Investing

Smart Tax Planning

If you’re a W-2 worker — meaning your employer withholds taxes from your paychecks — you can’t take the home office deduction for 2023.
However, freelance and contract workers with income reported via 1099-NEC may qualify.

Justin Paget | Digitalvision | Getty Images

If you were fully remote or a hybrid worker in 2023, you may be curious about the home office deduction for your tax return.
While fully remote work is now less common, hybrid positions represented 13.1% of U.S. job postings in December, and nearly 20% of all applicants went to those roles, according to LinkedIn.

But if you’re a W-2 worker — meaning your employer withholds taxes from your paychecks — you can’t take the home office deduction for 2023 on expenses related to that work, according to certified financial planner Eric Bronnenkant, head of tax at Betterment, a digital investment advisor. 

Since the Republican’s 2017 tax overhaul, there’s been no miscellaneous itemized deductions, which were subject to a 2% adjusted gross income limitation. That tax break allowed some W-2 workers to claim a deduction for unreimbursed home office expenses, explained Bronnenkant, who is also a certified public accountant.
However, you may qualify for the home office deduction for 2023 as a self-employed or contract worker, with earnings reported on Form 1099-NEC, he said.

Your office needs exclusive and regular use

Your home office must meet specific guidelines to qualify for the deduction, said CFP Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services. He is also a certified public accountant.
The office needs exclusive and regular use, and must be your “principal place of business,” according to the IRS, such as a separate room in your home.

Separate structures may also qualify. “This could be a studio, garage, or barn, as long as it’s exclusively and regularly used,” for business, Lovison said.

How the home office deduction works

If you qualify for the home office deduction, there are two ways to calculate the tax break, according to the IRS.
The “simplified option” uses $5 per square foot of the portion of the home used, up to 300 square feet, for a maximum tax break of $1,500.
“It can simplify your life in a lot of ways” but it may not provide the biggest tax break, Lovison said.
By comparison, the “regular method” uses the percentage of your home used for business and deducts actual expenses, such as part of your mortgage interest, insurance, utilities, repairs and depreciation.
Regardless of the method, it’s critical to maintain detailed records of your home office expenses and use, because thorough documentation could “substantiate your deduction claim” in the event of an audit, Lovison said. More

Nearly 2 in 5 couples, or 39%, of couples who live together completely combine their finances, whether they’re married or not, according to a new report by Bankrate.
Yet, this is not completely the case across generations. Gen Z adults, or those between the ages 18 to 27, are the most likely to keep their finances completely separate from their significant other by 38%.

Kupicoo | E+ | Getty Images

Deciding to combine your finances with your significant other can be a big step in the relationship.
Nearly 2 in 5 couples, or 39%, of couples who live together completely combine their finances, whether they’re married or not, according to a new report by Bankrate.

How couples handle money together varies across generations.
Gen Z adults, or those between the ages 18 to 27, are the most likely to keep their finances completely separate from their significant other, with 38%. By contrast, baby boomers, or adults age 60 to 78, are the most likely generation to fully combine their finances with their spouse or partner, at 44%.
Bankrate polled 2,233 U.S. adults in December, including 1,124 who were married or living with a partner at the time of the survey.
More from Personal Finance:Money talks should happen before the relationship gets serious3 financial tips for couples moving in togetherMany young unmarried couples don’t split costs equally
“One thing that comes up is the anxiety of, ‘Will I lose my autonomy if I merge my finances?'” said financial therapist Lindsay Bryan-Podvin, a behavior finance expert with Bread Financial.

Almost half, or 46%, of people who are in relationships keep their finances separate to avoid losing their financial independence, according to a recent survey from the financial services company. It polled 1,659 U.S. adults in early January.
“We don’t want our partner to turn into a pseudo-parent,” said Bryan-Podvin. “When we lose that financial independence, we all of a sudden get this dynamic of checks and balances versus equality.”

