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An 8.7% cost-of-living adjustment for 2023 will provide Social Security beneficiaries with the biggest boost in four decades.
If you’re tempted to claim Social Security retirement benefits early, experts say it may be wiser to wait.

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Current Social Security beneficiaries are poised to receive an 8.7% boost to their benefits for 2023 starting this month, thanks to the highest cost-of-living adjustment in 40 years.
If you’re at or near Social Security’s retirement benefit eligibility age of 62, you may wonder if you should claim benefits to get in on the COLA increase.

Experts say it’s generally still best to wait.
“Don’t feel like you’re going to miss it if you don’t claim now,” said Joe Elsasser, founder and president of Covisum, a Social Security-claiming software company.
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Generally, if you claim Social Security retirement benefits at age 62, your monthly checks will be reduced. Wait until full retirement age — ranging from 66 to 67, depending on when you were born — and you will receive 100% of the benefits you earned. Put off claiming even longer — up to age 70 — and you will get up to an 8% boost for every year you delay passed full retirement age.
The COLA increases what is known as your primary insurance amount — the benefit due to you at your full retirement age — every calendar year after you turn 62, according to Elsasser.

As a result, people who are 63 this year will get the 8.7% cost-of-living adjustment, whether they have claimed their benefits or not, Elsasser said.
If they continue to wait, they also stand to receive higher benefits as the discounts for early claiming get reduced, he said.

This year’s lesson for pre-retirees

What retirees are experiencing now can also serve as a lesson for pre-retirees, Elsasser said.
For current beneficiaries, the 8.7% COLA is calculated based on their benefit amount. The longer you waited to claim, the bigger your benefit and, therefore, the bigger COLA you will see.
Those who claimed Social Security early still get the same COLA rate, but based on reduced benefit amounts.

To make up for the shortfall, they may have to tap their retirement investment portfolios for more money, provided they even have those assets to draw on. And they may have to make those withdrawals from portfolios that are down due to rocky markets just to keep their standard of living the same, Elsasser said.
The lesson? “A larger Social Security check certainly softens that blow,” Elsasser said.

What to do as you approach claiming age

Even if you are not yet on the brink of claiming benefits, you should be regularly checking your Social Security statements, particularly to make sure your earnings are correctly recorded, said Jim Blair, vice president of Premier Social Security Consulting and a former Social Security administrator.
“If there’s a mistake, the sooner you catch it, the easier it is to fix,” Blair said.
Even if you plan to wait to claim until full retirement age or later, it’s wise to keep tabs on your estimated benefit amounts, he said.
Starting to do so no later than your late 50s may help you plan for other streams of retirement income, Blair said.

One question to keep in mind when deciding when to claim Social Security is whether your spouse will also rely on your benefits for income. This may make a big difference to their standard of living if you die and they are forced to rely on one income.
“The longer you wait, not only the higher your benefit’s going to be, but the higher the surviving spouse will receive,” Blair said.
There are reasons you may want to claim earlier, such as if you have a child who may be eligible for benefits based on your record.
“You need to look at all of your overall situation before you decide when to apply,” Blair said.

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The U.S. Department of Education proposed regulations Tuesday that would reduce the monthly bills for certain federal student loan borrowers.
The new repayment plan could lower monthly payments for certain borrowers to 5% of their discretionary income, from 10%.
Some borrowers may save $2,000 a year from the change, according to a fact sheet.

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The U.S. Department of Education proposed regulations Tuesday that would reduce the monthly bills for certain federal student loan borrowers.
Under the proposal, the administration of President Joe Biden would overhaul one of the existing income-driven repayment plans, known as Revised Pay As You Earn or REPAYE, which caps borrowers’ bills at a percentage of their discretionary income.

“We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed,” U.S. Secretary of Education Miguel Cardona said in a statement.
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The new REPAYE plan would reduce monthly obligations by as much as a half, according to a fact sheet from the Education Department. A typical graduate from a four-year public university could save around $2,000 annually under the new plan, it says.
Currently, the most affordable income-driven repayment plan requires borrowers to pay 10% of their discretionary income each month to their student debt. This change would lower that ceiling to 5%.
The plan should officially be available July 1, 2024, according to higher education expert Mark Kantrowitz, but some parts of it may be implemented sooner.

