Even inflation has a silver lining, particularly if you save for retirement through a 401(k) or other similar plan, such as a 403(b).
Next year’s contribution limits for such plans could jump a full $2,000 — from $20,500 to $22,500 — in 2023, according to projections from the asset management firm Mercer.
Catch-up contribution limits for those age 50 and older also could rise, from $6,500 to $7,500.
That means that those who are 50 or older may be able to sock away as much as $30,000 in their workplace retirement plan next year.
Mercer notes that next year’s contribution limits will be based on changes in the federal government’s Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of 2021 to the third quarter of 2022.
As Mercer notes:
“Using this measure, inflation is projected to reach its highest level since indexing began, causing 7%-11% increases for most limits, based on their rounding levels.”
It’s important to note that final estimates about next year’s contribution limits cannot be made until September CPI-U figures are released in October. After that, the IRS will officially announce next year’s contribution limits, probably no later than November.
Wondering how to invest all that money? Check out “7 Keys to Stress-Free Retirement Investing.”