How Democrats’ $ 3.5 Trillion Budget Plan Will Boost Retirement Savings

How Democrats' $ 3.5 Trillion Budget Plan Will Boost Retirement Savings

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There may be good news for those struggling to save for retirement. House Democrats are adding measures to help prepare people for the long term in their $ 3.5 trillion federal budget plan.

The House Ways and Means Committee on Tuesday released legislative proposals for parts of the budget dealing with boosting retirement savings, as well as several other programs to help American workers, children and the elderly.

The committee will begin a markup process on the proposals Thursday and Friday, Chairman Richard Neill, D-Mass., Said in a statement.

“Later this week, the Ways and Means Committee will dismantle the idea that only certain workers are eligible for ‘benefits’ like paid vacation, childcare and savings assistance for retirement, and will finally commit to these investments. ” Which makes these endorsements into the American workplace, ”said Neil. “We will also examine how we can commit resources to modernize a major trade agenda that supports American workers facing challenges due to international competition and our country’s seniors.” How does it provide better security?

Retirement savings will get a boost

So far, the proposals include two things that, if passed, would help boost Americans’ retirement savings.

First, Democrats are demanding that employers who do not currently offer employer-sponsored pension plans automatically enroll their employees in individual retirement accounts or other 401 (k) -like plans, according to the committee. According to a press release.

In 2020, about 33% of workers in the private sector did not have access to an employer-sponsored pension plan, according to government data. People working part-time or in the service sector and those with the lowest wages were the least likely to help an employer save for retirement.

In addition, Democrats aim to make savings credits refundable so people with no taxable income can claim benefits in the form of contributions to their retirement account, according to the latest proposal.

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The savings credit is a tax credit intended to reward the retirement savings of low- and middle-income workers. In 2021, the maximum credit was $ 1,000 for eligible people and $ 2,000 for those who married jointly. Currently, the credit is non-refundable, which means it may lower your tax bill, but is not refundable.

Beyond retirement savings, current proposals include increased benefits for workers in certain trades, as well as extended family and medical leave, investments in access to child care and worker services. , and improved health of the elderly and the safety of nursing homes.

Of course, so far these are only suggestions, and they will be debated and potentially changed during the markup sessions. Lawmakers plan to pass the $ 3.5 trillion budget through a process called reconciliation, which means it requires no Republican votes but must be unanimously supported by Democrats.

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