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Year-end Planning

In 2024, employers will be required to give more long-term part-time employees access to contribute to their company 401(k) or 403(b) plan.
Two thirds, 66%, of private-sector workers in the U.S. have access to an employer defined contribution plan, according to the U.S. Bureau of Labor Statistics. 
A strong labor market, along with changes in federal and state law are having many businesses re-evaluating their retirement plans. 

Like many workers, saving for retirement wasn’t a priority for Mark Zimmermann. The 72 year old thought he’d always run the family dairy farm in Wisconsin, but that didn’t go as planned.
“I struggled farming, I had too many disasters and was never able to put any money away,” Zimmermann told CNBC, speaking from an office at his current employer.

He’s now working in the manufacturing industry, maintaining equipment and setting up the sizing for customized metal parts. On his feet at the machines on the factory floor is physically demanding so Zimmermann works part-time.

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His employer, Mitchell Metal Products, has fewer than 100 workers and lets its part-time employees participate in the 401(k) plan.
“I really appreciate being able to [participate in the plan],” Zimmermann said. “I don’t have a lot of savings built up right now, not compared to what I’m going to need and with inflation with the way it is.”
The Merrill, Wisconsin-based manufacturer offers part-time workers access to the company 401(k) retirement plan as a way to attract and retain workers.
“Whether someone’s working full time or part time, we view them as our most valuable assets,” said Tim Zimmerman, president of Mitchell Metal Products, noting that 84% of his employees participate in the company retirement plan. 

More part-time workers to get 401(k) access in 2024

York, South Carolina, Now hiring, part time cooks sign posted outside Wing King Restaurant.
Jeff Greenberg | Universal Images Group | Getty Images

Just 66% of private-sector workers in the U.S. have access to an employer defined contribution plan, according to the U.S. Bureau of Labor Statistics. Tax breaks under recent legislation are aimed at making it easier for companies to offer the benefit. 
The incentives are among the sweeping changes to the laws governing retirement plans under the SECURE Act of 2019 and expanded under SECURE 2.0 at the end of last year. Also included are provisions to expand part-time workers’ access to retirement accounts. 
Under the original Secure Act, beginning in 2024, employers must extend eligibility for the company retirement plan to part-time employees who work at least 500 hours per year for three consecutive years. Starting in 2025, Secure 2.0 reduces the work requirement to two years. Companies already have been required to grant eligibility to employees who work at least 1,000 hours in a year.

Changes in the law, mandates in some states and the continued strong job market have many small businesses re-evaluating their retirement benefits.
“I think the real value is that we’re having conversations with plan sponsors,” said Eric O’Donnell, director of product strategy and marketing strategy for Sentry Insurance, which offers small and micro businesses retirement plan services.
Making part-time workers eligible for retirement benefits also opens up conversations about saving and investing with newly-eligible employees.
Such conversations, he said, helps them understand retirement plan investing “is for you, and it is something that you should be thinking about, it’s not for the wealthy, it’s for the everyday American.” More

Consumers eager to purchase last-minute holiday gifts may be more susceptible to fraud.
Plus, other scams tied to AI and gift cards may be more prevalent this year.

Mark Makela | Getty Images

Holiday shopping this year is expected to reach record spending levels, according to the National Retail Federation.
But as consumers open their wallets, they may also be making themselves vulnerable to potential fraud, particularly when shopping at the last minute.

“Procrastination is, quite frankly, one of the keys to success for crooks,” said Paul Fabara, chief risk officer at Visa.
“They assume that you’re going to fall for that last-minute offer that guarantees delivery of the product within 24 hours, or even the same day, at a discounted price,” Fabara said.

The first disappointment may be not receiving what you ordered. But that may be just the first part of a “double whammy,” according to Fabara.
The second part, “Now they use your card to do a whole bunch of transactions that have nothing to do with you as consumer,” Fabara said.
If you’ve been scammed, the first step is to contact your financial institution to let them know your account has been compromised, he said. A reputable organization should be able to monitor the transactions on your account for suspicious activity and let you know the next steps to take.

AI fraud risks pose a growing threat

This season, new risks tied to artificial intelligence should have consumers on high alert, Fabara said. That technology can easily impersonate your likeness. So if you use voice passwords for your accounts, that may be compromised.
To limit that risk, consumers should use multifactor authentication, Fabara said, a process that requires extra steps in addition to a password, such as a verifying a code sent by email or text, answering a secret question or scanning your fingerprint.
Consumers should also be on alert for other ways they may be compromised.
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Visa has identified five categories of fraud to watch for this season. Those are:

Digital skimming, where credit or payment card information is stolen from online stores.
Phishing and social engineering, where artificial intelligence makes it difficult for consumers to spot fakes or uses tactics like false websites or malicious advertising.
ATM or point-of-sale skimming schemes that steal personal identification numbers or other data.
One-time-passcode bypass schemes that send false prompts to try to access consumers’ accounts.
Physical theft at stores, malls and parking lots.

