Investing

In the last 50 years, working women have made strides in wages and savings compared with previous generations.
However, their married heterosexual counterparts have seen their retirement security decline because their husband’s fortunes have suffered, research shows.

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When it comes to retirement security for women, marriage may not give them the leg up it once did.
Women who have spent the majority of their adult life single — whether due to divorce or never marrying — are now generally as well prepared for retirement as married heterosexual couples, according to a study from the Center for Retirement Research at Boston College. 

“Women have made a lot of progress over the last 50 years,” said Laura Quinby, one of the researchers for the study. “They’ve made enormous strides in the labor market, are more likely to get a college degree and have careers.”
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Title IX of the Education Amendments of 1972 ushered in mandated gender equity in education programs or activities that received federal financial assistance. While the law is often associated with advances in women’s sports, it also contributed to more females going to college and into better-paying professions they previously may have been unable to access.
For example, the share of baby boomer women born in the early 1960s who hold a college degree is about 33%, compared with 15% among females born in the 1930s, the research shows. 

For married women, it’s a different story

However, part of the increased parity in retirement security is due to a decline in such security among married women, Quinby said.

That’s tied to the stagnating fortunes of men married to women, with the Great Recession hitting them harder than their female counterparts, the researchers said. For those who were in their prime working years, high unemployment and slow wage growth affected their ability to save for retirement.
“It’s really reflecting the impact that the Great Recession had on their husbands,” Quinby said.

The amount of wealth held at age 59-60 by a typical married woman’s household has decreased 23% to $446,000 from $579,000 for those born in the 1930s. For single women, it has jumped about 28% to $290,000 from $227,000.
While those amounts are far apart, the researchers translated the wealth into a retirement-income replacement rate for single and married women — that is, the share of earnings from their working years that will be covered by Social Security and their savings.
Among baby boomer women who were born after the mid-1950s who have spent their adult life mostly married, that income-replacement rate is 35%, down from 44% among those born in the 1930s. For those who have been mostly single, the rate is 33%.

At the same time, retirement security overall peaked for “war babies,” those born in 1942-1947, Quinby said.
“It’s primarily driven by the fact that wealth in defined contribution plans [i.e., 401(k) plans] is lower than the wealth in pension plans used to be for those older cohorts,” she said.

1 in 5 women ‘very confident’ about retiring with enough

Meanwhile, only 1 in 5 women feels “very confident” about being able to retire comfortably, according to a study from the Transamerica Center for Retirement Studies. More than half say they have too much debt or not enough income to save much, and 4 in 10 expect to retire after age 70, or not at all.
Additionally, there is still a gender wage gap. In 2022, women earned an average of 82% of what men earned, according to a new Pew Research Center analysis.
And, whether the retirement security gains by single women will continue is questionable.
“A lot of the gains that women made have largely played out,” Quinby said. “Absent any structural change, I think we won’t see the gains we have in the past.”

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President Joe Biden this week called for higher taxes on wealthy Americans to extend Medicare funding as part of his 2024 budget.
The plan would increase the net investment income tax to 5%, from 3.8%, for earnings of more than $400,000, including regular income, capital gains and so-called pass-through business income.
However, the plan is unlikely to pass in the Republican-controlled House of Representatives.

President Joe Biden delivers remarks on his plan to protect Americans access to affordable health care in Virginia Beach, Virginia, on Feb. 28, 2023.
Saul Loeb | AFP | Getty Images

President Joe Biden this week called for higher taxes on wealthy Americans to boost Medicare as part of his 2024 budget, aiming to help fund the program for at least 25 years.
The plan would increase the net investment income tax from 3.8% to 5% for earnings of more than $400,000, including regular income, capital gains and so-called pass-through business income, which flows to individual tax returns, according to the White House.

Enacted through the Affordable Care Act, the net investment income tax currently applies to earnings above $200,000 for single filers and $250,000 for married couples filing together.
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“Since Medicare was passed, income and wealth inequality in the United States have increased dramatically,” the White House said in a fact sheet. “By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come.”
The plan also aims to expand Medicare’s ability to negotiate prescription drug prices beyond the measures enacted through the Inflation Reduction Act.
Biden’s plan, however, is unlikely to pass in the Republican-controlled House of Representatives.

The full budget will be released Thursday.

