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A new forecast shows companies are planning 4.6% salary increases in 2023, up from a mid-year estimate of 4.1%.
The latest inflation reading showed a 7.7% rise in prices in October from a year earlier.
The Federal Reserve has raised a key interest rate six times this year in an effort to bring down the rate of inflation.

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The Fed aims for a 2% annual rate of inflation

While inflation is a normal part of an economy, the current rate is far above the Federal Reserve’s target of 2%.
So far this year, the Fed’s rate-setting committee has boosted a key interest rate six times in its ongoing effort to bring down the rate of inflation. The general idea is that by raising the cost of borrowing money, spending will decline and there will be less inflationary pressure due to lower consumer demand.

This also can lead to job losses. Nevertheless, although there’s been an uptick in layoffs, the unemployment rate is relatively low at 3.7%, according to the latest reading.

Boston Federal Reserve President Susan Collins expressed confidence Friday that inflation can be tamed without a big jump in unemployment.
“I remain optimistic that there is a pathway to re-establishing labor market balance with only a modest rise in the unemployment rate — while remaining realistic about the risks of a larger downturn,” Collins said in prepared remarks for a Boston Fed economic conference.

While the job market could look different months from now, the current shortage of workers is a challenge for companies: 75% of the WTW survey respondents said they struggle with attracting and retaining talent, thus the bigger salary budgets. Employers also are providing more workplace flexibility (67%) and are placing a broader emphasis on diversity, equity and inclusion (61%).
“As inflation continues to rise and the threat of an economic downturn looms, companies are using a range of measures to support their staff during this time,” said Hatti Johansson, a research director at WTW.
The WTW report is based on a survey conducted Oct. 3 to Nov. 4 and includes responses from 1,550 U.S. organizations.

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With persistent inflation eroding wage gains, more Americans are struggling financially just as the peak shopping season kicks into high gear.
Holiday spending could come at a high cost if it means tacking on additional credit card debt just as interest rates rise.

Just as the holiday shopping season gets into full swing, families are finding less slack in their budgets than before.
As of October, 60% of Americans were living paycheck to paycheck, according to a recent LendingClub report. A year ago, the number of adults who felt stretched too thin was closer to 56%.

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“More consumers who have historically managed their budgets comfortably are feeling the financial strain, which will impact their spending behavior as we head into the holiday shopping season,” said Anuj Nayar, LendingClub’s financial health officer.
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Not only are day-to-day expenses higher, but inflation has also caused real wages to decline.
Real average hourly earnings are down 3% from a year earlier, according to the latest reading from the U.S. Bureau of Labor Statistics.
A separate report by Salary Finance found that two-thirds of working adults said they are worse off financially than they were a year ago.

Already, credit card balances are surging, up 15% in the most recent quarter, the largest annual jump in more than 20 years.

People are trying to economize and make the most of what they have.

Cecilia Seiden
vice president of TransUnion’s retail business

Roughly half of shoppers said they will buy fewer things due to higher prices, and more than one-third said they will rely on coupons or other money-saving strategies, according to a separate survey by RetailMeNot.
More consumers also plan to finance their purchases this year with credit cards and buy now, pay later loans.
And 25% of shoppers said they would opt for cheaper versions or more practical gifts, such as gas cards, according to another holiday survey by TransUnion.
“People are trying to economize and make the most of what they have,” said Cecilia Seiden, vice president of TransUnion’s retail business.

Holiday debt ‘is easy to get into and hard to get out of’

Shoppers at the King of Prussia mall in King of Prussia, Pennsylvania, on Saturday, Dec. 4, 2021.
Hannah Beier | Bloomberg | Getty Images

Holiday spending could come at a high cost if it means tacking on additional credit card debt just as the Federal Reserve raises interest rates to slow inflation, according to Ted Rossman, a senior industry analyst at CreditCards.com. 
“Credit card debt is easy to get into and hard to get out of,” he said. “High inflation and rising interest rates are making it even harder to break free.”
Credit card rates are now up to 19%, on average — an all-time high — and those rates will continue to rise since the central bank has indicated even more increases are coming until inflation shows clear signs of a pullback.

