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When it comes to credit scores, there are a few things many borrowers often get wrong, experts say.
Here are the top misconceptions and why it’s so hard to set the record straight.

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Randy had an 850 credit score. According to FICO, the most popular scoring model, that’s as good as it gets.
Still, a line on his credit report said he could lower his utilization rate, so he promptly paid off the remainder of his car loan with one $6,000 payment, and then his score sank 30 points. (Randy has been a target of identity theft and asked to omit his last name for privacy concerns.)

Most people assume that wiping out those auto payments couldn’t hurt, but that’s a mistake.
More from Personal Finance:Here’s the best way to pay down high-interest debt63% of Americans are living paycheck to paycheck’Risky behaviors’ are causing credit scores to level off
When it comes to credit scores, there are a few things many borrowers often get wrong, experts say. Here are the top misconceptions and why it’s so hard to set the record straight.
Misconception No. 1: Debt is bad
Your credit score — the three-digit number that determines the interest rate you’ll pay for credit cards, car loans and mortgages — is based on a number of factors but most importantly, it’s a measure of how much you are borrowing and how responsible you are when it comes to making payments.  
Having an excellent score doesn’t mean you have zero debt but rather a proven track record of managing a mix of outstanding loans. In fact, consumers with the highest scores owe an average of $150,270, including mortgages, according to a recent LendingTree analysis of 100,000 credit reports.

The borrowers with a credit score of 800 or higher, such as Randy, pay their bills on time, every time, LendingTree found. 
To that end, having a four-year auto loan in good standing was working to Randy’s advantage.
“Lenders also want to see that you’ve been responsible for a long time,” said Matt Schulz, LendingTree’s chief credit analyst. 
The length of your credit history is another one of the most important factors in a credit score because it gives lenders a better look at your background when it comes to repayments.
Misconception No. 2: All debt is the same
Since Randy had already paid off his mortgage and has no student debt, that auto loan was key to show a diversified mix of accounts.
“Your credit mix should involve more than just having multiple credit cards,” Schulz said. “The ideal credit mix is a blend of installment loans, such as auto loans, student loans and mortgages, with revolving credit, such as bank credit cards.” 
“The more different types of loans that you’ve proven you can handle successfully, the better your score will be.”

The total amount of credit and loans you’re using compared to your total credit limit, also known as your utilization rate, is another important aspect of a great credit score. 
As a general rule, it’s important to keep revolving debt below 30% of available credit to limit the effect that high balances can have.
Misconception No. 3: You need a perfect score
Only about 1.6% of the 232 million U.S. consumers with a credit score have a perfect 850, according to FICO’s most recent statistics. 
Aside from bragging rights, you won’t gain much of an advantage by being in this elite group.
“Typically, lenders do not require individuals to have the highest credit score possible to secure the best loan features,” said Tom Quinn, vice president of FICO Scores. “Instead, they set a high-end cutoff, that is typically in the upper 700’s, where applicants scoring above that cutoff qualify as a good credit score and get the most favorable terms.”

Each lender sets their own credit score thresholds for who they consider the most creditworthy. As long as you fall within these ranges, you are likely to be approved for a loan and qualify for the best rates the issuer has to offer, Schulz added.
“Anything over 800 is gravy,” Schulz said, and “in some cases, the difference between 760 and 800 may not be that significant.”
Most credit card issuers now provide free credit score access to their cardholders, making it easier than ever to check and monitor your score.
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(An excerpt from the book, “Shut Up and Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange,” by Bob Pisani.)
Thirty years ago this week, State Street Global Advisors launched the Standard & Poor’s Depositary Receipt (SPY), the first U.S.-based Exchange Traded Fund (ETF), which tracked the S&P 500. 

Today, it’s known as the SPDR S&P 500 ETF Trust, or just “SPDR” (pronounced “Spider”).  It is the largest ETF in the world with over $370 billion in assets under management, and is also the most actively traded,  routinely trading over 80 million shares daily with a dollar volume north of $32 billion every day. 

How ETFs differ from mutual funds

 Holding an investment in an ETF structure has many advantages over a mutual fund.
 An ETF:

Can be traded intraday, just like a stock.
Has no minimum purchase requirement.
Has annual fees that are lower than most comparable mutual funds.
Are more tax efficient than a mutual fund.

Not a great start

For a product that would end up changing the investment world, ETFs started off poorly.
Vanguard founder Jack Bogle had launched the first index fund, the Vanguard 500 Index Fund, 17 years before, in 1976.

