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The annual rate for Series I bonds could fall below 5% in May based on inflation and other factors, financial experts say.
That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.   
However, the fixed rate portion of I bond interest can be harder to predict, experts say.

Jetcityimage | Istock | Getty Images

The annual rate for Series I bonds could fall below 5% in May based on the latest inflation data and other factors, experts predict.  
That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.    

Despite the expected rate decline, I bonds are “still a good deal” for long-term investors, according to Ken Tumin, founder and editor of DepositAccounts.com, which closely tracks these assets.  
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Meanwhile, short-term investors currently have higher-yield options, such as Treasury bills, money market funds or some certificates of deposit.
Backed by the U.S. government, demand has soared for I bonds amid higher inflation, particularly after the annual rate hit 9.62% in May 2022. Next month, the rate could drop to around 4.27%, some experts predict. 

How the I bond rate works

The U.S. Department of the Treasury adjusts I bond rates every May and November. That yield changes based on a variable and fixed portion.

The Treasury adjusts the variable part every six months based on the consumer price index, which is a key measure of inflation. The agency can change the fixed portion or keep it the same.
The fixed portion of the I bond rate stays the same for investors after purchase. The variable rate portion resets every six months starting on the investor’s I bond purchase date, not when the Treasury Department announces rate adjustments. You can find each rate by purchase date here.

Currently, the variable rate is 3.94% and the fixed rate is 1.3%, for a combined rounded yield of 5.27% for I bonds purchased between Nov. 1 and April 30.
The 1.3% fixed rate “makes it very attractive” for investors who want to preserve purchasing power long term, according to Tumin.

How the fixed rate could change

Since the variable rate for I bonds is based on six months of inflation data, experts agree it will fall from 3.94% to 2.96% in May. The fixed portion is harder to predict because the Treasury does not disclose its formula for changes.
David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates, expects the fixed rate will be 1.2% or 1.3% in May.
But “1.4% is not out of the question,” he said.
Enna looks at a half-year average of real yields for 5- and 10-year TIPS to predict fixed rate changes. The real yield reflects how much TIPS investors earn yearly above inflation until maturity.
A possible fixed rate change from 1.3% to 1.4% “isn’t enough to make a huge difference,” but investors always prefer the higher rate, he added.

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President Joe Biden and Vice President Kamala Harris on Monday released their 2023 tax returns.
The president and first lady Jill Biden reported a joint adjusted gross income of $619,976 for 2023, which was 7% higher than 2022.
Harris and her husband, Douglas Emhoff, showed an adjusted gross income of $450,299, which was slightly lower than their 2022 earnings.

President Joe Biden and Vice President Kamala Harris deliver remarks about healthcare in Raleigh, North Carolina on March 26, 2024.
Peter Zay | Anadolu | Getty Images

President Joe Biden and Vice President Kamala Harris released their annual tax returns Monday, and there are lessons within for average Americans, according to tax experts.
The president and first lady Jill Biden reported a joint adjusted gross income of $619,976 for 2023, which was 7% higher than in 2022. They paid federal income taxes of $146,629, and their effective tax rate was 23.7%.

Vice President Kamala Harris and her husband, Douglas Emhoff, showed an adjusted gross income of $450,299, which was slightly lower than their 2022 earnings. Their federal taxes were $88,570, and their effective tax rate was 19.7%.
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Interest income can be a ‘big surprise’

In 2023, both couples earned most of their income from salaries, with federal and state taxes withheld from employers.
Both couples also had interest income, which can cause a “big surprise” at tax time, without increased paycheck withholdings or quarterly estimated tax payments, explained David Silversmith, a certified financial planner and senior tax manager at Eisner Advisory Group in New York.
That’s why investors need to track taxable activity — such as dividends or fund distributions — in brokerage accounts, said Silversmith, who is also a certified public accountant.

While both couples made extra tax payments, they each incurred a small estimated tax penalty, based on underpayments from each quarterly deadline and interest. The Bidens paid a penalty of $285, while Harris and her husband owed $451.

