Investing

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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Many retirees still claim Social Security at age 62, even though their benefit checks would be bigger if they waited.
A bipartisan group of senators is hoping two changes may help encourage beneficiaries to delay.

Adamkaz | E+ | Getty Images

Many Americans claim Social Security retirement benefits at the earliest age possible but see their monthly benefit checks reduced for life because they did so.
Now, a bipartisan group of senators is proposing two changes to help encourage retirees to wait. The lawmakers include Sens. Bill Cassidy, R-La., Chris Coons, D-Del., Susan Collins, R-Maine, and Tim Kaine, D-Va.

The proposed updates include changing the language the Social Security Administration uses around the claiming process and increasing the mailing of paper Social Security statements.
The earliest age to claim Social Security retirement benefits is 62. However, those who claim at that age see a reduced benefit.
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“When to claim Social Security benefits is a critical decision for older Americans planning their retirement,” the senators wrote in a letter to the Social Security Administration.
“Most people, however, do not claim benefits at the age that would maximize their income in retirement, usually because they claim too early,” they wrote.

Social Security beneficiaries are entitled to full benefits once they reach their full retirement age — 66 to 67, depending on their date of birth. For every year delayed past full retirement age, claimants stand to get an 8% increase.
Yet 62 remains the most frequent claiming age, with almost 35% of men and 40% of women making that choice, the senators note, resulting in an average lifetime loss of $111,000 per household.

There are various reasons retirees claim at the earliest possible age, the senators note, including an inability to work, financial shocks, liquidity constraints, life expectancy or the desire to pass money on to heirs.
However, some people may start taking Social Security benefits at the soonest possible time because they are unaware of the advantages of waiting.
Some claimants who have the capacity to wait even six months to five years longer may not be doing so because they don’t “have adequate information to make an informed choice,” said Emerson Sprick, a senior economic analyst at the Bipartisan Policy Center.

New language would emphasize ‘maximum benefit age’

The lawmakers are seeking to change the language the Social Security Administration uses to better convey the advantages of waiting to claim benefits.
For example, while age 62 is currently called “early eligibility age,” the senators are calling to have that changed to “minimum benefit age.”

Ages 66 to 67, currently referred to as “full retirement age,” would be changed to “standard benefit age.”
Age 70 would be called the “maximum benefit age.”
If the legislation passes, the changes would be included in all of the Social Security Administration’s educational and informational materials — “essentially anything the public sees,” noted Sprick.

Mailed benefit statements would be more frequent

In addition, the lawmakers also propose having every person with a Social Security number receive a Social Security statement in the mail regularly throughout their earnings history.
The paper statements would be sent regardless of whether someone has established an online Social Security account, though opting out of the paper statements would be possible.
The statements would provide details on how much in benefits a person may receive at ages 62 to 70.
Paper statements would be sent whenever a person enters the work force or starts a new job. The statements would continue once every five years after a person turns 25, once every two years starting from age 55, and annually from age 60.

Mark Edward Atkinson | Tetra Images | Getty Images

“Having this consistent reminder and this information about the effects that your claiming age can have on your lifetime monthly benefit, we think is really important,” Sprick said.
Research from the Bipartisan Policy Center previously identified paper statements as one method of helping to encourage Americans to claim at the right age.
Other research has also pointed out the value of changing the benefits terminology the Social Security Administration uses.
In addition to the legislative proposal, the senators also sent a letter to the Social Security Administration seeking more information on the factors that lead beneficiaries to claim early, the steps the agency may take to encourage more informed claiming decisions and what effects new benefit statements have had on claiming behavior.

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With the Biden administration’s student loan forgiveness plan at risk, borrowers should familiarize themselves with the existing relief options, experts say.
Some of those options include enrolling in a forbearance or more affordable repayment plan and, in the more extreme cases, filing for bankruptcy.

Demonstrators in favor of canceling student debt gather outside the U.S. Supreme Court in Washington, D.C., on Feb. 28, 2023.
Bloomberg | Bloomberg | Getty Images

Keep your payments on hold

The Covid pandemic-era policy suspending federal student loan payments and the accrual of interest is still active.
The U.S. Department of Education has said borrowers won’t need to start making payments on their debt again until 60 days after the litigation around its forgiveness plan resolves. If the lawsuits are still unresolved at the end of June, the bills will resume 60 days after that, at the end of August.