The future of Medicare and Social Security

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Bond yields surged Tuesday as Federal Reserve Chair Jerome Powell said interest rates may have to remain higher for longer to quell inflation.
In particular, the 3-month Treasury yield leapt over 5%, touching levels last seen in 2007.
For investors hoping to put idle cash to work, there’s an opportunity to snap up short-term Treasurys and earn an attractive risk-free return.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 3, 2023.
Brendan Mcdermid | Reuters

The latest spike in bond yields was enough to spook the stock market into a sell-off Tuesday, but there’s a silver lining for fixed income investors: Short-term Treasurys are now touting a risk-free return of 5%.
The latest action follows comments from Federal Reserve Chair Jerome Powell, who said Tuesday that interest rates are “likely to be higher” than previously expected. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” he said.

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The yield on the 3-month Treasury touched a high of 5.015% on Tuesday, the highest level since 2007. (Note: that yield is annualized, not what you would get in just three months.)
Rates on the 1-year bill and 2-year Treasury note – the latter of which is most sensitive to the Fed’s policy – also popped more than 5% on Wednesday morning, reaching levels last seen in 2006 and 2007, respectively. Bond yields move inversely to prices.

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Treasury rates have popped higher as the Fed continues its rate-hiking campaign.

A piece of the action

Short-term Treasurys are a great way to put idle cash to work, and you can also “ladder” them to get a little interest on your money over a certain term. This means you build a portfolio of issues with different maturities and reinvest the proceeds as they mature.
Investors can get in on the action in a couple of ways.
First, they can purchase Treasurys directly from the U.S. government via TreasuryDirect.gov. They will have to set up an account on the site and link their bank to it. For short-term investors, 4-week, 8-week, 13-week and 26-week T-bills are auctioned every week. Two-year notes are auctioned monthly, and 10-year Treasurys are auctioned every quarter.

If you hold the Treasury to maturity, you aren’t subject to market risk. The bonds generally pay interest twice a year, but for T-bills, the interest you get is the difference between what you paid and the face value you receive at maturity.
Another way for investors to buy Treasurys is through a brokerage firm. This makes record-keeping easier for investors, especially if they already have an individual retirement account at a given firm.
The issue is that you may be subject to fees and minimum purchase requirements if you buy Treasurys through a brokerage account. Consider that you can buy Treasurys directly from the government with a minimum purchase amount of $100, but a brokerage firm can charge you for broker-assisted trades. Others require that you buy at least $1,000 in Treasurys.
Though Treasurys are considered risk-free because their payments are backed by the full faith and credit of the United States government, investors should be aware that the real rate of return they’re earning could be eaten away if inflation rises at a pace greater than the yield. A further risk is they may also miss out on investment opportunities in other assets like stocks.
These bonds may be a great way to get some interest on otherwise idle cash, but they shouldn’t make up the entirety of your portfolio.
— CNBC’s Michelle Fox and Gina Francolla contributed to this story.

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Supreme Court Justice Amy Coney Barrett is the conservative justice who seemed the most unconvinced by the plaintiffs challenging student loan forgiveness.
Even if Barrett finds that the plaintiffs don’t have standing to sue, she’d have to convince another conservative justice to come to her side for Biden’s student loan forgiveness plan to survive.
Barrett may be able to convince Justice Brett Kavanaugh or Chief Justice John Roberts.

U.S. Supreme Court Associate Justice Amy Coney Barrett.
Evelyn Hockstein | Reuters

The fate of the Biden administration’s sweeping plan to cancel $400 billion in student loan debt for tens of millions of Americans may hinge on the newest conservative member of the Supreme Court: Justice Amy Coney Barrett.
Barrett was the conservative justice who seemed the most unconvinced by the plaintiffs challenging student loan forgiveness, said Jed Shugerman, a law professor at Fordham University. Specifically, Shugerman said, Barrett didn’t seem to agree that they’d proven they have standing to sue.

“Barrett was vocally and deeply uncomfortable about ruling that any of the plaintiffs had standing,” Shugerman said.
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As a rule, plaintiffs must prove that a policy would cause them injury in order to challenge it in the courts.
That requirement, which has long been defended by conservative justices, especially former Justice Antonin Scalia, is meant to avoid people using the legal system to fight policies they do not like or agree with.
The six GOP-led states that brought a lawsuit against President Joe Biden’s plan argue that the debt cancellation for up to $20,000 per borrower would decrease profits for companies in their states that service federal student loans. That argument has become focused on the Missouri Higher Education Loan Authority, or MOHELA.

