Investing

The inflation rate has being declining gradually from its pandemic-era peak in June 2022.
Since the rate remains positive, the U.S. is experiencing disinflation. Prices are rising, but at a slower pace.
The U.S. has rarely experienced deflation, which is when the inflation rate is negative. Here, prices decline outright. Broad and sustained deflation is typically a bad outcome, economists say.

A customer visits a supermarket in San Mateo, California, on Dec. 12, 2023.
Li Jianguo | Xinhua News Agency | Getty Images

Inflation is retreating from its pandemic-era highs.
Economic jargon yields two similar terms — “deflation” and “disinflation” — that might describe this pullback.

So, which is the U.S. experiencing? In short: disinflation.

What is disinflation?

In an economy experiencing disinflation, prices are still rising. However, they’re growing at a slower pace than they had been.
The inflation rate is still positive but at a lower level.

The consumer price index, a key inflation measure that tracks average prices across a broad basket of consumer goods and services, increased 3.1% in November 2023 relative to a year earlier. That’s a significant decrease from the pandemic-era peak of 9.1% in June 2022.
“Disinflation is what we want to see right now,” said Sarah House, senior economist at Wells Fargo Economics. “It’s the more ideal outcome” relative to deflation, she said.

What is deflation?

Deflation, by contrast, is when average prices are falling outright. The inflation rate flips negative.
Some consumer categories, such as used vehicles and gasoline, have deflated over the past year, according to CPI data. Their prices have declined about 4% and 9%, respectively.
However, broad, sustained deflation in the U.S. would generally be a bad outcome, economists said.
More from Personal Finance:Why workers’ raises are smaller in 2024 — and may not go up from hereRocky FAFSA rollout leaves millions of students, families frustratedTax filing season kicks off Jan. 29. Here’s what taxpayers need to know
For one, if consumers expect prices to be cheaper in the future, they may hold off on buying goods and services. Reduced consumer demand may crimp economic growth and further weaken prices, creating a self-reinforcing downward spiral.
Deflation can also cause problems for people who borrow money, economists said. The asset they own — a car or a house, say — may be falling in value while debt payments stay the same. If a borrower’s income declines, they have less money to pay down debt.

The U.S. has rarely experienced deflation

The U.S. has experienced few deflationary episodes since the Great Depression, said Andrew Hunter, deputy chief U.S. economist at Capital Economics.  
“It’s something you tend to talk more about in textbooks than in practice,” Hunter said.
Historically, broad deflation has occurred during periods of “extreme economic weakness,” he said.
For example, the U.S. annual inflation rate flipped negative from March 2009 to October 2009 in the throes of the Great Recession. It nearly did so in May 2020 during the early days of the Covid-19 pandemic.

The U.S. has also seen deflation when oil prices have tumbled sharply, Hunter said. Energy prices drag down the aggregate inflation index.
That happened for several months in 2015, for example. Oil prices collapsed 70% from mid-2014 to early 2016, driven by growing oil supplies. That collapse was at the time one of the three biggest oil price declines since World War II, according to the World Bank.
Such cases of deflation — linked to falling energy prices — can be a positive for consumers due to falling prices at the gasoline pump, for example, Hunter said.

Consumers are unlikely to see lower price tags

The U.S. Federal Reserve targets a 2% annual inflation rate over the long term.
At this “benign” rate, inflation hardly occupies consumers’ or businesses’ brain power. They generally don’t think much about costs or pricing, or how income and revenue are keeping pace with expenses, House said.
The U.S. is on its way back to that target. The supply-and-demand factors that caused inflation to surge in the pandemic era have largely unwound, economists said.

However, the Fed’s target underscores a perhaps bitter reality for consumers: Consumer price tags are unlikely to deflate (i.e., decline) much if at all for many goods and services. Remember: Disinflation means a lower rate of price growth, not an outright price decline.
“Consumers have woken up to the reality that prices rarely go down in the aggregate,” House said.
Of course, incomes and wages have exceeded inflation in the pandemic era, meaning the average person’s buying power has actually increased despite rising prices.
The CPI is up about 19% from November 2019 to November 2023. Average hourly earnings are up 20% during that period, while disposable personal income is up 25%.Don’t miss these stories from CNBC PRO: More

The U.S. Department of Education said student loan servicer Mohela, or the Missouri Higher Education Loan Authority, failed to send timely billing statements to 2.5 million borrowers.
Here’s what to know about the issues borrowers are facing as they try to contact their servicers and apply for relief.