Tax planning for self-employment income

Over the years, the Bidens have reduced self-employment taxes by receiving some wages through their companies, which are structured as S corporations.
After paying “reasonable compensation” to shareholders, S corporation owners can take distributions without paying 15.3% for Social Security and Medicare taxes.
While the couple only made $4,115 in royalties for 2023, the structure has previously offered significant savings for the couple’s book deals and speaking gigs.  
However, working-age taxpayers with self-employment income would need to consider how lower wages could impact future Social Security income, said Catherine Valega, a certified financial planner and the founder of Boston-based Green Bee Advisory, who is also an enrolled agent.
Why that matters: The calculation for Social Security benefits uses up to 35 years of wages to calculate the monthly payments, she said.

Work with a tax professional

Typically, filers get a tax refund when they overpay levies throughout the year. Conversely, there’s generally a tax bill when filers don’t pay enough. Both tax returns showed the couples were fairly close on total taxes paid vs. owed.
When filing returns, “plus or minus $500 [for a refund or balance] is magical,” said Valega. “Both of them were spot on with that.” 
If you’re a higher earner with “a little bit of complexity,” such as multiple sources of income, she recommends working with a tax professional to “dive into each piece of the pie.”

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The Biden administration released the draft text of its revised student loan forgiveness plan.
Here’s what borrowers need to know.

U.S. President Joe Biden speaks as he announces a new plan for federal student loan relief during a visit to Madison Area Technical College Truax Campus, in Madison, Wisconsin, U.S, April 8, 2024. 
Kevin Lamarque | Reuters

The Biden administration on Tuesday released the draft text of its new student loan forgiveness proposal, which could reduce or eliminate the balances of millions of borrowers.
The proposed rules should be formally published in the Federal Register on Wednesday and will be followed by a 30-day comment period.

“Today’s announcement shows that the Biden-Harris Administration is continuing to fulfill our promises to fix a broken higher education system,” said U.S. Secretary of Education Miguel Cardona in a statement.
The regulatory text comes about a week after President Joe Biden revealed the details of his Plan B for student loan forgiveness.
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The administration has been working on that do-over since the U.S. Supreme Court rejected Biden’s first attempt at loan cancellation last summer.
After the U.S. Department of Education reviews comments from the public, it hopes to finalize the new rules and start canceling borrowers’ debts in the fall, it said.

What’s changed in the draft rules

At an April 8 event in Madison, Wisconsin, Biden said his new relief plan targets specific borrowers, including those who:

Are already eligible for debt cancellation under an existing government program but haven’t yet applied.
Have been in repayment for 20 years or longer on their undergraduate loans, or over 25 years on their graduate loans.
Attended schools of questionable value.
Are experiencing financial hardship.

The Biden administration also said that, if its new plan is enacted as proposed, borrowers will get up to $20,000 of unpaid interest on their federal student debt forgiven, regardless of their income.
The draft text echoes much of that announcement. However, the Education Department left out from its relief plan, for now, the group of borrowers experiencing financial hardship.
The department said it will release a second draft rule concerning people in this situation “in the coming months.”
This is breaking news. Please check back for updates. More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

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 — is becoming increasingly expensive.
“The benchmark of a six-figure salary used to be the gold standard income,” Sabrina Romanoff, a clinical psychologist, told CNBC. “It represented the tipping point of finally earning a disposable income and building savings and spending based on your wants, not just your needs.”

More than half (52%) of Americans say they would need at least $100,000 a year to feel financially comfortable, with 26% saying they would need a salary in the range of $100,000 to $149,000 per year, according to a 2023 CNBC Your Money survey conducted by SurveyMonkey.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

“Unfortunately, what has happened is that wages haven’t kept up with the cost of living, by and large, for the last 50 years or so,” said Elise Gould, senior economist at Economic Policy Institute.
“It becomes increasingly hard for many families to be able to attain that sort of middle-class lifestyle, that American Dream,” Gould said.
Consumers using the popular 50-30-20 budget guideline aim to spend 50% of their income on essential expenses, with another 30% for discretionary spending and the remaining 20% for savings.
A new report from GOBankingRates used that framework to analyze how much money a family of two adults and two children would need in each state to own a home, a car and a pet. The report tallied estimated annual essential expenses for such a family and then doubled that figure.