If you’re unemployed or dealing with another financial hardship at that time, you can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue.
If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that with forbearance, interest will rack up and your balance will be larger — possibly much larger — when you resume paying.

Compare alternate repayment plans

If you find your student loan payments too high when the bills resume, you should explore the different income-driven repayment plans available. These programs aim to make borrowers’ payments more affordable by capping their monthly payments at a percentage of their discretionary income and forgiving any of their remaining debt after 20 or 25 years.
Currently, the Biden administration is working to roll out a new repayment option under which borrowers would pay just 5% of their discretionary income toward their undergraduate student loans. The savings would be huge.
According to an example provided by higher education expert Mark Kantrowitz, a borrower who made $40,000 a year would currently have a monthly student loan payment of around $151 under the existing Revised Pay As You Earn Repayment, or REPAYE, plan. But with the new option, that monthly bill would plummet to $30.

I have significant concerns that there will be some big servicing delays.

Betsy Mayotte
president of The Institute of Student Loan Advisors

To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
If you do decide to change your repayment plan, Mayotte recommends submitting that application to your servicer well ahead of the timeline for payments to restart. Lenders will likely be overwhelmed when they have to begin collecting loan payments from tens of millions of people again, Mayotte said.
“I have significant concerns that there will be some big servicing delays,” she said.

Explore other forgiveness options

The Biden administration has recently made a number of improvements to the Public Service Loan Forgiveness program, which allows those who work for the government and certain nonprofits to get their debt cleared after a decade of payments.
There are typically three primary requirements for public service loan forgiveness, although the recent changes provide some more wiggle room in certain cases:

Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service.
Your loans must be federal Direct loans.
To reach forgiveness, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

The best way to find out if your job qualifies as public service is to fill out the so-called employer certification form. In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.

Jayk7 | Moment | Getty Images

What’s more, there are dozens of other forgiveness programs across the country that many borrowers are in the dark about, Kantrowitz said.
“There is no global database of all student loan forgiveness options,” he said.
For example, full-time teachers who work for five consecutive years in a low-income school may be eligible for up to $17,500 in loan forgiveness under the Teacher Loan Forgiveness Program.
The Nurse Corps Loan Repayment Program, meanwhile, allows certain nurses to get up to 85% of their student debt canceled.

File for bankruptcy

Among other reforms to the federal student loan system under Biden are new guidelines that will make it easier for those severely burdened by their student debt to discharge it in bankruptcy.
Currently, it’s difficult, if not impossible, for someone to walk away from their federal student debt in a normal bankruptcy proceeding.
“The new rules do give some hope to federal loan borrowers who may be struggling with their loans for 10 years or more,” Mayotte said.
The federal government will be less likely to object to borrowers’ attempts at discharging their debt, Mayotte said, if they have a record of making an effort to repay their student loans but don’t have a high enough income to cover the bill while also meeting their basic needs.

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The IRS makes annual inflation adjustments, including changes to the federal income tax brackets, standard deduction and more.
Based on soaring prices, the agency boosted the income thresholds for each bracket for 2023, applying to returns filed in 2024.
“This year’s annual adjustments are more significant than usual,” said Mark Steber, chief tax information officer at Jackson Hewitt.

Drakula & Co. | Moment | Getty Images

After a year of soaring prices, the IRS made annual inflation adjustments for dozens of tax provisions, including the federal income tax brackets for 2023, which may affect next year’s taxes, experts say.
While the rates didn’t change, the brackets show the federal income taxes you’ll owe on each portion of your taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

“This year’s annual adjustments are more significant than usual,” said Mark Steber, chief tax information officer at Jackson Hewitt, noting that “record-setting high inflation” contributed to the change.
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Steber said you’re likely to notice a difference on next year’s tax return.
The goal of yearly inflation adjustments is to offset “tax rate bracket creep,” he said, which happens when you owe more income taxes after wage increases without economic benefit due to inflation.

