Markus Andrews

Year-end Planning

Standard monthly Medicare Part B premiums will be $174.70 in 2024, up from $164.90 in 2023.
Beneficiaries with incomes above $103,000 for individuals and $206,000 for married couples will pay higher monthly rates.

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The standard monthly premium for Medicare Part B will increase by $9.80 per month in 2024, according to the Centers for Medicare and Medicaid Services.
That means the standard monthly premium will go up to $174.70 in 2024, an increase from $164.90 in 2023. The new rate is in line with previous projections by Medicare trustees, which had estimated a $174.80 standard monthly premium for next year.

The annual deductible for Medicare Part B will be $240 in 2024, a $14 increase from the $226 annual deductible in 2023.
The Part B premium and deductible increases are mainly due to projected increases in health care spending, according to the Centers for Medicare and Medicaid Services.
Medicare Part B covers physician services, outpatient hospital services, some home health care services, durable medical equipment and certain other services not covered by Medicare Part A.

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Monthly Part B premium payments are typically deducted directly from Social Security benefit checks. Consequently, the size of Medicare Part B premiums affects just how much of the annual Social Security cost-of-living adjustment beneficiaries may see. In 2024, Social Security benefits will increase by 3.2%, the Social Security Administration announced on Thursday, resulting in a retirement benefit increase of more than $50 per month, on average.
One forecast from The Senior Citizens League, a nonpartisan senior group, had projected the standard monthly Medicare Part B premium could rise by as much as $5 more per month, for a total of $179.80 per month, following the approval of a new Alzheimer’s drug, Leqembi.

“We are relieved to learn that the Medicare Part B increase in 2024 won’t be as high as we initially feared,” The Senior Citizens League said in a statement.

High income beneficiaries pay more for Medicare Part B

The rate beneficiaries pay for Medicare Part B is determined by modified adjusted gross income on their federal tax returns.
Those who earn above certain income thresholds pay extra toward their Medicare Part B premiums in what is known as income-related monthly adjustment amounts, or IRMAA.
Income-related monthly adjustment amounts affect roughly 8% of people on Medicare Part B, according to the Centers for Medicare and Medicaid Services.

In 2024, IRMAA charges will apply to individuals with more than $103,000 and married couples with more than $206,000 in modified adjusted gross income on their 2022 federal tax returns. That is up from $97,000 for individuals and $194,000 for married couples this year.
Costs for Medicare Part A, which covers inpatient hospital care, are also set to go up in 2024.
The Medicare Part A inpatient hospital deductible, which applies to the first 60 days of care, will go up to $1,632 in 2024, a $32 increase from $1,600 in 2023.
Beneficiaries then pay coinsurance amount of $408 per day, up from $400 in 2023, for the 61st through 90th day of hospitalization. That is followed by $816 per day, up from $800 in 2023, for lifetime reserve days.  More

Your Money

Women accounted for 31.2% of angel investors in the first two quarters of 2022, according to a report by Jeffrey E. Sohl at the Center for Venture Research at the University of New Hampshire. 
If you have the money and inclination, angel investing is “a window to innovation across the economy,” Jo Ann Corkran, co-CEO and managing partner of Golden Seeds, said at CNBC’s Financial Advisor Summit.

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Recent indicators show that women are increasingly eager to put their money to work outside of traditional portfolio offerings. 
For instance, women accounted for 31.2% of angel investors in the first two quarters of 2022, a slight increase from 30.3% in the same period in 2021, according to a report by Jeffrey E. Sohl at the Center for Venture Research at the University of New Hampshire. 

This is “an encouraging sign that women angels are an increasing active segment in the angel market,” especially as women are predicted to control the majority of the net worth in the U.S., the report said.
If you have the money and inclination, angel investing is “a window to innovation across the economy,” Jo Ann Corkran, co-CEO and managing partner of Golden Seeds, said Thursday at CNBC’s Financial Advisor Summit.
It doesn’t depend on the market cycle and innovation is always happening, she added.

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However, here’s the issue: Women don’t take enough risk when investing, said Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments, at the summit.
Unlike venture capital firms, angel investors make their own decisions and use their own wealth in a startup’s initial stages, said Corkran.

“It’s a way for people to use their money, skills, experiences and networks to help companies that are in their own portfolios,” she added.
Here’s how advisors can better position clients to take advantage of this growing woman-led market opportunity, according to angel-investing experts.