Using that framework, GoBankingRates found that all 50 states require more than a $100,000 annual income, according to the report, with 38 states needing more than $140,000.

Jason Reginato | CNBC

Economists have suggested that debt growth has become a substitution for income growth. Student loan debt reached an all-time high of $1.77 trillion in the first quarter of 2023 and Americans collectively owe $1.13 trillion on their credit cards as of the fourth quarter of 2023. This debt can have a ripple effect, especially when entire generations are starting their adulthoods with thousands of dollars in debt.
“Now people making well over six figures are still living paycheck to paycheck,” Romanoff said. “So what used to symbolize financial freedom is now keeping people stressed about making ends meet.”
Watch the video above to learn how much families in the U.S. need to make to achieve the American Dream.

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YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

Americans’ “magic number” savings goal for retirement has increased by over 50% since 2020.
But experts say the secret to building true wealth is having a high savings rate.

Aleksandarnakic | E+ | Getty Images

When it comes to retirement, Americans have a new number in mind — $1.46 million — for how much they think they will need to live comfortably, according to new research from Northwestern Mutual.
That estimate is up 53% since 2020, when Americans said they would need $951,000, as the cost of living has surged in recent years. It is also up 15% from last year, when respondents said they would need $1.27 million.

For many savers, that goal may sound daunting, particularly as U.S. adults have an average of $88,400 currently saved toward retirement, the study found. Likewise, a recent CNBC survey showed that 53% of Americans feel like they are behind on their retirement savings.
However, experts say having a “magic number” in mind should not be a priority when planning for your retirement.
“The number isn’t the emphasis,” said John Roland, a certified financial planner and private wealth advisor at Northwestern Mutual’s Beyond Financial Advisors.
“That retirement number is really just a starting point for a broader conversation on how to make clear, competent decisions in that phase of your financial life when you’re distributing money versus when you’re accumulating money,” he said.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Fidelity Investments, the nation’s largest provider of 401(k) savings plans, has moved away from providing broad estimates for what is needed to retire, said Rita Assaf, vice president of retirement products at Fidelity.

“There is no one size fits all,” Assaf said.
She said your income likely differs from other people’s. Other factors — such as how much of your income you hope to replace in retirement, where you plan to live, the lifestyle you plan to have, your health-care costs, and longevity — will all impact the actual number you will need.
“It really depends on your personal situation,” Assaf said. “We do think having a retirement plan helps with that, but it’s got to be a personal retirement plan.”

The number experts say to focus on

Financial advisors agree that having a high savings rate, along with appropriate asset allocations, is one of the most significant components of building wealth. That’s the number to focus on, they say.
Fidelity provides a framework for evaluating your retirement savings progress based on your age.
The framework includes saving your salary by age 30, which then increases to twice your salary by age 35, three times by 40 and continues to go up until the goal of 10 times by age 67.
“That may or may not be feasible depending on where you’re at,” Assaf said of the savings goals. “But it just gives an easier view of what to do.”
The framework assumes that the investor will start saving at age 25 and save 15% annually.

Recent retirement research from Vanguard recommends that workers ramp up their annual retirement savings rate to 12% to 15% of their incomes and invest in an appropriate asset mix for their ages. Doing so can help improve their sustainable investment rate — the highest level of pre-retirement income they can replace.
“I would much rather have clients that save 15% of their income and get a 5% rate of return than save 1% of their income and get a 15% rate of return,” Roland said.

He said that to save money, you need not spend it, a concept emphasized in the book “The Millionaire Next Door.”
“Many people who have significant wealth, you would never know because they don’t look visibly wealthy,” Roland said.
“Those are the people that, as they save and accumulate wealth, oftentimes have accumulated more than they ever anticipated,” he said.
If setting your retirement savings deferral rate to 15% now feels like too much of a financial stretch, you may instead try to boost your contributions by 1% per year. Experts say incremental increases can make a big difference in the long run.

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In ordinary years, students have several weeks to compare financial aid offers ahead of National College Decision Day on May 1, the deadline to decide on a college.
Amid this year’s FAFSA delays, many colleges and universities have changed their enrollment deadlines for students waiting on award letters before the fall semester.
All eight schools in the Ivy League are sticking with May 1.

