A few weeks ago, the Social Security Administration announced the 2023 cost-of-living adjustment will increase 8.7%, raising the average monthly payment by about $146. Given the inflation issues, this additional benefit offers approximately 70 million Americans some relief. But there is both a potential short-term problem for some and a longer-term problem for everyone receiving Social Security benefits. 

The short-term problem is higher taxes. Social Security benefits are not taxable income unless your combined income (adjusted gross income + non-taxable interest + 1/2 of your Social Security) as a single taxpayer is greater than $25,000. If it exceeds this amount but is less than $34,000 then one must pay taxes on 50% of Social Security’s benefit. If over $34,000 then 85% of the Social Security benefit is taxed.

For a couple, the thresholds are less than $32,000 for no taxation but over that amount, up to $44,000 50% of the benefit is taxed, and if above $44,000 then 85% of the benefit is taxed. Here is part of the insanity – these numbers have never been adjusted for inflation since the law went into effect during the Clinton years. Thus, with the higher benefit, more taxpayers will pay higher taxes.

What is the long-term problem? Earlier this year, we reported that the Social Security Trust Fund will run out of reserves in 2035. Given this sizable increase in benefits, that is likely to shorten the time. In turn, it gives Congress and the President less time to solve the issues.


Investment banking company, D. A. Davidson & Co, found that 72% of the women and 59% of the men do not have an estate plan. Why? The top response for not visiting a lawyer was because “I do not have enough money to worry about it.” Which, of course, is not a good reason! 

Who needs an estate plan? Anyone who is married needs one. Anyone with children needs one. Anyone who hasn’t set up their savings and investment accounts to avoid probate needs one. Anyone who owns a business needs one. Anyone who owns real estate needs one. In short, regardless of age, just about everyone needs an estate plan. In addition to a will, consider having a power of attorney, a health care surrogate, and a living will. For those with a larger estate, be sure to consider a living trust. If you have an estate plan, we recommend seeing your attorney every few years to make sure your wishes have not changed and to keep up with changes in the law.


Over the past couple of Perspective$, we have talked about how inflation is benefiting the payments to Social Security recipients. Now here is a host of tax-related takeaways from the IRS effective as of January 1, 2023.

On the income tax side of things, the standard deduction is increasing from $25,900 to $27,700 for a married couple filing jointly and from $12,950 to $13,850 for singles. The tax brackets are increased in the following categories:

                                                  Single            Married (filing jointly)

37% for income over          $578,125                 $693,750

35% for incomes over        $231,250                 $462,500 

32% for incomes over        $182,100                 $364,200 

24% for incomes over        $95,375                   $190,750 

22% for incomes over        $44,725                   $89,450 

12% for incomes over        $11,000                   $22,000 

10% for income up to        $11,000                   $22,000

The contributions for 401k, 403b, 457, and Government Thrift plans will increase from $20,500 to $22,500 and the catch-up provision for those age 50 and above will increase from $6,500 last year to $7,500 in 2023. That means older employees can contribute $30,000.  

The limit for IRAs will go to $6,500 from $6,000. Unfortunately, the catch-up provision for IRAs will remain at $1,000 as it is not adjusted for inflation. Deductible IRA contributions are limited by income and these limits were also increased significantly which may open the door for more people to contribute. A SIMPLE plan contribution is increased to $15,500 from $14,000 and the catch-up provision goes to $3,500.

On the estate side, the individual exemption increases from $12.2 million to $12.9 million or $25.8 million for a couple. Keep in mind that this exemption returns to the pre-2017 levels in 2026 which will likely be about half this amount. The annual gift tax exemption increases from $16,000 to $17,000.


Under the Inflation Reduction Act, the tax break of $7,500 for electric vehicles is continuing, but with some significant changes beginning January 1, 2023.  

  • It will not apply to EVs where the sticker price is greater than $55,000 for regular cars and $80,000 for SUVs, pickup trucks, and vans.
  • If your Modified Adjusted Income is greater than $300,000 for a couple or $150,000 for a single, the credit does not apply.
  • The car must be assembled in North America.
  • The battery must have at least a seven-kilowatt-hour capacity, and the battery must pass two tests: a minerals requirement and a component rule.
  • The mineral requirement is that a certain percentage of the battery’s mineral content is extracted from the U.S. or another free trade country.
  • The component rule requires that a certain percentage of the battery’s parts and/or assembly must occur in the U.S.
  • If the EV has one but not the other, the credit is cut in half.

To further complicate the requirements:

Want to purchase a used EV? Then the credit is equal to the lesser of 30% of the sales price or $4,000, and the EV must be at least two years old and purchased from a dealer. The income limits when buying a used EV are half of those above. Is there a place to determine if the car you want qualifies? Yes, here is the link to the Department of Energy’s website to help navigate this complicated tax break:



With the elections only a few days away, we will know soon whether the Democrats or Republicans control the House and Senate. The 118th Congress will begin on January 3, 2023. Will the 117th Congress get anything done before it is retired? Yes, on two fronts. First, if the Senate flips to the Republicans, you can bet that the Democrats in the Senate will do everything they can to confirm the judges that have been appointed by President Biden of which there are about 50. As we have come to realize, these lifetime appointments have major implications for years to come. 

There is also the possibility the EARN Act which expands the opportunities for Americans to increase their retirement savings is passed. The major features of this bill include:

1) increasing the Required Minimum Distributions (RMDs) age from 72 to 75 from retirement plans;

2) increasing the amount that an individual can put into a 401k from age 60 to 63;

3) increasing the catch-up provision for IRAs with an annual cost-of-living adjustment; 4) providing more flexibility in setting up an ABLE account for those with a disability;

5) allowing more part-time workers to participate in a 401Ks;

6) adding exceptions to early withdrawal penalties; and

7) increasing tax credits for small businesses that set up a retirement plan.

If and when the bill passes, we will provide a summary of the final bill.

(Source: Kiplinger Letter)



We have all heard the old adage by Warren Buffet of being greedy when others are fearful and fearful when others are greedy. In theory, this sounds great. In reality, it goes against every emotional intuition we have. Behavioral finance explores our self-defeating habits such as fear of missing out and loss aversion. These impulsive decisions run contrary to our investment goals and either leave us paralyzed in fear or drunk on irrational exuberance. 

Instead of trying to time our investments by painstakingly denying our emotional intuition and taking the exact opposite action, what if we did not try to time those investments at all? The truth is investing should be completely divorced from emotion and history shows us that there really is not a bad time to invest if given enough time. There is another old adage that we prefer, the best day to start investing was yesterday. The second best day – today. For more on the merits of staying invested, please see our latest video.


The Ellevest’s 2022 Financial Wellness Survey asked women to prioritize four types of financial wellness: financial, physical, spiritual, and mental. Last year, women listed financial wellness as the least important form of wellness. This year financial wellness moved up the list and took the second spot behind mental wellness.

So how can women prioritize their financial wellness? Ellevest’s survey found that 75% of the women continued contributing to their retirement plan despite the market volatility and inflation. Historically, women enter retirement with smaller retirement accounts and live longer so the importance of prioritizing retirement savings cannot be overlooked. Saving for retirement is an intentional way for both men and women to prioritize their financial health.