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Year-end Planning

The IRS delayed a tax reporting change for third-party payment apps such as Venmo, PayPal and Ticketmaster.
However, you may still owe taxes if you made a profit on resold Taylor Swift tickets, experts say.

Taylor Swift singing at The Eras Tour.
Buda Mendes/tas23 | Getty Images Entertainment | Getty Images

Last week, the IRS delayed a tax reporting change for third-party payment apps such as Venmo, PayPal and Ticketmaster. However, you may still owe taxes if you made a profit on resold Taylor Swift tickets, experts say.
For 2023, you won’t receive Form 1099-K without more than 200 transactions exceeding $20,000. The IRS will phase in a lower threshold for 2024 with a $5,000 limit, applying to tax returns filed in 2025.

While third-party payment apps won’t report as many business transactions to the agency this year, you are still required to pay taxes on profits, including resold concert tickets.

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“The big thing this past year was selling Taylor Swift concert tickets,” said certified financial planner Tommy Lucas, an enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. “If you only pay $1,000 and you resold them for $3,000, now you have a $2,000 gain. You need to report the taxes.”
As a renowned song by Swift goes, “Are you ready for it?”

‘If you want to follow the law … report it’

Ticket profits have always been taxable, and this may affect those who resold Taylor Swift concert tickets this summer.
Swift fans paid an average $2,183 for a resold ticket to a concert on the superstar’s The Eras Tour, according to resale research site TicketIQ.

Meanwhile, the average ticket price for Swift’s tour was $253.56, according to Pollstar. Depending on the section and additional fees, face value tickets typically ranged between $49 and $499.
“If you make income of any kind, whether you do a side job for someone else or make a gain selling tickets or collectibles, it is taxable income even if it is not reported to the IRS,” Lucas said.

Even if you don’t exceed the $20,000 threshold for sold items or services, you still have a duty to report the transaction.
“If you want to follow the law, you still got to report it, even if a third party is not,” Lucas said.

Prepare now to report ticket profits at tax time

Here are ways taxpayers can prepare:
1. Make sure you have accurate records: Regardless of the scenario, you really need to keep good and accurate records, said James Guarino, managing director at Baker Newman Noyes in Boston. “If you don’t have good records, it’s really hard to accurately report,” said Guarino. Keep copies of your purchase receipts for goods you later resell, such as those Taylor Swift tickets, since tax liability will be based on your sales proceeds minus the original purchase price.
2. Keep track of sales transactions: As people engage in numerous Venmo and PayPal transactions, it will be paramount to keep track of them, experts say. If you sold goods or services this year, do not close the accounts used for those transactions, added certified public accountant Albert Campo, managing and founding partner of New Jersey-based AJC Accounting Services. It will make record keeping much more difficult, he said.
3. Plan for your taxes: If you’re expecting to owe taxes, setting aside money or making quarterly estimated tax payments is “absolutely a smart thing to do,” since you may not be withholding enough through your paycheck at work, Lucas previously told CNBC.
4. Consider a separate bank account: It may be helpful to consider opening a second bank account for “extraneous activity” or business transactions, said Guarino.

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Around 813,000 student loan borrowers will receive an email from President Joe Biden notifying them that their debt has been forgiven because of his actions, the White House said.
Though Biden’s plans to cancel up to $400 billion in student debt for tens of millions of Americans were foiled at the Supreme Court, he has managed to erase $127 billion in student debt so far for more than 3.5 million borrowers — more than any other president in history.

U.S. President Joe Biden speaks about administration plans to forgive federal student loan debt during remarks in the Roosevelt Room at the White House in Washington, U.S., August 24, 2022.
Leah Millis | Reuters

Around 813,000 student loan borrowers will soon receive an email from President Joe Biden notifying them that their debt has been forgiven because of his actions, the White House said Tuesday.
Many borrowers who will get the email likely already knew about the loan cancellation and may have already received that relief. The message directly from the president, less than a year ahead of the 2024 presidential election, makes it clear who was responsible for the relief.

“Congratulations — your student loan has been forgiven because of actions my administration took to make sure you receive the relief you earned and deserve,” the email reads.
Biden has erased $127 billion in student debt so far for more than 3.5 million borrowers — more than any other president in history.

