Investing

Year-end Planning

You may have just a few weeks left to use any leftover money in your health-care flexible savings account.
Next year, individuals will be able to save as much as $3,200 in their FSA.

Tom Werner | Digitalvision | Getty Images

As 2023 comes to an end, you may have just a few weeks left to use any leftover money in your health-care flexible savings account. 
Employer-sponsored FSAs allow you to save pretax dollars and use the funds for qualified medical expenses. An individual can save up to $3,050 in these accounts in 2023.

However, unlike a health savings account, which roll over year to year, the funds in an FSA are considered “use it or lose it,” said certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida. She is also a member of CNBC’s Financial Advisor Council.
Depending on your employer, you may have some leeway.
A bit less than half, 42%, of employers offer a rollover, according to Employee Benefit Research Institute data from 2021. This year, that means you can take up to $610 into 2024. Another 26% of employers offer a grace period, which gives you an extra two and a half months to spend down 2023 funds.
The remaining 33% of employers don’t offer either accommodation. Almost half, or 48%, of workers in that situation end up forfeiting some of their pretax dollars, according to the EBRI.

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It’s common for workers to not know what their employer’s FSA rules are. If you’re uncertain, reach out to your company’s human resources department, Jake Spiegel, research associate at the institute, previously told CNBC.

Here are seven ways you may want to take advantage of those leftover savings while you can.
1. Invest in a biometric or fitness tracker
Consumers have a new opportunity: You can now purchase certain biometric or fitness trackers, such as an Oura Ring or a Withings ScanWatch, as an eligible FSA or HSA expense. Otherwise, taxpayers can only use FSA funds to purchase an activity tracker such as a Fitbit or a Garmin if they provide a letter of medical necessity from their doctor.
2. Squeeze in year-end doctor’s visits
If you’ve been meaning to visit any of your doctors, try to schedule it in the next few weeks. Typically, visits and consults are covered, and you’re getting those expenses in before your deductible resets at the start of next year.
If you can’t make it in person, telehealth visits are also covered. You can use your funds for dental care as well, for procedures such as routine dental cleaning, root canals, braces and other out-of-pocket expenses. 
3. Stock up on over-the-counter medications
The CARES Act of March 2020 removed prescription requirements to use FSA funds for many over-the-counter medicines. You can buy a supply of nonprescription medications such as pain relievers, cough medications, sleep aids and other treatments.
This can be a smart move as we move into cold and flu season, or if Covid cases pick up in your area.

4. Purchase women’s health products
Back in 2020, the IRS approved women’s menstrual products such as pads and tampons as eligible items under an FSA. Birth control and other contraceptives also count, as long as you show a medical prescription.
5. Buy certain skin care products
You can use your FSA savings for eczema-approved creams and lotions. It may be good to stock up on these items as cold weather brings on dry skin. Sunscreens with SPF 15+ are covered as well as any acne treatments with certain ingredients such as salicylic acid.
You don’t need to buy these products exclusively at health retail stores. Certain skin care purchases at beauty retailers such as Sephora and Ulta may qualify, too.
6. Plan ahead for a new baby
New and expectant parents can use their FSA funds for baby products such as diaper rash cream, baby breathing monitors and baby sunscreen.
7. Prepare for New Year’s resolutions
If your New Year’s resolution is to quit smoking, you can purchase OTC gum and patches, prescribed medications and pay for smoking cessation programs with your FSA funds.

How to use FSA funds wisely

In 2024, employees can contribute as much as $3,200 to a health FSA, the IRS said in November.
To avoid having too much left to spend down at the last minute in future years, pay attention to your balance and make efforts to use your funds throughout the year, said McClanahan. When it’s open enrollment time, look at your expenses in recent years to ensure you’re not putting aside too much money.
Those steps can help make sure “you’re actually using it wisely and not wasting it,” she said. More

Life Changes

College enrollment is struggling, and six-year completion rates are stagnant, according to recent reports.
Rising tuition costs and ballooning student debt balances have caused more students to question the return on investment. 
Broad-based loan forgiveness is off the table, but “the debate about the value of college continues,” says Rick Castellano, a spokesperson for Sallie Mae.

