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TikTok’s latest “tradwife” and “stay-at-home girlfriend” trends show an idealized view of adhering to very traditional gender roles.
Staying at home necessitates a degree of privilege that fewer young adults have these days.
If anything, women are working more, not less, and forgoing paid labor comes at a steep economic cost.
Some men are scaling back at work, a recent study shows.

If TikTok is any guide, more women are taking a traditional approach to romantic partnerships: Some say they are even opting out of the workforce entirely in favor of the so-called “soft life,” centered around their home, their family and their own wellbeing.
(Re-)enter the “tradwife,” one of social media’s growing trends. It shows a curated look at women embracing domesticity as the antithesis of what other young women are experiencing, who are “working hard and barely scraping by,” said Casey Lewis, a social media trend forecaster.

“The thing about tradwives is that it feels very different; it is an escape from a lot of people’s reality,” she said.
Experts say it’s a facade. Evidence shows this is something few women are actually doing, and it’s not a realistic lifestyle to aspire to.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

When it comes to women and money, the data largely isn’t favorable.
Although women are achieving increasing levels of education and representation in senior leadership positions at work, they still earn just 84 cents for every dollar earned by men — a dynamic that has shown no significant signs of improvement in decades. As a result, women are more likely to be financially vulnerable and have less saved for retirement and other long-term goals.
Even as women’s economic standing improves, they still lag their male counterparts by almost every financial measure. “I can understand individuals that say it’s just too much,” said Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York.

‘There’s nothing new here’

These are old ideas with fresh taglines, “Fair Play” author Eve Rodsky says of tradwives and the related social media trend of stay-at-home girlfriends, or SAHGs: “That is the definition of patriarchy — there’s nothing new here.”
“Tradwives are pretending they have agency over their choices,” Rodsky said. But forgoing paid labor comes at an economic cost. “The tradwife or stay-at-home girlfriends are taking huge economic risks,” she added. “What that really means is that you don’t have economic security.”

Francis, who is a member of CNBC’s Financial Advisor Council, advises her female clients to consider that they “at some point in their life are going to be solely responsible for making financial decisions on their own.”
Social media portrays a glamorized view of what that life looks like but “that is not realistic,” Francis said. Financial dependence can also mean a loss of power or control, she added.
For SAHGs, creating an imbalance in a relationship at the outset is more troubling, said Heather Boneparth, co-author of The Joint Account, a money newsletter for couples. “For the stay-at-home girlfriend, the power dynamic is even more skewed in favor of their partner because they really have everything to lose.”

Staying at home also necessitates a degree of privilege that fewer young adults have these days. In reality, most people are living paycheck to paycheck. More than three-quarters, or 78%, of millennials in the U.S. are in a “dual career couple,” compared with baby boomers at 47%, according to the Berkeley Haas Center for Equity, Gender and Leadership.
Two partners working full-time is increasingly necessary to achieve the American dream — which for many people involves some combination of owning a home, getting married, having kids and making enough after expenses to save for retirement and spend on leisure.
Today’s young adults are having a harder time reaching those key milestones, at least compared with their parents a generation ago, according to a recent report by the Pew Research Center.

‘Step back and do less’

There is a disillusionment taking hold among younger Americans, studies show. Generation Z is increasingly less motivated by the daily grind and adopting a more relaxed approach to their long-term financial security, according to a recent Prosperity Index study by Intuit. 
In the current climate, newly minted adults between the ages of 18 and 25 are more interested in experiences that promote personal growth and emotional well-being, the report found.
Young women, whether they’re married or not, are expressing a desire to “take a step out of the professional rat race,” Lewis said.
“There’s a lot of pressure on young women,” she said. Being a stay-at-home girlfriend or tradwife is “an excuse to step back and do less.”

But if anything, women are working more now, not less.
“Prime-age women, including mothers, are participating in the labor force more than ever before,” said Julia Pollak, chief economist at ZipRecruiter.
By 2023, women’s employment had recovered from pandemic-era losses. In 2024, the labor force participation rate for women ages 25-54 neared an all-time high, according to the Bureau of Labor Statistics.

In other words, you can choose to be a tradwife if you have a tradhusband.

