If France Is Doing This, You Have to Wonder if Other Nations Are Going to Follow Suit
Ric Edelman: The President is going to order that people work an extra three years before they're eligible to retire. No, not President Biden. President Emmanuel Macron, the President of France. In France, the legal retirement age is 62. He wants to raise it to 65. He said, "We're in an aging society and it's therefore normal that we work more." If France is doing this, you have to wonder if other nations are going to follow suit. This is all a reflection of the fact that we are, in fact living longer. And does it make sense to allow people to retire and receive pension or Social Security benefits at ridiculously young ages like, you know, 62? In fact, the Secure Act is winding its way through Congress right now and is widely expected to be signed by President Biden. It would delay your obligation to withdraw money from your retirement accounts, something called the RMD, the required minimum distribution. You won't have to do this until you're 75 years old. Won't take effect, though, until 2033. Assuming this law gets signed, you will be able to delay your withdrawals to age 73 starting next year, 74 by 2030, and age 75 by the year 2033.
Ric Edelman: And if you're 50 years of age or older, you'll be able to contribute an extra $6500 a year to retirement accounts, a total of $27,000 in savings. And that would rise to $10,000 a year starting in 2024 for people who are 62 to 64 years of age. So the government is recognizing that we are aging, we are living longer, we need to work longer, we need to save more, and that Americans are woefully unprepared and have saved too little. But here's the rub. You're going to have to put all of your contributions into your retirement account, if you're over the age of 50, into a Roth contribution. Why does the government want you to have to do that? This way, you're paying taxes on the money that you're contributing. It won't cost the government any loss of tax revenue. A Roth IRA is okay if you're in a low tax bracket, but the fact that the government is going to require that you use the Roth, well, that's a little bit of acid with your sugar. The retirement savings gap is significant, and that's what this new law, the Secure Act, is trying to address, the fact that people don't have enough money.