Gift card payment scams up 50%

The Better Business Bureau is also calling attention to gift card payment scams, where fraudsters seek those cards as payment, which have risen by 50% in the past year.
Unsuspecting consumers are prone to getting duped when it comes to the hot toy or item of the season, noted Melanie McGovern, spokeswoman for the International Association of Better Business Bureaus.
If a social media ad pops up showing the item available for an inexpensive price when it’s sold out everywhere else, be wary, she said.
Also be sure to check that the website and business are legit. Do a general internet search on a company to see what other consumers are saying about it, McGovern said. Also be aware that companies may be able to filter reviews on their own website.
The Better Business Bureau may also list a profile of a company and any complaints it may have against it.
Consumers should also double-check return policies before they buy, to ensure they can get a refund if they’re not happy with the product, McGovern said.
Other tips Visa is emphasizing this holiday season include making sure web addresses start with “https://” to make sure you have a secure connection; avoiding public Wi-Fi for shopping; and generally staying vigilant of deals that may be too good to be true.
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With more opportunities to tip and predetermined point-of-sale options for each transaction, gratuity has become less about rewarding good service.
Most consumers are dissatisfied with the current state of tipping.
“A lot of it has to do with being asked to give tips before service rather than after,” says tipping expert Michael Lynn.

Instacart operates similarly; shoppers see a list of batches that are available to them in their area, as well as the expected customer tip, and they may select the one they want to shop, according to the company.
Uber drivers may not see the expected tip in advance, but at one point they could see a rider’s tip history, or whether they were a “top tipper,” which may have factored into who drivers chose to pick up.
“It was a wonderful tool for a driver,” said Sergio Avedian, a driver and senior contributor at The Rideshare Guy, a blog aimed at helping rideshare drivers earn more money.
Uber phased out the top tipper rider designation earlier this year. The company did not immediately respond to a request for comment.
“Drivers depend more and more on tips these days,” Avedian said. Still, his tips average only about 12% to 13% of the fare, he estimated.

‘Tip fatigue’ is real

In most cases, consumers face more opportunities to tip for a wider range of services than ever before, a trend also referred to as “tip creep.” But recent surveys show shoppers are experiencing “tip fatigue” and starting to tip less — while resenting tipping prompts even more.
Two-thirds of Americans have a negative view of tipping, according to a report by Bankrate, especially when it comes to the predetermined point-of-sale options. 
“Consumers are dissatisfied with the current state of tipping, and a lot of it has to do with being asked to give tips before service rather than after,” Lynn said.
However, tipping in advance is not entirely new, he added. “People have long given bartenders generous tips as a bribe for future services, like getting a more generous pour.”
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Year-end Planning

It’s critical to run tax projections before enrolling in Affordable Care Act health insurance subsidies, experts say.
Popular moves like Roth individual retirement account conversions or selling assets to harvest capital gains can trigger a “phantom tax” for Marketplace enrollees.

d3sign | Moment | Getty Images

As millions of Americans compare health plans on the Affordable Care Act insurance marketplaces, experts say it’s critical to run projections and rethink popular tax moves before enrolling in subsidies.
Marketplace open enrollment typically runs from Nov. 1 through Jan. 15, but will extend to Jan. 16 because of a federal holiday in 2024.

It can be tough to gauge eligibility for subsidies and some popular financial strategies can create a “phantom tax” for marketplace enrollees, warned Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

More from Year-End Planning

Here’s a look at more coverage on what to do finance-wise as the end of the year approaches:

Marketplace enrollment has soared over the past four years, partially due to the expanded subsidies that were first enacted through the American Rescue Plan.
Some 91% of enrollees are receiving premium tax credits, which reduce or eliminate the cost of coverage for 2023, according to the Center of Budget and Policy Priorities. The average enrollee is paying premiums of $124 per month after the subsidies, which were boosted through 2025 via the Inflation Reduction Act.

How to know if you’re eligible for subsidies

When applying for marketplace insurance, you have to estimate your 2024 income to weigh eligibility for subsidies, which can be tricky.
Part of the calculation uses so-called “modified adjusted gross income,” or MAGI, which Lucas described as “the worst” because it includes more types of income compared to other versions of the formula.

