Investing

Lawmakers face a looming deadline to pass a spending bill to prevent a federal government shutdown.
Here’s how Social Security and Medicare services may be affected if a shutdown does occur.

A general view of the U.S. Capitol, where Congress will return Tuesday to deal with a series of spending bills before funding runs out and triggers a partial U.S. government shutdown, in Washington, D.C. Sept. 25, 2023.
Jonathan Ernst | Reuters

Washington lawmakers are scrambling to pass a spending bill before an Oct. 1 deadline.
If they cannot agree, there will be a federal government shutdown.

For retirees who rely on Social Security and Medicare, the good news is those programs will mostly be unaffected because they are considered mandatory spending.
“Checks will continue to go out,” Bill Sweeney, senior vice president of government affairs at AARP, said of Social Security benefits. “The people whose job it is to get those checks out will be continuing to come to work.”
More from Personal Finance:This purchase may be a ‘grenade’ to a well-planned retirement3 money moves millionaires are more likely to makeWhat the Federal Reserve’s latest move means for your money
Seniors who rely on Medicare can also expect services to continue.
“Most seniors should be fine, both on the Medicare side and on the Social Security side,” said Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare.

However, the longer a shutdown lasts, the more likely it is to affect these program beneficiaries, according to Freese.
There have been 14 federal government shutdowns since 1980, according to the Bipartisan Policy Center. When that happens, federal departments, agencies and programs generally come to a stop, and employees who are not exempted from the shutdown are furloughed.
If a shutdown happens this time around, it may be brief, according to Bill Hoagland, senior vice president at the Bipartisan Policy Center.

“We may have some minor shutdown because time is just running out,” Hoagland said.
While a government suspension of a few days likely will not have an impact, Freese said, beneficiaries may start feeling the effects if it lasts around 30 days.
“Our assumption is that the most impacted part of Social Security is going to be the disability program,” Freese said.
While services related to the payment of benefits will be prioritized, other processes related to disability claims, such as hearings, appeals, quality controls and reviews, may be put on the back burner, she said.
“The backlogs in the disability program are likely to get bigger, depending on how long the shutdown lasts,” Freese said.

What Social Security activities may be affected

The Social Security Office of Budget, Finance and Management has outlined plans for a partial shutdown of agency operations if a lapse occurs.
It would take the Social Security Administration half a day to complete shutdown activities. While almost 61,900 employees would be expected to be on board before a plan is implemented, about 8,500 agency employees would be expected to be furloughed once a shutdown is in effect.

Activities to be discontinued in a government shutdown

Benefit verifications

Earnings record corrections and updates

Payee accountings

Prisoner activities — suspension

Requests from third parties for queries

Freedom of information Act (FOIA) requests

IT enhancement activities, public relations and trainings

Replacement Medicare cards

Overpayments processing

Source: Social Security Office of Budget, Finance and Management

Activities that will continue during a government shutdown

Applications for benefits (including appointments, limited data exchanges and record corrections, including claims-related earnings, for mandatory benefits)

Requests for appeals (reconsiderations, hearings, Appeals Council)

Post-entitlement actions (changes of address, Supplemental Security income living arrangement changes, noncitizen verification/changes, direct deposit, death inputs, processing of remittances for overpayments and administrative fees)

Non-receipts and critical payments

Payee changes

Direct contact reinstatement of benefits

Issuance of original and replacement Social Security cards

Prisoner activities — beneficiary-initiated reinstatement of benefits only

Program integrity workloads (redeterminations and continuing disability reviews) due to the extended availability of appropriations

Critical information technology support for daily processing activities

IT multifactor authentication acceleration work

Source: Social Security Office of Budget, Finance and Management More

In four decades, graduate salaries have decreased more than 10% after adjusting for inflation, a recent report found.
In addition to soaring food and housing costs, millennials and Gen Z face other financial challenges their parents did not as young adults.
Some budgeting basics can give those just starting out a leg up, experts say.

When Jacynthe Riviere graduated from college with an accounting degree, “there were plenty of jobs,” she said — and “the big firms paid well.”
The year was 1984. Riviere, now 61 and living in Puerto Rico, made roughly $18,000 in her first position as a staff auditor — the equivalent of more than $53,000 today — but her income shortly increased to $24,000, which is a 33% jump.

