In 2023, Social Security benefits checks will increase by 8.7%. This is more than last year’s 5.9% increase for retirees. This year’s cost-of-living increase is the highest since 1981, when it was over 11%.

This change in Social Security benefits is one way to increase retirement funds. Seniors can also look for private ways to bolster their retirement savings. Read more below to learn about increasing retirement benefits and funds.

 

Federal Retirement Benefits in 2023

Social Security benefit checks will increase by an average of $146 per month for retired individual workers. For couples receiving benefits, the increase amounts to about $238. These cost-of-living adjustments will help seniors move ahead with retirement.

Since January 2023, these benefit changes have helped about 65 million Social Security beneficiaries face the rising costs of food, clothing, and other items. Cost-of-living increases are calculated by the Department of Labor’s Consumer Price Index (CPI), which has risen along with the recent high inflation rates.

To meet these higher costs, Medicare premiums have also decreased, something that has not happened for ten years. The standard monthly premium has gone down by about $5 per month from last year to this year.

In addition, the earnings limits have risen. For workers who are younger than full retirement age, between ages 66 and 67, earnings limits have increased to $21,240. That means workers can earn up to that amount with any deduction to Social Security benefits.

For those reaching full retirement age in 2023, the limits have gone up to $56,520 before deductions occur. Those who reach full retirement age do not have to worry about limits on earnings and receiving full benefits.

These changes in Social Security will help retirees. So too will waiting to claim Social Security.
Recent research indicates that waiting until age 70 to claim Social Security will result in benefits that are 76% higher than those at age 62. For those born in 1960 or later, the full retirement age is 67.

In 2023, the average benefit amount is $1,827 per month for individual retirees and $2,972 for couples. The maximum benefit for at full retirement age is $3,627 per month. These amounts of money may be enough for seniors to live on, but retirees may also need to look to private sources.

 

Private Retirement Funds in 2023

Many workers look to employer-provided 401(k) plans to increase their retirement funds. In 2023, employees can contribute up to $22,500 toward retirement, an almost 10% increase from last year.

An increase in catch-up contributions for 401(k)’s has also occurred. This year, those age 50 or over can now contribute an additional $7,500, an increase of $1,000 from last year. Likewise, matching employer contribution limits have increased by $5,000 this year.

As with changes to Social Security benefits, inflation and the rising cost of living are the main reasons for these changes in 401(k) plans. These additional contributions could go far in helping retirees.

The 2022 How America Saves report by Vanguard reflected that those aged 55 to 64 have a median 401(k) balance of almost $90,000, while those aged 65 and older have about $88,000 saved. That could be enough for retirement, but it may also need to be supplemented with Social Security.

Yet, close to 60 million workers do have access to these employer-provided retirement plans. Individual Retirement Accounts (IRAs) could be an option for retirees in this situation.

Traditional IRAs provide a tax-deferred way to plan for retirement. In 2023, individuals can place up to $6,500 in these accounts each year, if the person is age 50 or more. Roth IRAs allow an individual who is age 50 or higher to deposit after-tax funds up to $7,500.

Coupling IRA savings with Social Security benefits could be an effective strategy for retirees. Income from 401(k)s, IRAs, or other approved retirement plans do not impact the amount of Social Security benefits received each month.

Yet, you may have to pay taxes if income levels reach a certain point. For example, about 85% of benefits may be taxable if someone is single and earns more than $34,000, or married and earns over $44,000.


To learn more about retirement benefits and private retirement plans, visit Benefits Depot. Increasing retirement benefits and funds are central for seniors.