“This makes it more likely for credit card companies to increase their interest rates and makes the money you owe more expensive over time,” added Natalia Brown, chief client operations officer at National Debt Relief.
The rise in inflation and interest rates means consumers need to be particularly mindful, she said.
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Charitable giving tends to pick up toward the end of the year.
Last year, individuals donated a collective $326.87 billion to charities, according to GivingUSA’s 2022 report.
Be sure not to succumb to high-pressure tactics from solicitors for a nonprofit, says an expert.

Vladimir Vladimirov | E+ | Getty Images

With the holiday season about to be in full swing, the giving spirit is likely to follow.
If you’re among those who plan to make charitable donations before the end of the year, it’s worth making sure you know exactly where your money is going and how it will be spent.

Charitable giving tends to pick up in November and December, with some donors motivated by so-called Giving Tuesday (Nov. 29 this year) or fundraising campaigns and others making sure they get their donations in by Dec. 31 to take advantage of a tax break for taxpayers who itemize their deductions.
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Most adults — 68% — say they plan to donate the same amount to charities that they did last year, according to a recent study from Edward Jones. More adults (17%) plan to increase their donations than decrease them (10%).
Last year, individuals donated a collective $326.87 billion to various nonprofits, accounting for 67% of all charitable giving, according to GivingUSA’s 2022 report.

Here are some tips for making sure your philanthropic money ends up where you want it to.

1. Avoid high-pressure tactics

Sometimes, charities will market matching gift campaigns that involve a deadline that’s fast approaching.
“It encourages to you to give without giving you time to research whether the charity will use your donation efficiently or not,” said Laurie Styron, executive director of CharityWatch.
“It’s much better to step back and think about the causes you care about … and target those charities, Styron said.
“If it’s high pressure, it’s usually not a good charity,” she said.

2. Vet the charity

You can consult websites such as CharityWatch, GuideStar and CharityNavigator, which all analyze and rate charities to varying degrees. The Better Business Bureau also offers insights through its Wise Giving Alliance.
Additionally, most nonprofits — excluding churches — are required to file a Form 990 yearly with the IRS. Donors can use a search tool on the IRS website to confirm an organization is tax-exempt and eligible to receive tax-deductible contributions.

You can also look at the nonprofit’s website for an annual report, which would also include useful information about how it spends donated money.

3. Give directly to the nonprofit

Sometimes, individuals are solicited by someone who says they are raising money on behalf of a charity, but are collecting the money themselves.
In those cases, you’d need to know whether the person definitely is going to pass on the money raised to the charity.
“Even if it’s a legitimate middle person or donation processor, they might be taking significant administrative or processing fees out of your donation,” Styron said.
Instead, she said, if that charity’s programs appeal to you, make the donation directly to the charity.

4. Beware of ‘scammy charities’

Sometimes, a person or group will take the name of a highly popular charity name and slightly change it, Styron said.
“A lot of times, scammy charities will leverage a familiar-sounding name to try to scam you out of your money,” she said. For instance, they might add “foundation” at the end of a charity’s name or “American” in front of the name to make it sound like a charity that is broadly trusted.
In other words, it’s yet another reason to make sure you look into a charity before you give.

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Retirement account balances sank for the third quarter in a row, according to Fidelity’s analysis.
Despite wild market swings, most savers kept their contribution rate steady, Fidelity also found.

Months of market swings have taken a heavy toll on retirement savers.
The average 401(k) balance sank for the third consecutive quarter and is now down 23% from a year ago to $97,200, according to a new report by Fidelity Investments, the nation’s largest provider of 401(k) plans. The financial services firm handles more than 35 million retirement accounts in total.

The average individual retirement account balance also plunged 25% year-over-year to $101,900 in the third quarter of 2022.

Still, the majority of retirement savers continue to contribute, Fidelity found. The average 401(k) contribution rate, including employer and employee contributions, held steady at 13.9%, just shy of Fidelity’s suggested savings rate of 15%.
“The market has taken some dramatic turns this year,” Kevin Barry, president of workplace investing at Fidelity, said in a statement. “Retirement savers have wisely chosen to avoid the drama.”
“One of the most essential aspects of a sound retirement savings strategy is contributing enough consistently — in up markets, down markets and sideways markets — to help reach your goals,” Barry said.
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Just 4.5% of savers changed their asset allocation in the most recent quarter, with most moving their savings into a more conservative investment option, Fidelity said. Some retirement savers seem to have been spooked after suffering big losses amid worries tied to inflation, interest rates, geopolitical turmoil and other factors, 401(k) administrator Alight Solutions also found.