The SPDR encountered a similar problem. Wall Street was not in love with a low-cost index fund. 
“There was tremendous resistance to change,” Bob Tull, who was developing new products for Morgan Stanley at the time and was a key figure in the development of ETFs, told me.
The reason was mutual funds and broker-dealers quickly realized there was little money in the product.
“There was a small asset management fee, but the Street hated it because there was no annual shareholder servicing fee,” Tull told me.   “The only thing they could charge was a commission. There was also no minimum amount, so they could have got a $5,000 ticket or a $50 ticket.”
It was retail investors, who began buying through discount brokers, that helped the product break out.
But success took a long time.  By 1996, as the Dotcom era started, ETFs as a whole had only $2.4 billion in assets under management.  In 1997, there were a measly 19 ETFs in existence.  By 2000, there were still only 80.
So what happened?

The right product at the right time

 While it started off slowly, the ETF business came along at the right moment.
Its growth was aided by a confluence of two events: 1) the growing awareness that indexing was a superior way of owning the market over stock picking; and 2) the explosion of the internet and Dotcom phenomenon, which helped the S&P 500 rocket up an average of 28% a year between 1995 and 1999.
By 2000, ETFs had $65 billion in assets, by 2005 $300 billion, and by 2010 $991 billion.
The Dotcom bust slowed down the entire financial industry, but within a few years the number of funds began to increase again.
The ETF business soon expanded beyond equities, into bonds and then commodities.
On November 18, 2004, the StreetTracks Gold Shares (now called SPDR Gold Shares, symbol GLD) went public.  It represented a quantum leap in making gold more widely available. The gold was held in vaults by a custodian. It tracked gold prices well, though as with all ETFs there was a fee (currently 0.4%). It could be bought and sold in a brokerage account, and even traded intraday.

CNBC’s Bob Pisani on the floor of the New York Stock Exchange in 2004 covering the launch of the StreetTRACKS Gold Shares ETF, or GLD, now known as the SPDR Gold Trust.
Source: CNBC

Staying in low-cost, well-diversified funds with low turnover and tax advantages (ETFs) gained even more adherents after the Great Financial Crisis in 2008-2009, which convinced more investors that trying to beat the markets was almost impossible, and that high-cost funds ate away at any market-beating returns most funds could claim to make.

ETFs: poised to take over from mutual funds?

After pausing during the Great Financial Crisis, ETF assets under management took off and have been more than doubling roughly every five years.
The Covid pandemic pushed even more money into ETFs, the vast majority into index-based products like those tied to the S&P 500.
From a measly 80 ETFs in 2000, there are roughly 2,700 ETFs operating in the U.S., worth about $7 trillion.
The mutual fund industry still has significantly more assets (about $23 trillion), but that gap is closing fast.
 “ETFs are still the largest growing asset wrapper in the world,” said Tull, who has built ETFs in 18 countries. “It is the one product regulators trust because of its transparency. People know what they are getting the day they buy it.”
 Note: Rory Tobin, Global Head of SPDR ETF Business at State Street Global Advisors, will be on Halftime Report Monday at 12:35 PM and again at 3 PM Monday on ETFedge.cnbc.com.

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If you completed a Roth individual retirement account conversion in 2022, your tax return may be complicated, experts say.
When figuring out your tax bill, you need to use the “pro-rata rule,” which factors your pretax IRA funds into the calculation.
Experts say it’s important to project your total income before converting funds in 2023.

Source: Getty Images

If you made a Roth individual retirement account conversion in 2022, you may have a more complicated tax return this season, experts say. 
The strategy, which transfers pretax or non-deductible IRA funds to a Roth IRA for future tax-free growth, tends to be more popular during a stock market downturn because you can convert more assets at a lower dollar amount. While the trade-off is upfront taxes, you may have less income by converting lower-value investments.

“You get more bang for your buck,” said Jim Guarino, a certified financial planner and managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
More from Personal Finance:Tax season opens for individual filers on Jan. 23, says IRSHere are 3 key moves to make before the 2023 tax filing season opensAfter ‘misery’ for tax filers in 2022, IRS to start 2023 tax season stronger, taxpayer advocate saysIf you completed a Roth conversion in 2022, you’ll receive Form 1099-R from your custodian, which includes the distribution from your IRA, Guarino said. 
You’ll need to report the transfer on Form 8606 to tell the IRS which portion of your Roth conversion is taxable, he said. However, when there’s a mix of pretax and non-deductible IRA contributions over time, the calculation may be trickier than you expect. (You may have non-deductible contributions in your pretax IRA if you don’t qualify for the full or partial tax break due to income and workplace retirement plan participation.)
“I see a lot of people making a mistake here,” Guarino said. The reason is the so-called “pro-rata rule” which requires you to factor your aggregate pretax IRA funds into the calculation. 