You start with adjusted gross income, which is line 11 on the front page of your tax return and add back excluded foreign income, nontaxable Social Security benefits and tax-exempt interest, such as earnings from municipal bonds.  

If your actual income exceeds your estimates, you might be required to repay some or all of the subsidy.

Sean Lovison
Founder of Purpose Built Financial Services

“Accurate income forecasting is key when applying for ACA subsidies,” said Sean Lovison, a CFP with Philadelphia-based Purpose Built Financial Services. He is also a certified public accountant. “If your actual income exceeds your estimates, you might be required to repay some or all of the subsidy.”
The subsidy eligibility calculation also considers your location, family size and whether you spouse has available coverage.

‘You’re getting taxed in the background’

When weighing moves like Roth individual retirement account conversions or selling assets to harvest capital gains, it’s important to understand how these strategies may affect your eligibility for marketplace subsidies.  
“What you don’t know is you’re getting taxed in the background,” Lucas said. When clients took subsidies and had higher-than-expected income, he’s seen “horrible numbers” and an unexpected tax bill along with underpayment penalties. More

More people with federal student loans have been able to walk away from their debt in bankruptcy court due to a Biden administration policy change announced last November.
In the first 10 months of the new policy, student loan borrowers filed more than 630 bankruptcy cases, a “significant increase” from recent years, the government said.

President Joe Biden delivers remarks about the student loan forgiveness program on Oct. 17, 2022.
Leah Millis | Reuters

More people with federal student loans have been able to walk away from their debt in bankruptcy court due to a Biden administration policy change announced last November.
In the fall of 2022, the U.S. Department of Education and the U.S. Department of Justice released updated bankruptcy guidelines to make it easier for struggling borrowers to get their student loans erased in court. Previously, it was difficult, if not impossible, for people to part with their education debt in a normal bankruptcy proceeding.

“I am thrilled that our one-year review indicates that our efforts have made a real difference in borrowers’ lives,” said Associate Attorney General Vanita Gupta, in a statement on Thursday.
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In the first 10 months of the new policy, student loan borrowers filed more than 630 bankruptcy cases, a “significant increase” from recent years, the departments said.
“The vast majority of borrowers seeking discharge have received full or partial discharges,” they said.
Outstanding student debt in the U.S. exceeds $1.7 trillion, and around 7% of student loan borrowers have a balance of more than $100,000. Even before the Covid-19 pandemic, some 10 million borrowers were in delinquency or default.

Student debt had a high bar for bankruptcy discharge

Student loans were long treated differently than other types of debt in bankruptcy courts, garnering criticism from legal experts and consumer advocates.
Back in 2018, Federal Reserve chairman Jerome Powell said he was “at a loss to explain” why student loans couldn’t be discharged in bankruptcy. Powell also warned that the rising debt could slow down economic growth over time.
The difficulty of discharging student loans in bankruptcy dates back to the 1970s, when lawmakers added a stipulation that student loan borrowers had to wait at least five years after they began repayment to file for bankruptcy. That move came in response to concerns raised by policy makers and pundits that students would rack up a bunch of loans and then try to get rid of them after graduation.

Those fears were largely overblown, said higher education expert Mark Kantrowitz.
“Only borrowers who are facing extreme financial hardship seek to have their debt erased,” Kantrowitz said. “A bankruptcy discharge ruins your credit for seven years, preventing you from getting credit cards, auto loans and mortgages.”
Still, in 1990, the waiting period was upped to seven years. And the rules changed again almost a decade later, requiring that people with federal or private student loans prove that their debt poses an “undue hardship” to discharge it. Congress, however, never spelled out what that term means, and lawyers and advocates complained the uncertainty led to unfairness in the courts.
“The new policy represents a softening of the harsh stance on discharge of federal student loans,” Kantrowitz said. He added that the courts were now moving in the direction “of treating student loans like other debt.” More

This year, a 16-pound frozen whole turkey averages $27.35, a 5.6% decrease from 2022, according to the American Farm Bureau Federation.
Yet, Americans are still bracing for high prices across the supermarket aisles.
“Inflation is still clearly impacting food prices,” said Veronica Nigh, senior economist of AFBF, in a press meeting.

Tetra Images | Tetra Images | Getty Images

Families preparing for Thanksgiving will find that turkeys are cheaper this year. The U.S. bird population recovered from last year’s avian flu, boosting supply and helping push down prices.
This year, a 16-pound frozen whole turkey costs $27.35 on average, a 5.6% decrease from 2022, according to the American Farm Bureau Federation’s Thanksgiving Dinner survey, which polled respondents from all 50 states and Puerto Rico in early November. The cost of turkey represents 45% of the classic Thanksgiving basket of food prices the bureau tracks.