Nebraska’s solicitor general, James Campbell, who argued on behalf of the states in front of the justices on Feb. 28, said Biden’s plan threatened to eat away at MOHELA’s operating revenue by as much as 40%.

Barrett seemingly unsatisfied by plaintiff arguments

But Barrett asked Campbell why MOHELA itself was not suing to block the plan instead of Missouri.
Officials at MOHELA recently said it had no involvement in Missouri Attorney General Eric Schmitt’s decision to sue against the program.
“Do you want to address why MOHELA’s not here?” Barrett asked.
Campbell replied, “MOHELA doesn’t need to be here because the state has the authority to speak for them.”
Barrett wasn’t satisfied by that answer.
“Why didn’t the state just make MOHELA come then?” she asked. “If MOHELA is really an arm of the state … why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”

Many commentators were asking, ‘Where is the Missouri SG?’ It’s like, Where’s Waldo?”

Jed Shugerman
law professor at Fordham University

Campbell answered: “Your honor, that’s a question of state politics.”
Shugerman, the law professor, said Campbell fumbled to explain how a loss in revenue for MOHELA would harm Missouri.
“The Nebraska solicitor general was unconvincing,” Shugerman said. “It was a mess.”
Shugerman also criticized the decision to have Nebraska’s top state attorney argue the case in front of the justices as opposed to the solicitor general of Missouri. He said that would have been appropriate because Missouri is the state with the best claim of an injury.
“Many commentators were asking, ‘Where is the Missouri SG?'” he said. “It’s like, ‘Where’s Waldo?'”

Plan’s survival depends on 2 conservative votes

Barrett alone can’t save the program.
The liberal justices — Elena Kagan, Ketanji Brown Jackson and Sonia Sotomayor — are almost certain to vote in favor of the plan, Shugerman said.
On the other hand, three conservative justices, Clarence Thomas, Neil Gorsuch and Samuel Alito are likely to vote against it, he said.
Because of that, the Biden administration will likely need to convince not just Barrett but at least one of the other two conservative members of the court, Chief Justice John Roberts and Justice Brett Kavanaugh.

“If she is a fourth vote, the question is, can she convince a fifth?” Shugerman said.
If the justices ignore the states’ lack of standing, they risk allowing any state or individual to challenge almost any federal program, said Steven Schwinn, a law professor at the University of Illinois Chicago.
“This is no way to run a federal democracy,” Schwinn said. “If the plaintiffs have a problem with loan cancellation, they should take it up through political processes.”

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These days, students have to be resourceful when it comes to cutting college costs.
Here are some of the best — and often underrated — money-saving options for high schoolers.

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These days, students and their families have to be proactive about cutting college costs.
“It used to be, get into the best school you can get into and then figure out how to pay for it,” said Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”

Now, Chany says, “that’s a recipe for disaster.”
As inflation heats up, tuition alone at many colleges and universities is prohibitively high. About 83% of high school students said the current economic conditions have affected their ability to pay for college, according to a recent survey by scholarship search site ScholarshipOwl.
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Further, 88% plan to work part- or full-time to afford school. But there are other ways to rein in costs.
Even if you don’t have a well-funded 529 college savings plan, a few tried-and-true money-saving techniques can help.

Here are some of the best — and often underrated — options for high schoolers.

1. Take college courses in high school

Dual enrollment is a state-run program that allows students to take college-level classes, often through a local community college, while they are still in high school.
As many as 3 in 10 community college students are in dual enrollment programs, according to the American Association of Community Colleges.
Unlike Advanced Placement, the program in which high school students take courses and exams that could earn them college credit, dual enrollment credits are more likely to transfer.

In some cases, students may even be able to complete an associate’s degree by the time they finish high school, a process known as “early college.”
Over four years, early college programs cost about $3,800 more per student than traditional high school, according to one study. However, the estimated return on that investment is about $33,709 in increased lifetime earnings.
Before committing, research your state’s program to check the requirements and see how the credits will apply toward a degree.

2. Pile on Advanced Placement credits

Similarly, taking AP classes in high school — and scoring at least 3 out of 5 on the official exams at the end of the course — can earn students credit hours once they are in college.
Potentially, the more AP classes that a high school student can bank now, the fewer college courses they’ll have to pay for later — as long as the college gives credit for that coursework.
According to the College Board, the average student takes three AP exams over the course of their high school career, which means, if successful, you could reduce your time in college by an entire semester, potentially saving up to $15,000 or more.

