The U.S. Congress is currently debating a $1.7 trillion omnibus spending plan that must pass by the end of this week in order to avoid a government shutdown. This includes hotly-debated retirement legislation, Securing a Strong Retirement Act of 2022 (SECURE 2.0).
Provisions of the Act are likely to be included in some form in the package that may land on President Biden’s desk, according to CNBC.
The broader bill currently includes over 4,000 pages and would provide funding for the U.S. government through the end of the 2023 fiscal year. It could also impact both current and future retirees who will qualify for reverse mortgage loans.
The potential impacts of the SECURE 2.0 provisions include getting more workers involved in saving for retirement and broadly reducing risk for workers as time goes on, according to an analysis by Automatic Data Processing (ADP) released earlier this year.
If the package passes, employers would be required to automatically enroll employees in an offered 401K plan. It would also increase the age at which required minimum distributions can be taken and allow employees access to a portion of their retirement accounts for emergencies. The provisions would also incentivize small businesses to set up retirement plans for employees.
The reverse mortgage industry regularly discusses how senior retirement savings are reaching a crisis point. This idea was punctuated by 2021 data from the Boston College Center for Retirement Research, which showed that half of all American households are not saving enough for retirement.
The Bipartisan Policy Center (BPC) took a closer look at the provisions found in SECURE 2.0 recently, noting in September that increasing the use of automatic enrollment and automatic escalation would “amplify the benefits of expanding access to retirement plans.”
In order to avoid a funding shortfall and a government shutdown, the bill will have to be passed by the Friday deadline. The last time Congress and the White House were unable to come to a funding agreement was in late 2018, and the resulting shutdown stretched to the end of January 2019, making it the longest partial government shutdown in U.S. history.
While most reverse mortgage originators reported that things were business as usual at that time, industry performance data was clouded for months afterward — and HECM endorsements were halted entirely due to the shutdown.
