More retirees are struggling to stay on top of their finances, which is one reason Bank of America is launching its 401k Pay platform.
The platform is designed to help customers convert 401k assets into retirement income. It also includes management features, such as the ability to set up recurring withdrawals from 401k funds.
Many retirees are uncertain about the best way to manage their retirement savings. To address this, 401k Pay will offer guidance on retirement spending and provides tools to help users monitor their funds.
The platform is designed to determine the appropriate retirement income a customer should generate from their 401k account. This calculation is based on a holistic snapshot of the user’s finances and takes into accounts factors like cost of living, state and federal taxes, and required minimum distributions.
Feeling the Pinch
Retirement fund management tools are increasingly important, as macroeconomic factors have caused many retirees to feel the same pinch as the broader population. A combination of inflation and rising interest rates have strained budgets for years, often forcing retirees to rely on credit cards to meet their obligations.
According to the Employee Benefit Research Institute (EBRI), over two-thirds of U.S. retirees had outstanding credit card debt last year, marking a substantial increase from years past. Much of this debt was carried into retirement, as those entering retirement today tend have higher levels of debt than previous generations.
Planning for Unforeseen Expenditures
This growing dependence on credit cards is particularly concerning given the fixed incomes many seniors rely on.
Retirees are also more likely to face unexpected expenses related to health, home, or auto issue. Data from AARP shows that credit card debt remains the most common type of debt among adults over 50, with half of respondents citing medical expenses as a contributor to their monthly revolving debt.
The potential for unexpected expenditures underscores the importance of tools that help retirees monitor and manage their retirement funds effectively.
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