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Even before the Supreme Court blocked President Joe Biden’s plan to forgive student debt, fewer students were enrolling in college.
Nationwide, enrollment has lagged since the start of the Covid-19 pandemic, when a significant number of students decided against a four-year degree in favor of joining the workforce or completing a certificate program instead.

But this fall, freshman enrollment continued its slide, sinking 3.6%, according to the National Student Clearinghouse Research Center. The declines were most pronounced in bachelor’s programs at public and private four-year institutions.
“The debate about the value of college continues,” said Rick Castellano, a spokesperson for education lender Sallie Mae.

Completion rates are at a standstill

Six-year college completion rates have also stalled after years of steady growth, a separate National Student Clearinghouse Research Center report found. Only about 62% of students who started college in 2017 have graduated, essentially unchanged since 2015. Nearly one-third, or 29%, of all students who started that year have stopped out, or put their education on hold.

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“This is more bad news for four-year colleges,” said Doug Shapiro, the National Student Clearinghouse Research Center’s executive director.
“Not only have fewer of the 2017 starters completed as of 2023, but the data also show fewer still enrolled, suggesting that this is more than just a matter of slower progress during the pandemic years,” Shapiro said.

How student debt has influenced enrollment

Higher education, as a whole, is under pressure, Shapiro said. Rising college costs and ballooning student debt balances have caused more students to question the return on investment. 
Among recent “stopouts,” most said they put their education on hold due to financial obstacles, including the costs of programs, inflation and the need to work, a separate report by Lumina and Gallup found.
To that end, low-income students are the most likely to opt out.
Research suggested that Biden’s promise to forgive up to $20,000 in debt might have made it more likely that previously unenrolled students would reenroll.
However, that relief never came and now there is a new plan in the works.

It may be too early to tell the effect that could have on enrollment going forward, Shapiro said.
But increasingly, borrowers are struggling under the weight of education debt, which today totals more than $1.7 trillion.
For those who don’t get a degree, managing such a hefty amount of debt is especially difficult.

Among borrowers who start college but never finish, the default rate is three times higher than the rate for borrowers who have a diploma.  
“Broad-sweeping debt forgiveness may not be on the table but there are other programs the Biden administration has implemented,” Castellano said.
Already, Biden has managed to erase $127 billion in education debt for more than 3.5 million borrowers, largely through Public Service Loan Forgiveness and income-driven repayment plans.
“There are still options for students and families to reduce their payments and eventually get their loans forgiven,” Castellano said.
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Though aerospace and defense funds understandably haven’t done well in this year’s faltering market, some individual stocks have posted substantial gains.
This could be an advantageous time for investors to consider the category.
Lucrative products include fighter jets, helicopters, parts for those aircraft, avionics products, missile guidance system, drones and anti-drone technology and support services.

A US Air Force (USAF) Lockheed Martin F-35A Lightning II all-weather stealth multirole combat aircraft flies over during the 2023 Dubai Airshow at Dubai World Central – Al-Maktoum International Airport in Dubai on November 13, 2023. 
Giuseppe Cacace | Afp | Getty Images

In times of war, investors’ thoughts naturally may turn to defense stocks.
Continuing wars in Ukraine and Israel and Gaza, along with various simmering geopolitical hotspots around the world, could mean increased revenues for U.S. defense contractors, enhancing the allure of stocks in the aerospace and defense category.

Though aerospace and defense funds understandably haven’t done well in this year’s faltering market, some individual stocks have posted substantial gains. And now that the overall market has started moving upward in recent weeks, this could be an advantageous time for investors to consider the category.
Government sales account for varying amounts of revenues received by aerospace/defense companies — from 100% down to 30% or less in some cases.

Diversified revenue creates a ‘sweet spot’

As the label aerospace and defense implies, many such companies have civilian business from jetliner manufacturers and airlines, so the current boom in commercial aviation is a positive for them. This diversification currently puts them in a sweet spot.  
Though U.S. defense spending on contractors has been pared back a bit over last couple years, some aerospace and defense firms continue to benefit from total contract spending that increased markedly in 2017-2020, from $373.5 billion to $448.9 billion, rising with the total defense budget.

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U.S. support in what’s turning out to be a long war in Ukraine will likely push overall contractor spending higher, benefitting aerospace and defense companies.