How the pro-rata rule works

JoAnn May, a CFP and CPA with Forest Asset Management in Berwyn, Illinois, said the pro-rata rule is the equivalent of adding cream to your coffee then finding you can’t remove the cream once it’s poured.

“That’s exactly what happens when you mix pretax and non-deductible IRAs,” she said, meaning you can’t simply convert the after-tax portion.
For example, let’s say you have a pretax IRA of $20,000 and you made a non-deductible IRA contribution of $6,000 in 2022.
If you converted the entire $26,000 balance, you would divide $6,000 by $26,000 to calculate the tax-free portion. This means roughly 23% or about $6,000 is tax-free and $20,000 is taxable. 
Alternatively, let’s say you have $1 million across a few IRAs and $100,000, or 10% of the total, is non-deductible contributions. If you converted $30,000, only $3,000 would be non-taxable and $27,000 would be taxable.

Of course, the bigger your pretax IRA balance, the higher percentage of the conversion will be taxable, May said. Alternatively, a larger non-deductible or Roth IRA balance reduces the percentage. 
But here’s the kicker: Taxpayers also use the Form 8606 to report non-deductible IRA contributions every year to establish “basis” or your after-tax balance. 
However, after several years, it’s easy to lose track of basis, even in professional tax software, warned May. “It’s a big problem,” she said. “If you miss it, then you’re basically paying tax on the same money twice.” 

Timing conversions to avoid an ‘unnecessary’ tax bump

With the S&P 500 still down about 14% over the past 12 months as of Jan. 19, you may be eyeing a Roth conversion. But tax experts say you need to know your 2023 income to know the tax consequences, which may be difficult early in the year.

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“I recommend waiting until the end of the year,” said Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, noting that income can change from factors like selling a home or year-end mutual fund distributions. 
Typically, he aims to “fill up a lower tax bracket,” without bumping someone into the next one with Roth conversion income.

For example, if a client is in the 12% bracket, Lucas may limit the conversion to avoid spilling into the 22% tier. Otherwise, they’ll pay more on the taxable income in that higher bracket.
“The last thing we want to do is throw someone into an unnecessary tax bracket,” he said. And boosting income may have other consequences, such as reduced eligibility for certain tax breaks or higher Medicare Part B and D premiums.
Guarino from Baker Newman Noyes also crunches the numbers before making Roth conversion decisions, noting that he’s “essentially performing the Form 8606 calculation during the year” to know how much of the Roth conversion will be taxable income.

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The Spotify logo hangs on the facade of the New York Stock Exchange with U.S. and a Swiss flag as the company lists its stock with a direct listing in New York, April 3, 2018.
Lucas Jackson | Reuters

Coming off a week that was packed with corporate earnings and economic updates, it is still difficult to determine whether a recession can be avoided this year.
Investing in such a stressful environment can be tricky. To help with the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances. 

related investing news

Apple

Ahead of Apple’s (AAPL) December quarter results, due out on Feb. 2, investors are fairly aware of the challenges that the company faced during the period. From production disruptions in the iPhone manufacturing facility at Zhengzhou in China to higher costs, Apple’s first quarter of fiscal 2023 has endured all. Needless to say, the company expects a quarter-over-quarter growth deceleration.
Nonetheless, Monness Crespi Hardt analyst Brian White expects the results to be in line with, or marginally above, Street expectations. The analyst believes gains in Services, iPad and Wearables, Home & Accessories revenue could be a saving grace.
Looking ahead, White sees pent-up demand for iPhones come into play in the forthcoming quarters, once Apple overcomes the production snags. (See Apple Stock Investors’ sentiments on TipRanks)
The analyst feels that the expensive valuation of approximately 27 times his calendar 2023 earnings estimate for Apple is justified.
“This P/E target is above Apple’s historical average in recent years; however, we believe the successful creation of a strong services business has provided the market with more confidence in the company’s long-term business model,” said White, reiterating a buy rating and $174 price target.

