May 30, 2023

What to Know About 401(k) and Social Security Changes This Year

What new 401(k) developments might mean for your retirement nest egg.

Inflation and higher prices impact nearly everyone’s budgets, but especially seniors and retirees living on a fixed income. Learn what these significant changes happening to 401(k) and Social Security plans mean for your financial future.

401(k) contribution limits are increasing.

The 401(k), 403(b) and most 457 plan contribution limits for employees in 2023 have increased to $22,500. This means you can contribute more to your retirement plan, allowing you to build your nest egg even faster. Additionally, the contribution limit for individuals aged 50 or older has increased up to $7,500—meaning you can contribute up to $30,000 this year.

Consider the new cost-of-living adjustment.

Now, let’s talk about Social Security. The Social Security Administration has announced an 8.7 percent cost-of-living adjustment (COLA) for beneficiaries in 2023. This means that Social Security recipients will receive a higher payout to help them keep up with inflation. The maximum monthly Social Security benefit has also increased from $3,345 to $3,627 in 2023. Additionally, there are some changes to Social Security tax. The maximum taxable earnings for Social Security tax have increased to $160,200, previously being $147,000 in 2022.

Your retirement savings can benefit.

These changes to 401(k) and Social Security plans in 2023 can impact your financial future. By contributing more to your 401(k) plan, you can build your nest egg faster and ensure a more comfortable retirement. The increase in Social Security benefits and tax caps can also help you keep up with inflation and plan for your retirement accordingly.

It’s important to make adjustments to your retirement plan and stay informed about changes to ensure a stable and secure financial future. Citizens First Bank is here to help you with your retirement strategy and other saving needs. Stop by your nearest Citizens First Bank, give us a call or visit our website today!