Julia Pollak
Chief economist at ZipRecruiter

Of course, even in households where both partners work, many marriages still adhere to traditional gender roles. In cases where men are the primary breadwinners, it’s more often women who take on the bulk of the caretaking responsibilities, experts say. 
“In other words, you can choose to be a tradwife if you have a tradhusband,” Pollak said.

‘A big change happening’

In at least some marriages or partnerships, couples are reevaluating ideas about work and family and striking a balance between the two.
Recently, it’s actually men who are choosing to scale back at work, particularly high earners with higher levels of education, according to a 2023 working paper published by the National Bureau of Economic Research.
“The pandemic may have motivated people to re-evaluate their life priorities and also gotten them accustomed to more flexible work arrangements (e.g., work from home), leading them to choose to work fewer hours, especially if they can afford it,” the researchers wrote.
“There’s a great new set of men who are saying that overwork is not their first priority anymore,” Rodsky said of those men who may have already logged long hours and are now dialing back.
“The dark side of the pandemic was this ‘banana-bread-tradwife’ recycling of old ideas; the exciting side is this big change happening.” More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

Young adults are more likely than older cohorts to say that “owning my own business” is key to their financial security, according to a CNBC-SurveyMonkey poll.
CNBC, in partnership with Junior Achievement, brought together business leaders in the Denver area to speak with students about their journey in founding a company.
Successful entrepreneurs work through challenges, learn quickly from failure and surround themselves with people who support them.

The Junior Achievement Free Enterprise Center located in Greenwood Village, Colorado, is where high school students can explore careers and develop a plan to pursue their goals. The center aims to inspire the next generation of entrepreneurs.
Entrepreneurship is a common goal for younger people.

More than half, or 54%, of Gen Z adults say that they think they’d be happier owning their own business than working a normal day job, according to CNBC and SurveyMonkey’s new Workforce Survey. The survey polled 5,993 U.S. adults in the workforce in early April — including 770 Gen Z respondents age 27 and younger.

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“There’s a recipe for finding your path to purpose,” said Robin Wise, the president and CEO of Junior Achievement Rocky Mountain. “It’s seeing people do things that you might want to do. It’s knowing yourself.” 
In partnership with Junior Achievement, CNBC brought together business leaders in the Denver area to speak with students about their journey in founding a company. Here are five key pieces of advice that they shared:

‘Embrace what makes you different’ 

Mowe Haile, Founder of Sky Blue Builders, Darian Simon Cofounder of Be a Good Person, and Robin Thurston, Founder and CEO of Outside Interactive, Inc. speak with students about entrepreneurship.
Caitlin Steuben | CNBC

Darian Simon co-founded the clothing company Be a Good Person in 2015 to inspire positivity. He advises young people to “embrace what makes you different.”
Simon was diagnosed with autism and ADHD, or attention-deficit/hyperactivity disorder, at age 28. Now 30, he said he rejects the “disorder” part of the diagnosis and embraces it as his superpower.

“My greatest strengths are my neurodivergence because I have less inhibitive space in my brain, therefore I can ideate better,” he said. “Therefore the box doesn’t really exist in the same ways.”

Value adaptability

Robin Thurston sold his digital fitness technology start-up to Under Armour for $150 million in 2013. He recently founded Outside Interactive, a network of media brands in endurance sports, the outdoors and healthy living.
He compares starting a business to going on a difficult hike and advises keeping that analogy in mind as you embark on the journey — you’ll need to embrace the unknown, recognize that things are unlikely to go according to plan and work through inevitable difficulties, he said.
“That’s what great entrepreneurs do,” Thurston said. “They’re resilient, and they work their way through those challenges.” 

Recognize challenges ‘as opportunities’

Camila Uzcategui co-founded Vitro3D, a company that uses 3D printing-like technology in advanced manufacturing spaces, in 2020. She said her background in physics and interest in experimenting with technology taught her the value of failure. 
“In all of those challenges, I like to see them as opportunities to either pivot into a potentially new direction or pivot into a better way of understanding something,” Uzcategui said.

Expect excellence from your team

Mowa Haile founded Sky Blue Builders, a construction company, during the Great Recession in 2009. He said it’s important to surround yourself with people who share your passion — and always expect excellence from them.  
“When you’re an entrepreneur and you have a team, you’re there to coach them and lead them and encourage them,” he said. 

