What are the Big Takeaways for Social Security in 2023? Kiplinger’s recent article entitled “4 Potential ‘Silver Linings’ for Seniors in 2023” says that there’s some good news 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: What are the Big Takeaways for Social Security in 2023?
- 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”