‘It’s best to take a long-term approach to retirement’

“We encourage people not to make changes to their account based on short-term market events because often that can do more harm than good,” said Mike Shamrell, Fidelity’s vice president of thought leadership.
“It’s best to take a long-term approach to retirement.”
And despite the ongoing inflationary pressure straining most households, only 2.4% of plan participants took a loan from their 401(k), Fidelity said.
Federal law allows workers to borrow up to 50% of their account balance, or $50,000, whichever is less. However many financial experts similarly advise against tapping a 401(k) before exhausting all other alternatives since you’ll also be forfeiting the power of compound interest. 
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As day-to-day expenses continue to rise, Americans are taking on more debt.
Overall, credit card balances jumped 15% in the third quarter of 2022, notching the largest year-over-year increase in more than 20 years.
How much money you need to earn to cover expenses and save for the future comes down to understanding your net worth, experts said.

In an economy that has produced the highest inflation rate since the early 1980s, Americans are struggling to keep up with day-to-day expenses.
More consumers are now relying on credit cards to get by, which has helped propel total credit card debt to $930 billion in the third quarter, just shy of the all-time record, according to a new report from the Federal Reserve Bank of New York.

Credit card balances climbed more than 15% from a year earlier, the largest annual jump 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.”
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Why it’s ‘harder than ever’ to eliminate credit card debt

Meanwhile, “high inflation and high interest rates are making it harder than ever to pay down credit card debt,” said Ted Rossman, senior industry analyst for CreditCards.com.
Not only are credit card balances back to pre-pandemic levels, but consumers are also carrying balances for long periods.

Among Americans who carry credit card debt from month to month, 60% have been in credit card debt for at least a year, according to CreditCards.com.
As the Federal Reserve raises its target federal funds rate, credit card annual percentage rates are climbing as well. 

High inflation and high interest rates are making it harder than ever to pay down credit card debt.

Ted Rossman
senior industry analyst for CreditCards.com

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit. Cardholders usually see the impact within a billing cycle or two.
Already, credit card rates are roughly 19% — an all-time high — up from 16% earlier in the year.
Further, those rates will continue to rise since the central bank has indicated even more increases are coming until inflation shows clear signs of a pullback.
The best thing you can do now is pay down high-interest debt with a 0% balance transfer card, Rossman advised. Otherwise, consolidate and pay down credit cards with a lower-interest personal loan, he said.

Check your net worth to ‘provide clarity’ on priorities

How much money you need to earn to cover expenses and save for the future comes down to understanding your net worth and your goals, according to Paul Deer, a Boulder, Colorado-based certified financial planner and vice president of advisory service at Personal Capital.
Your net worth is essentially the sum of all of your assets — including cash, retirement accounts, college savings, house, cars, investment properties and valuables such as art and jewelry — minus any liabilities, or long-term debt, such as a mortgage, student loans, revolving credit card balances and any other personal loans.
“First and foremost, is your net worth growing or shrinking over time?” Deer said. If your net worth has been declining, it’s important to work on saving more and spending less. 

From there, consider the milestones you want to achieve going forward, Deer said, whether that’s retiring, buying a home or paying for your child’s or grandchild’s education.
“Laying those out can really help provide clarity over what you should be prioritizing today.”
Most people agree that they need to cut costs to build up their savings, and yet reports show consumers haven’t pulled back on food, entertainment or travel.
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Student loan default rates may spike if the Biden administration’s loan forgiveness plan is blocked, a top official at the U.S. Department of Education warns.
The department anticipates there “could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic,” Undersecretary James Kvaal said in the filing.

Student loan borrowers gather near The White House to tell President Biden to cancel student debt on May 12, 2020.
Paul Morigi | Getty Images Entertainment | Getty Images

Student loan default rates could dramatically spike if the Biden administration’s loan forgiveness plan is blocked, a top official at the U.S. Department of Education said in a new court filing.
The warning came as the Department of Justice asked a federal judge in Texas to stay an order that has temporarily blocked the Biden administration’s debt relief program.