In this era of high-tech warfare, when strategic military engagement is more about digital systems and aerial weapons than boots on the ground, aerospace and defense companies are advantageously positioned. Lucrative products include fighter jets, helicopters, parts for them, avionics products, missile guidance system, drones and anti-drone technology and support services.

Lesser-known companies have key market positions

Publicly traded companies in this category with relatively low downside risk (based on various fundamental metrics) and good growth projections include some familiar names of large companies, including General Dynamics, Lockheed Martin and Northrup Grumman.
Yet, standing out from such behemoths are some lesser known and/or smaller companies whose key market positions and robust growth projections may signal greater potential for investors.
Among them are these six:
TransDigm Group Inc. (TDG)

Projected average annual earnings growth over five years, according to FactSet: 26%
Market cap: $48 billion (as of mid-November)

TransDigm designs and manufactures original aircraft parts for manufacturers and aftermarket replacement parts for operators of commercial and military aircraft. Most of its revenue is from civilian aviation sources. The company is benefiting from the integration of global economies, which is spurring jetliner fleet additions, and from pricing power as the sole supplier of some items. Though its trailing 12-month price/earnings ratio is high, at 47, this multiple has been pushed up by stock price growth of about 15% over the past six months, as of mid-November.
Parsons Corp. (PSN)

Projected five-year annual earnings growth: 13%.
Market cap: $6.5 billion.

This global technology company gets most of its revenue from federal agencies, both defense and civilian. Parsons Corp. clients include the U.S. Department of Defense, the Missile Defense Agency, the State Department, Department of Homeland Security, the Department of Energy and the Federal Aviation Administration. Products and services include items to counter unmanned air systems, and gear for national security, bio-surveillance, space launches, border security, rail design/control and infrastructure engineering. The stock prices has increased about 36% over the past six months, bringing the trailing P/E up to 48.

Howmet Aerospace (HWM)

Projected five-year annual earnings growth: about 22%.
Market cap: nearly $19.9 billion.

About 30% of Howmet’s revenue is from defense. This is a manufacturer of lightweight jet-engine components, aerospace fastening systems, titanium aircraft parts and forged wheels. Its largest customers are commercial aircraft and jet engine manufacturers. Thus, this stock has more cyclical risk than more military-intensive companies. However, Howmet’s EBITDA (earnings before interest, taxes, depreciation and amortization) is up 16% this year, and order-flow momentum is highly positive. Trailing P/E: 31.
Curtiss-Wright Corp (CW)

Projected five-year annual earnings growth: Data was not available.
Market cap: about $7.8 billion.

CW has the best downside-risk/forward-performance metrics of all aerospace/defense stocks. Curtiss-Wright provides engineered products and services for the defense, industrial and global power-generation markets. Most defense companies are located in Virgina (near government clients in Washington), but Curtiss-Wright is headquartered in Davidson, N.C. Products include throttle-control devices, joysticks, transmission shifters, sensors and electro-mechanical actuation components used in commercial and military aircraft. Pure defense lines include turret-aiming and stabilization items, weapons-handling systems, communications gear and naval ship items, including airlock hatches and products for spent-nuclear-fuel management and propulsion parts. CW also provides services for ship repair and maintenance. Despite a stock price increase of more than 20% over the last six months, solid earnings have kept this company’s trailing P/E under 23.
Woodward Inc. (WWD)

Projected five-year annual earnings growth: 13.2%.
Market cap: $7.94 billion.

Woodward designs and manufactures mechanical control items for aviation and industry, both original equipment sold to manufacturers and replacement parts for operators. Products include fuel pumps, metering units, valves, nozzles, motors and sensors. Woodward also makes thrust-reversal systems for military aircraft and helicopters and commercial and private civilian aircraft and flight-deck systems for aircraft carriers. Industrial items include products for gas and steam turbines and compressors. This is another non-D.C. area company, located in Fort Collins, Colorado. Trailing P/E: about 39, with share price growth of more than 18% over the last six months.
Huntington Ingalls Industries (HII)

Projected annual five-year earnings growth: 24%.
Market cap: $9.3 billion.