White holds the 67th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 63% of the time and each rating has generated a 17.7% average return.

Spotify

 Audio streaming subscription service Spotify (SPOT) is also among the recent favorites of Brian White.
“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, and expanding its audio offerings,” said White, reiterating a buy rating and $115 price target.
The analyst does acknowledge some challenges that await Spotify this year but remains optimistic about its margin improvement plans and several favorable industry developments. While it may be tough to attract new premium subscribers, while facing continued pressure from a lower digital ad spending environment, Spotify should benefit from ad-supported monthly active users (MAUs) this year. (See Spotify Stock Chart on TipRanks)
White is particularly upbeat about the waning mobile app store monopolies, after the European Union passed the Digital Markets Act last year. The act will be imposed from May 2023. One of the benefits for Spotify will be the ability to promote its cheaper subscription offers. Now, it can make the offers available outside Apple’s iPhone app. (This had been a challenge, as Apple previously would allow it to only promote its subscriptions through iPhone app.)

CVS Health Corp.

CVS Health (CVS), which operates a large retail pharmacy chain, has been on Tigress Financial Partners analyst Ivan Feinseth’s list in recent weeks. The analyst reiterated a buy rating and a $130 price target on the stock.
The company’s “consumer-centric integrated model” as well as its increasing focus on primary care should help make health care more affordable and accessible for customers, according to Feinseth. CVS bought primary health-care provider Caravan Health as part of this focus. Moreover, the impending acquisition of Signify Health “adds to its home health services and provider enablement capabilities.”
The analyst also believes that the ongoing expansion of CVS’s new store format, MinuteClinics and HealthHUBs, will increase customer engagement and thus, continue to be a key growth catalyst. (See CVS Health Blogger Opinions & Sentiment on TipRanks)
Feinseth is also confident that CVS’s merger with managed healthcare company Aetna back in 2018 created a health-care mammoth. Now, it is well positioned to capitalize on the changing dynamics of the health-care market, as consumers gain more control over their health-care service expenditures.
Feinseth’s convictions can be trusted, given his 208th position among nearly 8,300 analysts in the TipRanks database. Apart from this, his track record of 62% profitable ratings, with each rating delivering 11.8% average returns, is also worth considering.

Shake Shack

Fast food hamburger chain operator Shake Shack (SHAK) has been doing well both domestically and overseas on the back of its fast-casual business concept. BTIG analyst Peter Saleh has a unique take on the company.
“Shake Shack is the preeminent concept within the better burger category and the rare restaurant chain whose awareness and brand recognition exceed its actual size and sales base,” said Saleh, who reiterated a buy rating on the stock with a $60 price target. (See Shake Shack Hedge Fund Trading Activity on TipRanks)
On the downside, the analyst points out that the expansion of services outside New York has weakened Shake Shack’s margin profile by generating low returns per unit and exposing the company to greater sales volatility. However, margins seem to have bottomed, and the analyst expects profitability to gain momentum over the next 12-18 months. A combination of higher menu prices and deflation of commodity costs are expected to push restaurant margins up to mid-teen levels.
In its preliminary fourth-quarter results, management at Shake Shack mentioned that it plans to tighten its hands with general and administrative expenses this year, considering the macroeconomic uncertainty. This “should prove reassuring for investors given the heightened G&A growth (over 30%) of the past two years.”
Saleh has a success rate of 64% and each of his ratings has returned 11.7% on average. The analyst is also placed 431st among more than 8,000 analysts on TipRanks.

TD Synnex

Despite last year’s challenges, business process service provider TD Synnex (SNX) has benefited from a steady IT spending environment amid the consistently high digital transformation across industries. The company recently posted its fiscal fourth-quarter results last week, where earnings beat consensus estimates and the dividend was hiked.
Following the results, Barrington Research analyst Vincent Colicchio dug into the results and noted that rapid growth in advanced solutions and high-growth technologies were major positives. Even though the analyst reduced his fiscal 2023 earnings forecast due to an expected rise in interest expense, he remained bullish on SNX’s efforts to achieve cost synergies by the end of the current fiscal year. (See TD Synnex Dividend Date & History on TipRanks)
Looking forward, the analyst sees a largely upward trend in growth, albeit a few hiccups. “The key growth driver in the first half of fiscal 2023 should be advanced solutions and high-growth technologies and in the second half should be PCs and peripherals and high-growth technologies. We expect Hyve Solutions revenue growth to slow in fiscal 2023 and slightly rebound in fiscal 2024 versus fiscal 2022 growth,” observed Colicchio, reiterating a buy rating and raising the price target to $130 from $98 for the next 12 months.
Importantly, Colicchio ranks 297th among almost 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered 13% returns on average.