“Unless the [Education] Department is allowed to provide debt relief, we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic,” Education Department Undersecretary James Kvaal said in the filing.
The Biden administration stopped accepting applications for its student loan forgiveness plan last week after Judge Mark Pittman of the U.S. District Court for the Northern District of Texas called the policy “unconstitutional” and struck it down.
Meanwhile, six GOP-led states argued in another lawsuit that the president’s loan relief program threatened their future tax revenues and circumvented congressional authority. Their challenge had been rejected by a federal judge, but then the states appealed and the 8th Circuit Court of Appeals in St. Louis issued a nationwide injunction temporarily barring the Biden administration from moving forward with its plan.

Student loans plagued with problems before Covid

Even before the pandemic, when the U.S. economy was enjoying one of its healthiest periods in history, problems plagued the federal student loan system.
Only about half of borrowers were in repayment in 2019, according to an estimate by higher education expert Mark Kantrowitz. About 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief for struggling borrowers, including deferments or forbearances.

These grim figures led to comparisons to the 2008 mortgage crisis.

Federal student loan payments have been on pause since March 2020, when the coronavirus pandemic first hit the U.S. and crippled the economy. Resuming the bills for more than 40 million Americans will be a massive task, and the Biden administration had hoped to ease the transition by forgiving a large share of student debt first.
However, since President Joe Biden announced his plan in August to cancel up to $20,000 for tens of millions of borrowers, conservative groups and Republican states moved quickly to try to block it. 
Despite offering student loan borrowers forbearances during previous natural disasters, default rates still skyrocketed, Kvaal said in the filing.
“[T]he one-time student loan debt relief program was intended to avoid” that problem, he added.

18 million borrowers most at risk for default

The borrowers most in jeopardy of defaulting are those for whom Biden’s student loan forgiveness plan would have wiped out their balance entirely, Kvaal said. The administration estimated its policy would do so for around 18 million people.
“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” Kvaal said. “This belief may well stop them from making payments even if the Department is prevented from effectuating debt relief.”
“Unless the Department is allowed to provide one-time student loan debt relief,” he went on, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”

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After a rough year for cryptocurrency, including the recent FTX collapse, there may be tax opportunities for crypto investors.
Despite recent losses, investors may have surprise gains for 2022, according to experts.

damircudic | Getty

After a rough year for cryptocurrency, taxes may not be a top priority for digital currency investors battered by steep losses.
But the falling crypto market and the recent collapse of digital currency exchange FTX may affect next year’s tax bill — and beyond, according to financial experts.

Despite recent losses, “gains from earlier in the year are still on the books,” said Andrew Gordon, tax attorney, CPA and president of Gordon Law Group.
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Typically, crypto trading is more active when the market is going up, and that’s when you are more likely to incur gains, he said.
However, it’s also possible to have profits even when the market drops, depending on when you bought and sold the assets.

The IRS defines cryptocurrency as property for tax purposes, and you must pay levies on the difference between the purchase and sales price. 

While buying digital currency isn’t a taxable event, you may owe levies by converting assets to cash, trading for another coin, using it to pay for goods and services, receiving payment for work and more.

How to reduce your crypto tax bill

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If you’re sitting on crypto losses, there may be a silver lining: the chance to offset 2022 gains or carry losses forward to reduce profits in future years, Gordon explained.
The strategy, known as tax-loss harvesting, may apply to digital currency gains, or other assets, such as year-end mutual fund payouts. After reducing investment gains, you can use up to $3,000 of losses per year to offset regular income. 
And if you still want exposure to the digital asset, you can “sell and rebuy immediately,” said Ryan Losi, a CPA and executive vice president of CPA firm, PIASCIK.
Currently, the so-called “wash sale rule” — which blocks investors from buying a “substantially identical” asset 30 days before or after the sale — doesn’t apply to cryptocurrency, he said. 

How the FTX collapse may affect your taxes

While crypto taxes are already complex, it’s even murkier for FTX customers. “There are different ways it can be treated, depending on the facts of the case,” Losi said.
You may be able to claim a capital loss, or “bad debt deduction,” and write off what you paid for the asset. But “it should only be done when that loss is certain,” Gordon said.
With FTX’s bankruptcy case in limbo, customers may opt to file for a tax extension and wait for more details to emerge, Losi said.
“It’s a question for the individual and their tax preparer,” Gordon added. “There’s not a clear way to go with it.”

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Simplified filing tools that enable individuals and families to submit their information to claim 2021 tax credits have final deadlines this week.
Here’s how individuals and families may still claim the $1,400 stimulus checks and enhanced child tax and earned income tax credits.