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The Biden administration used existing programs, including Public Service Loan Forgiveness and income-driven repayment plans, to deliver the debt cancellation. Previously, the relief under these programs was hard to access.
“The president is committed to fighting for hardworking American families, making sure we get them a little more breathing room, and allowing them to support themselves and their families,” a White House official said on Tuesday.
Biden’s plan to cancel up to $400 billion in student debt for tens of millions of Americans was rejected at the Supreme Court in June.

Republican nominees for president oppose student loan forgiveness.
Former New Jersey Gov. Chris Christie has said that Biden didn’t have the authority to cancel student debt without prior authorization from Congress.
“He knows he’s done something that is illegal and over the top,” Christie said on ABC’s “This Week” in 2022, shortly after Biden announced his broad forgiveness plan.

Former President Donald Trump sided with the Supreme Court.
“Today, the Supreme Court also ruled that President Biden cannot wipe out hundreds of billions, perhaps trillions of dollars, in student loan debt, which would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence; very unfair,” Trump said at a campaign event in June.
Florida Gov. Ron DeSantis has said that it’s wrong to saddle taxpayers with the expense of student loan forgiveness.
“Why should a truck driver have to pay for somebody that got a degree in zombie studies?” DeSantis said at an Iowa event in early August. “It doesn’t make sense.”
Voters support forgiving at least some student loan debt by a 2-to-1 margin, according to a Politico/Morning Consult poll. Less than a third oppose the policy. More

Year-end Planning

If you’re planning to donate to charity on Giving Tuesday, it can be tricky to claim a deduction on your taxes.
Since 2018, a higher standard deduction has made it harder to claim a tax break for charitable donations.
However, there are some strategies to maximize your tax break, experts say.

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When filing your taxes, you claim the larger of the standard deduction or your total itemized deductions. The latter category can include charitable and medical deductions, state and local taxes and more.
In 2018, the Tax Cuts and Jobs Act nearly doubled the standard deduction, slashing the number of filers who itemized. For 2023, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly.
Given these constraints, here are the most tax-friendly charitable giving strategies to consider, according to financial experts.

1. Qualified charitable distributions

If you’re age 70½ or older with savings in a pre-tax individual retirement account, you should consider so-called qualified charitable distributions, or QCDs, “before anything else,” said Juan Ros, a certified financial planner at Forum Financial Management in Thousand Oaks, California.

QCDs are direct transfers from an IRA to an eligible nonprofit organization, with a $100,000 limit per individual for 2023. (Starting in 2024, the limit adjusts for inflation.) 
While there’s no charitable deduction, the IRA distribution won’t add to your adjusted gross income and QCDs reduce your IRA balance over time. QCDs can also satisfy required minimum distributions if you’re age 73 or older.  

QCDs are a great way to give to charity, especially for those with large IRAs and in a higher marginal tax bracket.

Michael Maye
Owner of MJM Financial Advisors

“QCDs are a great way to give to charity, especially for those with large IRAs and in a higher marginal tax bracket,” said CFP Michael Maye, owner of MJM Financial Advisors in Gillette, New Jersey. He is also a certified public accountant.

2. Donor-advised funds

Another option, donor-advised funds, are a “great vehicle” for gifts when paired with profitable assets, according to Maye.
While donor-advised funds offer an upfront deduction, the fund acts like a charitable checking account, providing flexibility for future gifts.  
Some investors prefer the simplicity of making a single donation to a donor-advised fund, rather than tracking gifts to multiple charities throughout the year, experts say.

3. Give profitable assets

Whether you’re transferring money to a donor-advised fund or giving directly to a charity, experts recommend sending profitable assets, rather than cash.
Here’s why: If you have profitable assets in a brokerage account, you can give those investments to bypass the capital gains taxes you’d otherwise owe from selling.
If you owned the assets for more than a year, you can deduct the full market value of donated assets, limited to 30% of your adjusted gross income, Maye explained. But the excess donation “can be carried over to the next five tax years,” he said.

