Last year was anything but dull, especially when it came to the financial markets. From easing from under the restrictions of the pandemic to levels of inflation we haven’t seen in over four decades, to talks of a potential recession in the near future, last year really kept us on our toes. As we begin 2023, we’d like to note what the financial landscape looks like thus far and how it relates to your financial goals for the upcoming year.
Social Security Cost-of-Living Adjustment Increases
Starting this month, Social Security beneficiaries will see an 8.7% increase to help offset inflation and its effects on day-to-day costs. This means a $146 increase in the monthly benefit for most retirees. Meanwhile, Medicare Part B premiums will shrink back about 3% to $164.90, down $5.20 from last year; since these premiums are typically taken from Social Security benefits, that also bumps up the monthly payout.
Inflation is Trending Lower
The inflation report from last month showed that consumer prices trended lower for the month and confirmed that overall prices have been trending lower for the past six months. After reviewing inflation and other economic data, if the Fed concludes that it’s time to pivot on monetary policy, that decision would be expected to influence both the stock and bond markets.
Secure Act 2.0
In the final days of 2022, Congress passed a new set of retirement rules designed to facilitate contributions to retirement plans and access to those funds earmarked for retirement. The law is called SECURE 2.0, and it is a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act passed in 2019. The sweeping legislation has dozens of significant provisions, including raising the required minimum distribution age and allowing plan participants to use retirement funds in an emergency without penalty or fees.
What It Means for You
While inflation continues to show signs of weakening and the economy continues to keep strengthening, your account stands to benefit as a result. While we don’t have a crystal ball to determine where the future will take us, we are always happy to see and report things that benefit our clients. Regardless, we will always use every tool available to help our clients pursue their financial goals.
If any of these recent events cause you to have questions about your account, feel free to reach out to our office.