Cost to retire continues to skyrocket as Biden targets retirement advice
The cost to retire continues to increase as the Biden administration cracks down on "junk fees" in retirement investment advice.
"Three years ago, if you had been aiming for retirement savings of, let's say, $500,000, in today's climate, with higher prices, you need more like $600,000," American Institute for Economic Research’s Paul Mueller told FOX Business’ Gerri Willis. "In three years, you need another $100,000 to have the same purchasing power. So inflation has very much eaten away at people's savings."
Biden’s White House said in a press release Tuesday that part of the bigger "Bidenomics" plan includes a new rule enforced by the Department of Labor that will require advisers to recommend commodities or insurance products, like fixed index annuities, in the saver’s best interest.
The rule also would cover advice to roll assets out of an employer-sponsored retirement plan and financial advice involving what investments to include in your 401(k), according to the release.
U.S. RETIREMENT SYSTEM EARNS JUST A C+ IN GLOBAL STUDY
Willis reported Tuesday that the key change with this rule means sellers of insurance and annuities must observe the same standard of care required by licensed financial advisers.
The regulation change comes as baby boomers struggle to get their 401(k) balances to pre-COVID levels, with Fidelity reporting the generation had an average of $249,700 in December 2021, but saw $220,900 in June 2023.
Forbes has additionally reported that the average U.S. retiree is $470,000 short of what they need to retire comfortably.
Reacting to the report, Rosecliff founder and managing partner Mike Murphy said on "Varney & Co.": "The government should stay out of investments… And you should have the freedom to invest wherever you like, not where the government tells you to invest."
Despite statistics showing American savers are behind, Fidelity previously shared with FOX News Digital savings milestones to aim for based on your age.
By age 30, it’s recommended that you have saved at least 1x your annual salary. Then, it’s 3x your salary by 40, 6x by age 50, 8x by 60 and 10x by 67.
"It's not based on dollars. So you will see a lot of different reports that say, ‘Oh, you need X amount of dollars when you retire.’ And then you'll see a competing survey that says, ‘No, you need this amount," Michael Shamrell, vice president of Fidelity's workplace investing thought leadership, previously told Digital. "It doesn't allow for people in different geographical areas of the country where there may be different cost of living."
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"These guidelines are applicable to you and your savings journey," he added, "and again, help you understand what you need to save as a multiple of your salary as opposed to just some dollar amount that's out there that may or may not be realistic for you."
The White House said Tuesday "an adviser may receive a commission as high as 6.5 percent to recommend some insurance products," costing American families as much as $5 billion per year.