Payment plans based on student loan borrowers’ income date back to the mid-’90s. They provide an alternative to the standard repayment plan that spreads debt obligations evenly over a decade, or 120 months. Income-based plans typically trade lower payments for a longer repayment timeline, with any remaining balance forgiven.

Future of student loan forgiveness uncertain

The announcement comes while the fate of Biden’s sweeping student loan forgiveness plan remains uncertain. At the end of February, the U.S. Supreme Court plans to hear oral arguments on the policy.
Biden announced in August that tens of millions of Americans would be eligible for cancellation of their education debt — up to $20,000 if they received a Pell Grant in college, a type of aid available to low-income families, and up to $10,000 if they didn’t.
Since then, Republicans and conservative groups have filed at least six lawsuits to try to kill the policy, arguing that the president doesn’t have the power to cancel consumer debt without authorization from Congress and that the policy is harmful.

Two of those challenges have been successful in at least temporarily blocking the Biden administration from proceeding with its plan.
The Biden administration insists that it’s acting within the law, pointing out that the Heroes Act of 2003 grants the U.S. secretary of education the authority to make changes related to student loans during national emergencies. The country has been operating under an emergency declaration due to Covid since March 2020.
The government also says that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation is necessary to stave off a historic rise in delinquencies and defaults.

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This jackpot marks the fourth time that the game’s grand prize has climbed past $1 billion.
The upfront cash option, which most jackpot winners choose, is $568.7 million.
It’s important to set parameters for how much of your windfall you’d share and under what circumstances, experts say.

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If you’ve never had family or friends hit you up for money, that is likely to change if you were to win the $1.1 billion Mega Millions jackpot.
The grand prize has been climbing through twice-weekly drawings since mid-October, with no ticket matching all six numbers drawn to land the grand prize. This marks the fourth time the game’s jackpot has passed $1 billion, and if won at this level it would be the fifth-largest lottery jackpot ever.

Of course, the advertised $1.1 billion is what you’d get if you were to choose to take your winnings as an annuity spread over three decades. The lump-sum cash option — which most jackpot winners choose instead — is $568.7 million.
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While a chunk of your winnings would go to taxes, the amount you’d end up with after those levies would be more than most people see in a lifetime. It also may make you a target for people who want a piece of your newfound wealth, experts say.
Of course, not everyone will be preying on you, said Emily Irwin, managing director of advice and planning at Wells Fargo Wealth & Investment Management. “But … you never know what’s going to happen.”
When “the inevitable asking for money occurs,” she said, “how can you make sure you feel comfortable saying yes or no?”

Here are some tips to head off trouble.

Share the news with as few people as possible

If you manage to beat the odds stacked against a single ticket hitting the jackpot — the chance of hitting the motherlode is about 1 in 302.6 million — one of the most important things to do is share the news with as few people as possible.
“It’s hard for even your inner circle of people not to say anything,” said certified financial planner Susan Bradley, founder of the Sudden Money Institute in Palm Beach Gardens, Florida.

If you can shield your identity from the public, that can help minimize who finds out and protect you from random strangers hoping to get a piece of your winnings. Some states allow you to claim anonymously, while in others you may be able to set up a legal entity — for example, a trust — that claims the windfall, thereby shielding your name from the public.

Create a plan for how and when to donate

Before you even claim your prize, you should set up a team of professionals to help you navigate your new wealth. This group should include at least an experienced attorney, financial advisor and tax advisor.
One thing you can think about during this pre-claiming phase, with the guidance of your team, is whether and how you want to use some of the winnings to benefit others.

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Some jackpot winners tap their philanthropic side by either setting up a private foundation or using other tax-advantaged ways to make charitable contributions. If you determine from the start which causes you want to support — say, protecting the environment or battling hunger — it can make it easier and more rewarding to use those charitable dollars, experts say.
You also could determine a yearly limit to what you give away, whether to charities or individuals.