That year, graduates earned $23,278, on average, or $68,342 in today’s dollars, roughly $7,254 more than 2023 graduates, according to a recent report by Self Financial.
In four decades, graduate salaries have decreased more than 10% after adjusting for inflation, the report found.

Online tools can help

“Your parents might have been making more, but they didn’t have the tools that this generation has,” said John Hope Bryant, chair and CEO of Operation HOPE, a nonprofit dedicated to financial empowerment for underserved communities.

Anyone with a smartphone can now access a wealth of free or low-cost apps for budgeting, saving and investing.
“If you are in this generation, you have tools literally in the palm of your hand that can help you.”
More from Personal Finance:This purchase may be a ‘grenade’ to a well-planned retirement3 money moves millionaires are more likely to makeWhat the Federal Reserve’s latest move means for your money
“For those just starting out, their advantage here is technology,” said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.
Of course, “you have to do a little bit of due diligence first,” he added. Vet budgeting and investing apps before you hand over your information by reading reviews and checking their security measures. It also helps to consider how the app’s features help you better learn about and manage your money.

Go back to basics

Regardless of how much money you make at the outset, “in these early years of building good financial habits, it comes down to good behavior,” said Boneparth, who is also a member of CNBC’s Advisor Council.
Start with two basic fundamentals, Boneparth advised: “Know what comes in and what goes out.” Then, “build in a margin of safety with a cash reserve.”
“If you can get these two things under your belt, you are setting yourself up for success in the rest of your financial life.”
Experts say sticking to a budget and having an emergency fund are key to staying afloat during the inevitable economic ups and downs. Most financial pros recommend having at least six months’ worth of expenses set aside, or more if you are the sole breadwinner in your family or in business for yourself.
“There is inherently going to be volatility and how you are going to handle that makes the difference,” Boneparth said.
Subscribe to CNBC on YouTube. More

While car shoppers used to be able to find 3-year-old cars for $23,000 in 2019, pandemic-era manufacturing lulls triggered price increases and the average age of used cars, iSeeCars.com found.
The average transaction price for used cars is still 46% higher than the second quarter of 2018, according to Edmunds.
“It’s really not a great time for consumers to be buying cars, whether new or used,” said Paul Waatti, an industry analyst at market research firm AutoPacific.

Customers browse in a used car lot on Feb. 15, 2023 in Glendale, California.
Mario Tama | Getty Images News | Getty Images

As recently as 2019, used car shoppers could find a 3-year-old vehicle for about $23,000. That’s less likely today — in terms of both age and price.
Pandemic-era manufacturing issues have since increased the average age of used cars sold to 6.1 years, up from 4.8 years, according to car-shopping site iSeeCars.com, which analyzed more than 21 million used cars sold in 2019 and 2023.

The average price for all used cars sold increased 33% between 2019 and this year, rising to $27,133 from $20,398, according to the site.
More from Personal Finance:October ‘best time to book’ holiday airfare, economist saysHow girls, young women can be homeowners by age 302023 could be biggest year for labor activity in decades
“Plant shutdowns and limited new car production during the pandemic is still playing havoc with the used car market,” Karl Brauer, iSeeCars executive analyst, said in a statement.
To that point, 58% of sales from used vehicles came from 3-year-old or newer used cars in the second quarter of 2019. That figure dropped to 49% in the second quarter of 2023, according to Edmunds data.
The average transaction price for used vehicles in the second quarter of 2023 was $29,472, down 4.6% from last year’s record peak of $30,905, Edmunds found. While prices cooled slightly, used cars overall are still expensive; sticker prices are 46% higher than the second quarter of 2018.

“It’s really not a great time for consumers to be buying cars, whether new or used,” said Paul Waatti, an industry analyst at market research firm AutoPacific.

How the pandemic affected the used car market

Production of new cars dropped precipitously thanks to plant shutdowns in 2020, 2021 and 2022, raising demand in the used car market at large, iSeeCars found. Car rental agency woes added to the problem.
“The used car market has different supply chains, one being rental agencies,” said Ivan Drury, director of insights at Edmunds.

It’s really not a great time for consumers to be buying cars, whether new or used.