Arrows pointing outwards

But check the guidelines on Advanced Placement first. Each college has its own policies for awarding credit — although just completing the coursework may give you a leg up.
“APs work more to show that you excelled in high school,” said Hafeez Lakhani, founder and president of New York-based Lakhani Coaching, which helps during the college application process.
“It’s one of the most trusted ways to show you are challenging yourself with an advanced curriculum.”

3. Transfer from community college

A two-year program is not necessarily an alternative to a four-year degree. Increasingly, students go from community college to a four-year school.
“It’s a very smart way to start your higher education,” said Martha Parham, senior vice president of public relations at the American Association of Community Colleges. “A state university is about three times the cost for the same first two years.”

A state university is about three times the cost for the same first two years.

Martha Parham 
senior vice president of public relations at the American Association of Community Colleges

At two-year public schools, tuition and fees are $3,860 for the 2022–2023 academic year, according to the College Board. Alternatively, at in-state four-year public schools, tuition is $10,940 and at four-year private universities it averages $39,400.
Today, about half of all community college students go on to earn a bachelor’s degree, according to data from the National Student Clearinghouse Research Center.
At least 35 states even have policies that guarantee that students with an associate’s degree can then transfer to a four-year state school as a junior.

4. Try course sharing

If you are already enrolled in a four-year school, tapping community college courses can still be a worthwhile way to cut costs, a strategy known as course sharing.
In this case, students may be able to take a class at their local community college over the summer or at night and have it count toward their coursework.
In the wake of the pandemic, the online offerings have improved dramatically, making it even easier for students to work in classes from other institutions that are either less expensive or more accessible, keeping them on budget and on track for graduation.
“Sometimes those same courses are going to be cheaper at a community college,” Chany said. However, there is still the risk that those credits won’t count.

Compare the classes at community college with what’s offered at the four-year school, Chany advised. “If there is not a similar course offered at the four-year school, then likely the credits for that course at the community college will not be transferable, defeating the main purpose of this option.”
This is where students must advocate for themselves, according to Jay Field, senior vice president of institutional partnerships at Quottly, a platform for course and program sharing between colleges.
Call the college, speak to someone in the registrar or admissions office and an academic advisor, he said. 
“Don’t talk to your cousin Jimmy who took one class in 2002; it may be different now,” Parham added. “Colleges want to help you succeed, so don’t be afraid to reach out.”
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Ask an Advisor

The federal tax deadline is only six weeks away, and if you haven’t filed yet, you may qualify for free preparation.
There are several free filing options to consider, depending on your income, age, location and occupation.

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The April 18 federal tax deadline is only six weeks away, and if you haven’t filed yet, you may qualify for free preparation.
While many prefer a paid preparer, free filing options may be worth exploring for simple returns, such as filings with only a couple of W-2 forms, for example.

The IRS is reopening taxpayer assistance centers on March 11, and while these offices don’t offer tax preparation, they can direct you to free local options, the agency announced this week.
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Here are five free tax filing options to consider, based on your income, age, location, occupation and more.

1. IRS Free File

IRS Free File offers free online guided tax preparation for your federal tax returns and some state filings if your adjusted gross income was $73,000 or less in 2022. 
The program is a partnership between the IRS and several private tax software companies, meaning you can browse providers or use the agency’s lookup tool to find the best match based on location, income and other factors. 

It’s a good option for those who have simple returns, don’t need ongoing tax planning advice and could benefit financially from the free service.

Judy Brown
Senior financial advisor at SC&H Group

While most filers are eligible, few currently use the service. Although 70% of taxpayers qualify for IRS Free File, only 2% used it during the 2022 filing season, according to the National Taxpayer Advocate.
“It’s a good option for those who have simple returns, don’t need ongoing tax planning advice and could benefit financially from the free service,” Judy Brown, a certified financial planner at SC&H Group in the Washington and Baltimore area, previously told CNBC.

2. Volunteer Income Tax Assistance

Operating for more than 50 years, the Volunteer Income Tax Assistance program, or VITA, provides free in-person electronic tax preparation in locations such as community centers, libraries, schools and more throughout the country.
You may qualify for the service if you generally earned $60,000 or less, have a disability or have limited English proficiency, according to the Taxpayer Advocate Service. You can plug your ZIP code into this tool to find providers near you. 

