The start of the New Year is a great time to focus on retirement savings contribution limits. Thanks to the power of compound interest. The more you save this year, the more financially secure you may be during retirement.

Are you ready to make more headway on your retirement savings in 2023? Make sure to note the new IRS 2023 limits for how much you can contribute.

401(K), 403(B), 457 Plans, And The Thrift Savings Plan

The contribution limit for 2023 is $22,500, up $2000 from $20,500 in 2022. Individuals age 50 and older are eligible for catch-up contributions of $7500 for a total of $30,000.

Traditional Or Roth IRA

For those who contribute to retirement savings accounts outside of their employer, annual contribution limits have increased for both traditional IRAs and Roth IRAs. In 2023, eligible individuals can contribute up to $6,500, up from $6,000, to their IRAs.

Eligibility For Traditional Or Roth IRA Contributions

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Accounts (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2023.

Traditional IRA

Taxpayers can deduct contributions to a Traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work. The deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2023:

• If you are a single taxpayer covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
• If you are an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
• And lastly, for a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

Roth IRA

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000. In addition, for married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The income phase-out range for contributions to a Traditional or Roth IRA for single filers is $138,000 to $153,000. For married couples filing jointly, it’s $218,000 and $228,000.

The Saver’s Credit

The 2023 income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $73,000 for married couples filing jointly, up from $68,000. The limit is $54,750 for heads of household, up from $51,000. In addition, the limit is $36,500 for singles and married individuals filing separately, up from $34,000.

Simple IRA

The contribution limit for 2023 is $15,500, up $1500 from $14,000 in 2022.

Source: https://www.irs.gov/newsroom/401k-limit-increases-to-22500-for-2023-ira-limit-rises-to-6500

In conclusion, if you have any questions about 2023 contribution limits or how maximizing your contributions can help reduce your taxable income, visit your financial and tax professionals. In addition, if you have a Roth IRA or Traditional IRA, you can still make contributions for 2022 before Tuesday, April 18th, 2023.

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Disclosure

This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. 

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Life insurance provides a strategy to protect your assets against premature liquidation. If a loss from death occurs, the assets you’ve worked hard for may face early liquidation.

While health insurance protects you if you are injured or become ill, and other insurances protect against damages or loss of an asset, life insurance protects your beneficiaries from financial loss when you pass away.

Life insurance is worth the investment, even if you’re young and in good health. Above all, if someone depends on you financially, life insurance can help reduce financial hardship, provide a way to leave an inheritance, fund funeral expenses, and more. In addition, here are six reasons why you may need life insurance, depending on your situation:

1. For Retirement Funding

If you own whole life insurance, you can borrow against the policy’s cash value (without tax consequences) to supplement your retirement. You will still have some remaining death benefits if you don’t use all of the cash value or surrender the policy. Talk to your insurance professional to understand the details of using life insurance for retirement funding. In order to understand how it may or may not be an option for you, given your situation.

2. To Help Pay For Long-Term Care

Adding a rider to a life insurance policy can help pay for long-term care. Therefore by using a particular dual-insurance product, long-term care combines with life insurance so that the cash value can help cover long-term care costs. If the unused cash value is available at death, the policy pays a death benefit to beneficiaries.

3. To Provide Benefits If You’re Terminally Ill

Standard on many terms and whole-life insurance contracts, ‘living benefits’ allow those with a life expectancy of fewer than twelve months to access a portion of the death benefit before death.

4. For Estate Planning

If you have a large estate, you want to ensure that the estate remains ‘intact’. This help to ensure beneficiaries don’t have to liquidate assets to pay estate taxes. It can help pay estate taxes and settle outstanding debts while not jeopardizing the estate’s assets. It also provides an easy way to remove beneficiaries from dealing with these situations. In conclusion, using life insurance in estate planning involves working with an attorney and financial and tax professionals to determine if this is appropriate for your situation.

5. For Business Succession Planning

If you are a business owner and plan to pass on the business to a family member or other key employees, life insurance can be part of the purchase agreement by the intended new owners. Using life insurance in this way should involve a tax professional. In addition, this will help to fully understand IRS code implications and an attorney to help ensure the business succession planning is done correctly. Business succession planning involving life insurance is often part of the business owner’s retirement or estate plan.

6. To Help Fund College

If you’re a parent or grandparent, life insurance can fund part or all allowable education expenses for the insured (child). This can be done without tax consequences, assuming interest applies to the cash value. If the child doesn’t use it for education funding, you give them the gift of life insurance. In other words, this can be for themselves or their beneficiaries.

In conclusion, check with your financial professional or the life insurance carrier about turning the policy ownership over to the child when they’ve reached adulthood since they must own the policy when they’re an adult.

Disclosures

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This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.

Guarantees are backed by the financial strength and claims paying ability of the issuing company.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject ordinary income tax. Withdrawals are generally income tax-free, unless the withdrawal amount exceeds the amount of premium paid. Tax laws are subject to change. Clients should consult their tax professional.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Social Security Retirement and Supplemental Security Income (SSI) benefits will increase by 8.7 percent in 2023, the most significant increase since the 1980s. The last time the cost-of-living adjustment (COLA) was higher was in 1981, when the increase was 11.2%. The increase, due to inflation, will result in a Social Security benefits increase of an extra $146 per month, or $1,827 for 2023, up from $1,681 in 2022.