A pure defense play, Huntington Ingalls Industries is primarily a warship company with a focus on aviation, as it builds aircraft carriers. More than 82% of its revenue is from the Navy, though it also manufactures and services Coast Guard vessels. Long time frames for producing Naval ships may make HII’s revenues more predictable. The company’s ultimate product is the 1,106-foot nuclear-powered aircraft carrier, U.S.S. Gerald R. Ford. The latest in carrier technology, this ship can support up to 90 aircraft, including F-35s and other fighter jets, as well as helicopters and unmanned aerial vehichles (aka drones). In the water since 2013, the Ford was the subject of news coverage in October when the Pentagon deployed it to Mediterranean coast off Israel as a deterrent to Iranian involvement in the Israeli-Hamas conflict. The company is currently touting its status as the manufacturer of “the Gerald R. Ford class” of carriers. Trailing P/E: 17.7, even with a stock price increase of about 18% over the past six months.

Commercial air travel demand ‘still playing out’

Long-term forecasts for these companies are quite positive. And with post-pandemic demand for air travel still playing out, those with civilian aircraft business currently have diversified revenue. Yet wars can mean lower demand for commercial air travel in affected regions.
Nevertheless, the market positions of those with substantial defense revenue — derived from their status as sole or primary suppliers, developers of unique technology and established records as DOD partners — make them perennially investable propositions for long-term investors.
—Dave Sheaff Gilreath, a certified financial planner and the founding partner and chief investment officer of Sheaff Brock Investment Advisors and Innovative Portfolio, an institutional money management firm. More

Tennessee was one of the first states to require a half-semester personal finance course for high school graduation.
Currently, 23 states, including Tennessee, guarantee at least one semester of personal finance in high school, but only eight states have fully implemented the requirement.
“The work is never done,” said Bill Parker, director of the Tennessee Financial Literacy Commission.

Caiaimage/chris Ryan | Istock | Getty Images

There has been a wave of financial literacy legislation nationwide as states push to get personal finance classes into public schools — and Tennessee was one of the first to enact a high school mandate.
Since 2013, Tennessee has required a half-semester personal finance course for high school graduation and was among the first three states to add the mandate, according to Jackie Morgan, outreach senior advisor for the Federal Reserve Bank of Atlanta’s Nashville branch.   

“We were an early adopter,” said Morgan, who served as past president for Tennessee Jump$tart, an independent affiliate of the national Jump$tart Coalition for Personal Financial Literacy, which championed the policy.
“We’ve been able to help serve as a model for other states,” she said, pointing to Tennessee Jump$tart’s national recognition in 2009.

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While financial literacy has long been a priority, the Covid-19 pandemic sparked a wave of state-level legislation nationwide, said Morgan, who also served on the board of the Tennessee Financial Literacy Commission.
In 2023, some 23.6% of U.S. public high school students were guaranteed to take a personal finance course, up from 16.9% in 2019, according to financial literacy nonprofit Next Gen Personal Finance’s 2023 annual report.
However, the majority of U.S. high school students can only take personal finance as an elective or part of another course, and access gaps exist along racial, socioeconomic and geographic lines, the same report found.

The ‘gold standard’ for financial literacy

Currently, there are 23 states, including Tennessee, guaranteeing at least one semester of personal finance before high school graduation, as of Nov. 28, according to tracking from Next Gen Personal Finance.
Tennessee is one of only eight states that has fully implemented what the organization considers the gold standard: a stand-alone half-semester course dedicated to personal finance. Some 15 others are in progress.    
However, Tennessee is one of the few states that requires both economics and personal finance courses, whereas other places may prioritize one over the other. “It’s kind of like having a left hand without the right hand,” Morgan said.
In 2022, some 25 states required an economics course for graduation, according to an annual survey from the Council for Economic Education.

‘The work is never done’

While Tennessee adopted the high school mandate earlier than most other states, there’s still room for improvement, advocates say.
“The work is never done,” said Bill Parker, director of the Tennessee Financial Literacy Commission, which aims to incorporate personal finance into schools “as early as possible.”
“When they get to that high school course, ideally, they’re in a position to hit the ground running with some more advanced concepts that they can apply to their own lives,” he said.

When they get to that high school course, ideally, they’re in a position to hit the ground running with some more advanced concepts that they can apply to their own lives.

Bill Parker
Director of the Tennessee Financial Literacy Commission

The Commission has outlined priorities in its five-year strategic plan, which has included thought leadership and state-level advocacy for expanded financial literacy programming. Numerous studies have highlighted the benefits of teaching children financial literacy at an early age.
“We’re glad to have so much support at the state level and so many passionate teachers,” Parker said. “It takes a special teacher to have the energy and enthusiasm to introduce financial literacy on top of all of the other things that they have going on.”