How to help clients become angel investors

Financial advisors ought to keep angel investing in mind for clients as an option over portfolio investing because it has one of the highest rate of returns across all asset classes, said Corkran.
Over the long term, angel investing can bring a 25% to 35% in internal rate of returns (a metric used in financial analysis to estimate the profitability of potential investments), she added.
As women are projected to own as much as $93 trillion in assets globally as of this year, according to Boston Consulting Group, it’s in advisors’ best interest to engage female clients, said Tengler.

Research shows that two-thirds of women tend to lay off their financial advisors after becoming newly single, whether through divorce or by being widowed, she added.
Other studies have found women do about 60% more research and outperform male counterparts as investors, said Tengler.
Financial advisors can help their clients become angel investors by sharing resources on how to become familiar with risk by following these two practices:

Join an angel investing group: There are about 250 angel groups across the U.S. that work with different areas and sectors, said Corkran. Many offer training for new members on how to perform due diligence and risk assessments, she added.
Familiarize yourself: Enroll and subscribe to different associations that provide critical, original investor research, said Corkran. Moreover, read from industry and business publications weekly, said Tengler. “Start familiarizing yourself with the process and companies,” she added. More

Despite economic uncertainty, it’s still possible to build and preserve generational wealth, according to experts at CNBC’s Financial Advisor Summit.
“The No. 1 cause of great loss of wealth is concentration,” said Mel Lagomasino, CEO and managing partner of WE Family Offices.

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Despite economic uncertainty, it’s still possible to build and preserve generational wealth, experts said Thursday at CNBC’s Financial Advisor Summit.  
“There’s a real chance of a soft landing” for the economy, said Mel Lagomasino, CEO and managing partner of WE Family Offices, which has locations in New York City and Miami. “But I think we’ll still have an earnings recession,” she said, pointing to rising costs of labor amid worker strikes.

While rising interest rates have triggered stock market volatility, they have created competitive options for investors. “Now for a change, they’re getting paid,” Lagomasino said. “They can put money in very liquid, very safe investments and get 5%, 6% or 7%.”

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But through the end of 2023, “it’s going to be tricky, particularly with the geopolitical environment,” she said, urging investors to stay “very liquid.”

Biggest threats to generational wealth

With some experts still predicting a recession, experts at the summit said it’s also important to protect generational wealth.
“The No. 1 cause of great loss of wealth is concentration,” said Lagomasino, emphasizing the risk of having “a lot of eggs in one basket.”

The No.1 cause of great loss of wealth is concentration.

Mel Lagomasino
CEO and managing partner of WE Family Offices

Concentration risk was magnified in the tech community during the collapse of Silicon Valley Bank and First Republic earlier this year, said Rodney Williams, co-founder of SoLo Funds. “That effect was felt across so many different areas.”

That’s why “diversification is key,” he said.
Leverage is another big risk, especially when paired with excess spending, Lagomasino said. It can be a “toxic cocktail” for an investor who hasn’t diversified. 
“You can concentrate for a moment in time and then you diversify,” Williams added. “That’s the game.”   More

Year-end Planning

How much retirees pay for Medicare Part B premiums is based on their incomes.
An income increase of just $1 may trigger higher rates.
Here’s how year-end tax strategies may influence how much retirees pay for Medicare Part B coverage in future years.

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Social Security beneficiaries are set to receive a 3.2% increase to their benefits in 2024 based on the annual cost-of-living adjustment, the Social Security Administration announced on Thursday.
The change will result in an estimated Social Security retirement benefit increase of more than $50 per month, on average. The average monthly retirement benefit for workers will be $1,907, up from $1,848 this year, according to the Social Security Administration.

But beneficiaries won’t know exactly how much of an increase they will see until December, when they receive their annual benefit statements, Mary Beth Franklin, a certified financial planner and Social Security expert, said Thursday during the CNBC Financial Advisor Summit.

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One factor that may offset those benefit increases is the size of Medicare Part B premiums, which are typically deducted directly from monthly Social Security checks.
“You will be getting a larger Social Security benefit next year,” Franklin said.
“But remember, depending on your income, you may also be paying a lot more for Medicare,” Franklin said.

Medicare Part B premiums are based on income

Medicare Part B covers physician services, outpatient hospital services, some home health care services, durable medical equipment and certain other services not covered by Medicare Part A.