Yet Americans are bracing for high price tags across the supermarket aisles.
“Inflation is still clearly impacting food prices,” Veronica Nigh, senior economist of AFBF, said in a press call.
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About 60% of people celebrating Thanksgiving said inflation is affecting their budgets, a recent LendingTree survey found. To lower costs, 39% plans to shop around and use coupons.
“People are paying more at the grocery store and if they want to save money and spend less, they have to do more work in terms of looking for deals and being flexible about what they’re buying,” said Kimberly Palmer, personal finance expert at NerdWallet.

Ham, sweet potatoes are more expensive

While food inflation has slowed, this year’s celebration won’t be less expensive, because costs are still rising. There’s also a record spread between the wholesale prices supermarkets pay and the retail prices consumers pay.
The difference is impacting some popular dishes. For example, retail prices for ham — which some families serve instead of, or in addition to, turkey at Thanksgiving — are near an all-time high, with a price tag of $4.56 per pound in September, up 5.2% from last year, according to a recent Wells Fargo report. 

Sweet potatoes, a Thanksgiving side-dish staple, are also up 4% from a year ago, and russet potato retail prices are at all-time highs, costing $1.17 per pound in September, 14% up from a year ago, Wells Fargo found.
This is not a situation where shoppers should take a relaxed approach, said Mark Hamrick, senior economic analyst for Bankrate. Shoppers must compare prices and promotions across stores, as “there are good deals to be found,” he added.

Fresh foods are cheaper than canned products

High energy and raw material costs are the price-increase culprits for processed foods like canned green beans, which are up almost 9% from last year, Wells Fargo found.
Farmers are experiencing high fuel, seed, fertilizer and transportation costs, according to AFBF.

People are paying more at the grocery store.

Kimberly Palmer
personal finance expert at NerdWallet

Processed foods are also more sensitive to factors involving packaging costs and the supply chain, said AFBF economist Nigh. Climate change also has the potential to create issues in the supply change, said Hamrick.
Consumers can expect to pay around 20% less for fresh cranberries compared to a year ago while canned cranberry sauce is up 7% from last year, Wells Fargo found. Prices for canned pumpkin also increased and are about 30% higher from last year. 
While weather and disease last year affected lettuce crops and inflated prices in November 2022, Americans looking to include leafy greens in their Thanksgiving menus can expect prices 10% lower from a year ago. 

Buy your Thanksgiving bird sooner

Maren Caruso | Stone | Getty Images

While you may score some turkey deals the closer you get to the holiday, the major caveat to waiting last minute — in addition to less defrosting time — is a higher chance of not finding the exact size bird you’re looking for, said economist Nigh.
Given demand for this key Thanksgiving item, buying your turkey “sooner is probably better than later,” said Hamrick.
To maximize savings at the grocery store, plan out exactly what you need to buy and make sure you have a complete shopping list before you show up to the store, said Palmer.
“A lot of people waste money by buying things that they end up wasting,” she said.
Use search products, such as shopping apps, to help determine which stores have lower prices for items on your list. It “might actually be cheaper to go to a grocery store that you’re not used to going to,” Palmer said. 
Consider opting into supermarket loyalty programs. You can pull in more savings than expected by giving your phone number and email, said Palmer.

As 41% of potential hosts plan on using a credit card to pay for Thanksgiving expenses, per LendingTree, leverage credit cards that offer bigger rewards on groceries.
“Certainly credit card rewards can help extend your holiday budget but if you use them in tandem with other things like grocery store memberships, then it can help even more,” said Matt Schulz, chief credit analyst at LendingTree.
However, make sure you pay off the balance by the end of the month, otherwise “the amount you’re paying on interest wipes out any benefit of those rewards,” added Palmer.
Another way to save: Ask guests to pitch in. As potential hosts face financial strain, 61% of guests will and contribute a dish, whether that means bringing a homemade side dish (46%), a dessert (30%) or alcoholic beverages (19%), LendingTree found.
“Everybody knows that life is expensive right now,” said LendingTree chief analyst Matt Schulz. “Chances are they’ll be willing to help out because they know they would want help if the shoe was on the other foot.” More

The consumer price index was flat in October, signaling that the prolonged period of high inflation may finally be coming to an end, according to a report by UBS global wealth management.
However, “the slower pace of inflation is little comfort to households still dealing with the cumulative effect of rising prices,” said Bankrate’s Greg McBride.

