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Retire Wise | January 2023

Retire Wise | January 2023

| January 16, 2023
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SECURE 2.0 Act of 2022 Offers Important Benefits for Those in or Nearing Retirement

On December 23, 2022, President Biden signed a $1.7 trillion budget bill that included important retirement savings legislation. The SECURE 2.0 Act of 2022 (“SECURE 2.0”)1 comes on the heels of the original SECURE Act passed in 2019, which expanded retirement account types and eligibility. Changes under SECURE 2.0 include new rules and benefits for retirees and those approaching retirement age, several of which are highlighted below.

If you’re already retired:

  • Increased age for RMDs -Effective January 1, 2023, the age you must begin taking required minimum distributions (RMDs) from certain qualified retirement plan accounts increases from 72 to 73 years old. The minimum age requirement will eventually increase to 75 in 2033.
  • RMD penalty is reduced - Previously, if you failed to take RMDs, you would incur a 50% penalty. Starting in 2023, the penalty falls to just 25%.
  • Creation of retirement savings “lost and found” - SECURE 2.0 will enable the creation of a searchable database to help people find retirement benefits they may have forgotten. The retirement savings “lost and found” is scheduled to be created within two years of the bill’s enactment and will be housed at the Department of Labor.

If you’re nearing retirement:

  • Matching contributions for Roth accounts - Employers can now provide employees the option of receiving vested matching contributions to Roth accounts. Previously, matching contributions could only be made on a pre-tax basis.
  • Access to Roth emergency savings accounts - Effective in 2024, if your employer offers a retirement account and you are a non-highly compensated employee, they can allow you to contribute to a Roth for emergency savings. The maximum savings amount per year is $2,500, and you can make four withdrawals annually. (Your employer may or may not offer a match on these emergency savings.)
  • Higher catch-up contribution limits –Currently, if you are age 50 or older you can make catch-up contributions to your retirement plan up to certain limits. In 2025, SECURE 2.0 increases these limits to the greater of $10,000 or 50% more than the regular catch-up amount for individuals ages 60 through 63. The increased amounts will be indexed for inflation after 2025.
  • IRA catch-up amount could rise from year to year – Beginning in 2024, IRA catch-up contributions, which are currently $1,000 per year, will be adjusted for inflation.

This is not a complete list of changes under the SECURE 2.0 Act of 2022. To learn more about this new legislation and how it may impact your retirement strategy, call the office to schedule time to talk.

1 “SECURE 2.0 Act of 2022.” Senate Finance Committee, 19 Dec. 2022. https://www.finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

7 Ways to Save on Travel Costs in 2023

Despite rising costs and inflation, 6 in 10 Americans plan to travel this year, including many age 50 and over.1 If you’re among them, be sure to take advantage of available discounts and promotions, which can go a long way toward offsetting the impact of inflation on your travel budget. Below are seven ways you can save more on travel in 2023.2

  1. Hotels – Most hotel brandsoffer senior discounts of 10% to 20% off the advertised nightly rate based on availability. Some extend these discounts to travelers as young as age 50. If you don’t see a discounted rate when booking online, call the hotel’s reservations desk and ask about available discounts.

  2. Flights – Airlines offer a surprising number of money-saving opportunities for older travelers. These include annual passes for those 65 and up, military discounts for veterans and promotions specific to certain routes, destinations, travel times, or dates. You may be able to save even more with a credit card that offers flight or travel rewards.

  3. Train travel – Whether you’re traveling in the United States or abroad, seniors can save on train travel. Amtrak offers 10% off most rail fares for travelers 65 and up. If you’re 60 or over, you can save 10% with a Senior Eurail Pass.

  4. Car rentals – Car rental companies offer senior discounts anywhere from 5% of to 30%. However, don’t assume the senior discount is the best rate. In certain cases, special promotions available to the public may help you save even more.

  5. Cruises – Whether you’re embarking on a scenic river cruise or hitting the open seas, cruise companies want your business. In addition to senior discounts on everything from cabin rates to land excursions, if your travel dates and itinerary are flexible, you may be able to pocket significant savings by booking a “last-minute” cruise.

  6. Admissions – Many theme parks, museums, entertainment venues and tours offer senior rates. Some also offer promotions limited to specific hours of the day or days of the week.

  7. Memberships – Membership in organizations such as AAA and AARP can be one of the best ways to score travel deals and discounts across a wide range of travel services. Generally, what you save in travel costs will more than offset any annual membership fees.

1 “Americans plan to travel in 2023 despite inflation and rising costs.” Aviation Travel, 20 Dec. 2022, https://aviation.travel/americans-plan-to-travel-in-2023-despite-inflation-and-rising-costs/
2 Travel Discounts for Seniors. U.S. News, 28 Oct. 2022, https://money.usnews.com/money/retirement/aging/articles/travel-discounts-for-seniors.

This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.

Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are members FINRA/SIPC members. Located at: 655 W. Broadway, 11th Floor, San Diego, CA  92101.

Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

Some IRA's have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney.

Distributions from traditional IRA's and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty. Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first-time home purchase (up to a $10,000lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.

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