Student loan borrowers report spending hours on hold trying to contact their loan servicers.
Laylabird | E+ | Getty Images

Borrowers have been plagued by problems since the restart of student loan payments in the fall.
The U.S. Department of Education said at the end of October that student loan servicer Mohela, or the Missouri Higher Education Loan Authority, failed to send timely billing statements to 2.5 million borrowers.

As a result of Mohela’s errors, more than 800,000 borrowers had become delinquent, the Education Department reported.
Then just last week, the department announced that three additional student loan servicers — Aidvantage, EdFinancial and Nelnet — “all failed to meet contractual obligations to send timely billing statements to a combined total of 758,000 borrowers for the first month of repayment.”
More from Personal Finance:Getting engaged? Here’s what to know3 financial tips for couples moving in together for the first timeWhy ‘tipflation’ might ruin your chances for a second date
The Consumer Financial Protection Bureau has found that borrowers are waiting more than an hour, on average, trying to reach their student loan servicers on the phone. Meanwhile, borrowers’ requests to change payment plans are often stuck pending for more than 30 days with no resolution.
“Servicers are overwhelmed and are failing to help struggling borrowers navigate the options that are available to them,” said Persis Yu, deputy executive director at the Student Borrower Protection Center.

In comments to CNBC after the Education Department’s January announcement, Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, blamed the errors on a lack of resources and notice from the government.
“Time and effort spent by Federal Student Aid and the CFPB on their press strategy would be better put to use in trying to solve the actual problems by coordinating on advocating for more resources and executing better operational planning by the government,” Buchanan said.
Here’s what borrowers should know about the servicer problems.

You shouldn’t be on the hook for servicer errors

Borrowers affected by these servicer issues will be placed into an administrative forbearance until things are sorted out, the Education Department said. In the meantime, you shouldn’t owe any payments and will not face interest charges.
The months spent in administrative forbearance should still count for those borrowers working toward loan cancellation under an income-driven repayment plan or the public service loan forgiveness program.
If your servicer is not following those instructions, you can file a complaint with the Education Department’s feedback system at Studentaid.gov/feedback. Problems can also be reported to the Federal Student Aid’s Ombudsman, said higher education expert Mark Kantrowitz.

If you’re unable to reach your servicer on the phone, sending a message via the company’s website may work, Kantrowitz added.

On-ramp periods give borrowers breathing room anyway

In large part because the Biden administration anticipated that it would not be easy to get tens of millions of borrowers back into repayment after a three-year break, it has implemented a 12-month “on-ramp” period.
Through this September, borrowers should be protected from most of the usual repercussions of late or missed payments, including wage garnishments and negative reports to the credit bureaus.

The Education Department recently sent a letter to credit reporting and credit scoring companies reminding them that borrowers’ current activity is not necessarily indicative of an inability or unwillingness to make payments.
People should challenge any negative marks on their credit by contacting their loan servicer or the FSA Ombudsman, Kantrowitz said.
Has the restart of student loan payments negatively affected your credit? If you’re willing to talk about your experience for a story, please email me at annie.nova@nbcuni.com.Don’t miss these stories from CNBC PRO: More

Despite a rocky “soft launch,” more than 1 million students and families have filled out the new FAFSA, according to the Department of Education.
However, it is still unclear when schools will receive each applicant’s information, potentially delaying college award letters and the decision deadline this spring.

For many families, financial aid is crucial when it comes to affording college.
But students must first fill out the Free Application for Federal Student Aid to access any assistance, including student loans, work study and grants. And this year, a new FAFSA form has been plagued by problems.

“It does seem consistent with a process that was rushed at the end with inadequate testing,” higher education expert Mark Kantrowitz said. “They are building the plane while flying.”
More from Personal Finance:How to understand your financial aid offerThe cheapest states for in-state college tuitionFewer students are enrolling in college
For starters, the new FAFSA just soft-launched on Dec. 30 after a monthslong delay. Typically, students have access to the coming academic year’s form on Oct. 1.
In the days since its launch, the 2024–25 form was only available for limited windows of time as the U.S. Department of Education worked to “resolve minor issues,” according to a department spokesperson.
Some of the issues have been specifically related to contributors to the form, such as parents, who are not U.S. citizens or permanent residents, according to Kantrowitz, in addition to other various glitches and a prolonged processing time.