Paul Waatti
industry analyst at AutoPacific

In a typical year, rental agencies buy about 2 million new cars and then sell some existing inventory. But when people stopped traveling in 2020 amid Covid-era lockdowns, agencies thinned their fleets in the third and fourth quarter of 2020 without buying new vehicles, Drury said.
“There was no need for them to buy their normal level of vehicles,” Waatti said. “They sold off some of the older models and held onto a core amount of vehicles to get them through the pandemic.”
Rental agencies are now selling off vehicles that are about 4 to 5 years old, compared with the typical 2-year-old used vehicles that still have warranties left on them.

UAW strikes will have ‘some ramifications’

UAW members and workers at the Mopar Parts Center Line, a Stellantis Parts Distribution Center in Center Line, Michigan, picket outside the facility on Sept. 22, 2023.
Matthew Hatcher | Afp | Getty Images

Current strikes by United Auto Workers members at three major car manufacturers could also impact the used car market in the long run, as new inventory at dealerships dries up and supply chain issues cause dealers to run out of parts required for regular maintenance, Waatti said.
When people can’t buy new cars, they always look into used, especially at times like this year, when it is increasingly difficult to buy a new car, Drury said.
“People are already looking at used vehicles to save money; this just makes the problem more difficult,” he said.

Newer used cars that are coming into dealerships and need tune-ups will be waiting for those new parts for a while, Waatti said.
“There definitely will be some ramifications,” he said.

What to consider when buying a used car

Here are three considerations car shoppers should keep in mind when buying an older used car:

Carefully vet a vehicle that is 6 years old or older: Find the vehicle history report; you’ll see detailed information that will let you know the maintenance and accident history, Drury said. If the prior owner took the vehicle to a repair shop or mechanic that does not report this type of data, you want them to have a “binder of information or receipts” that shows you the vehicle was cared for beyond just the norm, he added.
Look into warranties: Typical warranties last for three years, Drury said. Even if the previous owner says the car still has warranty, double-check with the dealer. “If the vehicle is out of warranty, you can purchase an aftermarket warranty,” he added. However, they vary in cost and services by area because some aren’t valid in all states, he said. “Even if you’re looking at something that’s technically outside of the automaker back warranty, you can still go around that if you want that assurance, and purchase an aftermarket warranty,” he said.
Get preapproval from a bank or credit union to finance the purchase:  As interest rates are also very high, try to secure some form of pre-approval beforehand from your own bank or credit union instead of using dealer financing, which is often more expensive, Waatti said. “Having the pre-approval could save you hundreds [or] thousands in the long run in your loan.” More

As your wealth increases, it may be tempting to buy a second home or a boat.
But financial advisors warn those purchases can put a big dent in your retirement funds.

Courtneyk | E+ | Getty Images

Americans are at risk of falling short of what they may need to live on financially in retirement.
One potential reason is lifestyle creep, or the tendency to upgrade your lifestyle as you earn more.

An upgrade people are often tempted to make – the purchase of a second home – may be particularly risky for long-term planning, financial advisors say.
“Those bigger purchases, if not done really deliberately and diligently, can almost end up being almost like a grenade in your otherwise well-planned retirement,” said Patrick McGinn, president of Retirement Resources Investment Corp. in Peabody, Massachusetts. The firm is ranked at No. 29 on the 2023 CNBC FA 100 list of top financial advisors in the U.S.
More from Personal Finance:’Financial vortex’ may reduce retirement savings by up to 37%3 money moves millionaires are more likely to makeWhat the Federal Reserve’s latest move means for your money
The purchase of a second home takes away from money that could be invested elsewhere in an asset that’s more liquid than an extra property, according to Stephen Cohn, a certified financial planner and co-president of Sage Financial Group in West Conshohocken, Pennsylvania. The firm is No. 22 on this year’s CNBC FA 100 list.
Importantly, the return on those liquid investments may far exceed what someone may earn on a second home.

“There are people who think they can afford it, but don’t realize it’s going to impact their ability to reach their other financial goals, one of which is retirement,” Cohn said.

However, many people tend to convince themselves the house will appreciate, which they then can monetize or liquidate when they need it for retirement, he said.
“Typically, what happens is most people don’t want to give that second home up after they’ve lived in it for a certain amount of time,” which adds to their cost of living, Cohn said.