How the 2023 federal income tax brackets changed

There was roughly a 7% change in the federal income tax brackets from 2022 to 2023, said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute.

“That was a larger increase than usual,” he said. “And that is because inflation has been higher than usual,” explaining that inflation was “very modest” the decade prior to the pandemic.

How other tax provisions changed for 2023

The standard deduction also increased by nearly 7% for 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers may claim $13,850, an increase from $12,950.
With roughly 90% of Americans claiming the standard deduction rather than itemized deductions, the change may have a “large impact on taxpayers’ bottom line in 2023,” Steber said.
There were also boosts for dozens of other tax provisions, including the 401(k) and individual retirement account contribution limits, federal estate tax exemptions and more.
Of course, the impact of these shifts may vary by individual. “Each taxpayer situation is unique and any changes or adjustments can impact taxpayers very differently, depending on their facts and circumstances,” Steber said.
“Overall, it can be good for some, but not as favorable to others,” he added.

How to prepare for 2023 tax bracket changes

With tax law changes going into effect and others being proposed, 2023 may be “another year for the record books in terms of tax complexity and tax refund volatility,” Steber said.
To prepare, he urges taxpayers to “pay close attention to their taxes throughout the year,” including a mid-year check-up and another in December to avoid “refund shock” or a possible surprise balance at tax time.  

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In a race to overcome the Covid learning gap, billions in federal aid are now being put to work.
Still, states and school districts have spent less than half of their Elementary and Secondary School Emergency Relief funds, according to the latest federal data.
A deadline looms: The rest of that money must be allocated or spent by 2024, or it will be lost.

During the coronavirus pandemic, child reading and math competency rates plummeted across the country.
The National Assessment of Educational Progress found two decades of improvements were wiped away. The declines were widespread, but were most pronounced among the students who had already been struggling well before 2020.

In a race to overcome the Covid-19 learning gap, billions in federal aid are now being put to work.
While schools are trying to make up for the educational fallout from such a prolonged period of academic disruption, a deadline looms: States and school districts have now spent less than half of their Elementary and Secondary School Emergency Relief funds, according to the latest federal data — and the rest of that money must be allocated or spent by September 2024, or it will be lost.
“The money is going to be gone in a year or two,” said Bruce Baker, a professor and chair of the Department of Teaching and Learning at the University of Miami.
More from Personal Finance:College is still worth it, research findsHow to decide if you should go back to schoolThe Supreme Court weighs in on student loan forgiveness
“The federal government stepped up big, but that will phase out,” Baker said. The money has helped, he added, but these efforts need to be sustained. “You can’t do this for two or three years and expect things to be all good.”

Those with ‘the greatest need’ had ‘the greatest losses’

In fact, it could take decades for students to fully catch up, according to a January 2023 report by the consulting firm McKinsey & Co.
“For some students it’s going to take a longer period of time,” said Ray Sanchez, superintendent of the Ossining Union Free School District in Ossining, New York.
The pandemic disproportionately impacted the lowest-performance schools and students, the McKinsey report also found, putting them further behind their high-performing peers. 
“The schools that had the greatest need suffered the greatest losses,” Baker said.
Of the Ossining district’s 5,100 students, most are minorities and 70% live in poverty. With the additional resources, the district hired more full-time staff to support students in literacy and math, but Sanchez said he always knew those funds would be short-lived. “It wasn’t something we predicted would have 10 years of funding.”
Now the district must try to integrate what’s working into the general budget, he said. “We are seeking to try and sustain as much as we can.”

I don’t even know if you were a superintendent how you can sleep at night.

Jen Mendelsohn
co-founder of Braintrust Tutors

“I don’t even know if you were a superintendent how you can sleep at night,” said Jen Mendelsohn, co-founder of Braintrust Tutors.
“For better or worse, Covid created a perfect storm that needed immediate reaction,” Mendelsohn said.
“Schools understand the sense of urgency from a learning gap perspective, but that doesn’t mean they are able to implement a program very quickly and that is a challenge,” she added. “The bureaucracy is real.”