Social Security benefits are adjusted yearly for inflation based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W index measures the monthly price change in a market basket of goods and services, including food, energy, and medical care. With the current inflationary prices, the Social Security Cost of Living Adjustment may feel like little for many Americans receiving monthly benefits.

How Social Security Retirement Is Funded

Social Security funds through a payroll tax of 12.4 percent on eligible wages; employees and employers each pay 6.2 percent, and self-employed people pay 12.4 percent. The maximum work income subject to the Social Security tax is currently $147,000 for 2022 but will increase to $160,200 for 2023.

Today’s workers fund Social Security for those currently receiving benefits; each working generation supports the past generation ahead of them. Our decreasing younger generations and aging population are a reason for concern that the Social Security fund may not have sufficient funds in the future to pay out at the current benefit rate.

Is Cost Of Living Adjustment Enough To Keep Up With Inflation?

Inflation risk is the risk that will reduce the future real value (after inflation) of an investment, asset, or income stream will be reduced. Inflation risk may impact your savings and investments in these ways:

• Since prices increase over time and more significantly during high inflation, you cannot buy as much as before.
• Your net worth may decrease because inflation reduces your purchasing power.
• Inflation hurts the performance of investments with a set annual return. Such as a bond or certificate of deposit (CD), since you receive the same return each year.

Fixed-Indexed Annuities May Provide A Strategy For Inflation

Fixed-Indexed annuities are an appropriate strategy for retirees seeking income and safety to offset inflation risk. A Fixed-Indexed annuity is a contract issued and guaranteed by an insurance company and backed by the insurance company’s claims-paying ability. Here are other integrated features of Fixed-Indexed annuities:

• They provide growth potential through the features of their sub-accounts, which helps determine the performance (net of expenses) and the amount of money to be paid out. This unique feature helps provide growth, even during periods of inflation, and payments may increase over time.
• FIAs offer a tax advantage by allowing the owner to save more through tax deferral by offsetting their income. They have higher contribution rate limits than traditional pre-tax retirement savings accounts.
• FIAs may help smooth out a portfolio’s return pattern over time, regardless of market performance and inflation.
• They are tax-deferred accumulation vehicles. Whose growth benchmarks to a stock market index rather than an interest rate.

Inflation-Protected Annuities (IPA)

Inflation-protected annuities (IPA) are indexed for inflation risk through an inflation rider which is capped for inflation. IPAs earn more when inflation goes up and less when inflation goes down. However, this inflation rider feature comes with an additional price. Your financial professional can help determine if an indexed inflation rider is appropriate for your situation.

Contact our office if you have any questions about Social Security benefits. The 2023 Cost of Living Adjustment increase. Or questions on how Fixed-Indexed annuities may provide a strategy for inflation depending on your situation and your financial plan.

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Disclosures:

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.

This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

If you’re like many, overspending during the holiday season may deplete your savings. It is important for you to recover your savings so you’re financially prepared for unexpected expenses. Here are tips to help you spend less and send more money to your savings:

Use Automation To Save

You can recover your savings account by funding it through payroll deduction similar to how you use direct deposit into your checking account. Check with your employer to see if this is an option for you. Or, your bank’s automation to deposit a set amount from your checking account to your savings account each payday. Remember to continue to build your emergency savings fund and regular savings account over time.

Cancel Unused Memberships And Subscriptions

If you have subscriptions for streaming services or gym memberships you don’t use, cancel them. Even if they are small amounts, they can add up over time and deplete your savings.

Monitor And Estimate Utility Bills

With this year’s energy costs high, monitoring your heat and air conditioning temperature can help you save on your electric and gas bills. Another often-overlooked utility is a water heater that can cost you over time if turned up high. The safe and optimal temperature is 120 degrees to 130 degrees plus optimal for your wallet!
Shop and switch internet, cable, and other providers- Don’t forget internet and cable as part of your monthly budget. If you have internet or cable packages higher than you’d prefer, shop around for another provider’s package. Phone, cable, and internet are often bundled together but may not be the best package if separately each service costs you less. With more people having cell phones, paying for a phone line may be wasted money.

Use Coupons And Shop For Sales

Redeeming coupons can help you save money on items that you usually purchase anyway. Coupon offers may be on new items manufacturers want you to try instead of your usual brand. Coupons are easy to redeem through apps from your favorite stores. Shopping for sale items, last year’s model or open-box items can save hundreds of dollars on consumer goods that tend to be seasonally priced.

Transfer Credit Card Balances To A Zero-Interest Card

With interest rates increasing, credit card companies are enticing debt consumers to transfer their outstanding balances to their credit cards. While these offers may be for one year with zero interest, read the fine print to fully understand the offer as your rate will be impacted after the offer ends. If you’re confident you may be able to pay off the balance in full, consider the transfer to save you money.

Budget For Spending And Shopping

If you enjoy spending and shopping, make it part of your monthly budget, and stick to the dollar amount you budgeted. Create shopping lists- Creating a shopping list helps in a few ways. A shopping list helps keep you on track so you don’t overspend and helps ensure you don’t have to run out to get items you forgot that might cost you more at a convenience store.

SWG 2568567-1122d The sources used to prepare this material are believed to be true, accurate, and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of the information provided on this website. Nor is the company liable for any direct or indirect technical or system.

Don’t Deplete Your Savings This Holiday Season

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!