The prolonged period of high inflation may finally be coming to an end, according to an analysis of recent data by UBS global wealth management.
In October, the consumer price index, a closely followed inflation gauge, increased 3.2% from 12 months earlier, down from 3.7% in September, the U.S. Bureau of Labor Statistics said Tuesday.

The report marked a significant improvement on the pandemic-era peak of 9.1% in June 2022. 
“By next spring, inflation will have slowed to a comfortable level for both the Fed and investors,” said Solita Marcelli, chief investment officer of the Americas for UBS Wealth Management.
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“The slower pace of inflation is little comfort to households still dealing with the cumulative effect of rising prices,” said Greg McBride, Bankrate’s chief financial analyst.
“The strain on household budgets is real.”

47% of adults say monthly expenses exceed income

Consumers have struggled to keep up with high prices and higher interest rates across the board.
Nearly half, or 47%, of adults said their monthly expenses exceed their monthly income, according to a recent report by First National Bank of Omaha, and 62% of adults said they are living paycheck to paycheck, studies also show.
For now, though, cooling inflation could keep the Federal Reserve on the sidelines.

Although Fed Chair Jerome Powell recently said “inflation is still too high,” a move in December “seems highly unlikely,” McBride said. “But stubbornly high core inflation will have the Fed keeping their options open into 2024.”
Altogether, the central bank has raised rates 11 times in a year and a half, pushing its key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 
However, the Fed is unlikely to be able to claim victory just yet, Marcelli said.
For consumers, that means there will be no relief from sky-high borrowing costs.
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Deflation is the opposite of inflation. It’s when prices decline for certain consumer goods and services.
Pandemic-era supply chain problems have largely been unwound. A strong U.S. dollar makes it cheaper to import many goods.

Customers at a pop-up shop at a Forever-21 store in New York’s Times Square on Nov. 10, 2023.
Bloomberg | Bloomberg | Getty Images

Inflation continued its broad moderation in October, down significantly from pandemic-era highs that hadn’t been seen in more than 40 years.
This dynamic — whereby prices for consumer goods and services are still rising but at a slower pace — is known as disinflation.

However, prices have actually begun to deflate in some areas of the U.S. economy. Deflation is the anti-inflation: It means consumers are actually seeing prices fall.

Why some prices are deflating

Largely, deflation is happening on the “goods” side of the U.S. economy, or the tangible objects that Americans buy, economists said. Goods encompass roughly a quarter of the consumer price index.
There are several reasons for this.  
For one, a strong U.S. dollar makes imported goods cheaper. Some of those savings get passed on to consumers, said Mark Zandi, chief economist of Moody’s Analytics.
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The Covid-19 pandemic snarled global supply chains, causing shortages that fueled big spikes in prices. Energy costs surged when Russia invaded Ukraine, pushing up transportation and other distribution costs.
Now, supply chain disruptions are largely in the rearview mirror, economists said. Energy costs have declined. In fact, energy prices, which include categories such as gasoline and electricity, have fallen 4.5% in the past year, according to the consumer price index.
Over the long term, consumers also generally see savings as manufacturers shift goods production to lower-cost areas, Zandi said.

Some prices, like those for airline tickets and eggs, have also declined off record-high levels. The latter, for example, soared largely due to a historically deadly bout of avian flu among egg-laying hens. Egg and airline ticket prices are down about 22% and 13% in the past year, according to CPI data.
It’s unclear the extent to which prices will broadly continue to drop.
“Only certain prices are likely to decline” on a sustained basis, Andrew Hunter, deputy chief U.S. economist at Capital Economics, previously told CNBC. “It’s quite rare for retailers to actually cut prices.”

How measurement quirks affect prices

Some of the declines are due partly to measurement quirks.
For example, the U.S. Bureau of Labor Statistics, which compiles the CPI report, controls for quality improvements over time. Electronics such as televisions, cell phones and computers continually get better. Consumers get more for roughly the same amount of money, which shows up as a price decline in the CPI data. 

Health insurance, which falls in the “services” side of the U.S. economy, is similar.
The bureau doesn’t assess health insurance inflation based on consumer premiums. It does so indirectly by measuring insurers’ profits. This is because insurance quality varies greatly from person to person. One person’s premiums may buy high-value insurance benefits, while another’s buys meager coverage.
Those differences in quality make it difficult to gauge changes in health insurance prices with accuracy.
These sorts of quality adjustments mean consumers don’t necessarily see prices drop at the store — only on paper.   More