Why Gen Z tends to keep finances separate

Of couples in live-in relationships, 36% those earning less than $50,000 a year in household income keep their finances separate, Bankrate found.
“Lower-income households are often younger adults,” said Ted Rossman, a senior industry analyst at Bankrate. “The intersection between young adults also being those who have lower incomes may be helping to explain some of the divides.”
“In a lower-income household, it may be more likely that finances stay separate for a host of reasons,” said Bryan-Podvin. There’s a higher likelihood that they might have some anxieties around financial institutions and might do things outside of traditional banking systems, she said.
There can also be a level of shame about the amount of student loan debt or credit card debt that young adults carry, said Bryan-Podvin. Separate finances may let them keep those financial challenges private.
Gen Zers also grew up with a phone in their hand or with ready access to apps and technology, something that prior generations lacked, Bryan-Podvin said.
Therefore, they may not see the need for joint finances, especially when they could easily chip in for a joint expense through apps like Venmo or Zelle.
“It’s far easier to send and request money via a host of different apps,” Bryan-Podvin said. “It’s a part of just the enmeshment with technology that they have and how that piece is a bit more normalized.”
Yet, not all Gen Z couples are keeping their finances apart: Roughly 34% of Gen Z couples who live together fully combine their finances while 28% have a mix joint of “yours, mine, and ours,” Bankrate found.
While financial independence can be a priority for some couples, there are a few bonuses to joining forces.

How ‘yours, mine and ours’ can alleviate concerns

About 38% of co-living couples have a mix of joint and separate accounts, while 24% keep finances completely separate, Bankrate found.
Experts suggest couples should consider weighing a “yours, mine and ours” financial picture because it can help couples have best of both worlds: Individual accounts offer some financial independence within the relationship, alongside joint accounts for shared obligations.
“Yours, mine and ours can alleviate a lot of these concerns,” Rossman said. “This can be a healthy way to manage money as long as you agree upon a framework.”
Money can be a leading source of argument among couples, or even “financial infidelity,” or the practice of keeping certain purchases or financial realities a secret.
Almost half, or 48%, of couples admitted to have secretly made a financial decision without consulting their partner, Bread Financial found.

About 16% of coupled respondents hid a purchase from their partner while 22% admitted to withholding their credit card balances. Further, 12% of male respondents said they hid cryptocurrency ownership from a partner, compared to only 4% of women, according to Bread Financial.
However, couples who appreciate the idea of financial independence need to have open and honest discussions about money, said Bryan-Podvin.
If you and your partner decide to merge finances for shared responsibilities, discuss how much each person should contribute to the shared account. Such talks also help you come to terms about allowing each other some financial autonomy, she said. More

More Americans are expected to turn 65 through 2027 than in any time in history.
Despite the ‘silver tsunami,’ the correct age to retire is still in question.

Thomas Barwick | Digitalvision | Getty Images

A fight is brewing in Washington over whether the mandatory retirement age for airline pilots should be raised from 65.
The debate comes as baby boomers more broadly are reaching “peak 65” — the biggest number of Americans hitting that age in history.

With that wave, the U.S. is poised to broadly face the question: When is the appropriate age to retire?
More than 11,200 Americans will turn 65 every day — or over 4.1 million every year — from 2024 through 2027, according to estimates from the Retirement Income Institute at the Alliance for Lifetime Income.
Age 65 has traditionally been thought of as retirement age. The milestone still marks the point at which individuals become eligible for Medicare coverage.
But for Social Security benefits, the full retirement age — when a qualifying worker is eligible for 100% of the benefits they earned — is moving to 67 for anyone born in 1960 or later.
More from Personal Finance:If you want to age in place in retirement, here’s what to considerWhat happens to your Social Security benefits when you dieHow to better save for retirement in your 50s

Changing the retirement age is controversial, both in the U.S. and around the world. In France last year, pension reforms that raised the retirement age from 62 to 64 sparked fierce protests.
In the U.S., the Senate is expected to mark up a Federal Aviation Administration reauthorization bill that will consider pilots’ retirement age. The House version of the legislation moved the retirement age to 67.
This week, an FAA official told Congress the agency would like to have data to support the move to a higher age. The Air Line Pilots Association, a union, opposes any change and wants to keep the age at 65.
But a group of pilots called Raise the Pilot Age has come together to support increasing their ability to work to age 67.
“Bottom line, I want to keep flying,” said Barry Kendrick, who is president of the nonprofit group.

‘I’ve taken a 60% pay hit’

Kendrick, who recently turned 66, is a professional pilot who retired from a major airline after flying Boeing 777s internationally.
Kendrick can and does still fly smaller planes. But he is ineligible to fly with name-brand airlines that usually appear on consumers’ tickets. Those companies also typically pay the most, he said.
“I’ve taken a 60% pay hit to do what I’m doing now,” Kendrick said.
He has recently passed physical and cognitive tests necessary to fly.
“A smaller airplane is a different environment,” he said. “That’s actually physically more taxing than what I was doing before.”
Kendrick has not claimed Social Security retirement benefits, since he won’t get 100% of what he has earned until his full retirement age of nearly 67. He does have the option to claim his benefits now, but they would be permanently reduced.