There’s no one-size-fits-all strategy

Not only do learning delays differ by state and region, but the recovery efforts do, as well.
There is no one-size-fits-all strategy. Some school districts have hired additional teachers, tutors, school counselors and psychologists, others have started summer and after-school programs or implemented plans to identify students’ weak spots.
“Each district is so different,” said Kusum Sinha, superintendent of Garden City Public Schools in New York, which is considered high performing.
With federal funding, the Garden City school district hired more staff, added before- and after-school tutoring in math and reading, and created an in-person and online summer program. “If we run out of money, we’re going to have to figure out a way to continue,” Sinha said.
Other districts facing a staffing shortage are also using the funds to avoid layoffs or contracting private tutoring companies, many of which operate online. 

Justin Paget | DigitalVision | Getty Images

‘Tutoring is one of the most promising approaches’

“Tutoring is one of the most promising approaches for accelerating student learning and reducing educational disparities,” according to a working paper of the Annenberg Institute for School Reform at Brown University.
However, there is still little data on which programs are most effective, studies show.
Even when tutoring is available, struggling students are far less likely to opt in than their more-engaged and higher-achieving peers, the Annenberg paper also found.
“Concerns that opt-in resources can increase — instead of reduce — inequality are valid,” Annenberg’s researchers said.
“Research provides evidence that struggling and marginalized students will be less likely to take advantage of elective educational options, leading to the expansion, instead of reduction of educational disparities.”

The economic consequences of learning loss

There are economic repercussions to learning loss, as well.
Students may now face lower lifetime incomes, and a lower-skilled future workforce means states will see less economic activity in the years ahead, according to a research paper on the economic cost of the pandemic based on NAEP data, by Eric Hanushek, a senior fellow at Stanford University’s Hoover Institution.
Although the economic loss depends on both the learning losses suffered by students and the state’s economic standing, the report also said there were “significantly larger impacts on disadvantaged students who tended to fare worse during the pandemic.”
“Extensive research demonstrates a simple fact: those with higher achievement and greater cognitive skills earn more,” Hanushek found.
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There are roughly six weeks until the April 18 federal tax deadline for most Americans.
If you haven’t filed your tax return yet, there are some key things to know, according to tax experts.
“Every tax season has its own unique challenges,” said Mark Jaeger, vice president of tax operations at TaxAct.

Getty Images

1. Tax refunds may be ‘somewhat lower’ this season

While this year’s tax season kicked off with a flood of returns, early filings have slowed, according to Jaeger.
He believes the change in refunds is the reason why early returns have tapered off. “What we’re seeing is refunds are going down and more people have a balance due,” he said. 

The average refund was $3,079 as of Feb. 24, compared to $3,473 one year prior — about an 11% decline, according to the IRS. Of course, the average may change with millions of returns still to come.

What we’re seeing is refunds are going down and more people have a balance due.

Mark Jaeger
Vice president of tax operations at TaxAct

Typically, you receive a federal refund when you overpay the year’s taxes or withhold more than what you owe. The IRS warned in January that refunds this year may be “somewhat lower” than last year due to expiring pandemic relief that delivered tax breaks in 2021. 
In 2021, many families got a boost from the enhanced child tax credit, worth up to $3,600 per child, and child and dependent care tax credit of up to $4,000 per dependent. But those tax breaks, among others, have reverted to previous levels.
“Now you’re seeing this drop-off because you have people who are either less sure because they maybe getting a smaller refund,” Jaeger said. “Or they actually owe the IRS money … nobody really wants to pay that balance due until April 18.”

2. Avoid refund delays with a complete, accurate return

One of the best ways to avoid refund delays is by filing a complete and accurate return, according to the IRS. Typically, the agency issues refunds within 21 days for error-free, electronically filed returns with direct deposit for the payment.
However, experts say it’s critical to have all your tax forms ready before sending your return. Employers and financial institutions send tax forms every year, with a copy going to taxpayers and the IRS.

“If anything is furnished on a tax statement, the IRS knows it’s coming,” said Nicole DeRosa, senior tax manager at accounting firm Wiss, noting the missing information may trigger a tax notice from the agency, along with possible penalties and interest.
You can make a checklist of the forms you may need by reviewing last year’s tax return, experts suggest. If you’re still not ready by April 18, you can file for an extension, Jaeger said. But you still must pay your balance due by the tax deadline to avoid racking up penalties and interest.