4. Bunching donations

Another way to exceed the higher standard deduction is by bunching donations, which is a popular strategy for donor-advised funds, experts say. Rather than making a gift every year, bunching combines those donations into a single year.
Lumping multiple years of gifts into a donor-advised fund can offer donors “more bang for their buck,” said CFP Mitchell Kraus, owner of Santa Monica, California-based Capital Intelligence Associates. More

The average 401(k) balance fell 4% in the third quarter while withdrawals and loans rose, according to a recent report by Fidelity.
Most financial experts advise against raiding a 401(k) since you’ll be forfeiting the power of compound interest.
In times of turmoil, here’s what you need to know before tapping your retirement savings.

After falling sharply last year, retirement account balances bounced back in the beginning of 2023 — but slumped again in the most recent quarter.
The average 401(k) balance fell 4% to $107,700 in the third quarter, due, in part, to volatile market conditions, according to a recent report by Fidelity, the nation’s largest provider of 401(k) plans. The financial services firm handles more than 35 million retirement accounts in total.

The average individual retirement account balance was also down nearly 4%, to $109,600 from $113,800, in the second quarter of 2023.
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Despite market turbulence, the total savings rate for the third quarter, including employee and employer 401(k) contributions, held steady at 13.9%, in line with last year. That’s just shy of Fidelity’s recommended savings rate of 15%.
There were, however, other signs of trouble.

‘Last resort’ 401(k) hardship withdrawals rise

In extreme circumstances, savers can take a hardship distribution without incurring a 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.

The share of participants who tap such hardship withdrawals is on the rise, according to reports by Fidelity Investments and Bank of America — largely to avoid a foreclosure or eviction or to cover medical expenses, Fidelity found.
Bank of America’s recent participant pulse report showed that the number of 401(k) plan participants taking hardship withdrawals was up 13% from the second quarter and 27% compared with the first quarter of the year — with the average withdrawal amount just over $5,000.

Considering record high credit card debt, a declining personal savings rate and more than half of adults living paycheck to paycheck, the uptick is an indication that some households are struggling in the face of inflation and the increased cost of living, said Mike Shamrell, vice president of thought leadership for Fidelity’s workplace investing.  
Still, hardship withdrawals should be “your choice of last resort,” cautioned Joe Buhrmann, senior financial planning consultant at eMoney Advisor.
Most financial experts advise against raiding a 401(k) since you’ll be forfeiting the power of compound interest.
“‘Leakage’ from plan accounts through 401(k) loans and withdrawals can have outsized effects on retirement readiness,” said Sharon Carson, retirement strategist at J.P. Morgan Asset Management.

Explore your options before tapping your 401(k)

From tapping your home equity to taking out a personal loan, households should consider what resources are available in times of financial stress before borrowing against a retirement account.
However, in some cases, a 401(k) loan may be preferable to other alternatives, said Fidelity’s Shamrell. Federal law allows workers to borrow up to 50% of their account balance, or $50,000, whichever is less, without penalty as long as the loan 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.
“There are times where the loans may be a more valid direction, as opposed to putting that on your credit card,” Shamrell said.
And 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, rather than tap a loan that then gets deducted from your take-home pay, he added.  
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If you’re lucky enough to have a financial advisor as a friend or family member, you probably have asked them a financial question or two.
These are the top questions advisors say they were asked this Thanksgiving holiday, and how they answered them.

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When it comes to gathering with friends and family over the holidays, etiquette experts usually say that money and politics should be off the table.
That is, of course, unless you’re sitting with a professional financial advisor.

Advisors shared with CNBC the top questions they were asked this Thanksgiving, and how they answered them.
Check out their responses, which may help you, too.

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Is it still a good time to buy real estate?

The new higher interest rate environment has made the cost of financing a new mortgage more expensive, which has scared off some would-be buyers and sellers. Those who are sitting on the sidelines are wondering when to find the best opportunity.
“I’m a big fan of marrying the house and dating the rate. Given that there is only 3.6 months of inventory across the country, we are in a bit of a logjam for existing home sales because people can’t justify trading up to a more expensive home given that mortgage rates are at 7.5%. But just remember if you love the home, the odds are you won’t be in the higher rate forever as rates should come down to that 5% to 6% over the next 24 months.”
—Ted Jenkin, certified financial planner and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta. Jenkin is a member of CNBC’s FA Council.