Other occupations generally do not face federally regulated retirement ages.
But by shifting the Social Security full retirement age to 67, Congress has suggested workers wait at least until that age. Retirement beneficiaries stand to get the biggest benefits if they wait until age 70.
Experts say those retirement age rules, which were enacted in 1983 and are still getting phased in today, may change.
Social Security faces an imminent deadline by when changes must happen. The program’s combined trust funds are projected to run out in 2034. The projected depletion date for the retirement fund is sooner in 2033, according to the Social Security Administration.
Beneficiaries will face a more than 20% benefit cut if nothing is done by those deadlines.

‘We have to do this now’

To fix the shortfall, lawmakers may implement tax increases, benefit cuts or a combination of both.
Raising the retirement age would be a benefit cut. Such a change would encourage workers to retire later, and therefore continue to pay money into the program, or take reduced benefits. While that would positively affect Social Security’s finances, the change would result in a 20% benefit cut across the board to lifetime benefits, the Center on Budget and Policy Priorities has found.
Those who retire at the earliest eligibility age — 62 — could see a 43% reduction from their full benefit, according to the think tank.
The sooner any changes are passed, the more time there is to phase them in, as with the current shift to the retirement age of 67.
“We have to do this now,” said Jason Fichtner, a former Social Security Administration official who currently serves as chief economist at the Bipartisan Policy Center and executive director of the Retirement Income Institute.
“We probably have a four-year window, being optimistic, to really start making plans,” Fichtner said.

The outcome of this year’s presidential race may help determine what happens in that time.
While Republican presidential candidate Nikki Haley has suggested raising the retirement age on the debate stage, the top candidates — President Joe Biden and former President Donald Trump — have vowed to protect the program.
In the meantime, Congress has pushed up the retirement threshold for required minimum distributions to age 73, notes Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.
Because a worker’s personal tax bracket is based on distributions from retirement accounts and earned wages, a lower RMD age can be a disincentive to work, he noted.
“It’s not as if Congress is unaware of the fact that people work longer and live longer,” Gleckman said. “But when it comes to Social Security, it doesn’t want to make the decision that everybody knows it needs to make.”
Those changes could include raising the Social Security retirement age. However, lawmakers would have to keep in mind that while white-collar workers may be able to extend their careers, people who work in more physically taxing jobs may not be able to work longer. To address that, Congress may compensate by providing more generous benefits for low-income workers, Gleckman said.
Don’t miss these stories from CNBC PRO: More

The average credit card balance is now $6,360, an all-time high, a new report by TransUnion found.
Total credit card debt also reached a record $1.13 trillion in the latest quarter, the Federal Reserve Bank of New York reported Tuesday.
As consumers increasingly lean on their credit cards, more borrowers are also struggling with their payments, both reports show. 

Credit card debt has notched another new high.
Americans now owe $1.13 trillion on their credit cards, the Federal Reserve Bank of New York reported Tuesday.

Balances jumped 10% from a year ago, according to a separate quarterly credit industry insights report from TransUnion, with the average balance per consumer hitting $6,360, also a historic record.

“Consumers are just spending more,” said Charlie Wise, senior vice president of global research and consulting at TransUnion. “Even though the inflation rate is down, that doesn’t mean prices are coming down.”
Prices are still rising, albeit at a slower pace than they had been.
The consumer price index — a key inflation barometer — has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3.4% in December 2023.
Meanwhile, households continue to show signs of strain — more cardholders are carrying debt from month to month or falling behind on payments.

Credit card delinquency rates jumped across the board, the New York Fed and TransUnion found. Credit card delinquencies surged more than 50% in 2023, the New York Fed reported. According to TransUnion’s research, “serious delinquencies,” or those 90 days or more past due, reached the highest level since 2009.
“Consumers are struggling with their payments,” Wise said. “I think we will continue to see those delinquencies tick up.”
More from Personal Finance:Credit card debt hits a ‘staggering’ $1.13 trillionAmericans can’t pay an unexpected $1,000 expenseWhy workers’ raises are smaller in 2024

‘It’s not all bad news’

“It’s not all bad news,” said Ted Rossman, Bankrate’s senior industry analyst. Cardholders who pay their bill in full every month reap the benefits of cash back and travel rewards without paying interest.
“The big fork in the road is whether or not you carry a balance,” he said.
In that case, credit cards are one of the most expensive ways to borrow money. The average credit card charges a record high 20.74%, according to Bankrate.
At more than 20%, if you made minimum payments toward the average credit card balance, it would take you more than 17 years to pay off the debt and cost you more than $9,000 in interest, Rossman calculated.