Set up boundaries for money going to family, friends

For sharing with family and friends, you also should set up parameters, Irwin said.
“I think it’s helpful to think about under what terms you would gift money,” Irwin said. “Are you now the bank for family?
“If there’s a catastrophic event, will you be there?” she added. “If someone wants to start a business, would you be giving them seed money, or is it a loan?”
The benefit of establishing a plan, Irwin said, is that it can “eliminate feelings of guilt when you say no to individuals or organizations.”
Moreover, without boundaries, she said, “you could be in a position where you’re running through funds at an accelerated rate … and finding yourself saying yes more often than you wish.”

Additionally, keep in mind that some gifts come with “carrying costs” that need to be considered, Irwin said. For example, if you were to purchase an expensive home for yourself and each of your four siblings, those properties may come with ongoing, outsized bills and maintenance costs that you may be expected to cover.
Most importantly, winning hundreds of millions of dollars would be a chance to create long-term financial stability for you and loved ones if you approach it with foresight.
“Take care of yourself first and your family first,” Irwin said. “Make sure you don’t make decisions that could unduly harm your own balance sheet and comfort.”
Meanwhile, Powerball’s jackpot for Monday night’s drawing is $340 million (the cash option is $178.2 million). The chance of hitting Powerball’s top prize is a tad better than in Mega Millions: 1 in 292 million.

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As daily expenses stay high due to inflation, more Americans are relying on credit cards to make ends meet and fewer are able to pay their bills in full at the end of the month.
Now, 46% of credit cardholders carry debt from month to month, up from 39% last year, according to a new report by Bankrate.

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With day-to-day expenses staying high due to inflation, more Americans are relying on credit cards to make ends meet.
As the personal savings rate sank near an all-time low, credit card balances jumped 15% year over year, according to the latest quarterly report from the Federal Reserve Bank of New York, notching the largest increase in more than 20 years.

“With prices more than 8% higher than they were a year ago, it is perhaps unsurprising that balances are increasing,” the Fed researchers wrote in a blog post.
“The real test, of course, will be to follow whether these borrowers will be able to continue to make the payments on their credit cards.”
Now studies show fewer Americans are paying off their credit cards off in full.
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Nearly half, or 46%, of credit cardholders carry debt from month to month on at least one card, up from 39% last year, according to a new report by Bankrate.com.

“People are hanging in there for now, but some of the cracks are starting to show,” said Ted Rossman, senior industry analyst at Bankrate.
Not only can carrying a balance lower your credit score, but sky-high annual percentage rates also make credit cards one of the most expensive ways to borrow money.
The average credit card rate is now 19.6%, on average — at an all-time high — after rising at the steepest annual pace ever, in step with the Federal Reserve’s interest rate hikes to combat inflation.

Along with the Fed’s commitment to keep raising its benchmark until more progress is made, credit card rates will be over 20% by the end of the year, Rossman predicts.
Those with revolving debt tend to have even higher rates, he said. However, of those who carry a balance, 43% don’t even know the interest rate they’re being charged, Bankrate also found.

The math is ‘staggering’

At 19.6%, if you made minimum payments toward the average credit card balance — which is $5,474, according to Transunion — it would take you almost 17 years to pay off the debt and cost you more than $7,528 in interest, Bankrate calculated.
“The math is pretty staggering,” Rossman said.
The first thing you should do is acknowledge what you owe and the interest rate, he advised. Then, start to pay down the debt with a 0% balance transfer card.
A 0% balance transfer card is “the best weapon that you can have in your arsenal against credit card debt,” said Matt Schulz, LendingTree’s chief credit analyst. 

“If you don’t take steps to knock that debt down, it will only get more expensive,” Schulz said. 
Cards offering up to 21 months with no interest on transferred balances “are still widely available,” he added.
Making the best use of a balance transfer boils down to making those payments on time and aggressively paying down the balance during the introductory period, according to Schulz.
If you don’t pay the balance off, the remaining balance will have a higher APR applied to it, which is generally about 23%, on average, in line with the rates for new credit.
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January is the best time of the year to draft a budget, as well as to check in with your savings goals, experts say.
Even increasing your retirement savings contributions by 1% can have a powerful impact.

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New year, new you? Probably not.
One of the revelations that will likely come in 2023 is that you’re largely the same person as last year. You don’t suddenly love running or taking vitamins.

But sometimes it’s good when things don’t change, and the fact that many of the money moves we should be taking remain the same from one year to the next at least gives us more times to try to get them right.
Here are three of the most important actions to take now (and at the start of every year), financial experts say:

1. Update your budget

“The new year is a chance to reflect and start fresh,” said Brian Bender, head of Schwab Retirement Plan Services. “That should include your financial plan.”
Bender recommends making a list of any big expenses you anticipate for the coming year, including a possible move, marriage or pricey vacation.
You want to factor these costs into your budget and be prepared for them, he said. Similarly, if you’re making a career change or expecting a raise at work, you’ll want your new budget to reflect it.

To get an understanding of how much you spend, look back at your purchases over the last couple of months, said Kimberly Palmer, personal finance expert at NerdWallet.
“From there, you can create a ballpark estimate of where you want your money to go,” Palmer said.
One helpful rule of thumb, she added, is the 50/30/20 budget, which allocates “50% of your take-home pay toward needs, 30% toward wants and 20% toward savings and debt.”

2. Review your emergency savings

Having a solid emergency savings account is one of the best ways to sleep soundly at night, said Cristina Guglielmetti, president of Future Perfect Planning in Brooklyn.
The amount of money people need salted away varies, Guglielmetti said, and the start of the year is the perfect time to assess how much is best for you.
To begin, you’ll typically want to calculate your key monthly expenses, including rent, food and utilities and pet care, and then decide on a number of months you want the account to be able to cover should you lose your job. (Of course, that money would also come in handy for a one-time emergency such as an unexpected car repair or a medical bill.)
“It could be low, like one to three months, especially if there are other pools of savings to pull from, the possibility of family support or if one or both jobs is very stable,” Guglielmetti said. “Or, it can go as high as nine to 12 months if someone just prefers that kind of safety.”

She recommends keeping the cash in a high-yield savings account. You’ll just want to make sure any account you put your savings in is FDIC insured, which means up to $250,000 of your deposit (per accountholder, per bank) is protected from loss.

3. Make sure you’re on track for retirement

The start of a new year is the best time to check in with your retirement savings goals and to make any needed changes, experts say.
Some people may be able to take advantage of the increased annual contribution plan limits for 401(k) workplace retirement plans ($22,500) and individual retirement accounts ($6,500), Guglielmetti said.
Workers age 50 and older can qualify to make additional “catch up” contributions.
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Yet even a small increase in your savings rate can be powerful, said Rita Assaf, vice president of retirement with Fidelity Investments.
Assaf provided an example: For someone 35 who is making $60,000 a year, upping their retirement saving contribution by 1% (or less than $12 a week), could generate an additional $110,000 by retirement, assuming a 7% annual return.
“If you have access to a 401(k) with a company match, try to save to at least your company match level,” Assaf added. “If you don’t, it’s like leaving free money on the table.”

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The IRS said Friday that it had finished issuing refunds to people who qualified for a federal tax break on up to $10,200 of unemployment benefits received in 2020.
The American Rescue Plan Act offered the tax break. President Joe Biden signed the law in March 2021, after many people had already filed their 2020 returns.
The IRS sent refunds to 12 million people. The average refund was $1,232.

The IRS building in Washington.
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The IRS has issued tax refunds to 12 million people eligible for a tax break on unemployment benefits received in 2020, when the pandemic caused joblessness on a scale unseen since the Great Depression.
The refund payments — which totaled $14.8 billion — are the result of the American Rescue Plan Act of 2021. The law waived federal tax on up to $10,200 of unemployment benefits per person.

However, President Joe Biden signed the law in March 2021, after many households had already filed their tax returns. As a result, millions of them effectively overpaid their federal taxes and qualified for relief.
The IRS said Friday it had completed correcting those tax overpayments for qualifying individuals. The average tax refund associated with those corrections was $1,232.
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In total, the agency corrected 14 million tax returns, the agency said. Taxpayers who didn’t get refunds as a result of the correction may have had the overpayment applied to taxes due or other debts, for example. The IRS mailed letters informing these taxpayers of the corrections and advised keeping them with their tax records.
Taxpayers with income of $150,000 or more were not eligible for relief.