Few college admission cycles have been as hard on students as this one.
National College Decision Day — the deadline most schools set to decide on a college — is just two weeks away. But many college hopefuls are still unsure of where they stand financially, as problems persist with the new Free Application for Federal Student Aid.

“This is make or break for students,” said Ellie Bruecker, interim director of research at the Institute for College Access and Success. “We are really concerned about high school seniors having to make decisions about where to go to college — or whether to go to college — with such limited information.”
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In ordinary years, financial aid award letters are sent around the same time as offers of admission in early spring, giving students a month or more to make informed enrollment decisions ahead of National College Decision Day on May 1.
For most students and their families, the college they choose hinges on the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans.
However, this year, those award letters have been significantly delayed, as the Department of Education works to resolve ongoing issues with the new form. Even some applications submitted early now have to be reprocessed due to problems with applicants’ tax data. 

Decision deadlines pushed to May 15 or later

To that end, many colleges and universities have postponed their enrollment commitment deadlines to May 15 or later, according to the National Association for College Admission Counseling.
Amherst College, Purdue University and Pepperdine University are among the colleges and universities with a May 15 decision deadline this year.
“It’s my hope that, given a response date of May 15, students will be able to make informed decisions about where they will enroll,” Matthew McGann, Amherst’s dean of admission and financial aid, said in a statement. “It is also my hope that this extension will relieve a little bit of stress students are feeling as they head into the final stages of this year’s college admission process.” 
Some schools are also factoring in added flexibility. At Widener University in Chester, Pennsylvania, for example, students who confirm their enrollments by May 15 will have a period to reconsider once they receive their financial aid offer, allowing for a full refund of their deposit.
Other colleges, including Colorado State, Oklahoma State and Fairleigh Dickinson University in New Jersey, are pushing the deadline back to June 1.
“We are really just trying to encourage our campuses to be as flexible as possible,” said Charles Welch, president and CEO of the American Association of State Colleges and Universities. “Our No. 1 concern is making sure we give students every opportunity they can to make determinations about financial eligibility.”
A few institutions, like Fisher College in Boston, even delayed deadlines into July.
But all eight private colleges that comprise the Ivy League are sticking with May 1.
Most elite institutions are likely “not as worried about their enrollment management,” said Bruecker of the Institute for College Access and Success.
“I would wager those institutions have fewer students with financial need or they can offer institutional aid,” she said.
The National Association for College Admission Counseling created a directory of where most enrollment deadlines stand now. Here is the list.

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April 15 is the federal tax deadline for most filers and could be the last chance to avoid a penalty.
There’s still time to file an extension, which pushes the filing deadline to Oct. 15. But you still must pay taxes owed by the due date.
Many taxpayers can still file for free with IRS Free File or Direct File.

File by the deadline to avoid penalties, interest

While April 15 is the federal deadline for most taxpayers, filers in Maine and Massachusetts have until April 17. There are also automatic extensions for some taxpayers impacted by natural disasters.
But if you skip the tax filing deadline and owe a balance, you can expect IRS penalties and interest.
For failure to file, the IRS charges 5% of your unpaid taxes per month or partial month, capped at 25% of your balance due. The late-payment penalty is 0.5% per month or partial month, with a maximum fee of 25% of unpaid taxes. Interest is based on the current rates.

If you’re missing tax forms, the tax deadline is your last chance to file an extension, which pushes the filing deadline to Oct. 15. But the “extension to file is not an extension to pay,” warned certified financial planner Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services.

Extension to file is not an extension to pay.

Sean Lovison
Founder of Purpose Built Financial Services

According to the IRS, those who can’t pay taxes by the deadline have options. They can apply for a payment plan, or “installment agreement,” to pay their balance over time.

Two-thirds of taxpayers can expect a refund

If you don’t file, you could be giving up a refund, Werfel said on “Squawk Box.”
“Two out of every 3 taxpayers that are going to file by tonight’s deadline are actually owed a refund,” he said. “So it’s in your interest to get your taxes done.”
As of April 5, the IRS processed nearly 67 million refunds, with an average payment of $3,011, a 4.6% increase from last April’s refund, the agency reported Friday.
“Don’t walk down to the post office,” Werfel said. “File electronically, select direct deposit and we will get you your refund in under 21 days.”

