6 Changes Coming to Retirement Benefits in 2015

Keep growing and changing your retirement plan to keep up with new developments!
Keep growing and changing your retirement plan to keep up with new developments!

Ringing out the old and ringing in the new includes new changes to retirement benefits and plans. Nothing stays the same forever. And although some guidelines won’t vary much, if at all, changes in other areas of your retirement plans could be dramatic.

Here’s what you can expect in 2015, from Social Security to a whole new type of IRA:

1. Social Security Recipients Get a Raise

Social Security recipients can expect a cost-of-living increase in 2015. The Social Security Administration says it will implement an increase of 1.7 percent to Social Security and Supplemental Security beneficiaries.

While payments will be higher, the combined tax rate for Social Security and Medicare will remain the same. In 2014, the employee tax rate was 7.65 percent and the self-employed rate was 15.30 percent, and there will be no change in 2015. However, the maximum taxable earnings will increase from $117,000 in 2014 to $118,500 in the coming year.

2. Some Medicare Plans May Change Dramatically

Don’t count on last year’s Medicare costs to be the same in 2015. It’s a smart time to shop around and compare. Medicare prescription drug (Part D) plan premiums may stay the same for some, but may increase dramatically for others. According to AARP, most of the larger Part D plans will raise premiums from 11 to 52 percent in 2015. But on the upside, three of the other large plans will lower their premiums by as much as 31 percent.

Part D copays may also increase dramatically, and this will vary from plan to plan. Another thing to watch out for is new Medicare costs where there were none before. Even if your plan had no deductible in 2014, it might in 2015.

Compare your options and make sure you have the best and most affordable supplemental Medicare coverage for 2015.


3. 401(k) Plan Increase Contribution Limits

Contributions to 401(k) plans have always been limited — you can’t contribute an unlimited amount. But 2015 will bring an increase that can help you bump up your tax-deferred savings, explains CNBC. You can contribute $18,000 to your 401(k) in the coming year, up $500 from 2014.

Workers age 50 and older have enjoyed a catch-up contribution in the past, which helps make up for lost time and low contributions as retirement approaches. In 2015, the catch-up limit will increase from $5,500 to $6,000.

4. Roth IRAs Become Available to More People

Roth IRAs have a cutoff or phase-out range, which limit them to people whose earnings are under a certain amount. In 2014, the phase-out range was $181,000 to $191,000 for married couples and $114,000 to $129,000 for individuals, according to the IRS. In 2015, this range will increase by $2,000, making the new married phase-out range $183,000 to $193,000 and the individual range $116,000 to $131,000.

Traditional IRAs will also see some changes, explains the IRS. Individuals and heads of household who have an employee retirement plan will have a new phase-out range of $61,000 to $71,000, and married couples will have a range between $98,000 and $118,000, which is also an increase of $2,000.

5. 401(k) and IRA Plans Offer a Credit

Workers with lower incomes will also have more retirement savings incentives in 2015. The Saver’s Credit is a tax credit for people who fit into the low and moderate income category, and who are saving for retirement. In the coming year, more people can qualify for this credit.

The Saver’s Credit cutoff for individuals will be $30,500. For heads of household and married couples, the cutoff will be $61,000. The new limits represent increases between $500 and $2,000 over 2014, according to the IRS.


6. The U.S. Treasury Introduces myRA Retirement Accounts

The coming year will bring a new type of IRA to the retirement savings world, and it could help workers just getting started in life or those who haven’t had the ability to save like they’ve wanted to. MyRA is designed to help low and middle income people who don’t have access to an employer retirement plan, says CNN Money.

The myRA plan, which is a type of Roth IRA, allows workers with earnings under $191,000 to contribute up to $5,500 annually. It’s backed by the federal government as a U.S. savings bond investment. Once a myRA account reaches $15,000, it can be rolled into a traditional Roth IRA. Returns are low with a myRA, but they’re risk-free.

Overall, the outlook for the coming year is promising. Social security beneficiaries can expect a cost-of living increase, and more people will have access to tax-deferred retirement savings plans. Watch out for Medicare changes, though, as this is one area where plans can vary dramatically from 2014.

New Retirement can help you get the most out of your retirement, whether you’re still in the planning stage or already living the dream. Start here to find out what we can do for you.

7. And Those Are Just the Changes We Know About…

Inflation, stock market changes, real estate prices and your own health are all big factors for most people’s retirement. While, these are are changes that can not be predicted, there are  ways to protect your finances. The NewRetirement Retirement Calculator can help you navigate the planning process.

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