Millennials increasingly lean on credit

Still, consumers often turn to credit cards, in part because they are more accessible than other types of loans.
Overall, an additional 20.1 million new credit accounts were opened in the fourth quarter of 2023, boosted in part by subprime borrowers looking for additional liquidity, according to Wise. Subprime generally refers to those with a credit score of 600 or below, according to TransUnion. 
Many people in this group are millennials, he said, who are burdened by high levels of student loan debt and the housing affordability crisis.
“If you can’t afford to buy and your rent keeps going up, that’s not a very happy set of circumstances,” Wise said.

How to tackle credit card debt

“My favorite tip is to sign up for a 0% balance transfer credit card,” Rossman said.
Cards offering 12, 15 or even 21 months with no interest on transferred balances are out there, he added, and “these allow you to consolidate your high-cost debt onto a new card that won’t charge interest for up to 21 months, in some cases.”
Borrowers may also be able to refinance into a lower-interest personal loan. Those rates have climbed recently, as well, but at just under 12%, on average, are still well below the current credit card average.
Otherwise, ask your card issuer for a lower annual percentage rate. In fact, 76% of people who asked for a lower interest rate on their credit card in the past year got one, according to a LendingTree report.
Subscribe to CNBC on YouTube. More

The Biden administration recently announced it would look to forgive the student debt of borrowers experiencing “financial hardship.”
It is still uncertain who might be eligible, but there are clues from the U.S. Department of Education and in other programs that aim to help the same group of borrowers.

FG Trade | E+ | Getty Images

The Biden administration recently announced it would look to forgive the student debt of borrowers experiencing “financial hardship.”
So, who might be eligible?

It’s still uncertain, but there are clues from the U.S. Department of Education and in other programs that aim to help the same group of borrowers.
Since the Supreme Court struck down President Joe Biden’s original plan to cancel up to $400 billion in student debt, his administration has tried to rework its relief package to make it legally viable. To do so, it has sought to narrow the aid by focusing on certain groups, including those with balances greater than what they originally borrowed and students from schools of questionable quality.
More from Personal Finance:How one beach city is helping residents age in placeWhat happens to your Social Security benefits when you die62% of adults 50 and over have not used professional help for retirement
The U.S. Department of Education now says it will hold an additional rulemaking session on its “Plan B” for student loan forgiveness on Feb. 22 and 23, during which the negotiators will focus exclusively on financially strapped borrowers.
That category may be challenging to define.

But the department is looking for ways for people to get their debt forgiven based on hardship that remains after other benefits are exhausted, according to a source familiar with its plans.
Here’s who might be eligible.

Bankruptcy eligibility could be a guide

The Education Department has signaled that it could turn to the standard for the discharge of student loans in bankruptcy for guidance in how it defines those eligible for forgiveness under the hardship provision.

To walk away from their student debt in bankruptcy, borrowers typically have to prove “undue hardship,” which contains three factors: 1) an inability to maintain a minimal standard of living, 2) an unlikeliness to see their financial situation change and, 3) a record of good faith efforts to repay their loans.
“These standards may be informative of the considerations other policymakers have used to identify hardship,” the department wrote in a recent issue paper.
Few borrowers are likely to meet these requirements, said higher education expert Mark Kantrowitz: “Bankruptcy discharge of student loans requires a very harsh standard.”

Department wants to use government data

The negotiators on the committee for Biden’s revised relief program have identified several categories that could signal hardship. Those include borrowers who received a Pell Grant or qualified for a health insurance subsidy on the Affordable Care Act’s marketplace.
Lawmakers have also pushed the department to consider borrowers’ student debt-to-income ratio, as well as those debtors over a certain age with limited income.
One wrinkle: The Education Department has suggested it wants to identify eligible borrowers through easily obtainable administrative records. As a result, certain struggles, including significant medical or child-care expenses, may be hard for it to capture.
“They much prefer options that can be implemented using data already available to them,” Kantrowitz said.

