IRS Updated Life Expectancy Tables
With many other things going on in November, it was easy to miss when the IRS issued new life expectancy tables. This is important because these tables are used to calculate Required Minimum Distributions (RMDs) from IRAs and qualified retirement plans.
The old tables will still be used when determining 2021 RMDs, but as of January 1, 2022, the new tables become effective.
This change has been long overdue. The current life expectancy tables were last updated in 2002. The new tables better reflect the improved life expectancy of individuals. These changes will generally reduce the amounts required to satisfy RMDs, meaning account owners can retain a larger amount in their retirement accounts and defer taxes longer. Coupled with the fact that the RMD age was lifted to 72 in 2020 and no RMDs were required in 2020, there is potential to keep more money sheltered in tax-advantaged accounts.
A Retirement Income Roadmap for Women
While everybody needs to plan for retirement, women often face special challenges when planning for this time of life.
For one, their careers are more likely to be interrupted to care for children or elderly parents. Even if women stay in the workforce fulltime, they tend to earn less than men, on average. As a result, their retirement plan balances are often lower.
In addition to earning less, women generally live longer than men. This means having to stretch potentially limited retirement savings and benefits over many years.
Don’t dismay. Here are a few tips to help yourself or the women in your life manage these challenging financial realities.
Participate In Retirement Planning.
You may be balancing so many responsibilities that you haven’t given retirement planning much thought. Or maybe you’d rather let your spouse take on these duties. That’s understandable, but it’s critical for women to take an active role in planning for retirement. Married or not, make sure you are well-informed and are able to make financial decisions that benefit you.