House approves rule for ESG disclosure

The House last week approved a proposal requiring public companies to report environmental, social, and governance metrics for investors. The proposal passed with a 215-214 vote, according to published reports. The Securities and Exchange Commission is also reportedly considering rules on transparency for climate risk, board diversity, and other workforce issues.

Investors abandon millions in retirement accounts, study finds

A new academic report found that a total of $790 million in old retirement accounts had been abandoned by investors. The study, which examined unclaimed property in 2017, found that investors abandoned old IRA accounts and the accounts owners, who were 72½ or older, failed to take required minimum distributions. The median account total was $5,400, the report noted.

Many Millennials face savings challenges

Older Millennials starting their own families are facing challenges of trying to budget and include saving. Many are still paying off student debt. They are also trying to plan for retirement and save for their child’s college education. A recent study found that, due to college loan payments, 23% of Millennials reduced their retirement contributions. Another 27% delayed buying a home, and 24% cut back on emergency savings.

Senate bill proposes new rule for 401(k) withdrawals

Two senators last week introduced a bipartisan bill that would allow savers to take a penalty-free emergency withdrawal of $1,000 annually from 401(k) plans and individual retirement accounts. The Enhancing Emergency and Retirement Savings Act of 2021 would allow for one emergency distribution per calendar year. Savers would also be required to pay back the amount before any other distributions could be made from the plan.

Social Security uncertainty could cost investors

Uncertainty about the future solvency of Social Security could lead investors to make financial planning mistakes, according to a recent report from the National Bureau of Economic Research. The study found that indecision could cost younger and middle-age workers more than two months of earnings. The study noted that two big mistakes that savers could make are assuming their benefits will remain the same, even after the program becomes insolvent, or preparing their retirement savings strategy based on cuts that do not actually happen.

Rise in early retirements reveals income inequality

The pandemic has resulted in a surge of early retirements. Some are voluntary, while others are due to workers being forced to exit earlier than expected, according to a new study. About 1.7 million Baby Boomer workers retired early last year. The data revealed income inequality. Some savers, with investments, had sufficient income to retire. At the same time, many lower-paid workers, without a lot of savings, do not have enough resources to retire and need to find new jobs. Retiring prior to full retirement age means a reduction in Social Security benefits that could total up to 30%.

Investor trust on the rise

For the first time in more than a decade, the majority of investors surveyed recently said they trust that financial services firms are looking out for their best interests. The research focused largely on the financial advisory segment. The survey comprised affluent investors with more than $250,000 in investable assets and the near-affluent who earn more than $125,000 annually and are younger than age 45. The survey has included the question about trust since 2008.

Will the administration advance a new fiduciary rule?

The administration may advance proposals for a new, stricter fiduciary rule for retirement plan advisors and sponsors, according to a recent report citing retirement plan industry executives. The administration may also promote the inclusion of environmental, social, and governance (ESG) investments in retirement plans.

Savers improved financial plans during pandemic

A recent survey found that one third of adults said they have improved their financial discipline during the pandemic. Most respondents said they expect their new habits of saving and budgeting will continue post-crisis. During the past year, 83% of respondents said they created, reviewed, or made changes to their financial plans. An additional 17% said they did not have a plan prior to the pandemic.