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More and more baby boomers in the US decide to retire due to the pandemic

About 30 million baby boomers retired in the US in the third quarter of 2020, according to the latest report by Pew Research Center. It is 10% more than the same period in 2019, according to NBC12.
More and more baby boomers in the US decide to retire due to the pandemic

According to financial experts, the reduction of jobs due to the pandemic became the reason for that.

In addition to the basic state pension (Social Security), most new retirees have 401k or IRA plans.

The most famous American pension plan is 401K match. The money is deducted on it by both employer and employee, and the latter manages the investment process. An employee can deduct up to 15% of his salary to the personal retirement account on a monthly basis, but not more than 11 thousand dollars a year. The employer also contributes to this account a certain percentage of the employee's deductions, usually 30-50%, but sometimes 100% monthly. Vesting is a common practice. Taxes are paid already on the entire amount received on pension (that is, the EET scheme is used).

The second most famous type of American retirement plan is the so-called IRA (abbreviated from Individual Retirement Account). Investment opportunities are also wide in this case, but according to this plan, no more than $5 thousand can be deducted to the personal account per year. The money deposited into a personal account in accordance with the Roth IRA is taxed entering the system and is not taxed when it is received in old age, that is, at the exit (TEE scheme). Thus, there are no penalties for early withdrawal. Under the Traditional IRA scheme, contributions are tax exempt and there are pre-retirement withdrawal penalties.

Source: https://www.nbc12.com/2021/04/12/more-baby-boomers-are-deciding-retire-pandemic/

Photos are from open sources.

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