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Over the past three decades, Nashville, Tennessee, has seen a flood of transplants moving from higher-cost cities.
In 2022, the Nashville metropolitan area grew by about 35,624 people, or roughly 98 new residents per day, according to the Nashville Area Chamber of Commerce’s Research Center.  
However, nearly 80% of residents believe the city’s population is “growing too quickly,” according to a recent Vanderbilt University poll.

Nashville skyline at dusk.
John Greim | LightRocket | Getty Images

This story is part of CNBC’s new quarterly Cities of Success series, which explores cities that have been transformed into business hubs with an entrepreneurial spirit that has attracted capital, companies and workers.
Over the past 30 years, Nashville, Tennessee — a city known for country music — has seen a flood of transplants moving from higher-cost cities.

For new residents, “everybody has a different story,” said Jeff Hite, chief economic development officer of the Nashville Area Chamber of Commerce.
Some new residents come for job opportunities, while others move for a better quality of life or a lower cost of living, including no state income tax, he said.

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While Nashville is known for music and entertainment, other top employers include health care, manufacturing and technology.
In 2022, the Nashville metropolitan area grew by about 35,624 people, or roughly 98 new residents per day, according to Census data compiled by the Nashville Area Chamber of Commerce’s Research Center. 
Since 1990, the population has grown 81%, with more than two— million residents in the Nashville metropolitan area in 2022.

We see people moving from the same areas that we see companies having interest to relocate from — areas that are dense, expensive and highly regulated.

Chief economic development officer of the Nashville Area Chamber of Commerce

“We see people moving from the same areas that we see companies having interest to relocate from — areas that are dense, expensive and highly regulated,” Hite said. 
Nashville was named one of the top 10 “homebuyer migration destinations” in a recent Redfin report. Los Angeles, Chicago, San Francisco, San Diego and New York were the top origin cities for prospective transplants, according to search data between August 2023 and October 2023.

© Nina Dietzel | Moment | Getty Images

Downtown Nashville resident growth

The city’s primary tourism district has also seen an influx of new residents over the past 20 years, according to Tom Turner, president and CEO of the Nashville Downtown Partnership.
In 2003, there were roughly 1,900 residents living in downtown Nashville, which covers 2.4 square miles, and Turner expects it to reach about 23,000 residents within the next couple of years. 
Attracted to a “central location,” some 43% of downtown residents moved from out of state, survey data from the Nashville Downtown Partnership shows.

Cost of living, affordability are ‘major challenges’

While the Nashville area has seen staggering growth, affordability and quality of life are lingering concerns for many residents.
As of August 2023, a family needed to earn $124,095 per year to afford a median-price home worth $455,000 in the Nashville area, up 19% year over year, according to a Redfin analysis. 
That’s nearly $10,000 higher than the $114,627 income needed to buy a median-price U.S. home sold for about $420,000 in August 2023, the analysis showed.
“Cost of living and affordability are major challenges in this area,” Hite said, emphasizing the Chamber’s push for “high skill, high wage jobs” as more companies expand or relocate to the city.

Affordability has been a problem across the country, and we’ve certainly no exception.

Tom Turner
President and CEO of Nashville Downtown Partnership

Some 47% of Nashville residents said the city’s growth is “making their day-to-day life worse,” nearly double the percentage from 2017, according to a Vanderbilt University poll released in April 2023.
Nearly 80% of those surveyed believe the city’s population is “growing too quickly,” the poll found. Feelings about Nashville’s economy were split by income, with more negative views from residents earning less than $45,000 per year.
“Affordability has been a problem across the country, and we’re certainly no exception,” said Turner.
You can’t ignore rising housing prices and longer commutes, but “a lot of it is perspective,” he said. While long-time residents may have deeper concerns, transplants from high-cost markets may find Nashville “very affordable.”

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IBM is switching from a 401(k) match to a traditional defined benefit contribution.
Companies considering creating a similar plan would need to have a comparable structure to what IBM has built over the years.
Under the new plan, employees will get a guaranteed rate of return, but one that could be much lower than what they could get investing the money more aggressively.