Currently, the department can access records from the U.S. Department of Veterans Affairs and the Social Security Administration. These agencies could potentially help it find certain borrowers with disabilities and or those living in poverty. Its own data could be used to identify borrowers who received a Pell Grant.
More than 90% of Pell Grant recipients in 2015-2016 came from families with household incomes below $60,000, according to Kantrowitz. More than 6 million undergraduate students received the grants in 2020.
The Education Department could possibly get data from the U.S. Department of Health and Human Services to identify those who’ve received a health-care subsidy, Kantrowitz said.

More relief for struggling borrowers could be on the way

Meanwhile, the government’s collection practices with student loan borrowers, including the garnishment of wages and Social Security benefits, is another area under review, according to the source familiar with its plans. Consumer advocates have said these measures are extreme and punish people already struggling.
The Education Department has also recently made it easier for struggling borrowers to get their student loans erased in bankruptcy court. Previously, it was difficult, if not impossible, for people to part with their education debt in a normal bankruptcy proceeding.
Don’t miss these stories from CNBC PRO: More

The U.S. experienced 28 weather and climate disasters in 2023, costing a total of $92.9 billion in damages, according to NOAA’s National Centers for Environmental Information.
More than 18 million rental units are under threat from such environmental hazards, according to a recent study by Harvard University’s Joint Center for Housing Studies.
“It’s clear that not only are climate hazards happening more often, but they’re happening more often in places where people live,” said Jeremy Porter, head of climate implications research for First Street Foundation.

D3sign | Stone | Getty Images

Extreme weather and climate hazards are becoming more frequent, posing a threat not only for homeowners but for renters.
More than 18 million rental units across the U.S. are exposed to climate- and weather-related hazards, according to the latest American Rental Housing Report from Harvard University’s Joint Center for Housing Studies.

Harvard researchers paired data from the Federal Emergency Management Agency’s National Risk Index with the five-year American Community Survey to find out what units are in the areas that are expected to have annual economic loss from environmental hazards such as wildfires, flooding, earthquakes, hurricanes and more. 
“The rental housing stock is the oldest it ever has been, and a lot of it is not suited for the growing frequency, severity and diversity in environmental hazards,” said Sophia Wedeen, research analyst focused on rental housing, residential remodeling and affordability at the Joint Center for Housing Studies.
More from Personal Finance:What tenants should know to make rent improve creditThree ways Gen Zers can boost credit before renting’Housing affordability is reshaping migration trends’
In 2023, there were 28 weather and climate disasters with damages totaling $1 billion or more, a record high, according to the latest report by the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information. These weather disruptions collectively cost $92.9 billion in damages, an estimate adjusted for inflation, the agency found.  
“It’s clear that not only are climate hazards happening more often, but they’re happening more often in places where people live, which is why we’re seeing all of these damages increase over time,” said Jeremy Porter, head of climate implications research for First Street Foundation, a nonprofit organization in New York.

In addition, about twice as many properties in the U.S. have flood risks than what FEMA accounts for, according to research by First Street Foundation.
And flood insurance is only mandated for properties inside official flood zones, Porter said.
“Half the properties across the country don’t know they have a flood risk, which means the building owner may not have flood insurance,” he said.

Some renters ‘can’t afford to move away from the risk’

At a national level, 45% of single-family rentals and 35% to 40% of units in small, midsize and large multifamily buildings are located in census tracts, or neighborhoods, that are exposed to annual losses from climate-related hazards, the Harvard study found.
Units with the highest risk are manufactured housing, such as mobile homes and RVs, said Wedeen. While they’re a smaller share of the rental stock, 52% of manufactured units are located in areas with extreme weather exposure. 
As the market already faces a declining supply of low-rent units available, “environmental hazards would really exacerbate the existing affordability concerns,” Wedeen said. 

Renters in manufactured housing, low-rent or subsidized units are also often stuck with the housing they have or lack the same level of mobility as wealthier renters, experts say.
“These populations are more vulnerable and don’t have the financial means to protect themselves against the risks that exist,” Porter said. “It’s sort of a compounding risk when we see these increases in climate hazards and start impacting people who can’t afford to move away from the risk.”
Most of the state and local funds that cover post-disaster assistance go to homeowners, not rental property owners.
“That in turn puts a lot of burden on renters who are displaced by natural disasters and who may find it hard to find new housing,” she said.