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Logo and flags of Bayer AG are pictured outside a plant of the German pharmaceutical and chemical maker in Wuppertal, Germany.
Wolfgang Rattay | Reuters

Company: Bayer AG (BAYRY)

Business: Bayer AG is a 55-billion euro German multinational pharmaceutical and biotechnology company. It operates through three segments: (i) Pharmaceuticals (roughly 6 billion euros of EBITDA); (ii) Consumer Health (about 1.5 billion euros of EBITDA), and (iii) Crop Science (approximately 6.5 billion euros of EBITDA). The company acquired Monsanto in 2018 for 54 billion euros and has since been plagued with several lawsuits related to Monsanto’s Roundup herbicide product causing cancer.
Stock Market Value: $60.5B ($15.41 per share)

Activist: Inclusive Capital Partners

Percentage Ownership: 0.83%
Average Cost: n/a
Activist Commentary: Inclusive Capital Partners is a San Francisco-based investment firm focused on increasing shareholder value and promoting sound environmental, social and governance practices. It was formed in 2020 by ValueAct founder Jeff Ubben to leverage capitalism and governance in pursuit of a healthy planet and the health of its inhabitants. As a pioneering active ESG (“AESG”) investor, Inclusive seeks long-term shareholder value through active partnership with companies whose core businesses contribute solutions to this pursuit. Their primary focus is on environmental and social value creation, which creates value for shareholders.

What’s Happening?

Inclusive Capital Partners has acquired a 0.83% interest in BAYRY for investment purposes.

Behind the Scenes

As an impact-focused investor, Inclusive’s portfolio companies always have a dual mandate of being a compelling value proposition and generating a measurable positive impact on the environment and society. The firm’s thesis at Bayer is no different. Inclusive believes that Bayer, as a leader in the global agribusiness industry, is well-positioned to develop and proliferate technology which addresses humanity’s challenge of boosting food supply in the wake of increased global demand while also decreasing environmental impact.

Crop farming is a large contributor to global greenhouse gas emissions. Bayer’s crop science division accounts for approximately 25% of global crop farming. Bayer has been doing a good job at its core value objective of increasing crop yields and agricultural productivity by using innovative technologies and developments in crop science that also offer substantial positive environmental impact. For example, their short-stature corn adds 15% more productivity while also retaining more carbon in the soil and resulting in less waste than standard tall corn varieties that are more easily knocked over by the wind. Also, dry rice seed has the potential to increase yield per acre and produces less methane emissions than wet rice. Additionally, Bayer is working to advance gene-edited crops using CRISPR technology, which Inclusive believes will be more accepted and faster to move to market than genetically modified crops. Emerging crops, including those that are gene-edited, are expected to offer a myriad of benefits, such as improving yields, thus decreasing agricultural land demand and deforestation and reducing reliance on pesticide and fertilizer. Ultimately, these crops result in increased food security and yields of staples like corn, wheat, rice and soy.
Inclusive highlights Bayer’s incumbency in crop science exemplified by the company’s size, talent, significant cashflow and a $2 billion R&D budget. All of this can be used to acquire, develop and scale emerging technologies with the potential for systems change. Inclusive’s focus on impact at scale is why the firm sees the conventional ESG approach to “reject and replace” imperfect incumbents as insufficient to address global challenges.
Often Inclusive invests in companies where ESG improvements drive shareholder value. In this case, it is almost the opposite: Creating shareholder value in the form of a higher stock price and a lower cost of capital will allow Bayer to finance additional ESG opportunities that will also increase crop yield and profitability.
There are several ways to create this shareholder value. First, the board should explore de-conglomerating, primarily by spinning off Monsanto, which would pave the way for a sale of at least the Consumer Health business. Bayer currently trades at approximately 7x earnings while its pure-play crop science peer, Corteva, trades at closer to 20x earnings. If Monsanto got a 20x multiple as a pure play, even after deducting $10 billion of litigation liability, it would be worth the entire market cap of Bayer today. Second, the company could put this Roundup-related litigation to bed with a global settlement. Between August 2018 and May 2019, Bayer lost three lawsuits. This resulted in approximately $11 billion in settlements. However, the company has won its last six lawsuits, which should make settling the remainder easier. Even a $10 billion global settlement would likely benefit the stock price as it would remove a ton of uncertainty and make Bayer a buyable stock for many investors who would not touch it right now. Third, Inclusive is looking to bring in a new CEO as early as its next annual meeting in the spring of this year. Werner Baumann has been serving as CEO since 2016. In September 2020, the company extended his contract until the end of April 2024. Baumann was instrumental in the Monsanto acquisition and is probably the last person who would now support spinning it off and settling its claims. This needs to be done by a fresh CEO who holds no ownership over the Monsanto deal.
Inclusive is an amicable investor that is often invited onto boards and rules by the power of persuasion. We expect this situation to be no different, particularly since the firm is likely receiving a lot of support from other shareholders who have shown their displeasure for many years. In 2019, Baumann lost a vote of no confidence at the company’s annual meeting, with 55.5% of investors voting against ratifying the top management’s actions. In March 2022, Temasek Holdings (a 3% shareholder at the time) called for the replacement of Baumann as CEO. In April 2022, shareholders voted against a management compensation plan.
Jeff Ubben has always liked companies that were misunderstood by the market, and he has another one here. Due to the Monsanto litigation, Bayer is perceived as a bad actor and is somewhat uninvestable to many. Spinning off Monsanto and settling the litigation should remove that stigma. Focusing on the ESG innovations that increase crop yield and efficiency will change the company’s image to one of impact and value. This is a prime example of how Inclusive actively and qualitatively uses ESG and activist value creation together to benefit shareholders.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies.

