What is the Secure Act 2.0 and how does this affect my retirement?

Ralph Estep Jr.:
00:00

Are you curious about the Secure Act 2.0 but feel lost in the financial jargon? Ever wonder if those retirement rule changes could be your ticket to a worry-free future? Well, stay tuned as we unpack this game-changing legislation and discover how it might revolutionize your retirement plans.

Ralph Estep Jr.:
00:17

Hey everyone. Welcome back to the Ask Ralph Show. It's Tax Talk Thursday, and you know what that means, we're diving deep into a topic that might seem a little dry at first, but trust me, it's got the potential to impact your financial future in a huge way. We're talking about the Secure Act 2.0. Now yesterday, we covered the 5 things you can do to quickly boost your credit score.

Ralph Estep Jr.:
00:42

If you missed it, just head over to askralphpodcast.com and you'll find it and all of our other episodes right there on the site. I don't know if you know this or not, but you can also search our episodes by topic. So before you make any financial decisions, be sure to search our past episodes or send me a question for me to cover on this show. I truly love answering your questions.

Ralph Estep Jr.:
01:04

Well, let's get back to today's topic. Now, you might be thinking, "Ralph, the only secure thing I'm worried about right now is making sure I have enough gas in the car to get to work tomorrow." And trust me, I hear you. We are certainly in challenging financial times. But stick with me on this. This new law is all about retirement savings. And whether you're just starting out or you're already thinking about your golden years, understanding can mean the difference between scraping by or truly enjoying your retirement.

Ralph Estep Jr.:
01:32

Now, before we jump into the nitty gritty, let's hear from one of our listeners who wrote in a question about today's topic. This one comes from Eddie in Missouri, and Eddie writes: "Dear Ralph, I keep hearing about the secure act 2.0 thing on the news, but honestly, It just sounds like a bunch of confusing government jargon. I own a small bakery. I'm so busy trying to keep up with the flour prices and customer orders that I haven't had time to figure out what all this means. Can you help me break it down? Thanks, Eddie."

Ralph Estep Jr.:
02:05

Well, Eddie, you're preaching to the choir my friend. Government jargon is definitely not my love language either. But you're right to be curious about the Secure Act 2.0. It's got some pretty significant implications for small business owners like yourself, especially when it comes to planning for retirement. It also impacts all of us, because God willing, we will all see retirement someday.

Ralph Estep Jr.:
02:29

Welcome back everyone and a special welcome to those of you joining us for the first time. Here on the Ask Ralph Show, we believe that God wants us to be wise stewards of the blessings he's given us and that includes our finances. Today, we're diving into these sometimes-murky waters with the Secure Act 2.0, but don't worry. I promise to be your trusted guide, use plain language we can all understand.

Ralph Estep Jr.:
02:53

Now, before we get started, I want to share a verse that I think speaks to the heart of what we're talking about today. Comes to us from Proverbs 21:5, and it tells us this. "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." See, even the good book recognizes the importance of planning. The Secure Act 2.0 is all about giving us more tools and opportunities to plan for a secure financial future, both for ourselves and for our loved ones.

Ralph Estep Jr.:
03:23

So you might be asking, "Ralph, what exactly is the Secure Act 2.0?" Well, let me start by this. It's a big piece of legislation that was signed into law at the end of 2022. And it makes some pretty significant changes to the rules around retirement savings. Now I know what you're thinking. "Ralph, just tell me how it affects me." And that's exactly what I'm going to do. So here are some of the key takeaways from this Secure Act 2.0 that you need to know.

Ralph Estep Jr.:
03:47

The first is this. It allows for later required minimum distributions or those RMDs. I did a show on that a couple of weeks ago. Remember those pesky RMDs? You know, the money the government makes you take out of your retirement accounts and once you hit a certain age. Well, the Secure Act 2.0 pushes back the age for starting RMDs from 72 to 73. And for those of you born in 1960 or later, you get to wait even longer until age 75. This gives your money more time to grow tax deferred, which is a good thing. A simple fact is the longer the money stays in the account, the more it grows. Kind of like the yeast in your bread, Eddie. You've got to let that bread rise.

Ralph Estep Jr.:
04:28

And I know what some of you might be thinking. "Ralph, I'm nowhere near retirement age. Why should I care about this today and care about these RMDs?" And that's a fair point but remember this. Time flies. I know it sure does for me, as I, as I get older. The quicker time seems to move. Do you feel the same way? But the truth is, the earlier you start planning for retirement, the better off you'll be. Plus, these changes could have implications on how you think about estate planning and passing on your wealth to loved ones.

Ralph Estep Jr.:
04:56

So let's move on to the next big change. It provides for easier Catch-up Contributions. And this isn't the ketchup you put on your French fries. For those of you 50 and older, the Secure Act 2.0 makes it easier to turbocharge your retirement savings with what they call Catch-up Contributions. Starting in 2025, if you're between age 60 and 63, you'll be able to contribute even more to your 401(k) and IRA accounts.

Ralph Estep Jr.:
05:22

This is a fantastic opportunity to make up for any loss ground or simply boost your savings as you get closer to that retirement age. So if you'll be in that age range in 2025, now is this time to start planning for that change. What's the truth is, it’s only a few months away as we sit here in July of 2024. And for all of my small business owners out there, like Eddie who wrote in earlier, listen up! The secure act 2.0 expanded small business retirement plan options.

Ralph Estep Jr.:
05:50

This act makes it easier and more affordable for small businesses to offer retirement plans to their employees. This is a huge, win-win, both for the employee and for the employer. It allows you as an employer to attract and retain valuable employees, and it gives your employees a chance to build a more secure financial future. And listen, we all want to build that.

Ralph Estep Jr.:
06:10

Now I know this is a lot of information to digest, and the specific details of how Secure Act 2.0 will affect you depends on your individual circumstances. That's why I always encourage you to reach out to a qualified financial advisor who can help you make sense of it all and develop a personalized plan to meet your needs. But remember this. Even with all these changes, the most important thing is to be proactive about your financial future. Don't wait for the government to tell you what to do. Take control of your finances, make a plan, and trust that God will honor your efforts.

Ralph Estep Jr.:
06:45

Well, before we wrap up today's episode, I want to remind you that tomorrow, we're tackling a question that's on minds of many of us, and I get this question repeatedly. And they asked me this. Is it better to rent or buy a home? And how can I decide what's the best for me? Well tomorrow, we're going to be exploring the pros and cons of each option, looking at it through the lens of our faith, and I'll share some practical tips to help you make the best decision for your unique situation. That's one you don't want to miss.

Ralph Estep Jr.:
07:12

And don't forget, if you have a question you'd like answered on the show, head over to askralphpodcast.com and submit it there. You'll find a microphone right there at the bottom, right of the site where you can record your question. And if that doesn't work, you can always send me an email. That's to ralph@askralph.com. And while you're there, sign up for our email list and receive a free copy of my book. This is it right here. Mastering your finances. Now this normally sells for 10 bucks on Amazon. It's packed with even more tips and strategies to help you achieve financial freedom, God's way.

Ralph Estep Jr.:
07:44

Well, that's all the time we have for today. Remember, as I always close. Stay financially savvy and God bless you abundantly. Have a great day.