Many homes need upgrades to withstand disasters

Low-rent or subsidized units also face preservation issues, leaving them in poor physical condition. According to the Harvard study, units renting for less than $600 per month have higher rates of physical inadequacy from disrepair and structural deterioration.
Manufactured housing units are more likely to be physically inadequate, meaning they are “much less able to withstand the impact of a weather-related hazard,” Wedeen said.
What renters need is greater investment in the existing housing stock and upgrades that can mitigate the damage to a building and improve its resilience to hazards, Wedeen said.
“Without substantial investment, displacements and units becoming uninhabitable is only going to continue,” Wedeen said.

How renters can protect themselves

It’s important for tenants to understand that they need renter’s insurance to protect their possessions.
Landlords and building owners are responsible for repairing physical damage to the unit or building from a climate-related hazard, and those repairs will depend on whether the landlord or building owner is covered by property insurance, said Porter.
But the landlord’s insurance on the building does not cover renters’ personal property.
Renters should check what type of disasters are included in their renter’s insurance policy. They may need riders or a separate policy to cover risks such as flooding or earthquakes, experts say.

While a lot of the risks are out of the hands of renters, they can research to make informed decisions and prepare.
Before moving to a new area, renters should research the floodplain, look for a building with resilient features and find out what risks that area is exposed to by using search tools such as the FEMA flood map or riskfactor.com, a search tool backed by First Street Foundation’s data analysis.
In some areas, landlords must disclose to prospective tenants if a property is in a floodplain or has experienced flooding in the past. More

Smart Tax Planning

If your tax refund or bill is bigger than expected, it could be time to adjust your paycheck withholding.
You can use last year’s effective tax rate to see if you’re withholding enough federal taxes from each paycheck.

Witthaya Prasongsin | Moment | Getty Images

If your tax refund or bill is bigger than expected, it could be time to adjust your paycheck withholding — and a simple calculation could help, experts say.     
Typically, you get a refund when you overpay taxes throughout the year, and you owe money when you don’t pay enough. Many workers contribute via paycheck withholdings based on a completed form called a W-4.

But the form is “very confusing,” according to certified financial planner and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas. “You’re checking these boxes, but you really don’t know how much the IRS is going to withhold.”

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

How paycheck withholdings work

When you start a new job, you fill out Form W-4, which tells employers how much to withhold from each paycheck for federal income taxes. The form asks about your filing status, other income, dependents and more, which affect the percentage withheld.
“If you answer it properly, you probably will get a good outcome,” said JoAnn May, a Berwyn, Illinois-based CFP at Forest Asset Management. She is also a certified public accountant.
“The problem is that form is so foreign to people,” she said. “They see it and their eyes glaze over.” 

You also need to tell your employer about life changes — such as marriage, divorce, having a child or adding a second job — to make the necessary Form W-4 adjustments. After updating Form W-4, it’s important to double-check your paystubs for these changes, Loyd said.

Experts suggest reviewing your withholdings periodically to avoid a larger-than-expected tax bill or refund.  

Calculate last year’s ‘effective tax rate’

While Form W-4 can be daunting, Loyd said you can check your withholding by calculating the previous year’s “effective tax rate,” or the percent of taxable income you pay in levies. This is different from your marginal tax bracket.
Start by reviewing last year’s tax return. You calculate your effective tax rate by dividing your total tax (line 24) by taxable income (line 15).
“A person may be in the 22 percent bracket, but the rate they’re actually paying on everything may be 12 percent,” Loyd said.

If your 2024 earnings are similar to 2023, you’ll want your federal paycheck withholdings at roughly last year’s effective tax rate, Loyd said.
For example, if your gross paycheck is $1,000 and last year’s effective tax rate was 12%, you’ll want about $120 withheld in federal taxes, he said. Of course, this withholding could change if you have earnings from another job.

Don’t miss these stories from CNBC PRO: More

In your 50s, it can be difficult to prioritize retirement saving when family may be a higher priority.
Experts say these tips can help ensure you stay on track.

Silke Woweries | The Image Bank | Getty Images

Turning 50 is a milestone birthday — and it becomes harder to ignore that retirement may be just around the corner. But research shows that many Americans reach that decade feeling financially unprepared for what’s ahead.
Generation X — the oldest of whom turn 59 this year — will be the first generation to rely primarily on their 401(k) plans, research from Goldman Sachs notes.