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Today’s workers are tasked with making sure they will have enough money when they retire while also juggling competing financial priorities.
While planning for retirement may seem daunting, experts say there are strategic moves you can make to improve your lifestyle later on.

Mstudioimages | E+ | Getty Images

To maintain your standard of living in retirement, the rule of thumb is you need to be able to replace at least 70% of the income you had while you were working.
But many retirees fall short of that retirement income goal, according to research from Goldman Sachs Asset Management. The survey polled 1,566 U.S. participants between July and August 2022.

Just 25% of retirees generate that amount of income, the firm’s research found. Meanwhile, more than half of retirees — 51% — make do with less than 50% of their pre-retirement income.
The gap isn’t surprising, considering that more than 40% who are still working say they are behind schedule on their retirement savings. Members of the Gen X generation — who are sandwiched between millennials and baby boomers — were most likely to say they are behind on retirement, with more than 50%.
Competing life goals and financial priorities — a so-called financial vortex — may get in the way as savers balance other roles as parents or caretakers and as homeowners or renters.
“You have all these competing priorities that can crowd out retirement savings,” said Mike Moran, senior pension strategist at Goldman Sachs.
If you’re still working, there are steps you can take to meaningfully increase your cash flow in your later years and improve your chances of meeting that 70% income replacement ratio.

More from Personal Finance:What the U.S. debt ceiling could mean for Social Security and MedicareApproaching 62? What to know about Social Security’s 8.7% cost-of living adjustmentWhy applying for Social Security benefits with long Covid is tricky

1. Downsize your lifestyle

By reducing your cost of living now, you will need less income in retirement. Ask yourself whether you spend less than you make, suggested Sharon Carson, a retirement strategist at J.P. Morgan Asset Management.
“If you’re not already doing that, that’s the perfect place to get started,” she said.
Ted Jenkin, CEO and founder of Oxygen Financial and a member of CNBC’s Financial Advisor Council, said he recommends a 21-day budget cleanse to help people cut back their spending.
Over 21 days, shop every single bill in your household to see if you can get a better deal.

2. Nudge your savings higher

Even if your budget is tight, increasing how much you set aside toward retirement by even 1% of your salary can go a long way when you eventually need to draw down that money.
Generally, you should be socking away 15% of your salary toward retirement, according to retirement experts at J.P. Morgan Asset Management. That can include a company match, if you have one.
You may not get to 15% right away.
“Look at what you can do every year,” said Carson. “If you can do something, you have the long-term advantage of the compounding.”

