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Retirement Savings & Budget Alert: 2022 Changes to IRAs, Social Security and Medicare Thumbnail

Retirement Savings & Budget Alert: 2022 Changes to IRAs, Social Security and Medicare

Laurence Hale, AAMS®, CRPS®
Principal/Managing Partner, Investment Advisor & Chief Investment Officer

Whether you’re still saving for retirement or you’re already retired, there are some key financial changes you’ll want to know about and adjust for in 2022. Here’s a rundown of the good, the bad and the bottom line actions you’ll want to take to make sure you can still meet your goals and stay on-budget.


Retirement contribution limits and social security payments are increasing in 2022.

If you’re not yet retired, then preparing for retirement just got a little more financial wiggle room. The Internal Revenue Service (IRS) has set some new contribution limits for 2022. For workplace retirement accounts such as a 401(k) or 403(b) the contribution limit rises $1,000 to $20,500. (Catch-up contributions remain at $6,500.) The limit for SIMPLE IRAs has been increased by $500, to $14,000.

If you have a traditional Individual Retirement Accounts (IRA), you’re not so lucky; the limit remains at $6,000 (and the catch-up contribution remaining $1,000 as well). However, eligibility for Roth IRA contributions has increased, to between $129,000 and $144,000 for single filers and heads of households, and $204,000 to $214,000 for married couples filing jointly.

If you’re already retired and are a recipient of Social Security, you’ll receive a 5.9 percent cost-of-living adjustment (COLA) for 2022, the largest increase in four decades. This adjustment will begin with benefits payable in January 2022. You should have been notified about your new benefit amount by mail, but if you’ve set up your SSA online account, you can also view your COLA notice there.

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Inflation and Medicare costs are also rising in 2022.

With inflation currently running at more than 5 percent (about 2% higher than average), it’s possible that rising consumer prices may dilute the impact of the increased Social Security payments. As the cost of goods rises, the value and buying power of many retirement accounts diminish. And for some retirees, maintaining their savings and lifestyle becomes a challenge. It’s important to know if it will present a challenge to you as soon as possible so you can make adjustments.

If the inflation rate is at 5 percent, one might assume that a retiree would need to withdraw an additional five percent from their savings each year in order to adjust for inflation. But inflation affects each of us differently, depending on lifestyle factors and purchasing needs.

One of the better ways to measure this difference is through the Consumer Price Index for the Elderly (CPI-E), which shows inflation rates for households with individuals age 62 and above. However, this is still a generalization. The best way to determine the impact of inflation on your own household is to examine your personal lifestyle and make adjustments for the specific rising costs that will affect you.

The other rising cost to plan for is Medicare premiums, deductibles and copays, which will all be higher in 2022.

Most Medicare beneficiaries don’t pay a premium for Medicare Part A, but those who do will see an increase of between $15 and $28 per month. Part A coinsurance is also rising and the inpatient deductible is increasing by $72.

The Medicare Part B premium is rising by $21.60 per month, to $170.10. Those with a modified adjusted gross income above $91,000 for single filers or $182,000 for joint filers will pay an additional $68 to $408.20 on top of the standard premium. The Part B deductible is also increasing by $30, to $233.

Medicare Part D premiums will see only a small increase in 2022 of about $1.53, for a total cost of $33 per month. As with Part B, those with the higher modified adjusted gross income limits noted above will pay more – between an additional $12.40 to $77.90 per month.


Make any necessary adjustments now – to your retirement savings rate if you’re still saving, or to your budget if you’re already retired.

If you’re still saving for retirement and have a 401(k), 403(b), SIMPLE IRA, or Roth IRA, you should consider increasing your contributions to take advantage of the new, higher limits. Doing so as soon as possible will allow you to maximize your savings and returns down the road.

If you’re already retired, you should update your budget to take into account the increased social security payment, but also the increased costs of inflation and Medicare. Depending on your particular situation, you may come out ahead, flat or at a deficit. Knowing where you net out and making any necessary adjustments to your lifestyle or retirement fund withdrawals will help to avoid any unpleasant or potentially disastrous surprises later.

Regardless of your situation, it’s always a good idea to seek guidance from a financial professional about changes to any of your sources of retirement income. Any changes should be made within the context of a larger strategy that takes into account both your short-term needs and long-term goals.

Our Plan Well, Invest Well, Live Well strategic process can help you to do just that, and we’re proactive in guiding our clients through changes in policy and financial forces to ensure they’re always set up for the best possible outcome. See how we can help you to create a Plan Well, Invest Well, Live Well™ strategy for you and your loved ones now.

Presented by Principal/Managing Partner Laurence Hale, AAMS, CRPS®. Prepared by an independent third party for Commonwealth Financial Network®, copyright 2021. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. http://www.whzwealth.com (http://www.whzwealth.com).