How to file your taxes for free

This season, taxpayers have several ways to file federal taxes for free and there’s still time to use a couple of digital options.
Most Americans qualify for IRS Free File, which offers free guided tax prep software from several partners. The adjusted gross income limit is $79,000, but each partner has different eligibility requirements.
“It’s a product that we’re very proud of,” Tim Hugo, executive director of the Free File Alliance previously told CNBC. “We just wish more people knew about it.”
This season, millions of taxpayers also qualify for IRS Direct File, a free tax filing pilot program from the agency. Currently, Direct File is open to certain filers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
Some 100,000 taxpayers successfully filed returns with Direct File, as of April 15, according to a Treasury official. Werfel said an announcement about the program’s future is coming “later this spring” but the “results so far have been encouraging.”

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Wage growth has cooled nationally from its pandemic-era peak.
However, there are still certain occupational sectors — like legal, dental, child care, cleaning and sanitation, and medical information — with relatively high earnings growth, according to Indeed.
The labor market remains healthy despite a broad decline in wage growth, economists said.

Maskot | Maskot | Getty Images

Wage growth has cooled from its scorching pandemic-era pace. But there are still pockets of heat.
Workers are getting relatively big annual raises in occupational sectors like legal, dental, child care, cleaning and sanitation, and medical information, for example, according to a new analysis by job site Indeed.

Nationally, wages grew at 3.1% a year in March, well below the recent 9.3% peak in January 2022, according to Indeed, which tracks average pay advertised in its online job listings.
However, there’s “massive variation across industries,” according to Julia Pollak, chief economist at career site ZipRecruiter.
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At a high level, wage growth in 2024 is above average in 47% of job sectors compared with 2019, the year before the pandemic hit, according to the Indeed analysis.
Among them, it’s highest in the legal profession: Indeed found that average workers saw their paychecks grow at a 5.7% pace in March 2024 versus a year earlier. That’s down just 0.1 percentage points from six months ago.

The analysis found that the dental and child care sectors ranked just behind, each at 4.8% annual growth; medical information and cleaning and sanitation jobs placed just behind, both at 3.9%, according to the analysis.
By comparison, software developers have seen the lowest annual growth since March 2023, at 0.4%, according to data provided to CNBC by Indeed. That’s down from a recent 9% peak in April 2022.
Strong wage growth doesn’t necessarily translate to a high salary, though.
“I don’t think someone will leave their software development job to work in child care because wage growth is higher,” said Allison Shrivastava, a labor economist and author of the Indeed report. “But if you were working in [similar-paying jobs like] retail or food prep and you wanted higher wages, that might be worth looking at,” she said.

The average child care worker earns $15.42 an hour and $32,070 a year, according to data for May 2023 compiled by the U.S. Bureau of Labor Statistics. By comparison, software developers make $66.40 an hour and $138,110 annually on average, according to BLS data. Dentists make $96.57 an hour and $200,870 a year, on average, BLS data says.
Wage growth surged in 2021 and into 2022 as employers had to “roll out the red carpet” for workers at a time when labor was scarce and workers were “demanding to be made whole for inflation,” Pollak said.

She said it also “peaked at different times for different industries” during the Covid-19 pandemic due to a “complex web” of factors like labor supply and demand.
Some roles, such as face-to-face jobs in food services, became less attractive overnight after the pandemic led to a big shift in remote work. Turnover rose quickly among in-person occupations compared with turnover across remote ones, Pollak said.
For example, workers in accommodation and food services saw annual earnings growth peak at 16.1% in December 2021, according to ZipRecruiter data. By comparison, it found that those in the information sector saw growth peak at 7.8% in September 2022.

Current national wage growth is in line with the 2019 pre-pandemic average, indicating a labor market that is widely viewed as healthy.
While the average worker enjoyed historically rapid wage growth in the recent past, their pay wasn’t keeping pace with inflation. As inflation has fallen, buying power has risen again on average.
Shrivastava of Indeed said the job market “has cooled down from a really, really feverish pace.” However, she said, it has cooled to a place that “seems more sustainable” for workers and businesses.

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