Important financial planning considerations for 2023

In December, many people develop annual budgets and financial plans for the upcoming year. As we plan for 2023, there’s good news for those saving for retirement as well as for retirees themselves. Contribution limits have increased for many retirement saving vehicles and new cost-of-living adjustments for Social Security and Supplemental Security Income (SSI) recipients will take effect as of January 2023 and December 30, 2022, respectively.   

From a “financial planning best practices” standpoint, it is a good idea to increase your retirement saving plan contributions – ideally to the new maximums allowed, but if that’s not doable, then by as much as possible. And if you’re a retiree who is fortunate enough to not be fully dependent upon Social Security income for your living expenses, below are some financial planning ideas for making the most of your increased benefit.   

Increased Retirement Plan Contribution Limits in 2023: 

  • 401(k), 403(b), 457, and TSP Contribution Limit Increases 
    • So that workers can contribute enough to keep up with cost-of-living increases, the IRS announced nearly a 10% increase in the amount individuals will be able to contribute to their 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan in 2023. That contribution limit will be $22,500 next year (whereas it was $20,500 in 2022). The catch-up contribution limit for older employees, age 50 and above, will be $7,500 in 2023 (while it was $6,500 in 2022). It is recommended that workers take full advantage of the tax savings offered by these contribution limit hikes and automate higher contributions to these plans.  
  • IRA Contribution Limit Increases 
    • Those contributing to IRAs will be happy to learn that annual contribution limits will also increase – from $6,000 in 2022 to $6,500 in 2023. There is no cost-of-living adjustment (COLA) for the IRA catch-up contribution limit for those age 50 and above: That contribution limit continues to be $1,000.*  
  • SIMPLE IRA Contribution Limit Increases 
    • If you contribute to a SIMPLE retirement account, your contribution limit will increase from $14,000 in 2022 to $15,500 in 2023. For those age 50 and above, the catch-up contribution limit will increase from $3,000 in 2022 to $3,500 in 2023.   

Increased Social Security and Supplemental Security Income Benefits: 

You’ve likely heard that 2023 will bring an 8.7% cost-of-living adjustment increase to the approximately 70 million Americans receiving Social Security and Supplemental Security Income benefits. This is the largest COLA jump in over 40 years. According to the Social Security Administration, “The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation.” With U.S. inflation at 7.7% (as of October 2022) and many people feeling an economic pinch, this is a welcome development.   

If you are fortunate enough to not be dependent upon Social Security income to cover all your retirement living expenses, the following are a few ideas about what you can do with some (or all) of your additional 8.7% income. 

  • Increase contributions to your investment accounts  
    • Increasing investments will positively impact your retirement nest egg. 
    • Set up an automatic monthly transfer of funds. 
  • Add to your emergency fund 
    • We recommend having 3-6 months’ income in a high interest money market account. 
    • Set up an automatic monthly transfer of funds. 
  • Gift the funds 
    • Consider establishing a 529 college savings account for grandchildren, children, or family friends and contributing to it monthly. Accounts grow tax-deferred and withdrawals are free of federal and state taxes when the funds are used at eligible institutions. You may also get a state tax deduction for your contributions. 
    • Consider contributing to a favorite charity or charities on a monthly basis. Set up automatic charitable deductions. 

All in all, 2023 promises to be an easier year for those dependent upon government programs such as Social Security and SSI. And those who are able to use the increased benefits in other ways would be wise to utilize at least some of the funds to improve their overall financial well-being. 

*In addition, the income phase-out ranges for those contributing to an IRA in 2023 have increased. Please go to www.irs.gov for more specifics regarding income phase-out ranges.  

Sarah Caine, CFP®, is a Financial Strategist whose responsibilities include analysis and development of comprehensive financial plans and assisting in their implementation and on-going execution.  A graduate of Lehigh University and a Certified Financial PlannerTM, Sarah can be reached at [email protected]. 



ACNB Corp. sets earnings record in 2022

Gettysburg-based ACNB Corp., the financial holding company for ACNB Bank and ACNB Insurance Services Inc., announced record financial results for 2022.

ACNB posted net income of $35.752 million, an increase of $7.918 million, or 28.45%, compared with 2021. This year-over-year increase was primarily driven by increases in net interest income of $12.181 million and commissions from insurance sales of $2.156 million.

The corporation reported net income of $10.199 million for the three months ended Dec. 31, 2022, an increase of 126.90% compared with the fourth quarter of 2021.

“We, at ACNB Corp., are extremely pleased to report another year of record earnings for 2022 totaling more than $35 million,” James P. Helt, ACNB president and CEO, said in a release. “This corporate achievement was not anticipated at the start of the year, but neither were the economic conditions that evolved during the year. In response to inflationary pressures, the unprecedented actions of the Federal Reserve resulted in seven interest rate hikes beginning in March of 2022 for a fed funds target rate range of 4.25% to 4.50% at the end of the year.”