Pedestrians walk in front of the IBM building in New York.
Scott Mlyn | CNBC

IBM, which decades ago helped lead the shift from defined benefit plans to defined contribution plans, recently told U.S. employees it will be scrapping its 401(k) match in favor of funding what it calls a “retirement benefit account.”
Other companies may find it tricky to follow suit, experts say.

Starting next year, IBM will no longer provide a 5% match and a 1% automatic contribution into an employee’s 401(k). Instead, effective Jan. 1, the company will put 5% into the RBA, essentially a pension plan that will pay 6% interest through 2026. After that, the RBA will earn a rate equivalent to the 10-year U.S. Treasury Yield, with a 3% per year minimum through 2033. 
IBM says the change adds a stable and predictable benefit to employees and helps diversify their retirement portfolios.
“Under the plan, IBM bears 100 percent of the risk and must be prepared to pay the benefit at time of employee separation,” IBM said in a statement. 
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It’s unlikely to start a trend, however.

To make a similar move, experts say a company would have to already have a traditional defined benefit pension plan in place, and it would have to be overfunded and not be affiliated with a union.  
“Other companies may not have structure to pull off this type of change,” said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute. “IBM was in a really good situation to do it.”

IBM change makes use of a $3.5 billion surplus

“Big Blue,” as IBM was once known, has a long history of changes to its retirement plans.
In 1984, it was among a wave of large companies that began offering 401(k) plans. By the 1990s, its pension plan was cut back, then closed to new participants in 2006 and frozen in 2008. Some employees opposed the change, filing a lawsuit. In 2005, IBM settled some claims and won on appeal for the rest. 
Last year, IBM transferred $16 billion worth of pension liabilities to insurance companies Prudential and MetLife. The company had a $3.5 billion surplus in its plan, according to the company’s annual report.

Restructuring the retirement plan gives IBM the ability to use those surplus pension assets to fund its match.
“What’s interesting about what IBM is doing is they’re thinking about maybe there’s a more efficient way to capture those assets,” said Jonathan Price, a senior vice president and the national retirement practice leader at Segal, an HR management consulting firm. “They’re taking a slightly more nuanced approach than what we might have seen a few years ago and what we still might see other employers choose to do in the future.”

What the change means for employees 

For employees, IBM’s change is a mixed bag. Even employees who are not contributing to the 401(k) plan will get a defined benefit and the option for a lifetime annuity payment. But younger employees and those who make significant contributions in the plan are likely to find the set returns will limit potential upside. 
“Six percent sounds nice for 2024-2026, but after that, yields could be as low as 3%,” said Brandon Gibson, a certified financial planner and founder of Gibson Wealth Management in Dallas. He says a 6% to 7% annual return is a reasonable goal that can be reached with a mix of equities and fixed income. 

CFP Jack Heintzelman, a financial adviser with Boston Wealth Strategies in Needham Heights, Massachusetts, says plan participants should consider the allocation of the rest of their 401(k) assets since the match is going into a highly conservative investment. 
“You could maybe take on a little bit more equity exposure, a little bit more ‘risk,’ because the company’s contribution is in a fixed income, bond-like investment,” said Heintzelman. He said this is a reminder for employees to look at their retirement portfolio to see how the investments meet their goals.
While the change may not provide a significant benefit, experts say it’s still better than nothing: There’s no legal obligation for an employer to offer a 401(k) plan or provide a match. 
“It’s a decision that the employer has the right to make,” said Segal’s Price.Don’t miss these stories from CNBC PRO: More

Americans’ retirement confidence has been shaken.
Despite the advantages of a workplace retirement plan, most savers are missing out on all the benefits.
Experts say these are the most common mistakes workers make with their 401(k) plans.

A higher cost of living and growing savings shortfall has many Americans worried about their retirement security.
Those financial strains also make it harder for many workers to fund a retirement account. 

To that point, 41% don’t contribute any money at all to a 401(k) or employer-sponsored plan, according to a CNBC Your Money Survey conducted in August.
Even the majority of those that do contribute say they are not on track with their yearly 401(k) savings to retire comfortably.  
Despite the many advantages of a workplace plan, most savers are missing out, experts say. Here are three common mistakes workers often make when it comes to their 401(k) plans.

