hack-can-help-make-better-decisions/ (2021) Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

One of the most critical decisions you can make regarding your retirement is when you choose to claim Social Security. Deciding when to claim Social Security can make a difference in your monthly bottom line. Before You Retire Your monthly Social Security Benefit amount is calculated based on the number of years you have worked and the taxes you have paid into the Social Security Benefits program. Social Security counts the years you have paid taxes as “credits” for years that you have worked. For example, if you were born in 1929 or afterward, you must have 40 credits to receive Social Security benefits when you retire. This is equal to about 10 years of work.1 Your benefit amount is also calculated by the number of credits you have earned during your working years. Fortunately, the Social Security Administration has made it easier for you to verify your expected benefits by setting up an online account. It is worth double-checking your earnings to catch errors, if any, and factor in your expected benefits as you strategize for retirement.1 What Age Should You Claim? There are several ages that should be considered when deciding when to claim Social Security. Early Retirement Age: The earliest age you can claim Social Security benefits is 62. However, if you claim Social Security early, you'll receive a lower monthly payment as compared to waiting until the full retirement age.1,2 Full Retirement Age: This is the age when you are eligible to receive the full amount of your Social Security benefits. The full retirement age is calculated based on the year you were born. For example, for those born between 1943 and 1954, the full retirement age was 66. If you were born between 1955 and 1960, the full retirement age goes up to 67.1,2 Delayed Retirement Age: You can also delay the claim of your retirement benefits until age 70. If you wait until then, you will continue earning benefits. However, benefits stop accruing at age 70, so there may not be any reason to delay the claim of benefits past age 70.1,2 Deciding when to claim Social Security benefits is an important decision to make as you approach your retirement age. Talk with your us if you have questions about the best time for you to apply for Social Security. https://www.ssa.gov/benefits/retirement/learn.html https://www.cnbc.com/select/when-should-you-collect-social-security/ This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Advisory Services Offered Through CreativeOne Wealth, LLC an SEC Registered Investment Advisor. Trinity Financial Group and CreativeOne Wealth, LLC are not affiliated. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

"Will I outlive my retirement money?" This is one of the top fears for people who are starting to prepare for their retirement years. Determining how much money you need in retirement is a process. It shouldn't be a number that you pull out of thin air. The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement. We all have our "blue sky" visions of the way retirement should be, yet our futures may unfold in ways we do not predict. So, as you think about your "second act," you may want to consider some life and financial factors that can suddenly arise. You may see retirement as an extension of the present rather than the future. This is only natural, as we all live in the present, but the future will arrive. The costs you have to shoulder later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things. You may have a health insurance gap. If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost. Suppose you become disabled or seriously ill, and working is out of the question. How will you make ends meet? Age may catch up to you sooner rather than later. You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances. You could be alone one day. As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be tough when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future? These are some of the blind spots that can surprise us in retirement. They may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better. Your workplace retirement account can play a critical role in your overall retirement strategy. However, some people have gone further with such accounts than others, especially recently. Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Aside from these blunders, some classic financial missteps plague retirees. Calling them "mistakes" may be a bit harsh, as not all of them represent errors in judgment. However, whether they result from ignorance or fate, we need to be aware of them as we prepare for and enter retirement. Timing Social Security. As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments. Managing medical bills. Medicare will not pay for everything. Unless there's a change in how the program works, you may have a number of out-of-pocket costs, including dental and vision care. Underestimating longevity. Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents. Withdrawing strategies. You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually. Some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly. Talking About Taxes. It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to its "preferred domain," which means the taxable or tax-advantaged account that is most appropriate for it as you pursue a better after-tax return for your entire portfolio. Retiring with debts. Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors. Putting college costs before retirement costs. There is no "financial aid" program for retirement. There are no "retirement loans." Your children have their whole financial lives ahead of them. These are some of the classic retirement mistakes. To help you avoid them, take some time to review and refine your retirement strategy with the help of Trinity Financial Group. This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Advisory Services Offered Through CreativeOne Wealth, LLC an SEC Registered Investment Advisor. Trinity Financial Group and CreativeOne Wealth, LLC are not affiliated. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