3. Find ways to save outside of work plans

If you don’t have access to a 401(k) or other retirement savings plan through your employer, you’re not alone. As many as 57 million Americans lack access to a workplace retirement savings plan, according to estimates.
You may still contribute be able to an individual retirement account with pretax money, or with post-tax money through a Roth IRA. Some restrictions apply. For example, there are some limits on pretax contributions if a spouse has a workplace plan, and post-tax Roth contributions depend on your income.
Many states are also stepping up to provide retirement savings programs to workers who lack access to employer plans.

4. Stay invested

Carl Smith | Getty Images

The No. 1 preferred source of retirement income for retirees surveyed by Goldman Sachs was investments, Moran said. To get more income from your portfolio, you may want to consider dividend-paying stocks or municipal bonds, he said.
The key is to stay invested, and not put your money in and out of the market, Carson said.
Admittedly, losses hurt. But trying to time the market can be a losing battle, particularly because the market’s worst days tend to be closely followed by their best days.
“If you try to time the market, you need to be right twice,” Carson said.

5. Delay claiming Social Security benefits

The longer you wait to claim Social Security retirement benefits up to age 70, the bigger your monthly checks will be.
You may claim starting from age 62, but your benefits will be reduced.
At full retirement age — ages 66 through 67, depending on when you were born — you will receive the full benefits you earned.
For every year you delay past that age, up to age 70, you stand to receive an increase of up to 8%.
It’s still smart to wait, even with a historic high 8.7% cost-of-living adjustment this year, experts say.
The COLA increases what is known as your primary insurance amount, the benefit due to you at your full retirement age. The longer you continue to delay claiming, the higher your benefits will be and the bigger the impact the annual cost-of-living adjustments may have.

6. Consider an annuity

Wand_prapan | Istock | Getty Images

As pensions have gone by the wayside, products called annuities have become a way to create a stream of income in retirement. You will have to sacrifice a lump sum of money upfront in exchange for a steady stream of monthly checks in retirement.
A deferred annuity, which can provide income at a future date, can help if you’re worried about running out of money later, Moran said.
Some immediate or variable annuities, which may provide checks sooner, are offering attractive guarantees, Jenkin noted.
Because these contracts are binding, it helps to proceed with caution.
Make sure the fees and costs are not out of line, Jenkin said, and do not buy a product pushed by someone at a dinner seminar.
“The best advice is to hire somebody for an hourly rate to go shop the products for you,” he said. “Do not pay anybody a fee or a commission to sell it.”

7.  Plan to work a little longer

The second most preferred source of retirement income is part-time work, Goldman Sachs’ research found.
There are many benefits to that. Your income may not disappear entirely when you retire. Plus, you may still get the social benefit of interacting with colleagues, according to Moran.
The extra income you earn may help you delay Social Security benefits or withdraw less from your retirement portfolio, helping to make sure your money lasts longer for the years to come.

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Inflation has pushed Social Security’s annual increases up to historic highs for the past couple of years.
That may trigger a bigger tax bill for some beneficiaries. But proper planning can help.

Allison Michael Orenstein | Getty Images

Social Security recipients are just starting to see the record 8.7% cost-of-living adjustment in their monthly checks.
But come tax time, they could see surprises resulting from last year’s 5.9% increase, which at the time was the biggest COLA in four decades.

Last year’s 5.9% cost-of-living adjustment was like getting a 6% wage bump in 2022, according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League. Yet that boost to benefits was not enough to keep up with rising costs, according to recent research from the nonpartisan senior group.
A recent survey by The Senior Citizens League found 57% of older taxpayers worry more of their Social Security benefits will be taxed due to last year’s 5.9% cost-of-living adjustment. The survey, which was conducted last summer, included about 1,500 participants.
“There are a tremendous amount of people who are concerned,” Johnson said.
More Social Security beneficiaries may be required to file tax returns this season, but that will likely be a “relatively small number,” predicts Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities.
For beneficiaries who do file, the higher benefit income may be partly offset by a larger standard deduction and indexing of the tax brackets, he said.

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The new 8.7% cost-of-living adjustment that went into effect this month may make tax planning more complicated for more than 65 million beneficiaries who rely on Social Security checks.
From a tax savings perspective, there is not much you can do to mitigate your liability for this tax filing season, according to Brian Vosberg, a certified financial planner and enrolled agent who is president of Vosberg Wealth in Glendora, California.
“Once it’s Dec. 31, there’s very little you can do to actually minimize your tax liability,” Vosberg said.
One exception is if you make a prior-year contribution to an individual retirement account before April 15, which can help reduce your taxable income.
However, beneficiaries would be wise to get a jump on their tax planning for next year to mitigate the effects of the 8.7% cost-of-living adjustment.