1. Missing out on the employer match

“It’s a fairly small subset of workers that are fully maximizing their employer-sponsored plans that allows them to build a bigger next egg,” said Joe Buhrmann, senior financial planning consultant at eMoney Advisor.
At the very least, workers should contribute enough to their workplace retirement plan to reap the benefits of the company match, if available.

Most 401(k) plans, 98%, make contributions to workers’ retirement savings, according to the Plan Sponsor Council of America.
Yet, roughly 22% of plan participants are not getting the full match, according to data from Fidelity, the nation’s largest 401(k) plan provider.
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“There are a lot of workers out there that aren’t even aware of what their company’s match is,” said Mike Shamrell, Fidelity’s vice president of thought leadership.
In fact, the average company match in a 401(k) plan was 4.7% of a worker’s salary in the third quarter of 2023, according to Fidelity, but can typically range between 3% and 6%.
To that end, couples with two employer savings plans could benefit from prioritizing the more generous employer’s 401(k) matching funds.

However, everyone should aim to contribute enough to get the full match, Shamrell added. Depending on your salary and the matching formula used, that could translate into thousands of extra dollars going toward your nest egg every year. “That’s the closest any of us are going to get to free money,” he said.
To get there, Shamrell advises savers to auto escalate contributions, which will steadily increase the amount you save each year. 
The IRS recently raised the contribution limits to retirement accounts for 2024, increasing the thresholds to $23,000 for 401(k) plans and $7,000 for IRAs.

2. Tapping funds when times are tough

Taking money out of a retirement account will forfeit the power of compound interest. Still, more retirement savers are withdrawing money from their 401(k) plans to stay afloat amid a prolonged period of high inflation, recent reports show.
In times of financial stress, most financial experts advise against raiding a 401(k).
However, if participants do need to access their 401(k) savings through a loan or withdrawal, workers often don’t know which move makes the most financial sense, Shamrell said.
“A lot of times those two get lumped together,” he said.
With a 401(k) loan, workers can borrow up to 50% of their account balance, or $50,000, whichever is less, without penalty as long as the money is repaid within five years. There may be other conditions as well, and if you’re laid off or find a new job, most employers will require your outstanding balance be repaid in a shorter time frame.
Otherwise, workers can take a withdrawal, but those under age 59½ generally would owe a 10% tax penalty.
In more extreme circumstances, savers may take a hardship distribution without incurring the 10% early withdrawal fee if there is evidence the money is being used to cover a qualified hardship, such as medical expenses, loss due to natural disasters or to buy a primary residence or prevent eviction or foreclosure.

Halfpoint Images | Moment | Getty Images

In some cases, a 401(k) loan may be preferable to other alternatives, said Fidelity’s Shamrell. 
“There are times where the loans may be a more valid direction, as opposed to putting that on your credit card,” he said.
In other situations, especially for cash-strapped consumers living paycheck to paycheck, it may even make more sense to cover the cost of an emergency all at once with a hardship withdrawal, he added, rather than tap a loan for which repayment then gets deducted from your take-home pay.  
Going forward, there is another option set to take effect in 2024 that will let savers make one withdrawal of up to $1,000 a year for personal or family emergency expenses. This measure is intended to provide a lifeline for those in immediate need. 

3. Taking a short-term view

Ultimately, the key to investing for the long haul is “making sure you have an appropriate asset allocation and contribute in good markets and bad markets,” Buhrmann said.
After some extreme market volatility, 401(k) account balances lost nearly one-quarter of their value in 2022. However, the average balance is now $107,700, up 11% from a year ago, according to Fidelity, underscoring the importance of staying the course.
Workers who have been in their plan for 15 years straight have a much higher average balance of $448,800, up from just $56,300 in 2008, Fidelity found.

Although each household has their own unique set of circumstances, some age-based guidelines can help savers stay on track during periods of uncertainty, Shamrell said.
“You should not be making changes to your 401(k) based on short-term market moves,” he cautioned. “You want to make sure you are not losing out on possible growth opportunities or, alternatively, exposing yourself to unnecessary risk.”
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The Inflation Reduction Act extended and enhanced a prior tax credit for home efficiency upgrades.
The Energy Efficient Home Improvement tax credit is worth 30% of a project’s cost, up to a dollar cap.
The tax break helps homeowners save money on the upgrades and on future heating and cooling bills.