Complex returns delayed relief for some

The federal tax waiver made some households eligible for other income-dependent tax breaks, like the earned income tax credit, child tax credit and the recovery rebate credit (more commonly referred to as a “stimulus check”). Many of the adjustments included such corrections, according to the IRS — another complexity that contributed to delays.
Taxpayers eligible for the unemployment tax break whose account was not corrected by the IRS may need to file an amended 2020 tax return to claim it and any applicable tax credits they may qualify for due to that relief, the IRS said.
However, taxpayers shouldn’t file an amended return if they already filed one claiming the tax break, the IRS said. The agency directed taxpayers to an online FAQ related to the unemployment waiver if they have questions.

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Finding higher pay is one way workers can combat high inflation.
But a limited window of opportunity may be gone in six months.

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New government jobs data shows the U.S. labor market is still strong, with a record low unemployment rate of 3.5%.
“The unemployment rate is the lowest in 50 years,” President Joe Biden said on Friday. “We have just finished the two strongest years of job growth in history.”

Yet as the Federal Reserve looks to curb inflation, there is the risk the job market may decline in 2023. The question is whether that will result in a “soft landing” or full-blown recession.
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“A soft, beautiful perfect landing is still going to mean a lot more layoffs and a much softer labor market,” said Andy Challenger, senior vice president at outplacement firm Challenger, Gray & Christmas.
For workers who are looking for jobs now, there’s a lot of urgency, he said.
“Today is better than it’s going to be six months from now,” Challenger said. “So I would try to make your moves as soon as possible.”

Job-switchers more likely to get a raise above inflation

The latest data shows job switchers have seen 7.7% wage growth as of November, while workers who have stayed in their jobs have seen 5.5%, noted Daniel Zhao, lead economist at Glassdoor, citing figures from the Atlanta Federal Reserve.
However, workers may not be currently seeing wage bumps quite that big, due to the fact that data looks back over the past year, he said.
Higher pay has been needed to keep up with inflation. The consumer price index, a measure for a wide basket of goods and services, was up 7.1% in November compared with the previous year.
Wage growth, based on average hourly earnings, is up 4.6% from a year ago.

“People who switch jobs are much more likely to be getting a raise above inflation than people who are staying in their jobs,” Zhao said.
One caveat is that real wage growth may exceed inflation in 2023, if present trends hold, according to Curt Long, chief economist and vice president of research at the National Association of Federally-Insured Credit Unions. 
But with a possible economic downturn looming, workers seeking higher pay face a more complex decision as to whether to stay or go.

‘Best way to know your worth is to get an outside offer’

The gap between wage growth for job switchers and job stayers is the highest on record, at 2.2 percentage points versus 0.7 percentage points historically, noted Julia Pollak, chief economist at ZipRecruiter.
“There’s a big incentive for workers to job hop,” Pollak said.
New pay transparency laws, which require employers to disclose the pay ranges they’re willing to offer new employees for advertised positions, may also help, she said.

Those laws are currently in effect in Colorado, California, Washington and New York City. In September, New York state will follow.
People who do not live in those areas can still find pay information on websites such as ZipRecruiter, Glassdoor and others, she said.
With pay rates so competitive now, even some laid-off workers are finding higher offers than what they were earning before, according to Pollak.
“The best way to know your worth is to get an outside offer, which makes the whole thing real,” Pollak said.

Look for a pay match in your current role

Workers who see new hires getting paid more may want to approach their current employer, Pollak noted.
Tell them you love your job, have learned a lot and are committed to the company, yet you have learned your income would be higher elsewhere. “If you can match that, I would be thrilled to stay,” Pollak suggested saying.
Employers may have more reason now to pay to retain talent. A record 4.5 million workers quit their jobs in November, an 8.9% increase from the previous month.