Surround yourself with the right people

Lara Merriken founded Larabar, a company that makes vegan, gluten-free, plant-based bars, in 2000 after a career in social work.
“A lot of people were literally naysayers,” she recalled. “They were just like, why would you do this? Why would you get into a category that’s oversaturated?” 
She said that identifying and working with trusted confidants who were supportive and encouraging were critical to the company’s success. She sold Larabar to General Mills in 2008 for about $55 million. 
Another recipe for success is to learn from other entrepreneurs’ stories, Merriken said. “While we have our companies, we still need inspiration every day.”
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Health care, long an ailing stock market sector, has recovered over the past six months.
Several analysts are projecting strong performance for this year.
Health care is a defensive redoubt for investors because demand isn’t affected by the economy.

The Good Brigade | Digitalvision | Getty Images

Health care, long an ailing stock market sector, has recovered over the past six months, with currently robust vital signs and strong growth projections.
The recovery comes after the sector failed to make good on positive expectations for 2022 based on estimates of pent-up demand for physician office visits and elective procedures after the pandemic.

Health care was basically flat in 2022 and again for most of 2023, a year when its overall performance was the third-worst among the market’s 11 sectors and the S&P 500 grew 26%.

Why this year may be different

Late in 2023 and in the first quarter of 2024, health-care stocks turned around, advancing about 5%, about half of the gain of the S&P 500. In mid-April, as the S&P 500 pulled back, the health-care sector gave up its first-quarter gains.
Yet, like the S&P 500, health care has gained since the market’s October low, catching some wind after two years of doldrums for the sector. 
Several analysts are projecting strong performance for this year. BlackRock’s view is particularly sanguine: “Health care’s 12-month forward earnings growth is expected to lead all other sectors on a year-over-year basis.”

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One factor driving investment is the broadening of market performance from big tech stocks into other sectors. Amid this perennial sector rotation, health-care stocks are a natural place for money to flow now because they’re defensive, having historically done well in slowing and growing economies alike.

This defensive advantage has been drawing investment from institutional investors expecting slowing economic growth at this late stage of the business cycle, as the Federal Reserve estimates growth of 2.5% for the first quarter compared with 3% in 2023.  

Constant demand

Health care is a defensive redoubt for investors because demand isn’t affected by the economy. People will always need health care, and insured people will usually seek it, regardless of what the economy’s doing.
For many individuals, a slowing economy may lead to less job security, prompting them to spend less. This may mean putting off buying a new car or remodeling the kitchen, but not medical care.
Further, demand is unflagging from baby boomers on Medicare, including those with supplemental plans with relatively low deductibles and co-pays.
Also driving the sector has been a shift in investor sentiment, with buzz surrounding new pharmaceuticals, such as GLP-1 drugs for treating diabetes and effecting weight loss, and robotic technology enabling minimally invasive techniques for complex surgeries.

GLP-1 drugs have doubled Eli Lilly’s share price over the past 12 months, bringing its trailing price-earnings, or P/E, ratio for that period to a lofty 129. Over the same period, Intuitive Surgical’s robotic da Vinci Surgical System helped the company grow its stock 42%, bringing its trailing P/E ratio to 75.
Though these two stocks may continue to do well this year, health-care companies that probably have more room to grow, as indicated by their lower valuations, aren’t scarce. They can be found in various subsectors, including biotech, providers/services, equipment/supplies and life science tools/services.

Six stocks to watch

Here are six stocks with attractive valuations, low-risk fundamentals, good earnings and strong growth projections:

Abbvie (ABBV). This well-known biotech company has an unusually high dividend yield — currently, 3.83%. Products include drugs for treating psoriatic arthritis, plaque psoriasis, Crohn’s disease, depression and some cancers. Market cap: $286 billion. Trailing 12-month P/E ratio: 16.3.

Vertex Pharmaceuticals (VRTX). This biotech company is a dominant player in the market for cystic fibrosis therapies. After announcing largely positive results from a clinical trial of a non-opioid acute pain drug in January, the company said it would apply for regulatory approval at midyear. The goal is to capture some of the huge market share of opioids, which carry the risk of addiction. Market cap: about $102 billion. Trailing P/E: 28.