“It turns out my job was not to find great investments, but to help create great investors,” writes Carl Richards, author of “The Behavior Gap.”1 From increasing our budget mindfulness to taking a steadier approach to investing, Richards has drawn attention to the way our unexamined behaviors and emotions can be to our detriment when it comes to living a happy and financially sound life. In many cases, we make poor financial decisions when experiencing panic or anxiety as a result of personal or widespread events. Below we discuss the common financial behaviors driven by such circumstances. The Behavior Gap Explained Coined by Richards, “the behavior gap” refers to the difference between a smart financial decision versus what we actually decide to do. Many people miss out on higher returns because of emotionally driven decisions, creating a gap — “the behavior gap” — between their lower returns and what they could have earned. 4 Common Emotions that Can Create a Behavior Gap #1: Excitement When Stocks Are High Whether in a bull market or witnessing the hype from a product release, many investors may feel tempted to increase their risks or attempt to gain from emerging investments when stocks are high. This can lead to investors constantly readjusting their portfolios as the market itself experiences upswings. An investor who follows such patterns is likely to do the same with declines and may end up trying to time the market amidst its inevitable, unpredictable movement. #2: Fear When Stocks Are Low In response to market volatility, investors may feel the need to choose more secure investments and avoid uncertain or seemingly unsafe investments. When stocks are low, a common response may be to sell and effectively miss out on potential long-term gains. #3: Engagement in the Search for Alpha People yearn to make money and take action to do so. Throughout our lives, this emotional desire is likely a constant one. As such, many seek the help of a financial professional to procure above-average returns, otherwise known as “alpha.”1 However, in this search for “alpha,” our humanness — our emotions and our behaviors — may lead us astray. Ironically, studies done by DALBAR have calculated the “average investment return” as compared to investor returns and have shown that investor returns are lower.1 The underlying emotional desire and pursuit of money is exactly the recipe for unwise behaviors in response to emotions — but only if left unchecked. #4: Short-Term Anxiety and Focus As humans, viewing aspects of our lives through the lenses of current circumstances is normal. One emotional response to any event, however, is letting the moment consume us, especially if faced with grave consequences — from our personal health being compromised to the loss of loved ones. Many may find it difficult in these times to both think long-term and to remember logic. However, making a rash decision can inhibit the long-term benefit that comes from maintaining a balanced perspective without reactionary behavior. How to Lessen the Behavior Gap for Your Financial Health At any given point, the market can go up, down or it can remain the same. While many aspects of the market are out of our control, one thing we can control right now is how we handle our financial strategy. Remembering the likelihood of recovery over time — and the market’s nearly inevitable up-and-down movement — can provide a more logical angle to calm the nerves.  If you’re experiencing financial anxiety, take a breath and also remember the potential for long-term gains. Of course, you can and should always reach out us for further clarification and advisement. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Advisory Services Offered Through CreativeOne Wealth, LLC an SEC Registered Investment Advisor. Trinity Financial Group and CreativeOne Wealth, LLC are not affiliated. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. ARE-7555 | 20229 - 2020/7/7

The older we get, the more critical it is to ensure our affairs are in order and have an estate plan. But what exactly is an estate plan, and what should be included? Estate Plan Basics An estate plan is the management and organization of your assets should you pass away. It also includes documentation determining who can make medical and financial decisions should you become incapacitated. Most people think that estate planning just includes a will. While a will is a beneficial document, other documents should be included in your estate plan. A will (also called a last will and testament) specifies how you want your estate to be distributed. Besides dividing up your assets, a will also appoints guardianship for minor children. This last item is essential to designate; you don’t want a court determining who your children should live with in the event of your death. If your estate includes a revocable trust, a will is still needed. Called a “pour-over will,” the goal of this