Some retirement ‘wants’ just don’t hold water

The purchase of a boat is another example of a big-ticket transaction that can significantly reduce a retirement nest egg, according to McGinn.
A $50,000 boat may cost $15,000 to $25,000 per year to keep up between insurance, storage and maintenance, he said.
“In a sense, you’re pre-spending your retirement,” McGinn said, by putting your current consumption ahead of your future retirement needs.
To help clients evaluate the impact of a boat purchase, McGinn said he typically runs an analysis of the financial impact five to seven years out.

When evaluating a second home purchase, which typically costs more, McGinn said he does a deep dive analysis on the cash flow needs associated with the property and the investment growth that may be sacrificed as a result.
Likewise, Cohn said he also runs a financial analysis for prospective second home buyers that includes the impact it will have on them being able to retire at a certain age and to maintain a certain lifestyle.
If the purchase may derail clients’ financial goals, Cohn said he urges them to consider alternatives, particularly renting.
“Renting is by far, in our opinion, a much more efficient way of enjoying a destination,” Cohn said. More

At a campaign event earlier this month in Fort Dodge, Iowa, Sen. Tim Scott — vying for the GOP presidential primary nomination — said former president Ronald Reagan had it right when he fired thousands of striking air traffic controllers in 1981.
But the National Labor Relations Act of 1935 grants private sector workers the right to strike, and they can’t be fired for doing so.

Sen. Tim Scott, R-S.C., speaks to a crowd during a presidential campaign kickoff event at Charleston Southern University on May 22, 2023.
The Washington Post | The Washington Post | Getty Images

At a campaign event earlier this month in Fort Dodge, Iowa, Sen. Tim Scott of South Carolina said former president Ronald Reagan had it right when he fired thousands of striking air traffic controllers in 1981.
“Ronald Reagan gave us a great example when federal employees decided they were going to strike,” the Republican presidential contender said. “He said, ‘You strike, you’re fired.’ Simple concept to me.”

The comment was met by immediate blowback from the labor movement, as the number of strikes and other labor actions has exploded this year. Some 362,000 workers have gone on strike so far in 2023, compared with 36,600 over the same period two years ago, according to the Cornell ILR Labor Action Tracker.
More from Personal Finance:Buy holiday airfare in OctoberTruck buyers are driving up car payment costsWhy it’s hard to find a cheap new car these days
The United Auto Workers union filed a labor complaint against Scott for his remarks, accusing his campaign of interfering with workers’ rights to engage in union activity under federal law. Thousands of auto workers have gone on strike at plants across the country of late, demanding higher wages and better benefits.
Kenneth Dau-Schmidt, a law professor at Indiana University Bloomington, said that Reagan’s controversial action firing air traffic controllers continues to be condemned and revered, depending on whom you’re talking to.
“There never had a been a president so hostile to union workers, and it could have gone bad,” Dau-Schmidt said. “If one plane went down, Reagan would have looked like a goat.

“But there were no major crashes, and conservatives now just say, ‘You have to be tough,” Dau-Schmidt added.
A spokesperson for the Scott campaign defended the senator’s comments.
“Sen. Scott has repeatedly made clear, both at that event and others, that Joe Biden shouldn’t leave taxpayers on the hook for any labor deal,” they said.
Here’s what the law says about firing workers on strike.

Workers have the right to strike

The National Labor Relations Act of 1935 granted private sector workers the right to strike, said Sharon Block, a professor at Harvard Law School and the executive director of the Center for Labor and a Just Economy.
“Under the NLRA, strikers cannot be fired for striking.” Block said.

Members of the former Professional Air Traffic Controllers Organization, or PATCO, on strike in 1981.
Wally Mcnamee | Corbis Historical | Getty Images

The idea being, Dau-Schmidt added, that “if capital is going to be organized, then labor should be organized, too.”
However, when Reagan fired the air traffic controllers, he was acting within the law because the NLRA’s right to strike does not apply to federal employees, Dau-Schmidt said.
Although Scott specifically cited a case of firing federal workers at the campaign event, his comments were widely taken as hostile toward all union activity.

Job security still at risk for workers on strike

Even though private sector workers’ on strike are protected from termination, they can in certain cases be temporarily or permanently replaced if their employer hires someone else to do their job, Dau-Schmidt said.
“Permanent replacement looks a lot like firing from the employees’ perspective,” he said.
Still, workers have certain protections.
If a striker’s replacement leaves the job for whatever reason, the worker who was on strike must be offered the position before anyone else is hired, Block said.