1 million students submitted a 2024–25 FAFSA so far

Still, the site has been flooded with eager applicants who rely on college aid.
“Over 1 million students and families and counting have successfully filled out the ‘Better FAFSA,’ which is now available 24 hours a day, seven days a week,” U.S. Secretary of Education Miguel Cardona said in a statement.
In ordinary years, the FAFSA form is used by more than 17 million students and roughly 5,500 colleges and universities in all 50 states, according to the Department of Education.

Kantrowitz, who tested the system Jan. 2, said his submitted application “is still showing as not yet finished processing.”
“Six days later, it is still listed as ‘in review,'” he said. “Normally, the FAFSA would be processed within a few days,” he added.
Despite the lag, the Department of Education said there is “plenty of time to complete the FAFSA form.” Even if students successfully submit a completed 2024–25 form early this year, that information won’t be sent to schools until late January, the department said.

Students are ‘understandably frustrated’

Even by soft-launch standards, the rollout was challenging, according to Justin Draeger, president of the National Association of Student Financial Aid Administrators.
“Students, families, and financial aid administrators who have been waiting for this release for months are understandably frustrated,” Draeger said.
Further, it is still unclear when schools will receive each applicant’s FAFSA information, he added, which is necessary to begin building financial aid packages and to give students and families enough time to review and compare financial aid offers.
“The sooner the Department can deliver this information, the better,” Draeger said.
Because of the postponement, colleges might not get their financial aid award offers done until late March or early April, according to Kantrowitz.
“They’ll probably send out the offers of admissions out on time, but for families, they won’t know how much aid they are going to get,” he said. “They need to know whether they can afford the college.”

The FAFSA delay’s ‘domino effect’

That could potentially push back National College Decision Day on May 1, which is the deadline many schools set for admitted students to choose a school.
“The FAFSA rollout has been a mess and will be even more so if colleges have to push back their commitment deadlines beyond May 1,” said Hafeez Lakhani, founder and president of Lakhani Coaching in New York. “This will have a domino effect on wait list candidates as well.”
Still, Rick Castellano, a spokesperson for Sallie Mae, advises students and families not to get discouraged.
“Families shouldn’t use this setback, however, as a reason not to submit the form,” Castellano said.
“Completing the FAFSA can unlock scholarships, grants, state-based, and federal aid, and the last thing you want to do is leave free money on the table,” he said.
Subscribe to CNBC on YouTube. More

Dating apps see the highest rate of activity from the beginning of January to Valentine’s Day, experts say.
“Dating Sunday,” the first Sunday in January, is referred to as “the busiest day for online dating,” said Sheldon Bachan, senior brand communications manager at Tinder.
While getting back into the dating scene can spur many emotions, one thing is certain: It can be expensive.

Janina Steinmetz | Digitalvision | Getty Images

January can set the stage for new beginnings, with many single people setting a resolution to look for love.
In fact, dating apps see the highest rate of activity at this time of year.

There are 11.4 million more messages sent globally from Jan. 1 to Feb. 14 — Valentine’s Day — compared with the rest of the year, according to global internal data from dating app Tinder, and 58.7 million more likes are sent during this period.
“Everyone is back from the holidays with fresh New Year’s resolutions whether to find love, make more connections, or to put themselves out there in the New Year,” said Blaine Anderson, a dating coach for men in Austin, Texas.
“Dating Sunday,” the first Sunday in January, is referred to as “the busiest day for online dating,” said Sheldon Bachan, senior brand communications manager at Tinder.
More from Personal Finance:Getting engaged? Here’s what to know3 financial tips for couples moving in together for the first timeWhy ‘tipflation’ might ruin your chances for a second date
Like many other New Year’s resolutions, getting back on dating apps often requires a financial commitment. Some 35% of Americans who have used a dating website or app have paid to do so at some point, according to a recent report by Pew Research Center.

The average paying dating app user spends about $19 a month, Morgan Stanley found last year. But some users pay much more. In 2023, Tinder released a $499 monthly subscription, and Hinge introduced a $600-a-month membership.

3 things to consider before paying for a dating app

If you’re hunting for love in the new year, here are three things to be mindful of before you pay for a dating app:
1. Ask yourself if you are ready. If you haven’t made any changes in your life, paying for an app may not help: You’re likely to get the same results that you had before, said Anderson. “Do you have a job that allows you to have more time to date? Do you have the financial means to take people on dates or subscribe to dating apps?… Are you mentally prepared to integrate your life with somebody else’s?” she said.
2. App costs add to the already high expense of dating: Make sure your budget is prepared to weather the cost of the app as well as the resulting dates. The average cost of a full dinner and a movie across major cities in the U.S. is $159, according to a 2023 analysis by MoneyGeek. A 2020 report by LendingTree shows that Americans spend nearly $700 on dates annually.

