The 10 merriest reasons to be jolly about retirement

Our friends at ThinkAdvisor.com have put together a list of the Top 10 Merriest Retirement Facts of 2021. At the brightest time of year, it’s nice to know there are genuine highlights on the retirement front. Here’s the list:

1. The 2022 Social Security Cost of Living Adjustment will be 5.9%.
Yes, inflation this year increased to the highest levels in 40 years. But after years of small cost-of-living adjustments amid higher health care costs, this year the final COLA was set at 5.9%, which is the highest since 1982, when it was set at 7.4%.

2. Workers have saved more money for retirement.
Defined contribution plan participant balances increased by 24% between June 30, 2020 and June 30, 2021, while IRA balances increased by 30%, according to a Fidelity study. Also, the number of accounts with more than $1 million doubled during the year to over 750,000 between IRAs and direct contribution plans.

3. Rising stock markets have been kind to retirement accounts.

With the stock market rising roughly 26% through mid-December, long-term savers should be pleased.

4. More than 84% of adults over 65 are fully vaccinated against COVID-19.

Almost 60% of the U.S. population has been fully vaccinated against COVID-19. The numbers are even higher among older adults: More than 84% of those over 65 are vaccinated, according to the Mayo Clinic.

5. Default investments helped keep people invested.
The push to increase automatic enrollment in retirement accounts has helped reduce panic selling when the market drops. More than half of defined contribution plan participants are now enrolled in default investments such as target-date funds.

6. Company pensions are nearly funded.
The 100 largest company pensions increased their funded status to 97.6% from 88.5% over the last 12 months, putting pension plans on more solid financial footing.

7. The Social Security trust fund is in better shape than expected.
Some experts were worried that the Social Security trust fund would be in worse shape this year due to the pandemic’s impact on employment levels and, therefore, the payroll taxes that go toward Social Security. It turns out that the damage was lower than expected: the Social Security trust fund is expected to be depleted by 2033, only one year sooner than what was projected last year. Congress still needs to take action to extend the fund’s life, but it’s good news that the pandemic did not inflict greater damage.

8. Confidence in retirement reached an all-time high.

The Employee Benefit Research Institute found in its annual survey that 80% of retirees felt confident in their ability to retire comfortably, up from 76% in March 2020. And 72% of all workers surveyed expressed confidence in their ability to retire comfortably, up 3 percentage points from last year.

9. Retirement plan contribution limits are rising.
Contribution limits in employer plans such as 401k’s and 403b’s will increase to $20,500 from $19,500. IRA contribution limits for small-business plans will increase as well.

10. The Social Security 2100 bill was introduced.
Introduced by Rep. John Larson, D-Conn., in late October, the bill has 194 co-sponsors. Among other measures, it would adopt the consumer price index for the elderly (CPI-E) as the basis of annual cost-of-living adjustments. The index measures price changes specifically based on spending patterns of elderly people.

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