As we post important dates on our 2023 calendars… it is a great opportunity to reflect on our personal finances for the year ahead.
As you focus on January, know that many tax, benefits, and other financial changes take effect on the first day of the year. And it is important to note these changes will have a significant impact on many retirees’ household finances.
Inflation, cost of living increases, insurance premiums and tax withholdings will be the most universal money matters to consider in 2023.
Plan for High Inflation.
While the impact of high inflation will negatively impact anyone’s budget, a retiree’s budget is of particular concern. Consider creating new financial goals with a professional advisor. Know and understand withdrawal percentage rates from investment accounts and how it impacts your financial security for the long-term.
Factor in changes to Social Security/Medicare and Taxes.
For those heading into 2023 as a retiree, a larger than usual Social Security cost of living adjustment will occur. This is often referred to as COLA. Retirees will see a slight decrease in Medicare premiums. Iowa’s new tax laws could bring some relief to individuals on a fixed income.
According to the Social Security Administration, the average benefit will increase by approximately $140 per month starting January 1, 2023. In addition, the Centers for Medicare and Medicaid Services report a $5.20 per month decrease in premiums for most Medicare recipients.
While the impact of the new Iowa tax laws will depend on an individual household’s circumstances, the savings for an average retiree on Social Security and Medicare will be approximately $150 per month. The best way to establish financial security for a new year is by accurately knowing last year’s (2022) personal income and expenses. Use this to inform you as you build a 2023 spending plan or budget.
Build Financial Security into Spending/Saving.
Experts are cautioning that the year ahead could bring more uncertainty. Keep an emergency fund that can cover three to six months of living expenses. This may even be a time when six to nine months may feel more
This institution is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries, go
to www.extension.iastate.edu/diversity/ext.
comfortable. This fund protects a retiree from being forced to use retirement investments and may be used for daily living expenses when the stock market is weak.
Also, carefully consider big spending decisions that could impact a retiree’s overall financial security should some unexpected medical or emergency need surface.
Now, for the good news.
Although there’s bound to be factors that are beyond our control, feeling more confident about finances can help you navigate whatever comes your way.
Iowa State University Extension and Outreach offers numerous resources for Iowans to start the new year on the right financial track. A free, confidential, and unbiased one-on-one financial consultation with a family wellbeing specialist is one way to get started. Contact the ISU Extension and Outreach Buena Vista County office at 712-732-5056 to find out more or to schedule a consultation.