How Social Security benefits are taxed

Social Security benefits are taxed based on a formula called combined income.
“The max Social Security that can be included in taxable income is 85%,” Vosberg said. “So you always will get 15% of your benefit non-taxable.”
Combined income includes your adjusted gross income, nontaxable interest and half of your Social Security benefits. Income including interest, dividends, capital gains and distributions from 401(k)s or IRAs are all added into that equation, Vosberg said.

Up to 50% of benefits are taxed for individual tax filers with between $25,000 and $34,000 in combined income and those who are married and filing jointly with between $32,000 and $44,000 in combined income.
Up to 85% of benefits may be taxable for individuals with more than $34,000 in combined income or married couples with over $44,000.
Because those thresholds are not adjusted for inflation, more beneficiaries may be subject to taxes on their benefits.
As interest rates rise, you may also be earning higher interest payments on your cash, which could also push up your combined income, Vosberg said.
One caveat for 2023 is the IRS has put in place higher federal tax brackets to adjust for inflation.

Tips to minimize the tax bite

For beneficiaries, now is a good time to plan their 2023 income to ensure the most tax efficient blend of income, Vosberg said.
For example, if you’re budgeting for $5,000 in income per month, and your monthly Social Security checks are $2,000, you may look to withdraw money you’ve already paid tax on for the remaining $3,000. That may include traditional savings or Roth IRAs.
“You blend the income and you can effectively control your taxes in retirement,” Vosberg said.
“A lot of times [that can] reduce the tax that you’re paying or even eliminate the tax that you’re paying on Social Security,” he said.
To accomplish that, it is important to loop in a qualified tax planner or CPA, Vosberg said.
Pre-retirees can also benefit from professional guidance. By building up their post-tax money through savings or Roth conversions in the years leading up to retirement, they may more effectively control their taxable income later on, Vosberg said.

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Despite mass layoff announcements at major tech companies this week, the overall job market remains strong, experts say.
That makes this a good time to be looking for a new position, even if unexpectedly.
Here are a few key considerations before kicking off a search.

Whether by choice or necessity, many workers will change jobs in the months ahead.
Some companies, particularly tech giants, have been announcing deep cuts to their workforces as they face ongoing challenges due to rising interest rates and inflation.

Most recently, Google said that it will lay off 12,000 people, Amazon announced a fresh wave of job cuts affecting more than 18,000 people, and Microsoft said it plans to lay off 10,000 workers amid fears of an oncoming recession.
At the same time, government data shows the U.S. labor market is still strong, with a record low unemployment rate of 3.5%.
Many industries continue to do very well, according to Barbara Safani, president of Career Solvers in New York. The tech layoffs don’t “necessarily reflect on the broader job market,” she said.
And the Federal Reserve has demonstrated it can raise rates without jeopardizing the robust labor market so far, Randy Frederick, managing director of trading and derivatives for Charles Schwab, recently told CNBC.
“If you can engineer a decline in inflation without crushing the jobs market, that’s the ‘Goldilocks’ soft landing,” he said. 

96% of workers will look for new job in 2023

In general, “the first quarter of the year is always a good time to look because fiscal budgets have been replenished,” Safani said. 
Overall, a whopping 96% of workers are looking for a new job in 2023, largely in search of better pay, according to a recent report by jobs site Monster.com. 
“This is phenomenally high,” even compared with the numbers at the height of the “great resignation,” said Vicki Salemi, career expert at Monster.
Nearly half, or 40%, of job seekers said they need a higher income due to inflation and rising expenses, Monster found. Others said they have no room to grow in their current role or that they are in a toxic workplace.
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Job-switching is widely considered the best way to improve your career prospects and pay. In fact, the difference in wage growth for job switchers relative to those who stay in their current role is at a record high.
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%, according to Daniel Zhao, lead economist at Glassdoor, citing data from the Atlanta Federal Reserve.

Key considerations when looking for a new job

For those kicking off a job search, Safani advises clients to consider how all aspects of a new position measure up.
“Really look at it holistically,” she said. “You may be getting paid more, but it’s important to vet that opportunity.” Other factors to consider include opportunities for advancement, flexibility and a healthy work-life balance.
“Do your research,” Salemi advised. “Find out what the benefits are, find out what the culture is like.”
“Workers can have both — a higher salary and a positive, healthy work environment.”
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