5 Financial Silver Linings Seniors Have to Look Forward to in 2023
It is common to feel anxious about the future regardless of your age. And if you’re approaching retirement, there can be even more uncertainty. With the inflation rate hitting 7.1% at the end of November 2022, you have every right to be concerned.
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However, 2023 is shaping up to be an excellent year for those ages 65 and older. Here are five financial silver linings that seniors can look forward to in 2023.
Cost of Living Adjustment Increase
The Social Security Administration (SSA) has announced that the Cost of Living Adjustment (COLA) for 2023 will increase by 8.7%, the biggest gain since 1981. The increase will take effect in December 2022 and will be reflected in January 2023 benefit payments. This is great news for seniors, as the COLA helps to keep pace with rising costs and maintain seniors’ purchasing power.
Decrease in Medicare Premiums and Deductibles
The Centers for Medicare & Medicaid Services (CMS) state that the standard monthly Part B premium for 2023 will reduce by $5.20. This brings the premium to $164.90, down from $170.10 in 2022. This means that Medicare beneficiaries will have more money to allocate to other expenses.
Required Minimum Distribution Age May Increase
Under the proposed SECURE 2.0 bill, the Required Minimum Distributions (RMD) age for IRAs would progressively increase from 72 to 75. The RMD age would immediately rise by one year to 73. The last adjustment would be made for the 2023 tax year, increasing the final threshold to 75. This is beneficial because it will give seniors more time to grow their retirement savings without worrying about required distributions.
Increased Retirement Account Contribution Limits
The 401(k) contribution limit is set to increase by $2,000 in 2023. This will increase the 2022 limit from $20,500 to $22,500. The catch-up contribution limit for those ages 50 and older will also increase by $500, bringing up the contribution from $26,000 to $26,500. This is good news for seniors who are behind in retirement savings and need to catch up.
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Catch-Up Contributions Available for Seniors
You may be eligible to contribute much more through catch-up contributions if you’re above 50 or have more than 15 years of service for a 403(b) plan. More than the standard $22,500, you could contribute up to $30,000 this year. This way, you can supercharge your retirement savings if you have the extra cash. 2023 is a bright year for seniors and their finances. These silver linings will help ease some of the anxiety that comes with retirement and provide peace of mind as you enter your golden years.
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