2021 Updates As we close the book on 2020 and look forward to a new year, there are some noteworthy updates for 2021 and also a few things that will stay the same as it pertains to savings, investing, and financial planning.

Moving forward into 2021, those receiving Social Security payments will receive a 1.3% increase in payments. This costof- living adjustment is calculated based on the cost of goods and services increasing (inflation). The average estimated monthly social security retirement benefit will be $1,543 per month in 2021 according to the Social Security Administration 1.

The Centers for Medicare and Medicaid Services, recently reported2 the standard premium for Medicare Part B enrollees will increase by $3.90 per month starting in 2021 to a monthly premium of $148.50. Higher income enrollees will be subject to a larger Medicare Part B premium amount.

Per Internal Revenue Service code, there is a periodic review and adjustment of retirement plan contribution limits to align those with the cost-of-living increases. For 2021, plan types 401(k), 403(b) and 457, salary deferral limits remain at $19,500.

For these plan types, account holders age 50 or older may contribute an additional $6,500 as a “catch-up” contribution. If your employer offers a SIMPLE IRA plan, employee contribution limits will also remain the same at $13,500 plus an additional $3,000 for those ages 50 and older. Additional plan limit increases can be found on the 1RS website at www.irs.gov/retirementplans/ cola-increases-for-dollar-limitations-on-benefits-and-contributions.

Traditional and ROTH IRA contribution limits remain at $6,000 ($7,000 if age 50 or better) for 2021. However, the income limits have increased for individual and joint tax filers in qualifying for ROTH funding eligibility and for the tax deductibility of Traditional IRA contributions. Now is a good time to review savings rates and make sure adequate contributions are being made to realize long-term financial goals.

Health Savings Account (HSA) limits are increasing3 for the new year with individual plan HSAs allowing for a $3,600 contribution and family plan HSA coverage at $7,200. Additional catch-up contributions of $1,000 are also allowed for those age 55 or older. HSA contributions are only permitted for certain taxpayers with qualifying high deductible health care insurance. Not only do HSA contributions allow for valuable savings to cover health care related expenses, it also affords taxpayers an “abovethe- line” tax deduction.

The King Of Country, George Strait, reminds us to “Make each tomorrow be the best that it can be”. Let set some time and make a plan for 2021 and beyond to prepare for a more sound financial future.

Adam Smit is a CERTIFIED FINANCIAL PLANNER ™ . Tax preparation services are not offered at Adam Smit Investment Management LLC and customers should seek specific tax guidance from a qualified tax advisor. This article is for general information only and not intended to provide specific advice or recommendations. Securities offered through LPL Financial. Member FINRA/SIPC.

1 – www.ssa.gov/news/press/factsheets/colafacts2021 .pdf 2 – www.cms.gov/newsroomlfact-sheetsl2021 -medicare-partsb- premiums-and-deductibles 3 – www.irs.gov/pub/irs-drop/rp-20-32.pdf