Planning Your Retirement in 2023
January 3, 2023
January is here, and planning your retirement for the new year does not have to be complicated. Most people dream of the day that they’ll retire. What could be better than no work and plenty of free time? Unfortunately, though, statistics reveal that one in four Americans do not have any savings set aside for retirement. This alarming statistic illustrates the importance of retirement planning. One of the essential aspects of planning is understanding the changes that affect retirement plans.
Planning Your Retirement in the New Year
If you want to know how to outline your retirement in 2023, you need to be on the lookout for the following four changes that will take place.
Prepare for Retirement With New IRA Limits
Individual retirement accounts, or IRAs, are a great way to invest in your retirement because they offer the unique benefit of tax-deferred growth. It means that you don’t have to pay taxes on the contributions and investment earnings until you start taking mandatory distributions at age 72. At this time, you can invest and watch your contributions grow, but new limits will cap how much you can save in these accounts. The limit will increase to $6,500 annually, compared to $6,000 in 2022.
Invest Even More in Savings With New 401(k) Limits
A similar change will affect people saving for retirement with a 401(k). Like IRAs, 401(k) accounts are advantageous because they allow tax-deferred earnings and contributions. One of the main differences of a 401(k) is that employers typically offer and subsidize this type of account. Starting in 2023, there will be a new limit on how much employees can contribute. It will increase from $20,500 annually to $22,500. If you are over 50, you can make catch-up contributions in excess of this sum.
Get Ready for New Ranges for IRA Income Phase-Out
One of the most significant advantages of an IRA is that anybody can open this type of account. You don’t need an employer to start saving. Generally, your contribution limit will decrease as your income increases if you also contribute to a workplace plan. It is called the IRA income phase-out range, which caps contributions for earners who make a certain amount. Check with your advisor.
Understand How Social Security Affects Retirement
Finally, if you’re planning for retirement, you need to understand the upcoming changes that will affect how Social Security funds retirement. In 2023, there are several changes that the Social Security Administration has planned, including a cost of living adjustment of 8.7%. This means that Social Security payments will increase by an average of $140 in 2023.
About 1891 Financial Life
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Our portfolio is extensive, ranging from various life insurance policies to our MYGA to support your financial needs no matter what stage of life you’re in. For more information, contact us at (855) 804-7424.
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