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“We’re still seeing a lot of job churn,” Long said. “People are leaving current jobs, finding new jobs, at a rate higher than it was previous to the pandemic, but it’s lower than it was early in 2022.”
Often to have a valid request for more pay, you have to put in the work and win job interviews and get job offers, according to Challenger.
“It’s the way you go out and verify your worth in the market,” Challenger said.
If you go that route, you must be prepared for the fact that your current employer may not match the offer.
“You do have to be willing to move,” Challenger said.

Changing jobs before a downturn is ‘a balance of risk’

Admittedly, the decision of whether to make a big career move right before an economic downturn is “always a balance of risk,” Challenger said.
If a company decides to pursue layoffs, they may follow a “last in, first out” policy that leaves the newest hires with pink slips. “It’s not risk-free to move jobs in the middle of a falling market,” Challenger said.
“But right now you have more leverage than you’re going to have six months from now,” he said.
While the job market is still healthy, it is not as hot as it was six or 12 months ago, Zhao said. In 2023, that may translate to slower hiring and subdued plans for pay raises, he said.

If you never take any risks, then it’s going to be difficult to get the pay raise or job that you want.

Daniel Zhao
lead economist at Glassdoor

Before making a move, it’s worth considering whether there are aspects of your job that can make up for not getting the exact raise you want. For example, if you can negotiate working from home one more day per week, that can help save money on gas or other transportation costs, Zhao said.
Also, consider other compensation in the form of benefits and the value of your happiness in your current position. “Base pay isn’t everything,” Zhao said.
After evaluating your options, the best approach is to take an “educated risk,” he said.
“If you never take any risks, then it’s going to be difficult to get the pay raise or job that you want that’s the right fit for you,” Zhao said.

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President Joe Biden’s student loan forgiveness plan may fall through due to challenges in Supreme Court.
Borrowers should explore the many other loan relief options across the country for which they may qualify.

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Popular repayment plans lead to forgiveness

After 20 to 25 years of payments, borrowers enrolled in so called income-driven repayment plans get any remainder of their debt cancelled by the federal government.
“Income-driven repayment plans are also student loan forgiveness plans,” Kantrowitz said.

In the meantime, borrowers’ monthly bills are capped at a share of their discretionary income, and some payments wind up being as little as $0. As a result, experts recommend that low-income borrowers explore the options.

Many qualify for Public Service Loan Forgiveness

Signed into law by then-President George W. Bush in 2007, the Public Service Loan Forgiveness program allows certain nonprofit and government employees to have their federal student loans canceled after 10 years, or 120 payments.
Although the program has had its fair share of problems, the Biden administration recently made a number of improvements to it.

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There are typically three primary requirements to qualify for the program, 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 a employer certification form.
In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.

Forgiveness options for teachers, nurses and others

In addition to those two main programs, there are numerous other forgiveness opportunities that many borrowers miss out on because they don’t know about them, experts say.
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 allows certain nurses to get up to 85% of their student debt cancelled.

There are many other opportunities for loan forgiveness that often go unknown…

Mark Kantrowitz
higher education expert

Health professionals who commit to at least two years of service in a Native American community can receive as much as $40,000 in student loan assistance through the Indian Health Service Loan Repayment Program.
The John R. Justice Student Loan Repayment Program provides loan assistance of up to $4,000 a year, or as much as $60,000 in total, to state and federal public defenders and state prosecutors who agree to remain employed in those positions for at least three years.
Federal agencies also offer student loan repayment assistance programs, Kantrowitz said. Agencies can make payments to a federal employee of up to $10,000 a year, for a total of $60,000, according to the U.S. Office of Personal Management.
Meanwhile, there are numerous state-level student loan forgiveness programs.

For example, the Get on Your Feet Loan Forgiveness Program in New York offers certain recent graduates who are enrolled in an income-driven repayment plan relief equaling 24 months of payments.
And lawyers in Texas who work for specific legal aid programs may be eligible for the Texas Student Loan Repayment Assistance Program.
“Student loan forgiveness is based on the borrower’s occupation, in most cases,” Kantrowitz said. “So they should look for forgiveness based on their job, especially for their state.”

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