3. There’s a one-year delay for 1099-K reporting

Whether you’re a gig economy worker, online seller or transfer money between family and friends, payments from apps like Venmo or PayPal have become a confusing tax topic.  
Although business income has always been taxable, individuals and the IRS shouldn’t receive Form 1099-K unless 2022 payments crossed a threshold of more than 200 transactions worth an aggregate above $20,000.
If you receive the form by mistake, the IRS says to contact the issuer immediately. But tax professionals say to include the form’s details on your return to avoid a mismatch at the agency. “If you did get one, you want to report it,” Jaeger said.

Originally, the threshold for 1099-K reporting was set to change for 2022, dropping to $600 for even a single transaction. This means many more filers would have received Form 1099-K this season — but the IRS delayed the reporting change until 2023.
However, even if you don’t receive the form for 2022 business payments, you still need to include that income on your tax return, DeRosa said.

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NVIDIA President and CEO Jen-Hsun Huang
Robert Galbraith | Reuters

Recession risk is on the minds of investors, particularly as the Federal Reserve remains resolute in hiking interest rates.
In these tough times, investors would be well advised to find stocks that are positioned to navigate a potential economic downturn.

related investing news

To help with the process, here are five stocks chosen by Wall Street’s top professionals, according to TipRanks, a platform that ranks analysts based on their past performance.

Nvidia

Chip giant Nvidia (NVDA) has been under pressure due to the slump in the PC gaming market. Revenue and earnings declined in the fiscal fourth quarter compared to the prior year, but the company managed to beat Wall Street’s expectations due to the year-over-year rise in data center revenues.
Investors cheered Nvidia’s first-quarter revenue guidance and CEO Jensen Huang’s commentary about how the company is well-positioned to benefit from the heightened interest in generative artificial intelligence (AI).   
Jefferies analyst Mark Lipacis expects Nvidia’s data center revenues to reaccelerate year-over-year beyond the first quarter and grow 28% in 2023 and 30% in 2024, supported by higher AI spend. (See Nvidia Stock Chart on TipRanks) 
Lipacis said, “In contrast to INTC/AMD noting cloud inventory builds, NVDA discussed a positive H100 ramp (already crossing over A100 in just second quarter after launch), accelerating DC [data center] revs YY beyond C1Q23, and alluded to better visibility and more optimism for the year due to increasing activity around AI infrastructure, LLMs [large language models], and generative AI.”

The analyst views Nvidia as a “top pick” following the recent results, and reiterated a buy rating. He raised the price target for NVDA stock to $300 from $275.
Lipacis is ranked No. 2 among more than 8,300 analysts on TipRanks. His ratings have been profitable 73% of the time, with each rating delivering a return of 27.6%, on average.

Ross Stores

Ross Stores (ROST) delivered upbeat results for the fourth quarter of fiscal 2022, as the off-price retailer’s value offerings continued to attract customers. However, the company issued conservative guidance for fiscal 2023 due to the impact of high inflation on its low-to-moderate income customers.
Following the results, Guggenheim analyst Robert Drbul, who is ranked 306th among the analysts on TipRanks, lowered his fiscal 2023 earnings per share estimate for Ross Stores to reflect the impact of persistent macro headwinds.
Nonetheless, he expects Ross Stores’ earnings to return to double-digit growth in fiscal 2023, driven by a higher operating margin, the accelerated opening of new stores and the company’s share buyback program.
Drbul reiterated a buy rating for Ross Stores and a price target of $125, citing “the favorable environment for the company given greater supply of branded goods in the marketplace, stronger value proposition, and broader assortment compared to pandemic levels.”
Drbul has delivered profitable ratings 63% of the time, and his ratings have generated an average return of 9.1%. (See Ross Stores Hedge Fund Trading Activity on TipRanks)