Medicare Part B premiums for 2024 have not yet been announced. The Medicare trustees have projected the standard monthly premium may be $174.80 in 2024, up from $164.90 in 2023.
But some beneficiaries may pay much higher rates based on their incomes, in what is known as income-related monthly adjustment amounts, or IRMAA.
In 2023, you pay the $164.90 standard Part B premium if you file individually and have $97,000 or less (or $194,000 or less for couples) in modified adjusted gross income on your federal tax return in 2021.
Those monthly premiums go up to as much as $560.50 per month for individuals with incomes of $500,000 and up, or couples with $750,000 and up.
No matter the monthly Part B premium rate, beneficiaries get the “exact same Medicare services,” according to Franklin.

It is truly like a hurricane for your health care costs in retirement.

Mary Beth Franklin
CFP and Social Security expert

If your income goes up by even $1, you may be bumped up to a higher Medicare Part B premium tier and have to pay extra.
“It is truly like a hurricane for your health care costs in retirement,” Franklin said.
In 2024, the monthly Part B premiums will be based on information in 2022 federal tax returns.
Beneficiaries and their financial advisors would be wise to pay attention to how their incomes may change, and therefore affect Medicare Part B premium rates, when implementing three year-end tax strategies, Franklin said.

1. Roth conversions

A Roth conversion happens when pre-tax funds from a traditional IRA or an eligible qualified retirement plan like a 401(k) are moved to a post-tax retirement account.
While this triggers an immediate tax bill because that money is treated as income for the year, it frees up the possibility for tax-free retirement withdrawals later.
However, that extra income for this year may trigger higher Medicare Part B premiums later, Franklin warned.
“Advisors may want to reach out to their clients and say, ‘Remember, for long-term tax planning purposes, we did that Roth IRA conversion?” Franklin said. “‘Your Medicare premium may go up. But it might just be a one-year hit.'”

2. Tax loss harvesting

As the year ends, one popular strategy advisors may employ is tax loss harvesting, where some investments are sold at a loss to offset the capital gains owed on other profitable investments.
This strategy may help reduce adjusted gross income and future Medicare premiums, Franklin said.

3. Qualified charitable distributions

Retirees who are taking distributions from IRAs and who want to make charitable donations may want to consider making those contributions directly from their retirement accounts in what is known as a qualified charitable distribution.
“That money does not show up on your tax return, and will not boost your income taxes or your future Medicare premiums,” Franklin said.
Of note, even though required minimum distributions now start at age 73 (if you reach age 72 after Dec. 31, 2022), qualified charitable distributions are still available to retirees ages 70½ or older, Franklin noted. More

The housing market is dealing with several “tricky” dynamics, said Tracy Kasper, president of the National Association of Realtors.
Those dynamics include an “inventory crisis” and the highest mortgage rates in decades.

Prospective buyers visit an open house for sale in Alexandria, Virginia.
Jonathan Ernst | Reuters

The housing market is dealing with several “tricky” dynamics, according to Tracy Kasper, president of the National Association of Realtors.
“What we’ve experienced over the last probably 12 to 18 months is what I really like to call a leveling,” Kasper said Thursday during CNBC’s Financial Advisor Summit.

That slowdown in home sales comes after “exponential increases year over year” during the Covid-19 pandemic, Kasper said.
With fewer people selling their houses, she said, there is now an “inventory crisis.”
“We’ve seen a crunch — our first-time homebuyers are struggling,” she added.

First-time homebuyers’ woes

During the Covid-19 pandemic, first-time homebuyers found it hard to compete with other buyers who had more cash to spare, Kasper said.
Now, they simply can’t find anything as current homeowners are reluctant to put their house on the market and give up existing low-rate mortgage.

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Mortgage rates are currently approaching 8%, the highest level in decades, and have priced many first-time homebuyers out of the market, Kasper said.
Higher rates add to monthly payments, which can mean it’s harder to qualify for a mortgage. Last year, lenders were denied loan applications due to “insufficient income” more often than any other point since records began in 2018, according to a new report from the Consumer Financial Protection Bureau.
“In most cases, income did not increase at the pace of average mortgage payments,” certified financial planner Barry Glassman, founder and president of Glassman Wealth Services in McLean, Virginia, recently told CNBC.
Glassman is also a member of CNBC’s Financial Advisor Council.
Given these obstacles, Kasper said real estate insiders are desperately seeking ways to increase inventory, including pushing for government incentives such as tax breaks for sellers.
“We’re looking for any conversation that we can have, that would open up that inventory,” Kasper said.
Housing and banking groups also sent a letter to the Federal Reserve this month, strongly encouraging the central bank to not contemplate further rate hikes. More