If workers were on strike due to unfair labor practices as opposed to economic conditions, they may also have a right to reinstatement.
Beyond the law, it would be foolish from a business perspective for the automakers, or any big company, to hastily part ways with their labor force, Dau-Schmidt said.
“If they started firing these workers, they’d find all of UAW workers on strike,” he said. “It could take months or years to replace everyone, and they’d lose a lot of money.”
— Additional reporting by CNBC’s Spencer Kimball. More

Some employer-sponsored plans such as 401(k)s allow you to make contributions on either a pretax or a Roth basis.
Unlike contributions to traditional 401(k) accounts, those to a Roth 401(k) are made with after-tax dollars.
Here’s a look at the pros and cons of incorporating a Roth 401(k) into your retirement plan.

Jose Luis Pelaez Inc | Digitalvision | Getty Images

There are a lot of opportunities to minimize your tax burden when it comes to retirement planning. Of course, making the most of tax-advantaged accounts is a key aspect of any retirement strategy.
Some employer-sponsored plans such as 401(k)s allow you to make contributions on either a pretax or a Roth basis. Unlike contributions to traditional 401(k) accounts, those to a Roth 401(k) are made with post-tax dollars.

This means that the money you contribute has already been taxed, so there are no immediate tax deductions. The upside is that qualified withdrawals from a Roth 401(k), including both contributions and earnings, are entirely tax-free in retirement if you meet certain criteria.

More from Your Money:

Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Let’s cover the basics.
Like traditional 401(k) accounts, in 2023 you can contribute to a Roth 401(k) up to $22,500 if you’re under age 50, and up to $30,000 with catch-up contributions if you’re over 50.
Roth 401(k) contributions are not subject to income limitations that Roth individual retirement accounts, or IRAs, currently have. For people approaching retirement, this can be a really appealing strategy to max out their retirement savings.
Pre-retirees might experience some lower-income years between retirement and when required minimum distributions kick in at age 72, especially if you might be downshifting hours or working part-time.

It makes sense during those periods to make Roth contributions or convert funds from pretax to Roth while in a lower tax bracket. A Roth 401(k) allows a much higher contribution limit to accomplish that than a Roth IRA.

Now, let’s examine the pros and cons of incorporating a Roth 401(k) into your retirement plan:

The pros

Tax-free withdrawals in retirement: The most significant advantage of a Roth 401(k) is that withdrawals made during retirement are entirely tax-free. This means you can allow your investments to potentially grow tax-free for as long as you wish, giving you greater flexibility in managing your retirement income. By having a tax-free source of income you can potentially reduce your overall tax burden in retirement, especially if you anticipate being in a higher tax bracket. This can be a game changer when it comes to managing your cash flow in retirement.
Diversification of tax liability: Having both traditional 401(k) and Roth 401(k) accounts provides diversification in terms of your tax liability. This can be particularly valuable in uncertain tax environments. When you retire, you can strategically choose which account to withdraw from based on your tax situation at the time. Withdrawals from a Roth 401(k) for instance, would not increase your modified adjusted gross income, which would maintain eligibility for programs such as the Premium Tax Credit, if you retire before meeting age criteria for Medicare.
Flexibility in contributions: Roth 401(k) accounts allow for more flexibility in contributions. You can contribute to both a traditional and a Roth 401(k) account simultaneously, as long as you stay within the IRS contribution limits. And unlike Roth IRAs, contributions to a Roth 401(k) are not subject to income limitations, allowing you to better structure your tax liabilities and control your taxable retirement income.

The cons

No immediate tax deduction: Contributions to a Roth 401(k) are made with after-tax dollars, which means you won’t receive an immediate tax deduction. If you’re in a higher tax bracket now and expect to be in a lower one during retirement, this could be a disadvantage.
Complex decision-making: Managing both traditional and Roth 401(k) accounts requires careful planning. Deciding how much to allocate to each account can be a complex decision that depends on your current tax situation, your retirement goals and your investment strategy. To fully maximize the Roth 401(k), you must have a five-tax-year period of participation to avoid nonqualified distributions and you must wait until at least age 59½ to begin those distributions. Unlike with a Roth IRA, a major limitation is that you cannot make tax-free withdrawals from your account at any time without meeting those two conditions, or criteria around death or disability. The same restrictions that apply to pretax contributions also apply here, which can “lock up” your after-tax dollars and complicate your financial situation.
Uncertainty in tax policy: The tax benefits of a Roth 401(k) are contingent on tax laws remaining unchanged. Tax policy can fluctuate over time, which could affect the future benefits of your Roth account. While tax-free withdrawals are a compelling feature, they are not guaranteed to last indefinitely. We saw this with the legislative discussions around eliminating the backdoor Roth IRA loophole in 2021.