Steve Smith | Tetra Images | Getty Images

Winter is almost here, meaning the year’s coldest temperatures aren’t far off.
But homeowners can take advantage of recently enacted tax breaks to help boost their home’s efficiency, thereby trapping more heat inside and better defending against winter’s chill — and saving them money in the process.

The Energy Efficient Home Improvement tax credit, offered by the Inflation Reduction Act, can help defray homeowners’ costs on such projects — such as installing energy-efficient insulation, windows, doors and electric heat pumps — while also likely reducing the size of future heating bills, experts said. It’s worth a maximum $3,200 a year.
More from Personal Finance:Are gas-powered or electric vehicles a better deal? EVs may win out in long runConsumers may soon get up to $14,000 or more in energy rebates — if states sign onWhy climate change may cost you big bucks — and what to do about it
The average American spends $2,000 on energy bills each year, and $200 to $400 may be “going to waste” from drafts, air leaks around openings and outdated heating and cooling systems, according to the U.S. Department of Energy.
Home heating accounts for 45% of the average person’s energy use, and water heating for another 18%, the agency said.
“You want to minimize heat loss to the outside through walls, windows, drafts, etcetera, and supply the heat as efficiently as possible,” said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy.

Home efficiency upgrades can also reduce people’s planet-warming greenhouse gas emissions, at a time when climate change is already fueling more extreme and financially costly weather events.

How the tax break works

Westend61 | Westend61 | Getty Images

The Inflation Reduction Act, which President Joe Biden signed into law in August 2022, extended and enhanced a prior tax credit available for home efficiency upgrades.
The tax credit is worth 30% of the cost of qualifying projects. There’s a dollar cap: Taxpayers may qualify for up to $3,200 a year, in aggregate. But their ability to do so depends on how many and which projects they undertake.
Certain upgrades carry distinct caps. For example, homeowners can get up to $500 a year for installing efficient exterior doors, $600 for exterior windows and skylights, plus $1,200 for insulation and air-sealing materials or systems. They can also get up to $150 for a home energy audit.
The combined tax break for these projects is capped at $1,200 a year.
Replacing single-pane windows with double-pane Energy Star-rated windows, for example, “is like plugging actual holes in your house,” said energy and climate policy expert Kara Saul-Rinaldi, president and CEO of AnnDyl Policy Group.

The Environmental Protection Agency estimates homeowners can save 15% on heating and cooling costs, on average, by air sealing their homes and adding insulation in attics, floors over crawl spaces and basement rim joists.
Some projects carry a separate, $2,000 annual cap. They include: installing electric or natural gas heat pump water heaters, electric or natural gas heat pumps and biomass stoves and biomass boilers.
Altogether, taxpayers can get a maximum overall credit of $3,200 a year, if they combine projects worth up to $1,200 and $2,000. The IRS published a fact sheet that gives examples of the overall tax break consumers can expect for specific upgrades.  
The Energy Efficient Home Improvement credit is available through 2032. Homeowners can claim the maximum annual credit each year that they make eligible improvements, and there’s no lifetime dollar limit.
“People can look forward and plan,” Saul-Rinaldi said. “They may know they need insulation over their kid’s room, or need to upgrade their windows, or want to transition to cleaner fuel, but they can’t do it all today or this year.”

There are some caveats to claiming the credit

The installations must meet certain efficiency standards, as outlined by the IRS. Labor costs may not apply in certain cases, the IRS said.
Taxpayers can only benefit from the tax credit when they file their annual tax returns.
The tax credit is also nonrefundable, meaning households must have a tax liability to benefit. The IRS won’t issue a refund for any tax credit value that exceeds one’s tax liability. Excess value can’t be carried forward to benefit in future tax years.  

Taxpayers who want to claim a tax break on their 2023 tax returns — which most people will file early next year — have a short window to complete a qualifying project. They’d need to be finished by the end of December. Projects only qualify once they’re “placed in service” — essentially, once a project is installed and operational.
Homeowners can consider getting a home energy audit by the end of December, which would qualify for a tax break and help determine future efficiency projects, Saul-Rinaldi said. Then, homeowners can complete those projects and claim the tax break in future years.
They may also be able to pair the tax break with energy-efficiency rebate programs created by the Inflation Reduction Act and soon being rolled out by states, experts said.Don’t miss these stories from CNBC PRO: More