Stryker Corp. (SYK). This medical device company manufactures various implants for spinal conditions and joint replacements for knees, hips and shoulders. Stryker benefits from sustained demand from aging boomers with deteriorating joints. Market cap: $129 billion. Trailing P/E: 33.

Medpace Holdings (MEDP). At 43, Medpace’s trailing P/E may seem high, but the share price has risen 63% over the last six months. A contract research organization, Medpace provides client companies with expertise and services to help them shepherd new drugs and medical devices through the different phases of development. Market cap: $12 billion.

Iqvia Holdings (IQV). This biotech company operates at the intersection of health care and technology, providing analytics, tech solutions and clinical research services to inform decision-making at hospitals and R&D organizations. P/E: 31. Market cap: $42 billion.

Cencora (COR). Though Cencora’s share price has risen more than 27% over the last six months, earnings growth gives this provider of pharmaceutical supply-chain solutions and services for the human and animal markets a relatively low trailing P/E — 26. Market cap: $47 billion.

Since 1952, presidential election years have been consistently positive for the overall market, especially when an incumbent is running. But health-care stocks are sometimes an exception because the sector is a political punching bag for candidates pledging to cut costs for consumers. Stock prices may dip from such rhetoric, creating buying opportunities.
Current projections indicate that investors now buying shares of health-care companies with good fundamentals and strong market positions, and holding them into 2025, may be positioned for strong gains.
— By Dave Sheaff Gilreath, a certified financial planner, and partner/founder and chief investment officer at Sheaff Brock Investment Advisors and its institutional arm, Innovative Portfolios. Sheaff Brock Investment Advisors placed #10 in CNBC’s FA100 rankings. More

The U.S. Department of Labor issued a final “fiduciary” rule on Tuesday that aims to raise investment-advice standards in retirement accounts.
The regulation follows an initial Biden administration proposal in October 2023.
President Obama also tried to crack down on conflicts of interest among brokers, advisors, insurance agents and others who give retirement advice. That rule was killed in court.

The U.S. Department of Labor headquarters in Washington.
Al Drago/Bloomberg via Getty Images

The Biden administration issued a final rule on Tuesday that cracks down on the investment advice that advisors, brokers, insurance agents and others give to retirement savers.
The U.S. Department of Labor regulation — which follows a rule proposal in October — aims to ensure that investment recommendations are in savers’ best interests, according to agency officials.

In legal terms, the final rule expands the scope of when a broker, advisor or other intermediary must act as a “fiduciary,” meaning they are required to give advice that puts the client first.
The final rule takes effect on Sept. 23. It takes up the mantle of a prior effort by the Obama administration to rein in conflicts of interest in retirement accounts. That Obama-era “fiduciary” rule, which experts say was broader than Biden’s measure, was killed in court.
Current retirement rules don’t provide adequate protections to savers, Labor Department officials said during a press call Tuesday.
Often, advice is tainted by “significant conflicts of interest” and in many circumstances there’s “no obligation” to act in retirement customers’ best interests, said Lisa Gomez, assistant secretary of the Employee Benefits Security Administration.
“That’s not right,” Gomez said.

The Labor Department is trying to restrain bad actors relative to two big areas of advice: rollovers from 401(k) plans to individual retirement accounts and purchases of insurance products like annuities, according to retirement and legal experts.
In certain instances, conflicts of interest may allow financial professionals to recommend a transaction that pays them a higher fee but isn’t necessarily best for the client. Such a dynamic can “chip away” at Americans’ savings, Gomez said.
The Council of Economic Advisers estimates Americans lose up to $5 billion a year due to conflicts of interest relative to one insurance product, an indexed annuity.
“For too many people, the retirement plan savings they have through their job are by far the single biggest sources of savings they have,” Gomez said. “These important and tax preferred savings deserve protection, and it is the Department of Labor’s job to make sure they are protected.”