Gen Xers were most likely to say they are behind on retirement, compared with other generations, the firm’s research found.
A so-called financial vortex — where competing life goals get in the way of financial priorities — is to blame, according to the research. For example, Gen Xers may be balancing care for aging relatives and children that forces them to put their own financial progress on the back burner.
The typical Gen X household has just $40,000 in retirement savings, according to research from the National Institute on Retirement Security.
More from Personal Finance:How one beach city is helping residents age in placeWhat happens to your Social Security benefits when you die62% of adults 50 and over have not used professional help for retirement
Experts say even in your 50s, it’s not too late to take steps to get in better financial shape.

“While retirement is an exciting vision for a lot of people, the transition can be really stress-inducing,” said Keri Dogan, senior vice president of financial wellness and retirement income solutions at Fidelity.
Shifting from saving for retirement to living in retirement is one of the biggest transitions a person will make in their lifetime, she said.
“There’s a lot to do in those preparation years,” Dogan said.

Prepare for the unexpected

To start getting ready for retirement, it helps to come up with a vision for what you want those years to look like, Dogan said.
Start thinking about when you might be able to afford to retire and how you can make your money last and put together a list of decisions you will have to make along the way, such as how to obtain health care coverage, either through Medicare or private insurance, she said.
Also be prepared that your plan will need to be adjusted along the way.
The median age that workers 50 and older expect to retire is 67, according to the Transamerica Center for Retirement Studies. Yet the research also finds that 56% retire sooner than they had planned.

The average retirement age actually falls around 61 or 62, according to Dogan, as many people retire earlier than expected because they become caregivers, get pushed out at work or see their health status change.
“That’s one of the reasons it is so important to have a plan, so you can look at different scenarios and understand what kind of situation you’d be in if something unexpected were to hit,” Dogan said.
Ted Jenkin, a certified financial planner and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta, said he typically helps clients come up with a “work optional” plan to leave their long-term corporate jobs for work they find more fulfilling.

Set limits with your children

Gen Xers are providing more support to their children compared with other generations, said Jenkin, who is a member of CNBC’s Financial Advisor Council.
And there’s good reason. Elevated inflation has made it a higher hurdle for those younger adults to move out on their own. Meanwhile, many have student loan balances.
But it is important to set limits with that financial support.
“Gen Xers have a very hard time saying no to their kids,” Jenkin said.
Set boundaries for how long children will remain on a family cell phone plan or auto insurance policy and when it makes sense for them to start paying rent if they’re still living at home, Jenkin recommended.

Save more where you can

Once you hit age 50, you’re eligible for what’s known as catch-up contributions.
This year, savers who are at or above that age can sock away an extra $7,500 in their 401(k), 403(b) and most 457 plans, as well as the federal Thrift Savings Plan, for a total of $30,500 in 2024.
Likewise, retirement savers 50 and up may contribute an extra $1,000 to IRAs in 2024, for a total of $8,000.

Yet many savers are not taking advantage of those higher limits, according to Fidelity. Just 16.7% of those ages 55 to 59 are making retirement account catch-up contributions, the firm has found.
The good news is even if you can’t reach those maximums, just increasing your deferral rate to your retirement saving by just 1% can increase how much you have in retirement.

Brush up on Social Security, Medicare rules

It is a great time in your 50s to look at your Social Security statement to see the retirement benefits for which you may qualify, according to Jenkin.
Importantly, you should also double-check to see that your work records are accurate, he said. The Social Security Administration provides free access to benefit information online.
In addition, because Medicare eligibility does not start until age 65, it’s important to think about how you will obtain health care coverage earlier if you need it. For example, it may make sense for someone to retire at age 63½ and then use COBRA coverage for the 18 months until they reach Medicare age, Jenkin said.
If you’re in your early to mid-50s, it’s also a great time to explore what Social Security claiming strategy fits your particular situation best.

Get expert feedback

It’s hard to spot your own financial blind spots, which is why it helps to consult an expert such as a certified financial planner.
Yet 62% of people ages 50 and up have not consulted a financial professional to help, according to a recent AARP survey.
While a reluctance to pay for advice is one reason respondents cited for not consulting with a professional, experts say it is possible to find cost-effective help. Search tools provided by National Association of Personal Financial Advisors; the CFP Board or the XY Planning Network may help identify potential financial professional matches.
Don’t miss these stories from CNBC PRO: More