3. Paying for apps does not guarantee a match: While paying app subscriptions may seem to be an investment in your dating life, users must understand that “the most important thing for online dating is to have a standout profile,” said Anderson. Simply paying for apps won’t immediately change your prospects. Instead, edit your profile and get a second opinion from trusted peers or dating experts.
“It’s not your fault; you didn’t learn this in school,” said Anderson, “We’re not meant to think in 160 characters or a little box of text to describe ourselves.”
— CNBC reporter Annie Nova contributed reporting. More

A survey by Deutsche Bank found that calorie consumption declines when a patient takes a GLP-1 medication like Novo Nordisk’s Ozempic or Wegovy.
However, once the medication is stopped, the number of calories a patient consumes will rise again.
In some cases, a patient will eat more than they consumed prior to treatment, the survey found.

A customer shops in a Kroger grocery store on July 15, 2022 in Houston, Texas.
Brandon Bell | Getty Images

Investors have cheered a new class of weight loss drugs for their ability to help people shed unwanted pounds, but the findings of a recent poll underscore the challenges patients face if they cease treatment.
The survey by Deutsche Bank found that calorie consumption declines when a patient takes a GLP-1 medication like Novo Nordisk’s Ozempic or Wegovy. However, once the medication is stopped, the number of calories a patient consumes will rise again — and in some cases, will be even higher than what he or she was consuming before treatment began, the survey found.

The polling was conducted in December, and involved 600 U.S. consumers, Deutsche Bank said in a research note. Seventy percent of the participants were using a GLP-1 drug when questioned, while the remaining 30% had stopped taking this type of medication. The investment bank conducted the survey as part of its attempts to better understand the long-term implications of anti-obesity medications, which also include Eli Lilly’s Zepbound, on the food and beverage industry.
The survey found that among the patients still on medication, about 30% said they ate “a little less,” while 22% said they ate a “a lot less.”
“Perhaps surprisingly, 17% of respondents stated that they were consuming a lot more and 18% a little more,” the bank’s analysts wrote. “This meant that a net 18% of those who were using GLP-1 medication were eating less.”
“However, amongst those who were no longer taking GLP-1 this more than reversed with a net 30% stating that they were now eating more than they were prior to using GLP-1 medication,” the report said.
“We believe that the survey conclusions back up our view that GLP-1 is not a reason in of itself to avoid investing in Food and Beverage stocks,” the analysts wrote in the note.

A year to forget

Without a doubt, 2023 was a year worth forgetting for many food and beverage stocks, with many underperforming the market. For those shares that managed to eke out a gain in 2023, the upside likely came late in the year.
Many food and beverage stocks began falling in the summer, as awareness of GLP-1 medications like Wegovy spread. The move accelerated after the release of data from Novo Nordisk in August showed that the drugs could help patients not only lose weight but also improve their cardiovascular health. Investors started to worry that people would widely adopt the drugs and there would be all sorts of ripple effects, which started to be reflected in stock prices.
But in the midst of the market’s year-end rally, a fresh batch of data also showed that patients who took Zepbound and stopped regained around half the weight they had lost while they were on the treatment. That finding helped some of the affected stocks to recover.

Stock chart icon

Kraft Heinz shares over the past year.

Shares of Mondelez, the maker of Oreos and Cadbury, gained 16% over the past three months, which helped it tally an 8% gain over the past year. Kraft Heinz shares posted a 10.2% loss over the past year, but has reaped a 19% gain over the three-month period. U.S.-traded shares of Nestle are up more than 5% over the past three months, but the stock has a 2% loss over the past 12 months. Unilever shares follow a similar pattern. Shares of the Ben & Jerry’s owner are up nearly 2% over the past three months, but are down more than 3% over the past year.