The number of 401(k)-to-IRA rollovers is ‘astronomical’

The final rule doesn’t differ significantly from the Biden administration’s initial proposal, Labor officials said.
Its elements kick in over two time periods.
Starting Sept. 23, the financial industry must acknowledge fiduciary status when working with clients and adhere to “impartial conduct standards.”
Those standards mean financial professionals, when giving personalized investment advice to customers, have an obligation to be prudent, loyal and truthful and charge reasonable fees, for example, Labor officials said.
The remaining parts of the rule start a year later, in September 2025, officials said.
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Americans rolled over about $779 billion from 401(k)-type plans into IRAs in 2022, according to data cited in a Council of Economic Advisers analysis. Rollovers are common upon retirement, and the annual rollover dollar sum has grown as more baby boomers enter their retirement years.
“The amount of money being rolled over is astronomical,” said Andrew Oringer, partner and general counsel at the Wagner Law Group.
“That juxtaposition of an enormous amount of money and a compensation system that can incentivize the seeking of the rollover without regard necessarily to the best interest of the participant is something that has concerned the Department of Labor,” Oringer said.   

Meanwhile, industry groups say the regulation isn’t necessary and would harm the very retirement savers the Labor Department is trying to protect.
In a statement, the American Council of Life Insurers, a trade group, said the new regulation is “alarmingly similar to the Department’s 2016 regulation” under President Obama.
Before being overturned, that rule caused more than 10 million investor accounts with $900 billion in total savings to lose access to professional financial guidance, the group said.
Additionally, federal and state rules governed respectively by the Securities and Exchange Commission and National Association of Insurance Commissioners already offer “robust” consumer protections for retirement savers, ACLI said.
However, there appears to be concern from the Labor Department that the “reach and substance” of those regulatory schemes are “insufficient” in the retirement content, and it is trying to “level the playing field,” Oringer said.
Labor officials also said Tuesday that the final fiduciary rule differs significantly from the Obama-era regulation.
“We have done our level best to write a rule that takes the teaching of the Fifth Circuit [Court of Appeals], the lessons we learned from the [public] comments,” and draft a rule that protects investors without putting “undue burden” on the financial industry, said Timothy Hauser, deputy assistant secretary for program operations at the Employee Benefits Security Administration.

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After the Supreme Court blocked President Joe Biden’s first plan to forgive student debt, his administration set out to create a relief package that would survive legal attacks.
Here’s why the U.S. Department of Education thinks the revised plan will endure.

US President Joe Biden speaks about student loan debt relief at Madison Area Technical College in Madison, Wisconsin, April 8, 2024. 
Andrew Caballero-Reynolds | AFP | Getty Images

The aid package is narrower

Biden’s 2020 campaign promise to erase student debt was thwarted at the Supreme Court in June.
The majority-conservative court ruled that Biden didn’t have the authority to erase $400 billion in student debt without prior authorization from Congress. Biden had tried to forgive the debt of nearly all 40 million federal student loan borrowers, with many people getting up to $20,000 in cancellation.
This time, the Biden administration has narrowed its aid by targeting specific groups of borrowers, including those who’ve been in repayment for decades or attended schools of low-financial value. It hopes this will help the plan survive in front of a court that is skeptical of broad loan cancellation, experts say.

More than 25 million borrowers still stand to benefit from the program.
As a result, for critics of broad student loan forgiveness, Biden’s new plan looks a great deal like his first.

After the president touted his revised relief program on April 8, Missouri Attorney General Andrew Bailey, a Republican, wrote on X that Biden “is trying to unabashedly eclipse the Constitution.”
“See you in court,” Bailey wrote.

There’s a different legal justification

In addition to the fact that this effort is a more targeted aid program, the U.S. Department of Education is also using a different law — the Higher Education Act — as its legal justification. Biden’s first forgiveness plan was based on the Higher Education Relief Opportunities for Students Act, or HEROES Act, of 2003.
The HEROES Act was passed in the aftermath of the 9/11 terrorist attacks and grants the president broad power to revise student loan programs during national emergencies. The Biden administration initially tried to use this law because, at the time, the country was under national emergency status from the Covid-19 pandemic.