Ultimately, the decision may come down to your current and projected future tax situation. Many financial advisors recommend a balanced approach, combining both traditional and Roth 401(k) accounts to maximize flexibility in retirement income planning.
To make an informed decision, consult with a financial professional who can assess your specific circumstances and help you create a retirement strategy that aligns with your financial objectives and minimizes your tax liability. Remember that there is no one-size-fits-all answer when it comes to retirement planning, and your choice should reflect your individual financial needs and goals.
— By Jude Boudreaux, certified financial planner, partner and senior financial planner with The Planning Center in New Orleans. He is also a member of the CNBC FA Council. More

Your Money

While caregiving can be financially, emotionally stressful, Latino caregivers often experience higher financial strain, an AARP report found.
“It’s just not a Latin thing to drop your parents or siblings off in an assisted living facility, it’s not in our culture,” said certified financial planner Marianela Collado.

Jose Luis Pelaez, Inc. | Getty Images

Caregiving can require a significant investment of time and money, no matter your background, but Latino caregivers — particularly Latinas — tend to have more burdensome expenses.

Lea este artículo en español aquí.

It’s worth being aware of those financial effects, experts say, because caregiving is an important touchstone in Latino culture. It’s expected for family members to step in when someone needs help. 

“It’s just not a Latin thing to drop your parents or siblings off in an assisted living facility, it’s not in our culture,” said Plantation, Florida-based certified financial planner Marianela Collado. “It’s a given that someone is going to take care of grandma or grandpa.”

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

While it may be part of the cultural fabric to take family members under your care, it’s important to make sure that you take the necessary steps to set yourself up before the financial commitment occurs.
“That’s your typical Latino thing: You’re not looking for a home for them, you’re looking for which family member is going to move in and take care of them,” added CFP Louis Barajas, CEO of International Private Wealth Advisors in Irvine, California.

Latino caregivers have high financial strain

Family caregivers spend on average 26% of their annual income on caregiving activities, according to a 2021 report by AARP. The organization calls that measure “financial strain,” and bases it on the caregiving expenses relative to a caregiver’s annual income.
Compared to other races and ethnicities, Hispanic and Latino caregivers have the highest financial strain, AARP found, with caregiving expenses that account for 47% of annual income. Broken down by gender, Hispanic and Latina women have financial strain of 56% — more than twice the overall caregiver average and the highest across all racial and ethnic groups and genders — while Hispanic and Latino men come in second at 38%, AARP found.

Hispanic caregivers are likely to report more financial impacts from caregiving than non-Hispanic whites, an earlier AARP report found. Those consequences might include leaving bills unpaid or paid late, moving to a less expensive area or difficulty affording basic expenses like food. What’s more, Hispanic caregivers are more likely than non-Hispanic whites to have their work affected by caregiving, such as a need to leave work early, arrive late or take time off to provide care.While disappointing, information like this is important, and can serve as a wake-up call for all parties involved. Here are a few financial strategies to better position yourself as a caregiver:

1. Explore claiming your family member as a dependent

There can be financial advantages to claiming a family member you are caring for as a dependent on your tax returns. It’s a strategy you might employ in the U.S., or for a relative you’re sending money to abroad. U.S. residents who routinely send money to family members in Mexico, for instance, may be able to claim them as dependents in their taxes under a treaty between the U.S., Mexico and Canada, said Barajas, a member of the CNBC FA Council.
In order to qualify as a dependent, the family member must meet specific qualifications around their income and their relation to you, said Collado, the CEO and co-founder of Tobias Financial Advisors. Additionally, you must prove that you provide more than half of the person’s financial support for basic expenses.
Claiming your family member as a dependent can also open the door to deduct some of their medical expenses, as long as you meet specific criteria, Collado said.
“Make sure you’re paying those institutions directly, such as doctors or hospitals,” she said.