“Timing the real estate market, or any market for that matter, is very difficult. And there’s also a difference between buying a home versus buying an investment property. If we’re talking about a roof over your own head, I don’t view it as an investment. Then it comes down to what you can afford to do. Homes might be ‘overpriced,’ but if you can afford to comfortably live in one, who is to say it was a bad decision? … Affording a home is a matter of mapping out what you can afford to save for a down payment and your monthly payment.”
—Douglas Boneparth, CFP and president, Bone Fide Wealth in New York. Boneparth is a member of CNBC’s FA Council.

How will the 2024 election affect the economy?

As the 2024 presidential election approaches, some investors are getting jitters. A recent survey found nearly half of investors — 45% — believe those political contests will have a bigger impact on their portfolios than market performance.
“The election results are unknowable, so my thoughts are to do all the financial fundamentals well and control what you can (debt levels, spending, savings rate, taxes). Regarding the government debt and spending, I am counseling that economic growth will be hindered, taxes will be increased (income, payroll-related taxes and Medicare premiums.) Get spending under control and increase savings where possible.”
—Donald M. Roy, CFP and founder, New England Wealth Advisors in Bedford, New Hampshire.

Are we headed for a recession?

The question as to whether or not an economic downturn is on the horizon has dominated headlines over the past year. That may be a formal recession, defined as two consecutive quarters of falling GDP, or a soft landing.
“It is important to look at the expected severity; not all recessions are severe. This recession upcoming looks to be mild as employment is solid and corporate profits are decent. Recession will be due to Fed making money expensive, not corporate center being week.”
—Donald M. Roy

Is bitcoin a scam?

As headlines show high profile cryptocurrency executives taking the fall for regulatory violations, that has left many investors wondering whether crypto assets, namely bitcoin, are still a good investments.
“Like any new type of technology, bitcoin reminds me of the volatility you take on when you buy an early technology stock. I don’t think bitcoin is a scam, but I do think there are scammers as evidenced with Sam Bankman-Fried when it comes to cryptocurrency. Nobody should have more than a 1% to 3% allocation in crypto, in my view, and it is a seven- to 10-year hold time if you put money in this asset category.”
—Ted Jenkin

Why invest now, with so many geopolitical issues around the world?

As conflict in between Israel and Palestine, as well as Ukraine and Russia, continues, some investors are tempted to stick to the sidelines. Experts say fears about what may happen should not influence your investment strategy.
“Although geopolitical events may introduce uncertainty and market volatility, diversification remains a key strategy for mitigating these risks. We have been through these types of issues many times before. Geopolitical challenges can create investment opportunities, and historical market resilience underscores its adaptability to geopolitical changes. While short-term fluctuations may occur due to specific events, markets generally adjust over time, often experiencing upward trends, particularly for long-term investors.”
—Ashley Folkes, a certified financial planner and managing director at Inspired Wealth Solutions in Birmingham, Alabama.

Is Social Security going bankrupt?

The trust funds that Social Security relies on to pay benefits are running low on funding. In the next decade, benefits may be reduced if nothing is done to fix the situation. But that does not necessarily mean the program is going broke entirely.
“The issue related to the solvency of [Social Security] will need to be addressed as the current path isn’t sustainable. It could be a combination of raising the maximum the maximum limit on earnings for withholding of Social Security (it is $160,200 for 2023 and $168,600 for 2024), increasing the rate of Social Security taxes (currently 6.2% for employees & employers) or delaying the age. I explained to my mom (who is currently retired, and her friends and relatives are, too) that her benefits would not just disappear.”
— Marguerita Cheng, CFP and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. Cheng is also a member of the CNBC’s FA Council.

Is there still hope for student loan forgiveness?

The Supreme Court struck down President Joe Biden’s plans to forgive up to $20,000 in debt for federal student loan borrowers. Since then, the White House has worked to identify other ways to provide debtors with flexibility, though those plans may look different this time around. Now that federal student loan repayment has started, some have received inaccurate bills.
“Even if you disagree with the billing, pay as requested then seek an adjustment. It isn’t worth damaging credit and then working to get it fixed. Keep records of all phone calls and chat transcripts.”
—Rob Schultz, CFP and senior partner at NWF Advisory Group in Encino, California.

Are extended warranties worth it?