However, the conservative justices didn’t buy that argument.
Chief Justice John Roberts wrote in the majority opinion for Biden v. Nebraska: “But imagine instead asking the enacting Congress a more pertinent question: ‘Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'”
“We can’t believe the answer would be yes.”
The HEA, which the Biden administration is now using, was signed into law by President Lyndon B. Johnson in 1965 and allows the Education secretary some authority to waive or release borrowers’ education debt.
When Sen. Elizabeth Warren, D-Mass., was running for president in 2020, she pointed to the HEA as a law that would allow her to deliver sweeping loan relief.
“This authority provides a safety valve for federal student loan programs, letting the Department of Education use its discretion to wipe away loans even when they do not meet the eligibility criteria for more specific cancellation programs,” Warren wrote in her student loan forgiveness proposal back then.

Biden administration is using rulemaking process

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The federal tax deadline was April 15, and if you missed it, you should file your return and pay your balance as soon as possible.
If you still owe taxes for 2023, you’ll continue racking up penalties and interest until you file and pay, according to the IRS.

Delmaine Donson | E+ | Getty Images

The federal tax deadline was April 15 for most filers — and if you missed it, you should file your return and pay your balance as soon as possible, experts say.
If you still owe taxes for 2023, you’ll continue racking up penalties and interest until you file and pay your outstanding balance, according to the IRS.

The late filing penalty is 5% of your unpaid balance per month or partial month, capped at 25% of your balance. The fee for failure to pay is 0.5% per month or partial month, with a maximum fee of 25% of unpaid taxes. Interest is based on the current rates.
“The longer you wait to file, the bigger the risk of higher penalties and interest from the IRS and state,” said Mark Steber, chief tax information officer at Jackson Hewitt.
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However, that doesn’t mean you should rush to file a return if you’re still missing key information, like tax forms for your investments or other earnings.
“A return needs to be completely accurate,” Steber said. “No guessing or estimating.” 

With missing information, the IRS could flag your tax return for audit, processing could be delayed or you could receive an agency notice. 
Still, “file an accurate return as soon as you’re able,” Steber suggested. 
Of course, some filers in disaster areas automatically have more time to file federal returns and pay taxes owed.

How to make a late payment for your taxes

There are several online choices for late tax payments, including IRS Direct Pay and your IRS online account.
If you can’t pay your tax balance in full, you have “various payment options,” including payment plans, according to the IRS.
IRS online payment plans, or “installment agreements,” include:

Short-term payment plan: This may be available if you owe less than $100,000 including tax, penalties and interest. You have up to 180 days to pay in full.

Long-term payment plan: This may be available if your balance is less than $50,000 including tax, penalties and interest. You must pay monthly, and you have up to 72 months to pay off the balance.

You could also qualify for first-time penalty abatement, which is like a “‘get out of jail free’ request,” according to Nicole DeRosa, tax partner at accounting firm Wiss & Company.
However, eligibility depends on the type of penalty and your past compliance with the IRS, she said. More

If you’ve inherited an individual retirement account since 2020, you could have a shorter timeline to withdraw the money, which can trigger tax consequences.
Under the Secure Act of 2019, certain heirs have a 10-year window to deplete an inherited IRA, but there’s no penalty for missed 2024 distributions.
There are several factors to consider when deciding to take inherited IRA withdrawals, experts say.

Jacob Wackerhausen | iStock / 360 | Getty Images

If you’ve inherited an individual retirement account since 2020, you could have a shorter timeline to withdraw the money, which can trigger tax consequences. But there are a few things to consider before emptying an inherited account, experts say. 
Under the Secure Act of 2019, so-called “non-eligible designated beneficiaries,” have a 10-year window to deplete an inherited IRA. Non-eligible designated beneficiaries are heirs who aren’t a spouse, minor child, disabled or chronically ill. Certain trusts may also fall into this category.

In 2022, the IRS proposed mandatory yearly withdrawals for heirs if the original account owner had already started their required minimum distributions, or RMDs. But the agency has since waived penalties for heirs’ missed RMDs amid confusion.
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These waived RMDs could create a tax problem for certain heirs who still must empty inherited accounts within 10 years, experts say. The shorter window could mean larger distributions and higher-than-expected income for those years.
However, “most beneficiaries don’t even care about the 10-year rule. They just want the money,” said individual retirement account expert and certified public accountant Ed Slott. 