Kontoor Brands

Next on our list is another consumer discretionary company – Kontoor Brands (KTB), which owns the iconic Wrangler and Lee Brands. Shares of the clothing company rallied on the day it reported solid fourth-quarter results and issued a strong outlook for 2023.   
Williams Trading analyst Sam Poser noted that the demand for Wrangler and Lee continues to improve, fueled by the company’s brand-enhancing initiatives. Further, he thinks that Kontoor’s fiscal 2023 outlook “will likely prove conservative.” He expects the company’s revenue growth in China to turn positive in the second quarter and sequentially accelerate thereafter.
Poser raised his fiscal 2023 and 2024 earnings per share estimates, reiterated his buy rating for Kontoor Brands and increased the price target to $60 from $53. (See Kontoor Brands Insider Trading Activity on TipRanks)
“The combination of better than expected 4Q22 results, led by a 20% increase in U.S. DTC [direct-to-consumer] revenue, ongoing improvements in the positioning of both the Wrangler & Lee brands, and reasonable guidance, are indicative of ongoing improvements in KTB’s consumer facing capabilities and its overall operations,” said Poser.  
Poser is ranked 134th among the analysts tracked by TipRanks. Further, 55% of his ratings have been successful, generating a return of 17.7%, on average.

Fiserv

Fiserv (FISV), a provider of payments and financial services technology solutions, is also on our list this week. Last month, the company announced its fourth-quarter results and assured investors about being well-poised to deliver its 38th consecutive year of double-digit adjusted earnings per share growth, supported by recent client additions, solid recurring revenue and productivity efforts.
Tigress Financial analyst Ivan Feinseth noted that Fiserv continues to experience strong business momentum, thanks to the performance of its payments product portfolio and the strength in Clover, the company’s cloud-based point-of-sale and business management platform. (See Fiserv Financial Statements on TipRanks)
“FISV’s diversified product portfolio and industry-leading technology position it at the forefront of the ongoing secular shift to electronic payments and the growing use of connected devices to deliver payment processing services and financial data access,” said Feinseth. The analyst reiterated a buy rating for FISV stock and raised the price target to $154 from $152.
Feinseth holds the 176th position among more than 8,300 analysts tracked on the site. Moreover, 62% of his ratings have been profitable, his ratings generating an average return of 12.3%.

Workday

Workday (WDAY), a provider of cloud-based finance and human resources applications, issued a subdued outlook for fiscal 2024, which overshadowed better-than-anticipated results for the fourth quarter of fiscal 2023.
Baird analyst Mark Marcon noted that Workday continues to gain market share in human capital management and financial management solutions in the enterprise space, though its pace of growth ahead is “slightly tempered by macro uncertainty.”
Marcon also noted that despite elongated enterprise sales cycles due to macro pressures, Workday gained seven new Fortune 500 and 11 new Global 2000 customers in the fiscal fourth quarter. The analyst said that the new co-CEO Carl Eschenbach is “quickly making a mark on WDAY” and that the company is expected to reaccelerate subscription revenue growth to the 20% level once the macro backdrop is normalized.
“While our near-term expectations are more muted, we believe the valuation relative to the long-term potential continues to be attractive considering WDAY’s high net revenue retention (over 100%), high GAAP gross margins, strong FCF [free cash flow] and strong growth potential given financials moving to the cloud,” said Marcon.
The analyst slightly lowered his price target for Workday stock to $220 from $223 to reflect near-term pressures. He reiterated a buy rating, given the company’s long-term growth potential.
Marcon ranks 444th out of the analysts followed on TipRanks. His ratings have been profitable 60% of the time, generating a 13.5% average return. (See Workday Blogger Opinions & Sentiment on TipRanks)

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The New Road to Retirement

Without action from Congress, Social Security may only be able to pay full benefits for another decade.
As lawmakers weigh potential fixes, getting bipartisan agreement won’t be easy.

Pascal Broze | Onoky | Getty Images

To be sure, other changes may be on the table.
Sens. Angus King, I-Maine, and Bill Cassidy, R-La., are reportedly leading a bipartisan coalition to propose changes including raising the retirement age to 70. Their plan also reportedly calls for the creation of a sovereign wealth fund that could invest Social Security’s funds in stocks. If the returns on those funds fell short, that could trigger more wages to be subject to payroll taxes, as well as higher rates on those levies.
Spokesmen for the Cassidy and King declined to provide further details, noting the plan is not finalized.