Consumers making big ticket purchases this holiday season face many choices, including whether they want to opt for an extended warranty. But is the extra protection worth it? Not always.
“In general, I’m not a big fan of extended warranties and not a big fan of trip insurance. In the law of large numbers, less than 1 out of 10 people ever ‘cash in’ or ‘use’ the extended warranty, so you would just be better off skipping it on the whole.”
—Ted Jenkin More

South Korea’s markets have been plagued by what is commonly called the “Korea discount,” where stocks are valued lower or assigned a higher risk premium than their global peers.
While this may seem like a market opportunity to investors to sink money into South Korea so as to take advantage of the undervaluation, analysts think it is not that simple.

A cameraman takes video footage of a stock index board showing South Korea’s benchmark stock index (L) after a ceremony celebrating the New Year’s opening of the South Korea stock market at the Korea Exchange in Seoul on January 2, 2023. (Photo by Jung Yeon-je / AFP) (Photo by JUNG YEON-JE/AFP via Getty Images)
Jung Yeon-je | Afp | Getty Images

South Korea’s stock market, despite being home to Asia’s fourth largest economy, is often considered undervalued by analysts, leading to what is sometimes referred to as the “Korea discount.”
Data from the Korea Exchange showed that the Kospi benchmark index as a whole has a price-to-book ratio of 0.92, and its price-to-earnings ratio stood at 18.93. A price-to-book ratio measures whether a company’s share price is undervalued, with a number below 1 indicating the stock may be below fair value.

The “Korea discount” refers to a tendency for South Korean securities to be assigned lower valuations or bear an inflated risk premium by investors, explained Vikas Pershad, portfolio manager for Asian equities.
For investors who subscribe to the idea that prices will gravitate toward fair value, an undervalued market could be a great investing opportunity.
But it may be more complex than that.
If stocks continue to be undervalued, what appears to be a value buy for investors could quickly turn into a so-called value trap — where investors buy what appears to be a relatively cheap stock, only for the stock price to continue falling or remain stagnant.
So, why is there the “Korea discount”?

There are a number of reasons for this, according to Jiang Zhang, head of equities at investment firm First Plus Asset Management. They include geopolitical risks involving North Korea, corporate governance, limited foreign investor participation and most notably, the company’s management or corporate structure, he told CNBC.

Chaebol challenge

In South Korea, most market heavyweights are corporations called “chaebols,” large family-owned global conglomerates that are usually controlled by the founder’s family. These may consist of a group of companies or several groups of companies.
Notable chaebols include market heavyweights such as Samsung Electronics, LG, SK and Hyundai.

Chaebols make up a huge part of the South Korean economy. One such example is Samsung and its affiliated companies, which contributed 22.4% to South Korea’s GDP in 2022.
However, these very same companies are part of the reason behind the Korea discount phenomena.
Chaebols “often have complex corporate structures which have resulted in poorer governance, transparency, and shareholder rights,” said Jeremy Tan, CEO of Tiger Fund Management, the fund management arm of online brokerage Tiger Brokers.
Zhang pointed out that under the family-owned structure of chaebols, investors hold little sway over the company’s strategic direction.
He highlighted that family owners, by virtue of having a dominant stake in the company, may pursue businesses that are unrelated to the core business or are loss-making, which will destroy shareholder value.

Dividend dilemma

Some investors may take the position that a lack of capital gains is acceptable for their portfolio because they plan to hold stocks for dividend payouts.
However, IHS Markit highlighted in June last year that in South Korea, the ex-dividend date comes before the companies’ dividend announcement dates.
As such, shareholders of South Korea stocks face a unique set of risks and opportunities as they are expected to hold their share through the ex-dividend date without knowing how much dividend will be distributed.
The ex-dividend date refers to the date that an investor needs to own a stock in order to receive the dividend. This is unlike companies in most other advanced markets, which announce their dividend payout and ex-dividend date before the ex-dividend date passes.

Zhang also said South Korean companies historically “do not have a habit of returning money to the shareholder because they view the money to be theirs, rather than that of the shareholder.” Those that do have an average dividend payout ratio of about 15% to 20%, he added.
In comparison, Chinese and Japanese companies have a payout ratio of 30% to 40%, while those in Southeast Asia have a ratio of 40% to 50%, according to Zhang.

Sink money or stay away?

