Hello Eagle Wealth Community,
Has the stormy financial news felt like a dark cloud lately? Consider keeping an eye out for silver linings and take advantage when good news heads your way. In other words, when opportunity knocks (in this case retirement contribution limits), answer it.
The Internal Revenue Service has released new limits for the coming year. After months of high inflation and financial uncertainty, some of these cost-of-living-based adjustments have reached near-record levels.
Individual Retirement Accounts (IRAs)
IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500.
The income phase-out range for Roth IRA contributions increases to $138,000-$153,000 for single filers and heads of household, a $9,000 increase. For married couples filing jointly, phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.
Workplace Retirement Account
Those with 401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, the limit rising to $22,500. Those aged 50 and older can now contribute an extra $7,500, bringing their total limit to $30,000.
A $1,500 increase in limits for 2023 gives individuals contributing to this incentive match plan a $15,500 stop light.
The IRS also announced several other changes for 2023, including an increase to the annual exclusion for gifts to $17,000 per person and an increase to the estate tax exclusion threshold.
As the end of the year quickly approaches (wasn’t it just summer?!) it’s time to start thinking about your 2022 retirement account contributions. If maxing out the limit isn’t in this year’s plan, you can always increase your contribution if your budget allows. Every little bit counts in your big financial picture.
If you’re unsure of what contribution amount is right for you, remember that your financial team is here to help. We’ll consider your entire financial plan and help you decide on the best contribution amount for your personal situation. Give us a call if you have any questions about what these changes mean for you.
Your Eagle Wealth Team
Unplug to a New Activity
Constantly being wired up, plugged in, and online can actually cause stress. It can also be hard to put down your smartphone or similar device. By doing so, you might be missing out on time spent cultivating other interests and participating in other activities that can enrich you, relax you, and help you to be more mindful and present. Here are a few ideas:
Get outside and get some steps in. Walking and fresh air can work wonders on regrouping and resetting to an unplugged state. You can start in your own neighborhood or visit a local park or beach.
Take a staycation. Explore your town as if you were visiting. There may be some hidden gems like restaurants or museums you never knew existed.
Class is in session. Take a class in something you’re interested in, like art, music, history, or literature. Many cities have community colleges and adult education programs.
Read. Read a book. Real paper, with words, a spine, and covers. Make an outing of going to the bookstore to see what’s out there, and pick up a book, magazine, or journal.
Tip adapted from HuffPost
The Week on Wall Street
Hawkish comments by Fed Chair Jerome Powell, following the announcement of another 75 basis points interest rate hike last week, cast a pall over financial markets, sending yields higher and stocks lower.
The Dow Jones Industrial Average slipped 1.40%, while the Standard & Poor’s 500 declined 3.35%. The Nasdaq Composite index lost 5.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.04%.1,2,3
The official statement released following the Federal Open Market Committee (FOMC) meeting appeared to suggest a potential for future easing of interest rates. Investors cheered the news, sending stocks higher. But the optimism was crushed 30 minutes later on hawkish comments by Fed Chair Powell during his post-meeting press conference.
Losses accelerated into Thursday, led by technology names, which were under pressure due to rising bond yields. The yield on the two-year Treasury note rose to its highest level since 2007. The sentiment took damage from workforce reduction/freeze news from multiple technology companies; some considered it a sign of a pending recession. Stocks managed to erase some of the week’s losses on Friday following a strong employment report and a drop in the U.S. dollar.4
From Dove To Hawk In 30 Minutes
In the statement accompanying the 75 basis point rate increase, the FOMC said that future increases would consider the cumulative monetary tightening to date and the lag in impact such tightening involves.5
But in his post-meeting press conference, Fed Chair Powell struck a more hawkish tone. He said that current inflation data did not support any slowdown in rate increases and that the terminal rate (the point at which rates will no longer rise) may be higher than initially expected.6
THE WEEK AHEAD
KEY ECONOMIC DATA
Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, November 4, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
COMPANIES REPORTING EARNINGS
Tuesday: The Walt Disney Company (DIS).
Wednesday: Roblox Corporation (RBLX), Occidental Petroleum Corporation (OXY).
Thursday: Becton, Dickinson and Company (BDX).
Source: Zacks, November 4, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance
Disclosures and Footnotes
Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance.
1. The Wall Street Journal, November 4, 2022
2. The Wall Street Journal, November 4, 2022
3. The Wall Street Journal, November 4, 2022
4. The Wall Street Journal, November 3, 2022
5. The Wall Street Journal, November 2, 2022
6. The Wall Street Journal, November 2, 2022
7. IRS.gov, July 20, 2022
8. Culinary Hill, May 19, 2022
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.