Meanwhile, Senate Democrats led by Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., last month reintroduced legislation that calls for reapplying the Social Security payroll tax on wages over $250,000. It would also require wealthy individuals to pay a 12.4% tax on business and investment income. The plan would also add $2,400 per year to benefits.
Discussion about how to shore up Social Security has increased since President Joe Biden’s State of the Union address, during which he prompted both sides of the aisle to promise not to cut the program.

“I will not cut a single Social Security or Medicare benefit,” the president vowed later that same week at an event in Florida.
Yet the clock is ticking to shore up the program.
A recent Congressional Budget Office report projected Social Security’s combined funds may run out in 2033, two years sooner than the Social Security actuaries estimated last year. Once those depletion dates are reached, that would mean benefit cuts of 23% or 20%, respectively.
Changes to prevent those cuts may have profound effects on Americans’ retirements and the U.S. wealth distribution.

Raising retirement age may be a 20% benefit cut

The Social Security full retirement age is gradually changing to 67, based on changes enacted in 1983.
Lawmakers are considering raising the full retirement age again to age 70.
“This absolutely is a benefit cut,” said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.
The change would result in a 20% benefit cut across the board to lifetime benefits, she noted.
People who retire at 62, the earliest eligibility age, would see a 43% reduction from their full benefit, according to Romig. A $1,000 benefit, for example, would be reduced to $570.
“It would be hard for people to absorb that cut,” she said.

More from The New Road to Retirement:

Here’s a look at more retirement news.

While delaying benefits could help increase a beneficiary’s monthly checks, many people are not able to do that.
In 2021, 3 in 10 Social Security beneficiaries claimed at age 62. Of those who claimed at that age, about a quarter had already stopped working, Romig noted.
The most common reasons for retiring early were job losses, health issues or caregiving responsibilities.
Current beneficiaries and near retirees would likely be spared from any retirement age changes. But younger generations may feel the pinch. The Republican Study Committee budget, put forward by House leaders, has called for raising the full retirement age to 70 for people born in 1978 or later.

Payroll tax changes could target wealth inequality

In 1983, 90% of earnings were subject to Social Security taxes, which was a record high following the reforms Congress put in place, according to the Economic Policy Institute. In 2021, 81.4% of all wages were subject to Social Security taxes, as income inequality has led more earnings of high wage workers to fall over the cap.
That drop has caused big revenue declines for Social Security.
Cumulative losses since 1983 mean the Social Security trust fund had 50% fewer reserves, or $1.4 trillion less, as of 2022, according to the Economic Policy Institute. Between 2019 and 2021, about $26 billion in revenue was lost.
“It’s pretty clear that we need to tax higher earners’ wages that are spilling over that Social Security cap,” said Elise Gould, senior economist at the Economic Policy Institute.
In 2023, $160,200 of earnings are subject to Social Security payroll taxes. The tax rate is 6.2% for both employees and employers, or 12.4% for workers who are self-employed.
Warren and Sanders are calling for reapplying the Social Security payroll tax to income over $250,000, while also taxing certain business and investment income at 12.4%.
At a minimum, lawmakers should consider lifting the earnings cap to a level that results in 90% of earnings being subject to Social Security taxes, the Economic Policy Institute recommends.
“If we were back to that 90%, that would significantly increase revenues,” Gould said.

Leaders face tough trade-offs as debt ceiling looms

As Democrats resist benefit cuts, and Republicans oppose higher taxes, finding a compromise to fix the program will not be easy.
It will be crucial to look at the effects of any reform package in its entirely, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
A higher retirement age may be accompanied by other changes like a robust minimum benefit, for example, that can protect people at the bottom of the income distribution, Akabas said.
Just raising payroll taxes — without any benefit cuts — could provide enough money to shore up the program.
But some experts question whether that would be responsible when other tax increases are needed to pay for the country’s needs.
“If we rely only on more revenue from high income people to fix this problem, we’re not going to be able to tap that endlessly for other priorities that we have as a country, like a massive federal debt,” Akabas said.
It’s “dangerous” to think about Social Security without looking at the entire budget, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
“It’s very easy for people to pretend there’s [an] infinity [of] resources in our budget, and there are not,” she said. More