With such challenges, should investors be putting their money into South Korea stocks — or should they stay away?
Most analysts say South Korean equities are attractive for long-term investors, as long as the country continues its proposed reforms. South Korea’s Financial Services Commission claimed this year that it had made “notable progress” in capital market reforms.
Efforts include improving foreign investors’ access to capital markets, improving dividend distribution practices and including English language disclosures.
Hebe Chen, market analyst at IG International is of the view that the South Korean market “unquestionably merits more attention from global investors.”
If the proposed reform increases accessibility to global investors and resolves corporate issues, it will draw more attention to South Korean equities, Chen said, adding it will “hopefully consign the ‘Korea discount’ to history.”
However, she advocates that before any meaningful changes take effect, investors should exercise more patience for the time being.
South Korea’s inclusion to the MSCI World Index could be another factor. The country is currently part of of the MSCI Emerging Markets index, but has expressed interest in being recognized as a developed market, which could lead to being included in the MSCI World Index.
Efforts by Korean authorities to promote investment are good signals, said Ryota Abe, economist from Sumitomo Mitsui Banking Corporation’s global markets and treasury department.
“If authorities continue to improve the investment environment further, the chances for the South Korean stock index to be included in the [MSCI World Index] will grow,” he said.
However, improvements will take a long time, he pointed out, adding that should it materialize, more inflows will be expected, which will be “optimal” for the South Korean market.

Where to invest

Nonetheless, not all sectors are equal.
While South Korean companies are prominent in sectors like semiconductors, automotive and finance, there are also other bright spots.
There are promising long term opportunities in sectors such as defense, battery supply chain and infrastructure, M&G Investments’ Pershad said.
He pointed out that “the strengthening partnerships between South Korea and West Asian countries, particularly Saudi Arabia, are creating additional investment opportunities.”
Zhang, from First Plus, said investors should look for small- and mid-cap companies that are subject to less family influence, are better positioned for change in corporate governance, and open to a more friendly shareholder return policy.
On the other hand, large cap companies that are have extensive family influence may not be willing to change the existing status quo.
Zhang suggested looking at small- and mid-cap companies that have “global exposure, a proven business model, consistent revenue and earnings growth.”
When the global economy shifts into recovery mode, he said, these companies can easily capitalize on the broader opportunities. Such companies also have a higher likelihood of delivering generous payouts, he added.
“Investors will be ultimately rewarded with both attractive dividend returns and stock price appreciation.” More

When federal student loan borrowers refinance their debt, they often forfeit a number of consumer protections, experts warn.
Here’s what to know.

Recep-bg | E+ | Getty Images

Now that federal student loan payments have restarted after a three-year reprieve, some borrowers may be wondering if it’s a good time to refinance.
And companies haven’t been shy in pushing the option, said higher education expert Mark Kantrowitz.

“Some lenders seem desperate for origination and refinancing volume, so they are spending a lot on advertising,” Kantrowitz said.
Refinancing is when one or more loans are rolled into another, and borrowers often refinance to obtain a lower interest rate or new repayment terms. But converting federal student loans into private debt can lead to the loss of a number of consumer protections, experts warn.
Refinancing can be a great option for those in a solid financial situation, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for the lenders.
“Borrowers should definitely shop around for the best rate, and educate themselves on benefits they could gain or lose,” Buchanan said.
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Outstanding student loan debt in the U.S. has tripled over the last decade, and it burdens Americans more than auto and credit card debt. Average debt at graduation is currently around $30,000, up from $10,000 in the early 1990s.
Here’s what to know before you refinance.

Federal loans have more safeguards

The most important thing to keep in mind when considering refinancing your federal student loans is that, should you move forward, your debt will be transferred to a private company, and become a private student loan. As a result, you’ll no longer be eligible for the government’s relief options.
“Private student loans don’t have the same benefits as federal student loans,” Kantrowitz said.
For example, the U.S. Department of Education allows borrowers to put their loans into forbearance for up to three years. You can also pause your payments during periods of economic hardship and unemployment.
Private student loans, on the other hand, typically extend just a one-year forbearance, Kantrowitz said.
Borrowers can also repay their federal student loans through an income-driven repayment plan, which caps the monthly bill at a share of the borrower’s discretionary income, with some borrowers ending up paying nothing. Such affordable plans are rare among private lenders.