The steep interest rate changes during the year pushed the fed funds rate to its highest point since December 2007, he noted. “These interest rate increases were a major contributor to ACNB Corp.’s 2022 earnings performance as assets repriced more quickly than liabilities, which coupled with asset growth resulted in strong net interest income performance.”

“Despite these unusual and unprecedented economic times,” Helt said, the corporation completed key strategic initiatives planned for 2022, including the acquisition by ACNB Insurance Services Inc. of the business and assets of Hockley & O’Donnell Insurance Agency in Gettysburg in February and the opening of the new Upper Adams Office in Biglerville in October as ACNB Bank continued its plans for optimization of the community banking network.

Paula Wolf is a freelance writer

Benefits of employee-owned business seen in state’s numbers

Robert Whalen, president and CEO of HB Global, Harrisburg, said his company is has seen tremendous growth since becoming employee-owned 12 years ago. 

His company is one of the many that make Pennsylvania second in the nation for employee-owned companies, with Harrisburg and York cities ranking in the top 25. 

Robert Whalen

Certified Employee-Owned, an organization launched in 2017 to accelerate the creation of an employee-owned economy by providing certification for employee-owned businesses, said Harrisburg, which ranked third city in the nation, is home to 17 employee-owned companies, including HB Global, D&H Distributing, and Schaedler Yesco Distribution.  

With a population of 58,000, Harrisburg has one employee-owned company for every 3,400 residents, the company said. 

Kevin McPhillips, CEO of the Pennsylvania Center for Employee Ownership, said the picture is even brighter than that. Pennsylvania falls only behind California, which is 3.5 times larger, he said. 

McPhillips, who heads the volunteer organization to raise awareness about the benefits of employee ownership, said these companies change lives, offering people a real future. “When employees own stock, it makes the company more profitable,” he said.

Thomas Dudley, Certified Employee-Owned’s CEO, said, “We set out to create a list of the top cities for employee ownership because we want to shine a light on the cities that have fostered an environment where employee ownership thrives. We want to help people see which cities have clusters of employee-owned companies so that we can understand what’s driving their success.” 

While York ranked 24 on the list of cities in Certified Employee-Owned’s ranking, McPhillips said the picture is brighter than that. York County, he said, has some of the highest employee-owned companies per capita in the nation. “A lot of that is from the support of the York County Economic Alliance,” he said. 

Kevin McPhillips

Studies show that employees who have ownership in their company are eight to 12% more productive and they earn two to three times more retirement wealth, McPhillips said.  

Employee ownership changes the relationship between the company and employee, Dudley said. When every employee has an ownership stake, companies become rooted in place.  

“In 2010, we had a single location in Harrisburg. Now we have 10 divisions along the east coast, the Carribean and Phoenix, Arizona,” HB Global’s Whalen said. 

That computes to 20 times the revenue and 10 times the employees HB Global had when it changed to employee owned, Whalen said. 

“The ownership culture contributes to efficiency,” he said because employees take value in ownership.  

The company has grown through acquisitions and Whalen said all new employees are offered ownership on day one.  “We recognize length of service with their former owners and offer shares accordingly,” he said.  

“We believe employees should share in what we create,” Whalen said. “We believe over time they produce more, and we are a better company with better service because of it.” 

According to Certified Employee-Owned, the wealth these companies build flows through the local economy, the jobs they create are more stable, and they become more involved in service. 

 Because of these connections, employee ownership is a win for workers, businesses, and communities, the company said. Common examples include Employee Stock Ownership Plans (ESOPs), Worker Cooperatives, Employee Ownership Trusts (EOTs), and broad-based equity compensation plans such as stock options, Dudley said. 

McPhillips said an ESOP is a federal program where an owner can sell all or part of the company to employees. “The business takes a loan to pay the owner and then doesn’t pay taxes on the profits equal to the percentage of employees involved,” he said.  

“If you aren’t paying taxes, it creates cash flow which translates to organic growth,” McPhillips said. “The more cash, the more investment so the share value goes up and all employees have more investment.” 

While wages may not increase immediately, McPhillips said employee-owned workers average 30% more in pay as the business grows. More importantly, he said, they have a retirement they can count on. 

A relatively new model in the U.S. that has been used in the United Kingdom for some time, he said, is the Employee Ownership Trust. “The owner comes to an agreement with employees on the price of the business and the shares are then held in a trust,” he said. 

The trust protects the workers from a buyout and, at the same time, ensures profits are divided among the employees, he said. 

McPhillips said no matter what the model, employee-ownership brings a rationale to the workplace. “You spend all day at your job and now you are able to have a future,” he said. “The wealth gap is killing us; it affects all of us. This is not the answer to it all, but we have a low hanging fruit that is available, and we need people to know about it.” 

McPhillips added, “Pennsylvania is doing great. Companies are making the investment. The only reason there aren’t more employee-owned companies is people don’t know about it. That’s why we do what we do.”