Thomas Barwick | Digitalvision | Getty Images

If you haven’t filed a 2021 federal tax return, there may be a chance you could be missing out on some generous tax credits.
A simplified filing tool — GetCTC.org — will let you submit your information in order to receive any money due to you.

But you have to act fast. The deadline to use GetCTC.org to claim the 2021 tax credits is Tuesday, Nov. 15 at 11:59 p.m. Pacific time.
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The advantage of using GetCTC.org is that it offers a simplified filing process, according to Roxy Caines, earned income tax credit campaign director at the Center on Budget and Policy Priorities.
For those who miss today’s deadline, there are other opportunities to claim the money, including next through the IRS Free File program that is open through Thursday, Nov. 17 until midnight Eastern time. Beyond that date, they will still be able to claim by filing a federal tax return.
“This is not the very last deadline,” Caines said. “People will be able to claim tax credits that they’re eligible for through Tax Day 2025.”

How much the 2021 tax credits are worth

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The American Rescue Plan Act passed by Congress in 2021 temporarily made enhanced tax credits available to millions of Americans.
That included a Recovery Rebate Credit that provided third stimulus checks of $1,400 per person.
It also made existing tax credits — the child tax and earned income tax credits — more generous.
The child tax credit included up to $3,600 for children under age 6 and $3,000 per child ages 6 through 17. Up to half of those amounts were paid in advance through monthly child tax credit payments. However, to claim the remaining sums — or the total amount if a family did not receive advance payments — they need to file a federal 2021 income tax return.
The earned income tax credit, which applies to low- and middle-income workers, was also enhanced for that tax year. Workers with no children may qualify for up to $1,502, which increases to as much as $6,728 for filers with three or more children. Because eligibility was expanded for workers without children and younger and older age thresholds, more workers qualify for the credit in the 2021 tax year.

Who may have yet to file

In October, the IRS sent letters to more than 9 million families who still have not filed federal tax returns to alert them they may still qualify for these credits.
While Republican congressional leadership questioned the timing of the notices so close to the midterm elections, Caines said she did not see it as unusual.
“We have seen that it takes the IRS a long time to coordinate these type of outreach efforts,” Caines said.
The letters were similar to notices the agency sent in September 2020 that also alerted 9 million non-filers they could be missing the stimulus checks that were sent that year.

Many of the non-filers are not required to file tax returns due to low incomes.
That population tends to include people who are harder to reach, who may not speak English or who live in households with mixed tax-filing statuses, Caines said.
For people in this population, it is important to know they may be eligible for these tax credits, even if they have not qualified in the past, she said.
Still, some may hesitate to file for the credits in the first place.
At a recent panel hosted by the Bipartisan Policy Center former IRS commissioner John Koskinen said administrative barriers, including long waits for customer service from the tax agency, may contribute to the problem.

Misperceptions about the consequences people may face after filing may also contribute to the problem.
People may hesitate to file a tax return if they fear they owe money, Caines said. But if they qualify for the more generous 2021 tax credits, it could reduce their tax debts and enable them to claim refunds in the future, she said.
Another reason people may hesitate to claim is due to immigration concerns: that, by filing tax returns, they could put themselves or a family member at risk of deportation.
“The IRS is prohibited from sharing tax information with anyone, including ICE, except in cases of investigating criminal cases,” Caines said.

Ways to claim the money

GetCTC.org, which is available in English and Spanish, provides a simplified filing process with questions to prompt users to input their information. The tool allows for people to claim the $1,400 stimulus checks, child tax credit and earned income tax credit for the 2021 tax year.
“Taxes can be intimidating; GetCTC has prompts built into it,” Caines said.
Notably, if you want to claim the earned income tax credit using GetCTC.org, you will have to have a W-2 demonstrating your income handy.
For people who have earned income they can show through 1099 forms or self-employment income, other filing tools may let them claim the 2021 enhanced earned income tax credit, Caines said.
IRS Free File, which will stay open until Nov. 17 for the 2021 tax year, lets people whose incomes are $73,000 or less file online. Free fillable forms are available for any income level.
Individuals and families who miss both the GetCTC.org and IRS Free File deadlines still have up to three years to file their tax returns and claim the 2021 tax credits for which they may be eligible.
People who miss this week’s deadlines may want to try to find a Volunteer Income Tax Assistance site near them that will handle prior year returns, Caines said.

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