Appetite comes roaring back

Deutsche Bank said the impact of anti-obesity medicines on food and beverage stocks needs to assessed “in the context of all weight loss programs and the possibility that GLP-1 cannibalises such programs, limiting the net effect on food and beverage producers.”
Dr. Shantanu Gaur, founder and CEO of Allurion Technologies, said the results of the survey are not surprising. Allurion, which went public via SPAC in August, is developing a gastric balloon and behavior modification programs to treat obesity.
“This is something that you would expect,” he said explaining that “appetite can return with a vengeance” once patients stop GLP-1 therapy. Bodies tend to seek out a “set point,” or a preferred weight mass where they will return to without intervention and behavior modification.
Semaglutide, the active ingredient in Ozempic and Wegovy, acts like a natural hormone, glucagon-like peptide-1, or GLP-1, in the body to control insulin levels in the blood and suppress appetite. Zepbound (tirzepatide) mimics GLP-1 as well as a second incretin, glucose-dependent insulinotropic polypeptide, or GIP. Once these hormones are no longer supplemented in the body, hunger signals will return.
The American Medical Association has said that obesity is a chronic condition, and Novo Nordisk and Eli Lilly expect patients who take incretin medications will need to be on the drugs long term to control their weight. In this way, incretin drugs are like medications that are taken for conditions such as high blood pressure and cholesterol. Patients aren’t told to stop taking those drugs once their blood pressure and cholesterol levels fall to a healthy range. If they do, the readings are likely to spike again.
But even with blood pressure medication, compliance can be an issue. Dr. Gaur said about half of people on cholesterol medication will stop taking it after a year. The rate of compliance is even lower with anti-obesity medications, he said.
Meanwhile, Deutsche Bank said it expects interest in weight loss programs may be peaking as shown by internet search data, and that tends to be a good time for investors to hold food and beverage stocks. Nestle and Unilever are the firm’s top European picks, while Mondelez and Kraft rank among its favored U.S. staples names.
“The main point is that usage of GLP-1 drugs is not just a pure addition to the total number of people on weight loss programs, it is part of the entire eco-system,” the report said. “We suspect that many of the answers given with regard to consumption would be similar for those given by many people when they start a weight loss program.”
Don’t miss these stories from CNBC PRO: More

As Congress negotiates federal funding for the 2024 fiscal year, Social Security beneficiaries’ checks won’t be interrupted, expert says.
But budget negotiations may have an impact on the quality of the services the Social Security Administration can provide.

The United States Capitol building is seen in Washington D.C., United States on October 4 , 2023. 
Yasin Ozturk | Anadolu Agency | Getty Images

What may happen with Social Security in a shutdown

If the worst-case scenario happens, and lawmakers fail to finalize a deal before both of those dates, it may take some time for Americans to notice, according to Andrew Lautz, senior policy analyst at the Bipartisan Policy Center.
“Americans don’t start to really feel the day-to-day effects until a shutdown has lasted for a week or two and agencies have to start shutting down more and more programs and services,” Lautz said.
Those effects may be felt on a “rolling basis,” he said, as Americans find the programs and services they rely on become unavailable, such as a phone line that becomes inactive because government employees have been furloughed or a department that stops giving out loans or grants during the shutdown period.

The disruptions may be most acutely felt by tens of thousands of federal employees who find themselves either furloughed or working without pay.
In reaction to the threat of a partial government shutdown last year, the Social Security Office of Budget, Finance and Management outlined its plans for agency operations during a lapse.
Certain activities — such as applications for benefits or issuance of Social Security cards — would continue. Other services — such as benefit verifications or replacement Medicare cards — would be put on hold.
That framework for Social Security may still apply if the lawmakers fail to finalize an agreement before the Feb. 2 deadline, according to Richtman.

Advocates are watching Social Security funding

This weekend’s activity has prompted optimism that Washington leaders may be able to get an agreement done before those dates.
However, Social Security advocates including the National Committee to Preserve Social Security and Medicare are closely watching how much funding the agency receives through the negotiations.
President Joe Biden last year requested $1.4 billion more for Social Security in 2024, while House Republicans advocated for cuts to the agency’s operations budget.

Current negotiations point to flat funding for the Social Security Administration, according to the National Committee to Preserve Social Security and Medicare, while reports show the agency already has long waits for service and outdated technology.
Lack of adequate funding may challenge new Social Security Commissioner Martin O’Malley’s plans to improve the agency’s services, Richtman said.
Lawmakers often report hearing from constituents that they have difficulty getting through to Social Security, obtaining replacement cards or verifying their benefits, he said.
“These members of Congress or Senate complain to Social Security, but they won’t provide enough funding to actually be able to do the job,” Richtman said.
“That’s hypocrisy on the part of those members,” he said. More

The IRS will start accepting and processing 2023 tax returns for individual filers on Jan. 29.
Most taxpayers must file federal returns and pay balances by April 15 to avoid penalties and interest. 