2. Look into local or state assistance programs 

Some government programs pay a relative to care for an elderly or incapacitated family member, said Roberto and Amanda Corral of California-based special needs planning firm Corral Financial Strategies.
For instance, California offers in-home support services or IHSS, where a qualifying care provider can be paid for caregiving, explained Roberto Corral.
Primary caregivers may also consider respite programs, which pay an outside or secondary caregiver a set amount of hours a month to relieve labor from the primary caregiver.
“It doesn’t give money back to their pocket but it helps with the emotional load,” said Amanda Corral.

Further, if your loved one is eligible for Medicaid, depending on the state, there is a chance a family member can be paid for their caregiving services.
Find out if your loved one qualifies for a Medicaid long-term care program that pays family members. If they are a U.S. veteran, they may qualify for the Veteran Directed Care Program.

3. Build up your own financial safety nets

If you’re a young worker and you anticipate taking care of a family member in the future, now is the time to get your own finances in order. Start by paying down high-rate debt, and install financial safeguards by investing in long-term goals like retirement.
You also should build up your emergency fund to weather unexpected expenses for yourself as well as those you will eventually be caring for. Consider financial products like high yields savings accounts, which keep your money readily available, Collado said.
If you’re the main breadwinner of the family, it will be important to think about things such as disability insurance that help protect that income if you have a medical condition that leaves you unable to work.”Disability insurance can soften the blow because, depending on the policy, you can get partial income,” Amanda Corral said. More

Michael Wirth, CEO of Chevron.
Adam Jeffery | CNBC

Dividend-paying stocks can help enhance portfolio returns, but investors will need to perform their due diligence as they sift through the names.
Investors should carefully assess these companies by paying attention to various factors, including the dividend growth rate and the ability to consistently generate sufficient cash flows to support payments.

Bearing that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Public Service Enterprise Group

First on this week’s dividend list is Public Service Enterprise Group (PEG), one of the leading electric and gas companies in the U.S. Last month, PEG reaffirmed its full-year earnings guidance, as the company expects growth in regulated operations, the realization of higher average hedged prices and its cost control efforts to offset the impact of higher interest rates and lower pension income.
Earlier this year, PEG increased its quarterly dividend by 5.6% to 57 cents per share (annualized dividend of $2.28), marking the 19th annual increase for the company. PEG’s dividend yield is 3.8%.
RBC Capital analyst Shelby Tucker highlighted that PEG’s subsidiary Public Service Electric and Gas (PSE&G), which is a franchised public utility in New Jersey, enjoys solid cash flows from the nuclear assets in its power generation business.
While the company faces cost and pension expense headwinds this year, the analyst expects a 6% EPS compound annual growth rate through 2027 and 5.5% annual dividend growth.

“We believe the primary attraction to PEG is a strong pipeline of electric and gas investments in New Jersey with low equity dilution risk,” said Tucker.
Tucker reiterated a buy rating on PEG while slightly lowering the price target to $69 from $70. He ranks No. 305 among more than 8,500 analysts tracked by TipRanks. Tucker’s ratings have been profitable 63% of the time, with each rating delivering a return of 9%, on average. (See PEG’s Insider Trading Activity on TipRanks)

Southern Company

Tucker is also bullish on Southern Company (SO), a gas and electric utility giant. Earlier this month, the analyst called SO a “quality utility operating in constructive regulatory environments.” He reiterated a buy rating on the stock and increased the price target to $80 from $78.
With the company’s much-delayed Vogtle nuclear project’s commercial operation date on the horizon, the analyst thinks that investors are finally hopeful of better times ahead. The company expects its Vogtle Unit 4 to be placed in service during late fourth quarter of 2023 or the first quarter of 2024.
The analyst sees the possibility of SO commanding a premium compared to its peers as the year progresses and heads into 2024. Post-Vogtle, Tucker expects the company to accelerate its EPS growth and use the higher cash flows to boost dividends.
Note that in April, Southern announced a 2.9% increase in its quarterly dividend to $0.70. This is the 22nd consecutive year in which SO has raised its dividend. SO offers a dividend yield of 4%.  
“We note that SO’s utilities mostly operate in strong economic environments, which should support investment opportunities throughout the decade,” said Tucker. (See Southern Company Stock Chart on TipRanks)

