Here are 6 Financial Updates for the New Year:
1. Social Security Checks Get a Boost.
Approximately 70 million Americans can look forward to an 8.7% boost in benefits in 2023.
Federal benefit rates increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index. On average, Social Security benefits will increase by more than $140 per month starting in January.1
2. 2022 Interest Rate Increases have made bond interest rates more attractive.
A positive outcome of rising interest rates is that bond rates have become very attractive. They are a bigger contributor to our portfolios. There are also great short-term opportunities for a higher yield than traditional savings accounts.
- CDs and high-yield savings accounts pay 3-4%.
- 6-month T-Bills pay 4.7% annualized.
- Intermediate bond funds pay 5% +.
3. Inflation is cooling.
This signals that the Fed’s aggressive rate increases are working. It indicates a potential slowing of rate increases in 2023 and a return to healthy inflation of 2-3%.
4. Increased Limits for Retirement Plans.
- You can now contribute up to $22,500 per year to 401k/403b/Thrift Savings/most 457 plans WITH the catch-up contribution increasing to $7,500 per year for people aged 50 and older.2
- IRA up to $6,500 / year ($7,500 total if 50 or older)
Tax Tip: Contributing to a 401(k)/403(b) is still the easiest, most effective way to lower taxable income.
5. ROTH IRA Income Limits Increase.
Your income affects the maximum amount you can contribute to a Roth IRA. Earnings limits increased for Roth contribution eligibility. For example, if your MAGI is less than $138,000 in 2023 and you're a single filer, you can contribute the full amount. If your MAGI is more than $138,000, but less than $153,000, you can contribute a reduced amount to a Roth.3
6. Everything is on Sale!
We just want to remind you that down markets are a great opportunity to buy stocks at a discount. Market history shows that what goes down usually comes back up. Take advantage of the market while it's down!
If you would like to talk about your financial situation, schedule a complimentary call!