Navigating 2023: Financial Planning Reminders

Navigating a new year can be tricky, especially as it relates to your financial situation. Here are some important reminders on retirement and health plan contributions, adjustments to Social Security benefits and Medicare premiums, beneficiary designations, and IRA contribution eligibility to help guide you through 2023.

Review Retirement and Health Savings Plan Contributions

While many of us tend to "set and forget" our retirement and health plan contributions, now is a great time to review your current contribution levels. Employers often institute compensation changes at the beginning of the year which could have a direct impact on your ability to contribute to these accounts. Factors to consider when determining contribution levels include lifestyle expenses, pre-tax vs. post-tax (Roth) contributions, and liquidity needs.

As a reminder, here are the contribution limits for common employer-sponsored retirement plans and health savings accounts:

Tens of millions of Americans receive Social Security benefits, are enrolled in Medicare, or both. As of December 2022, more than 70 million people were receiving Social Security benefits, and around 65 million were enrolled in Medicare in 2022. For the roughly 70% of Medicare enrollees who are also collecting Social Security, their Medicare Part B premiums are automatically deducted from their Social Security payments.

Each year, adjustments are made to Social Security benefits to account for inflation, as are Medicare premiums to reflect changing healthcare costs. In the fall, the Social Security Administration announces the COLA (cost of living adjustment) that will affect Social Security benefits payable in January the following year. For 2023, this increase is 8.7% — the largest increase in 40 years. Occasionally, there are years when there is no increase, but the SSA has never reduced benefits, or negative COLA.

Similarly, the Center for Medicare and Medicaid Services annoucnes each fall the adjustments to Medicare Part B premiums, which take effect the following year. For 2023, Part B premiums have decreased. Please note that Medicare premiums are determined by income levels, and premiums could increase or decrease based on year-over-year changes in income.

Beneficiary Designations

Beneficiary designations may overrule instructions in your will or trusts, so it is crucial to ensure they are up to date. Work with your trusted advisor to verify all retirement plan and insurance policy beneficiaries reflect your current wishes, particularly if you have had any recent life changes such as marriage, divorce, or a birth or death in the family.

Eligibility for Individual Retirement Account Contributions for 2022 Tax Filing

Tax season is upon us and anyone with earned income from 2022 has until April 18, 2023, to decide whether to contribute to either a Roth IRA or Traditional IRA. There are specific rules related to an individual or spouse's participation in an employer retirement plan as well as income limitations to be aware of before an overcontribution is made that could lead to tax penalties. Before filing your return, be sure to review your Adjusted Gross Income in conjunction with the income phaseout table below to determine your eligibility to make a tax-deductible contribution. 

• IRA deduction phaseout for active participants:

• Roth IRA phaseout: