While you probably already found your notice in the mail, you may be curious about the COLA increase happening for Social Security recipients in the New Year. Starting in January, beneficiaries will see an 8.7% increase to help offset inflation and its effects on day-to-day costs.

This means a $146 increase in the monthly benefit for most retirees. Meanwhile, Medicare Part B premiums will shink back about 3% to $164.90, down $5.20 from last year; since these premiums are typically taken from Social Security benefits, that also bumps up the monthly payout.

While many retirees rely on Social Security for a significant portion of their retirement income, it’s important to remember those who collect payments while still earning income from work or some other source. Those still earning such income may want to consider adjusting their tax withholding.

The financial markets are complex systems. They can move from one event to the next so quickly that it’s hard to know what’s driving prices.

For example, look at the roundtrip oil prices in the chart below.

Oil prices surged to over $120 a barrel in the first half of 2022 on concerns over how Russia’s invasion of Ukraine would influence crude supply. But in the second half, oil prices have trended lower as traders feared a global recession might reduce oil demand.

So which one is it? Or is it both? Regardless of what you believe, oil prices have made a round trip in roughly 12 months.

The critical takeaway is that markets can be turbulent. One can quickly replace the factors that push prices higher with a new set of characteristics that drive prices lower.

So ask yourself, “Will the talk about a recession be the theme for all of 2023, or will a new storyline replace it at some point?”

Will you pay higher taxes in retirement? It’s possible. But that will largely depend on how you generate income. Will it be from working? Will it be from retirement plans? And if it does come from retirement plans, it’s important to understand which types of plans will be financing your retirement.

Another factor to consider is the role Social Security will play in your retirement. When do you plan to start to take Social Security benefits? If you have a spouse, when do they plan on taking benefits? It’s critical to answer key Social Security benefits questions so you have a better understanding of how it will affect your taxable income.

What’s a pre-tax investment? Traditional IRAs and 401(k)s are examples of pre-tax investments that are designed to help you save for retirement.

You won’t pay any taxes on the contributions you make to these accounts until you start to take distributions. Pre-tax investments are also called tax-deferred investments, as the money you accumulate in these accounts can benefit from tax-deferred growth.

For individuals covered by a retirement plan at work, the tax deduction for a traditional IRA in 2021 is phased out for incomes between $105,000 and $125,000 for married couples filing jointly, and between $66,000 and $76,000 for single filers.¹

Keep in mind that once you reach age 72, you must begin taking required minimum distributions from a traditional IRA, 401(k), and other defined contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.

What’s an after-tax investment? A Roth IRA is the most well known. When you put money into a Roth IRA, the contribution is made with after-tax dollars. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2021, contributions to a Roth IRA are phased out between $198,000 and $208,000 for married couples filing jointly and between $125,000 and $140,000 for single filers.²

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawal can also be taken under certain other circumstances, such as the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.

Remember, this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, or financial professionals before modifying your retirement strategy

Are you striving for greater tax efficiency? In retirement, it is especially important – and worth a discussion. A few financial adjustments may help you manage your tax liabilities.

The holiday season is upon us; from story time with sorely missed grandchildren to laughter with friends and family over long-cherished memories, there’s little doubt that “the most wonderful time of the year” has arrived.

For my family, this season is a time of reflection and connection as we bid farewell to the old year and look, with hope, toward the new. As your family gathers, it may be a perfect opportunity to share your estate strategy and explain your decisions regarding your wealth. I’m always happy to help you structure that discussion and can help explain why we selected specific approaches with your overall financial management.

Discussing financial matters can be challenging, so please let me know if I can ever be of assistance, and don’t hesitate to share my contact information or let me know how I can help.

Happy holidays to you and your loved ones.

It appears that America’s corporate leaders are preparing for the worst while hoping for the best.

Almost half of S&P 500 CEOs in second-quarter conference calls pointed to “recession” as a potential headwind in 2023. In response, some companies have chosen to trim headcount while others are managing budgets and looking for operational efficiencies.

Across the board, however, the focus on a potential recession is taking a toll on CEO confidence. The Conference Board’s Measure of CEO confidence is at its lowest since 2008.

Remember, it’s healthy for companies to prepare for a challenging economic climate, and CEO confidence may grow once we see more green shoots in the economy.

After all, by this time next year, the buzzword of the quarter could be something else entirely, like “recovery,” “rebound,” or “growth.” That type of language can only help boost confidence.

Do you need a life insurance policy in retirement? One school of thought questions this decision. Perhaps your kids have grown, and the need to help protect the household against the loss of an income-earner has passed.

If you are thinking about dropping your coverage for either or both of those reasons, you may want to ask yourself a few additional questions before moving forward.

Remember that several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Does your policy have a cash value? If you have a whole life policy, it may have built a cash value over time. Whole life insurance is designed to remain in force for your whole life, as long as you remain current with your premiums. Before surrendering a whole-life policy, be certain you understand the policy’s features and limitations.

This article is for informational purposes only and is not a replacement for real-life advice, so you may want to consider asking for guidance from a financial professional before modifying your life insurance strategy. Life insurance is not insured by the FDIC (Federal Deposit Insurance Corporation). It is not insured by any federal government agency, bank, or savings association.

Do you anticipate paying estate taxes? If the value of your estate exceeds federal or state estate tax thresholds, you may owe estate taxes. Life insurance proceeds may help your heirs manage the tax situation, and could prevent the need to sell other assets. Estate tax laws are constantly changing, so you may want to consider speaking with a legal professional, who can provide information on potential legislative changes.

Are you carrying a mortgage? If you borrowed to purchase your home or have refinanced and are carrying a mortgage, the proceeds for a life insurance policy may help your heirs manage the mortgage payments.

When you read about money matters, you may see the phrase, “getting your financial house in order.” What exactly does that mean?

To some, when your financial “house is in order,” it means it is built on a solid foundation. It means that you have the “pillars” in place that are designed to support your long-term financial well-being.

#1: A banking relationship. Having a relationship with a bank can play a role in many financial strategies. You have many different choices when deciding on which bank is right for you. Some banks are larger and nationally-based, while others are smaller and community-based. Different banks may have unique advantages and disadvantages, so it’s important to look around and see what each one can offer you.

#2: An emergency fund. You know that label you see on fire extinguisher boxes – “break glass in case of emergency?” Only in a financial emergency should you “break into” your emergency account. What is a financial emergency? Everyone’s definition varies, but it can range from a broken water heater to major car repairs to unemployment help.

#3: A workplace retirement strategy. At some point, you may want to consider when is the right time to start saving for retirement. Workplace retirement plans can offer you a convenient way to get started, if one is available.

#4: An eye on Insurance. Like the other decisions you’ll need to make while building your financial foundation, choosing the appropriate insurance program is going to be influenced by your own individual life circumstances. For example, if you’re supporting a family, you may want to look into an insurance program that is designed to protect you in the event that something happens to you or prevents you from working for a period of time.

#5: Estate Strategy. It’s never too early to start thinking about your legacy. For some, this can mean providing some financial support to your loved ones. For others, it might mean creating a program that supports charities and organizations. Whatever your aspirations, it’s important to ensure that your assets transition smoothly in accordance with your wishes.

Over the years, the Fed has followed a similar pattern with interest rates. It raises interest rates, then pauses, so it can see how the economy is adjusting to the higher rates. The chart below shows the Fed’s pattern with short-term rates during the past 30 years.

So, when will the Fed be ready to pause? In the table below, you can see that speculators are anticipating it may start as early as March 2023 when the Fed funds rate is between 5% and 5.25%.

The Federal Open Market Committee gave an update on its outlook for interest rates when it released the minutes from its November 2022 meeting.

“In addition, a substantial majority of participants judged that a slowing in the pace of (interest rate) increase(s) would likely soon be appropriate,” the Committee said. “A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability.”

It’s an encouraging update that leaves plenty of room for interpretation. But when investing, it’s best to focus on what you can control and understand that markets will fluctuate over time.

The fees that investors pay to financial professionals for their advice and services come in two basic forms: transaction fees and ongoing fees. While professionals may differ in what fees they charge, they are required to fully disclose them.

Transaction Fees

These fees are generally one-time fees assessed at the time a transaction is made. Examples of transaction fees include:

Commissions

Paid on the purchase and sale of a stock.¹

Mark Ups / Mark Downs

Occur when a broker-dealer sells or buys an investor a position that it owns. FINRA guidelines ensure the prices paid by investors are reasonably related to the market for the security.²

Sales Loads

The sales charge for buying a mutual fund. They may either be front-end (charged when you buy the fund) or back-end (charged when you sell the fund). Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Surrender Charges

This fee is assessed when an investor sells an annuity prematurely. Generally, it is a percentage of the amount withdrawn.³

Redemption Charge

A charge some mutual funds assess if a fund position is not held for a prescribed period of time.

Ongoing Fees

These fees are levied for as long as an investor remains in a particular investment or investment platform. They typically are calculated as a percentage of assets. Examples of ongoing fees include:

Fees for Professional Investment Services

These are the fees an investment professional charges to manage assets.

Annual Operating Expenses

Mutual funds and exchange traded funds (ETFs) have ongoing fees that pay for the management of assets and any administrative and service (or distribution) fees. ETFs also are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Annual Variable Annuity Fees

In addition to the annual operating expenses of the funds contained in an annuity, an annuity may have additional service fees, administrative charges, and insurance costs. Variable annuities are sold by prospectus, which contains detailed information about investment objectives and risks, as well as charges and expenses. You are encouraged to read the prospectus carefully before you invest or send money to buy a variable annuity contract. The prospectus is available from the insurance company or from your financial professional. Variable annuity subaccounts will fluctuate in value based on market conditions, and may be worth more or less than the original amount invested if the annuity is surrendered.

Combined Fees

Some products or investment platforms may charge a combination of transaction fees and ongoing asset-based fees. Examples include:

ETFs

When you invest in an ETF, there is a transaction fee at the time of purchase and when it is sold, as well as an ongoing fee to manage the fund.

Mutual Funds

Funds may be sold with a sales load and also assessed ongoing fees.

Investment Programs

While most programs offer an inclusive ongoing fee for advice and transactions, some programs may charge both forms of fees.

Don’t Be Afraid to Ask Questions

Investors should be aware of what they are paying for a professional’s services and advice. Don’t hesitate to ask questions like “How do you get paid?” or “Do I have a choice of how I pay you?”

Forty-four percent of Americans do not own any stocks or stock-related investments, according to a recent Gallup poll.¹

Individuals may cite different reasons for not investing, but with important long-term financial goals, such as retirement, in the balance, the reasons may not be good enough.

Why Invest?

• Make Money on Your Money

You might not have a hundred million dollars to invest, but that doesn’t mean your money can’t share in the same opportunities available to others. You work hard for your money; make sure your money works hard for you.

• Achieve Self-Determination and Independence

When you build wealth, you may be in a better position to pursue the lifestyle you want. Your life can become one of possibilities rather than one of limitations.

• Leave a Legacy to Your Heirs

The wealth you pass to the next generation can have a profound impact on your heirs, providing educational opportunities, the capital to start a business, or financial support to your grandchildren.

• Support Causes Important to You

Wealth can be an important tool for impacting the world in a meaningful way. So whether your passion is the environment, the arts, or human welfare, you can use your wealth to affect positive changes in your community or around the world.

A Framework for Investing

The decision to invest is an acknowledgment that it comes with certain risks. Not all investments will do well, and some may lose money. However, without risk, there would be no opportunity to potentially earn the higher returns that can help you grow your wealth.

To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal. Remember, diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.

Because investing can be complicated, consider working with a financial professional to help guide you on your wealth-building journey.