Refinancing eliminates forgiveness eligibility

Getting a lower interest rate is harder today

Given the loss of consumer protections, borrowers should refinance only if they can save money by getting a lower interest rate, Kantrowitz said.
“But that is harder these days,” he said, pointing out that the Federal Reserve has repeatedly raised interest rates over the last few years.
While federal student loan rates reset annually for new loans, the rate is fixed once the loan is disbursed. Private student loans, meanwhile, have either fixed or variable rates that depend on current lending conditions.
As a result of the rising-rate environment, Kantrowitz said, “opportunities for savings are more limited, even for borrowers with excellent credit.”
Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit, agreed.
“I am seeing a lot of high rates compared to what I’ve seen in recent history,” Mayotte said.

Borrowers most likely to save money through refinancing are those holding federal student loans from several years ago, when interest rates were higher, Kantrowitz said. Rates on some federal student loans were around 7% or higher between 2006 and 2008. Undergraduate federal student loans disbursed last summer had an interest rate of 5.5%.
Federal student loan borrowers don’t need to refinance to get a slightly better rate, Kantrowitz pointed out: Most student loan servicers will offer a 0.25% interest rate deduction when you sign up for automatic payments.
It can’t hurt for people who already have private student loans to see if they can pick up a better rate, Mayotte said. If your current interest rate on your private student loan is, say, 12%, you may be able to refinance for a rate around 7%, she said, if you have a good credit profile.

Revising loan terms can add to your overall costs

Borrowers shouldn’t get excited too quickly about a refinancing offer with a lower monthly payment, Kantrowitz said.
In some cases, a lender may extend your repayment timeline to get you a lower monthly payment but increase the total amount you’ll need to pay.
Kantrowitz provided an example: A borrower with a $30,000 loan and a 5% interest rate will have a monthly bill of around $320 on a 10-year repayment term, and with interest they’ll pay a total of roughly $38,000. Refinancing their loan to a 20-year-term will result in their monthly payment dropping to around $198, but in the end they’ll have shelled out closer to $47,000.
In addition to that math, those considering a refinance should carefully read all the terms and conditions, Mayotte said.
“Is the interest rate variable, and if so how high can it go?” she said. “Are there options for temporary reduced or paused payments?”
Borrowers should also understand any fees associated with the origination of the refinance, she added. More

If happiness has a price tag, the average person believes the magic number is $1.2 million, according to a recent financial happiness report.
As it stands, most people don’t think they have enough money saved to achieve their long-term goals, such as retirement.

Young adults put the price of happiness even higher

When broken down by generation, millennials put the number much higher — more than $500,000 — according to the report. Millennials and Gen Z were also more likely to say money can buy happiness.
A prolonged period of high inflation has made it harder for those just starting out. More than half, or 53%, of Gen Zers said the rising cost of living has been a barrier to their financial success, according to a separate survey from Bank of America.
In addition to soaring food and housing costs, millennials and Gen Z face other financial challenges their parents did not as young adults. Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, but today’s young adults are also carrying larger student loan balances.

Retirement is the biggest obstacle

Regardless of age, retirement is often the biggest obstacle when it comes to financial security.
Increasingly, even doctors, lawyers and other highly paid professionals — often already considered “rich” — who benefit from stable jobs, homeownership and even a well-padded retirement savings account, said they don’t feel financially comfortable either.
While most people in the Empower report said they would need $1.2 million in the bank, other studies have found that high-net-worth individuals put the bar even higher. More than half said they would need more than $3 million, and one-third said it would take more than $5 million, according to a report by Edelman Financial Engines.
Often, “people think they need a lot more than they do — that’s because they haven’t zeroed into their right number,” said Jason Friday, head of financial planning at Citizens Wealth Management. “It’s always going to be a moving target.”

Although everyone has different needs and expectations, some age-based guidelines can help, according to Mike Shamrell, vice president of thought leadership for Fidelity’s Workplace Investing.
“Target date funds are one way to get a sense of your age-appropriate risk tolerance,” he said. “You want to make sure you are not losing out on possible growth opportunities or, alternatively, exposing yourself to unnecessary risk.”
Experts recommend working with a financial advisor to get a handle on where you stand relative to your long-term goals.
However, there are also plenty of online tools that can get you started, Friday said. “That gives people a simple entry into the planning process.”
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