document is to cover any assets that may have not made it over to the trust.1 An advanced medical directive (medical power of attorney) establishes who can make medical decisions for you should you become unable to do so. A medical power of attorney also allows you to designate a conservator should you become mentally incapacitated.1 A living will details to your physicians what type of care you want to receive at the end of your life when you face a terminal illness or are in a vegetative state. Do not resuscitate (DNR) and do not intubate orders are listed here. While a last will and testament is designed to specify your wishes upon your death, a living will determines what happens to you while you’re still alive.1 A financial power of attorney , much like a medical power of attorney, appoints someone to handle your financial affairs should you become unable to do so. There are two different types of financial powers of attorney: a durable power of attorney and a springing power of attorney. A durable power of attorney goes into effect as soon as the documents are signed, whereas a springing power of attorney only goes into effect if you become mentally incapacitated.1 A revocable living trust is a more detailed document that details not just what happens after you’re gone or incapacitated but what happens while you’re alive, too. At its core, a revocable trust is a vehicle to hold your assets; meaning that until assets are moved over, it’s essentially just an empty vessel. If you have a more complicated estate, a revocable living trust can help manage a variety of assets and beneficiaries. As the trustee, you’ll still have control over your assets while they’re in the revocable living trust, and assets held in the trust will avoid probate after your death.1,2 Estate plans are a necessary part of life, albeit one that no one really wants to think about. But having an estate plan is one of the kindest things you can do for your loved ones. You’ll gain peace of mind knowing that your family is taken care of, no matter what life throws at you. https://www.investopedia.com/articles/pf/07/estate_plan_checklist.asp https://www.thebalance.com/what-is-a-revocable-living-trust-3505191 Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Advisory Services Offered Through CreativeOne Wealth, LLC an SEC Registered Investment Advisor. Trinity Financial Group and CreativeOne Wealth, LLC are not affiliated. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. ARE-7555 | 20229 - 2020/7/7

It seems like when summertime hits, time slows down. The hustle and bustle of the holiday season is over, the taxes are complete and the vacation days are scheduled. If you find yourself with a bit of extra time on your hands in the upcoming months, you may want to use this opportunity to check in on your family’s finances. While doing a thorough analysis of your wealth may sound intimidating, we’ve broken it down into eight simple steps to keep you focused and on track.  Step 1: Analyze Your Budget In early 2022, the Bureau of Economic Analysis reported that the personal savings rate is at only 6 percent.1 An effective way to avoid spending more than you’re earning is to step back and take stock of your monthly and annual budget. And if you don’t have a budget at all, use this time to make one. Many credit cards or banks will offer categorical breakdowns of your spending, which can be a great way to find out what you’re spending the most money on and if there’s room to cut back. To get the best look at your spending habits, you may want to evaluate your savings and spending record over the past six to 12 months. Step 2: Seek Out Tax Savings Do you scramble to pull your paperwork together every March and April? This year, try taking a different approach to tax season by evaluating your tax-saving strategies early. You may want to work with your financial planner or tax professional to create a mock tax return, as this can help you understand your withholding options and tax-saving opportunities such as 401(k) or 403(b) options, IRAs and HSA contributions. Focus on filing any time-sensitive deductions and brush up on changes in tax laws. Reaching out to your tax professional now could mean you have more time to prepare and strategize together for next year’s returns. Step 3: Tackle Your Debt An alarming 38 percent of adults carry credit card debt from month to month.2 If you’re guilty of putting off managing your amounting expenses, now’s the time to start planning to pay them off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to focus on managing and eliminating. While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a better idea of your total debt’s big picture. By creating an annual debt summary, you and your financial professional can better understand whether you’re gradually working down the amount or falling farther into the hole. Step 4: Revisit Short and Long-Term Goals A lot can change in a year - marriage, death, divorce, growing your family and experiencing a major career change. Even seemingly small adjustments, like a job promotion or sending a kid off to college, can have a significant impact on your financial status. That’s why it’s important to regularly review your long-term goals and progress towards them while revisiting and evaluating your shorter-term goals as well. Step 5: Evaluate Coverage and Providers As you’re reviewing your budget and expenses, take the extra time to thoroughly evaluate your current providers and coverage options. This includes your internet, cable and wireless service providers in addition to your insurance coverage options. If you tend to set up auto payments and forget about your monthly bills, this could be an opportune time to revisit what it is you’re actually paying for. Step 6: Reassess and Rebalance Your Portfolio It’s important to visit your portfolio and risk tolerance regularly to help keep it in line with your tolerance, goals and market conditions. While most managed portfolios will be rebalanced automatically, it’s important to take stock of your investments’ big picture. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance. Step 7: Review Your Retirement Savings Whether retirement is decades down the line or within the upcoming year, reviewing your retirement savings on an annual basis is a great habit to start. Take the time to assess whether or not you’re maxing out your retirement contribution options and how the savings you’re making today will translate into retirement income later down the line. Step 8: Assess Your Estate Plan It’s not fun to plan for the worst-case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues down the line. As you assess your legacy plan annually, make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your passing. While you’re likely daydreaming of book reading, beach-going and backyard barbecuing this summer, don’t forget to do yourself a favor and squeeze in some financial assessment as well. https://www.bea.gov/data/income-saving/personal-saving-rate https://www.nfcc.org/resources/client-impact-and-research/2021-consumer-financial-literacy-and-preparedness-survey/ Advisory Services Offered Through CreativeOne Wealth, LLC an SEC Registered Investment Advisor. Trinity Financial Group and CreativeOne Wealth, LLC are not affiliated. Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

Secure Act 2.0 is on the way. The bill recently passed the House of Representatives in rare bipartisan fashion, with a 414 - 5 vote in favor. You may remember the first Secure Act, which was signed into law by former President Trump in December 2019. That law raised the age for required minimum distributions from 70 ½ to 72. It also impacted 401(k) contributions, student loan repayments, and the use of annuities in 401(k) plans. 1 If passed as currently written, Secure Act 2.0 would have an even greater impact. The bill could change the RMD age even further, plus alter things like RMD penalties, catch-up contributions, employer contributions, and more. 2 Below are seven ways Secure Act 2.0 could affect your retirement strategy: 2 Raising the RMD age to 75. Secure Act 1.0 raised the RMD age from 70 ½ to 72. Part 2.0 would push it out even further: Age 73 starting in 2023. Age 74 in 2030. Age 75 in 2033. Catch-up contribution expansion. Current law allows for employees age 50 and older to make catch-up contributions to their 401(k) each year in addition to their regular contributions. This year, the catch-up contribution amount is $6,500. Under Secure Act 2.0, that amount would increase to $10,000 for workers ages 62 to 64, beginning in 2024. 3 Catch-up contributions become Roth contributions. Under Secure Act 2.0, all catch-up contributions are treated as Roth contributions starting in 2023. That means that catch-up contribution dollars will be made with after-tax dollars. They still grow on a tax-deferred basis, and then distributions are tax-free after age 59 ½. 3 New Roth matching contributions. Secure Act 2.0 also allows employees to elect for their employer matching 401(k) contributions be made as Roth contributions. Again, these would be made with after-tax dollars, but would generate tax-free distributions in the future. 3 Student loan matching contributions. Secure Act 2.0 also formalizes an idea that the IRS has already approved. Secure Act 2.0 would allow employers to make matching contributions to 401(k) plans based on employee student loan payments. The contributions would vest on the same schedule as normal matching contributions. 2 Reduced RMD penalties. Under current policy, the penalty for a missed required minimum distribution is 50% of the missed distribution. Under Secure Act 2.0, that penalty would fall to 25%. 3 Automatic contributions. Finally, Secure Act 2.0 would encourage retirement saving by requiring new 401(k) plans to automatically set new participants’ contributions at 3%, with 1% automatic increases each year up to a maximum of 10% contributions. Employees would have the opportunity to opt out of the automatic contributions. 4 Secure Act 2.0 would mark a major change in retirement policy, and would also likely impact your strategy. It is not yet law, but given the bipartisan support of the bill thus far, it seems reasonable that it will pass. 5 Let’s talk about your retirement income strategy and how it could be affected. That’s especially true if you will take RMDs or make catch-up contributions in the near future. 1. https://www.cnbc.com/2022/04/05/retirement-savers-may-benefit-from-secure-2point0-what-needs-working-out.html 2. https://finance.yahoo.com/news/secure-act-2-0-passes-120019436.html 3. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/house-passes-secure-act-2-to-promote-retirement-savings.aspx 4. https://www.cnbc.com/2022/02/05/heres-whats-new-with-401k-plans-this-year.html#:~:text=Contribution%20limit%20changes&text=For%202022%2C%20you%20can%20put,not%20count%20toward%20these%20limits . 5. https://www.cnbc.com/2022/03/30/house-passes-secure-act-2point0-heres-what-it-means-for-your-retirement-.html Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.