Kiplinger’s recent article entitled “4 Potential ‘Silver Linings’ for Seniors in 2023” says that there’s some good news regarding Social Security on the horizon, especially for those who are finding it a little harder to make ends meet. Here are four of these “silver lining” situations:
- Social Security Payments Will Jump by the Highest Amount in Decades. The annual Social Security cost-of-living adjustment (COLA) will go up 8.7% in 2023—the largest increase since 1981. Inflation has resulted in the COLA to help preserve the purchasing power of Social Security payments.
- Medicare Premiums Will Decrease. Since Medicare premiums are generally deducted from Social Security checks, an increase in premiums can water down the benefit of a COLA. A decrease in COVID-19-related acute care treatments helped to reduce Medicare costs this year. For those with a modified adjusted gross income of $97,000 or less as single filers ($194,000 as joint filers), monthly Part B premiums will be $164.90, a decrease of more than $5 per month.
- RMDs May Be Lower. Many retirees have seen the value of their retirement assets drop by 20% or more this year. However, a benefit for retirees is lower required minimum distributions (RMDs) next year. Your RMD for 2023 will be based on how much your traditional IRA and pre-tax 401(k) accounts are worth as of December 31, 2022.
- Retirement Account Contribution Limits Are Really Going Up. If you’re still working and want to maximize contributions to your employer-sponsored retirement plan, in 2023, the limit on annual employee contributions to 401(k), 403(b), and most 457 plans will increase to $22,500 (up from $20,500 in 2022), plus up to $7,500 in additional catch-up contributions for those 50+. If you’re still contributing to an IRA, the annual contribution limit will go up from $6,000 in 2022 to $6,500 in 2023, plus an extra $1,000 in annual catch-up contributions if you’re over age 50.
Reference: Kiplinger (Nov. 2, 2022) “4 Potential ‘Silver Linings’ for Seniors in 2023”