Wednesday October 29, 2014
2015 Social Security and Retirement Updates
Since the fall season is now here, we get to find out if there will be a cost of living (COLA) increase for those individuals collecting Social Security in 2015. We also find out what changes the IRS will be making to 401k, IRA and other employer-sponsored retirement plans.
In an effort to make this very timely and straight-forward, I thought I would write a brief post that outlines the major impacts to all of you.
In 2015, the Social Security Administration will increase the amount its recipients receive by 1.70%. Last year, the increase was 1.50%. Starting in January this will be reflected on the amount that you receive. For those that are not collecting Social Security, this may create a slight adjustment to your estimated amounts as well. I encourage you to look up benefits after the 1st of January.
Moving on to retirement account contribution changes we see a few changes that will provide some benefit to those who are looking to save more. Although these are not monumental increases, every little bit helps and I encourage all of you to take advantage of these savings options if you are eligible. Below lists the major changes:
401k and Thrift Savings Plan– In 2015, annual employee contributions will increase to $18,000/year from $17,500. For those of you over the age of 50, you get another break in the form of an increase to the “catch up.” This amount increased from $5,500 to $6,000 allowing for a total contribution of $24,000 for those over the age of 50 who want to maximize contributions.
For self-employed and small business owners who normally make SEP-IRA contributions, this increases to $53,000 from $52,000.
I should also note that the IRS did not increase Traditional IRA or Roth IRA contributions for 2015. Nor did the increase “catch up” provision for these either. However, they did increase the income limit by $2,000 for each of these. If you income was close to these limits previously, you may not be able to make these contributions.
To top this off, it looks as if employers are slowing becoming more willing to do 401k matches as well. During the last recession, only 70% of employers were making matching contributions to 401k participants. Today that number is up near pre-recession levels of 80%.
Saving for retirement does not happen overnight. Those that become the most successful understand the concept of consistently saving and taking advantage of these slight increases over time. I hope you found this article helpful and best of luck closing out 2014!