IRS Commissioner Daniel Werfel testifies before the Senate Finance Committee on April 19, 2023.
Chip Somodevilla | Getty Images

The tax season officially kicks off Jan. 29, which marks the first day the IRS will accept and process 2023 tax returns, the IRS announced Monday.
Most taxpayers must file federal returns and pay balances by April 15 to avoid penalties and interest. But the agency urges taxpayers to begin the filing process sooner.

IRS Free File, which offers free guided tax prep through software partners, will open Jan. 12 and will hold returns until they can be filed with the IRS. Taxpayers may qualify with an adjusted gross income of $79,000 or less for 2023.
Meanwhile, the IRS Direct File pilot, which will allow free online filing through the agency, will roll out in phases with wide availability expected by mid-March for eligible taxpayers in participating states.
More from Personal Finance:It’s time to boost 401(k) plan contributions for 2024Here are 4 options for short-term savings in 202456 million Americans have been in credit card debt for at least a year
“As our transformation efforts take hold, taxpayers will continue to see marked improvement in IRS operations in the upcoming filing season,” IRS Commissioner Danny Werfel said in a statement. “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”   
The IRS expects to receive more than 128.7 million individual tax returns by the federal deadline. As of Dec. 29, the average refund for 2023 was $3,167.

Don’t miss these stories from CNBC PRO: More

For 2024, you can defer up to $23,000 into 401(k) plans, up from $22,500 in 2023, with an extra $7,500 for savers age 50 and older.
Some 15% of investors maxed out employee deferrals in 2022, according to a 2023 report from Vanguard.
However, you need to consider your short- and long-term financial goals before maxing out your 401(k), experts say.

Shapecharge | E+ | Getty Images

If you’re itching to save more for retirement, there are higher 401(k) contribution limits for 2024. But there are a few things to consider before maxing out your plan, experts say.
For 2024, you can defer up to $23,000 into 401(k) plans, up from $22,500 in 2023, with an extra $7,500 for savers age 50 and older. Some higher earners can funnel even more into their 401(k), depending on plan rules.

Some 15% of investors maxed out employee deferrals in 2022, according to a 2023 report from Vanguard. However, the average deferral rate was 7.3% for employees automatically enrolled in their plan.
More from Personal Finance:Buy now, pay later is a troublesome type of ‘phantom debt,’ experts sayHere are 4 of the best options for short-term savings in 2024, experts sayIRS tax bracket changes may mean your paycheck is slightly bigger in 2024
Pretax 401(k) contributions provide an upfront tax break by reducing adjusted gross income, but investors owe levies on future withdrawals. By comparison, after-tax Roth 401(k) contributions allow assets to grow tax-free, without reducing current-year taxes.
“If we’re fully comfortable with waiting until past age 59½ to touch that money, those tax advantages can really go a long way,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. He is also a member of CNBC’s Financial Advisor Council.

If we’re fully comfortable with waiting until past age 59½ to touch that money, those tax advantages can really go a long way.

Douglas Boneparth
President of Bone Fide Wealth

However, “affordability is obviously a big part of it,” and other financial goals may come before maximizing your retirement contributions in a given year, he said.

Don’t miss your 401(k) match

If you have limited cash flow, experts suggest contributing at least up to the employer match, which is a company deposit based on your contributions. “But then goal priorities kick in,” Boneparth said.
If you’re saving to buy a home or pay for a wedding, “you might see more money allocated to a money market fund or savings account than your 401(k)” for a time, he said.
Your emergency savings are also important, said Boston-based CFP Catherine Valega, founder of Green Bee Advisory, who recommends starting with at least three months of expenses.
Ultimately, you need to rank your short- and long-term goals, including how much those goals cost and when you want to achieve them, Boneparth added.

Consider ‘trial and error’ for contributions

“Our goal is to get to that 401(k) max for everybody,” Valega said. “But there are plenty of clients who can’t.”
When deciding the right percentage, “sometimes, it’s a question of trial and error,” and you can try a higher contribution for a couple of paychecks to see how it feels for your cash flow, she said.
“If it feels like you’ve got a little more wiggle room, then you can increase it by one percent,” Valega said.

Don’t miss these stories from CNBC PRO: More