Chevron

Next up is dividend aristocrat Chevron (CVX). In January, the oil and gas giant increased its quarterly dividend by about 6% to $1.51 per share, making 2023 the 36th straight year with a higher dividend payment. CVX’s dividend yield stands at 3.6%.
On Sept. 13, Goldman Sachs hosted roundtable discussions with Chevron’s senior management. Analyst Neil Mehta said that the firm remains bullish on CVX due to its peer-leading capital returns profile, inflecting upstream operations expected in 2025 supported by higher Tengiz/Permian volumes and relative valuation.
The analyst contends that near-term pressures like risks around the Tengiz project are largely reflected in CVX’s valuation. He highlighted management’s constructive view on the upstream business, reaffirming nearly 3% CAGR forecast for production over the next five years.
“The company reiterated its commitment to competitive shareholder returns, which we believe is a core differentiating factor for CVX over the next few years,” added Mehta, who ranks No. 181 among more than 8,500 analysts on TipRanks. 
The analyst currently expects about a 9% capital return yield in 2024/2025, higher than the U.S. energy majors peer average of about 7%. Overall, Mehta reiterated a buy rating on Chevron with a price target of $187.
Mehta’s ratings have been successful 67% of the time, with each rating delivering an average return of 13%. (See Chevron Hedge Fund Trading Activity on TipRanks)

Broadcom

Semiconductor company Broadcom (AVGO) managed to beat the Street’s fiscal third-quarter estimates. However, investors seemed unsatisfied as the quarterly outlook was in line with the analysts’ expectations, unlike that of chip giant Nvidia (NVDA), which crushed estimates on artificial intelligence tailwinds.
Broadcom generated $4.6 billion in free cash flow in the fiscal third quarter of 2023. It paid a cash dividend worth $1.9 billion in the quarter and repurchased 2.4 million shares.
Earlier, AVGO increased its quarterly dividend for fiscal 2023 by 12% to $4.60 per share (annualized $18.40). This hike reflected the company’s twelfth consecutive increase in annual dividends since it initiated dividends in fiscal 2011. It offers a dividend yield of 2.2%
Baird analyst Tristan Gerra recently reiterated a buy rating on AVGO stock while boosting the price target to $1,000 from $900 to reflect solid growth opportunities, mainly in the company’s custom application-specific integrated circuit (ASIC) business for AI applications. Gerra also noted that the company’s free cash flow remains strong.
The analyst said that recent channel checks revealed a surge in Broadcom’s custom ASIC business to over 2 million units for next year, which was more than 2.5 times his unit base expectation for 2023. He added that generative AI investments are accounting for nearly all the growth in Broadcom’s semiconductor business, with AI-related revenue now exceeding $1 billion.
Gerra holds the 514th position among more than 8,500 analysts tracked on TipRanks. Moreover, 54% of his ratings have been profitable, with each generating an average return of 8.7%. (See Broadcom’s Financial Statements on TipRanks)

Bristol-Myers Squibb

We end this week’s list with biopharmaceutical company Bristol-Myers Squibb (BMY). The company repurchased 17 million shares for $1.2 billion and made dividend payments of $2.4 billion in the first six months, ended June 30.
The quarterly dividend of $0.57 per share for 2023 indicates a 5.6% year-over-year increase, marking the 14th consecutive year of dividend hikes. BMY’s dividend yield stands at 3.9%.
Following the company’s Research and Development (R&D) Day held in New York on Sept. 14, Goldman Sachs analyst Chris Shibutani reaffirmed a buy rating on BMY stock with a price target of $81.
At the event, management highlighted how new product launches and the acceleration of research and development productivity would drive future revenue growth, addressing concerns about the Inflation Reduction Act and loss of exclusivity of key drugs.
Shibutani noted that management expressed continued confidence in the 2030 new product launch revenue goal of more than $25 billion (non-risk adjusted), based on currently visible late-stage and already commercializing opportunities.
Commenting on BMY’s capital allocation program, Shibutani said that management’s priority remains business development (BD). “Beyond BD, the company remains committed to growing its dividend and will continue to be opportunistic with share buybacks,” the analyst added.
Shibutani holds the 271th position among more than 8,500 analysts tracked on TipRanks. In all, 44% of his ratings have been profitable, with each generating an average return of 20.5%. (See BMY Options Activity on TipRanks) More