Most beneficiaries don’t even care about the 10-year rule. They just want the money.

Individual retirement account expert

Heirs tend to earmark an inheritance for certain expenses and “the money is coming out on the way to the funeral,” he said.

Indeed, nearly 40% of Americans expecting an inheritance will use the money to pay off debt, according to 2023 survey from New York Life.

Tax changes are ‘one of many moving parts’

Provisions from the Republicans’ signature 2017 tax overhaul are slated to sunset after 2025 and without changes from Congress, individual federal income tax brackets could be higher.
Before 2018, the federal individual brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. But five of these brackets are temporarily lower through 2025: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Lower brackets through next year could prompt some heirs subject to the 10-year rule to make pretax withdrawals sooner.
But the expected tax law changes are just “one of many moving parts,” according to certified financial planner Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts.
“To a certain extent, I would lean towards other aspects of a client situation potentially being more important,” he said.
Before withdrawing money from an inherited account, you’ll need to consider one-off situations like selling a business or a home, which could temporarily boost income. You should also weigh your expected retirement date and when to start taking RMDs from your own retirement accounts, Jastrem said.
“It’s the big picture of each unique client’s plan,” he said.

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YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

More than eight in 10 teenagers have already thought about their retirement, according to a recent report. However, far fewer know the best way to set up a long-term plan.
Ed Slott, a certified public accountant and the founder of Ed Slott and Co., recommends starting with a Roth individual retirement account.
He said contributions can be small at the outset because “time is the key asset.”

Getty Images

When it comes to teens and money, there is often a disconnect.
Overall, teenagers are taking a greater interest in their long-term financial health — although far fewer understand basic retirement planning.

A majority, or 83%, of 13- to 18-year-olds, said they had already thought about their retirement, according to the results of a survey from Junior Achievement and MissionSquare.
But most teens mistakenly believed saving money in a bank account was the best long-term strategy. Only 45% said investing in stocks and bonds with the help of a financial advisor, which would offer a greater long-term return, was the preferred way to go.

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“This research shows retirement is more top-of-mind for teens than one might think,” said Jack Kosakowski, Junior Achievement’s president and CEO. “While young people have given retirement planning some thought, it’s apparent they still need information on the best way to go about it.”

‘The greatest money-making asset you can possess’

Although retirement can seem far away, particularly for those just starting out, teens have a unique opportunity that others do not, according to Ed Slott, a certified public accountant and the founder of Ed Slott and Co.
“The greatest money-making asset you can possess is time,” he said. “Someone who starts at 15 has a huge advantage even over someone who starts at 25.”

Slott recommends opening a Roth individual retirement account to get a head start.
Contributions to a Roth IRA are taxed upfront, and earnings grow tax-free. In retirement, withdrawals are completely free of tax and penalties, as long as the account has been open for at least five years.
Since there are no age restrictions, anyone with earned income — say, from a summer job — can contribute.

Even if a teen only puts some money away, parents can add funds on their child’s behalf, as long as the combined amount doesn’t exceed the teenager’s earned income for the year. Once contributed, the money inside a Roth IRA account can be invested appropriately to suit any type of long-term goal.
In Christopher Jackson’s 12th-grade personal finance class, students open Roth IRAs with an initial grant of $100 from the community, which they then learn to maintain on their own. Jackson, who teaches at Da Vinci Communications High School in Southern California, tells his students that “this is going to be the most important class they are going to take in their life.”
“My No. 1 goal is to affect their children’s children,” he recently told CNBC.

How Roth IRAs help you start saving

While there is a maximum IRA contribution limit of $7,000 for 2024, it’s less about how much you save and more about the act of saving, Slott said. “It doesn’t have to be a lot. Time is the key asset.”
Meanwhile, both the investment and all the interest, dividends and growth on these assets will accumulate tax-free over the years.

If there are more immediate needs before hitting retirement age, account holders can withdraw their contributions at any time without taxes or penalties if, for instance, they need the money for college or a down payment on a house down the road, according to Slott.
However, Slott advises young adults to view tapping into these funds as a last resort.
“Roth money is the last money you should touch because that money is growing the fastest and it will never be eroded by current or future taxes,” he said.
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