Thilan Kiridena, a CFP and founder of Capital Elements in New York, said VITA volunteers can handle tax-related questions, but may not be able to tackle complex returns.

3. Tax prep for older Americans

Older Americans may also qualify for free in-person and virtual tax help through the AARP Foundation Tax-Aide program.
While the service targets low- to moderate-income filers ages 50 and older, it’s open to filers of all ages with less complicated returns. You can find a location through the AARP Tax-Aide website.
The program works with VITA and Tax Counseling for the Elderly, or TCE, which also provides free tax preparation for those who qualify.

4. MilTax

Another free option, MilTax, is a program for service members, qualifying veterans, family members and more, provided by the U.S. Department of Defense.
The service includes tax preparation and filing software, along with personalized guidance. Eligible taxpayers can use MilTax for electronic federal returns and up to three state filings for free, according to the IRS.

“MilTax is a great resource for military families as it understands the nuances of the different types of military pay,” said Desiree Kaul, a CFP at Main Street Planning in Satellite Beach, Florida.

5. Free Fillable Forms

If your adjusted gross income is above $73,000 and you don’t qualify for the other options, you may also consider Free Fillable Forms for current year federal returns.
The program is similar to filing paper returns online, without software or guidance. You can learn more about Free Fillable Forms here. More

Retirement 401(k) account balances lost nearly one-quarter of their value in 2022, but there is still the potential for a comeback this year, one expert says.
Odds are that “a rebalance, like a regular haircut, is needed,” according to Winnie Sun, a member of CNBC’s Advisor Council.

“If you’ve suffered losses in your 401(k) last year, you’re certainly not alone,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC’s Advisor Council.
“It’s important to remember that as long as you haven’t sold those investments, you haven’t realized the loss, either, and there is a potential for a comeback.”
It’s reasonable to expect that portfolios will continue to improve in the next year, or even by year-end, she said.

How to bounce back from 401(k) losses

One very important practice every investor should do is to review their investment allocation at the start of the year, Sun advised. 

That means this is a good time to check if your allocation still meets your needs, she said. If you’re not sure, consult with a financial advisor to help you calculate your risk tolerance and your investment time horizon and see if how you’re invested still works for you. 
Odds are that it probably doesn’t, Sun said, and “a rebalance, like a regular haircut, is needed.”
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Even if one sector of the financial markets performed well, you can’t assume that will continue. “So, if you are too heavily weighted in large-cap growth, for example, but less so in international, it’s better to build a more sustainable diversified portfolio,” she said. 
After a tumultuous year, many older Americans are concerned about their retirement security. Nearly half, or 48%, of retired Americans believe they’ll outlive their savings, a separate report by Clever Real Estate found.
“Everyone is feeling pressure financially — there’s a lot of uncertainty out there in the markets and the economy,” said Mike Shamrell, Fidelity’s vice president of thought leadership.

However, “a lot of people understand there’s going to be ups and downs,” he added. “Don’t let short-term economic events derail your long-term retirement savings efforts.”
“If your time horizon is long, and you’re able to afford to do so, consider adding during market dips,” Sun advised. “If you’re buying quality investments long term, this will help you buy more shares since the market is down.”
To that end, try to increase your 401(k) contribution percentage this year, she said.
The average 401(k) contribution rate, including employer and employee contributions, currently sits at 13.7%, just below Fidelity’s suggested savings rate of 15%.
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While the thought of funding your retirement adequately might be daunting, if you start planning now you’ll certainly be thankful later. It also might not be as difficult as you think.
Retirement usually entails replacing your onetime annual salary from a workplace with other income sources to maintain your current lifestyle. While Social Security may cover part of your budget, the rest of your money will most likely need to come from your savings and investments.

CNBC crunched the numbers, and we can tell you how much you need to save now to get $70,000 every year in retirement — without taking a bite out of your principal.

More from The New Road to Retirement:

Here’s a look at more retirement news.

First, there are some ground rules. The numbers assume you will retire at age 65 and that you currently have no money in savings.
Financial advisors typically recommend the mix of investments in your portfolio shift gradually to become more conservative as you approach retirement. But even in retirement, you’ll likely still have a mix of stocks and bonds, as well as cash. For investing, we assume a conservative annual 6% return when you are saving and an even more conservative 3% rate during your “interest-only” retirement.
We also do not factor in inflation, taxes or any additional income you may get from Social Security or your 401(k) plan.
Watch the video above to learn more.

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