For many investors, this year has been a wild ride—with interest rate increases, a crypto implosion, and whipsawing values in the major market indices. It might be tough to catch one’s breath and look ahead to next year. But the end of the year is the perfect time to take stock of your investments, evaluating what worked, what didn’t, and what you might do better next year. Here are four key opportunities to consider that may recharge and reset your finances as you enter the new year.

Review and Refresh Your Financial Plan

If you set goals for the past year, evaluate your progress. Did you spend more than expected? Save less than expected? Or did you manage your goals easily—suggesting a bigger challenge may be appropriate for next year?

While setting financial goals for next year, you might also consider the long-term. When do you plan to retire? What do you need to see before getting there—a specific number in your 401(k), a paid-off balance sheet, or something else? Should you stay in your home or downsize? The answers to these questions may help you formulate a more solid plan.

Assess Your Retirement Readiness

Are you on schedule to retire? Are you contributing enough to your 401(k) or IRA?

Though the answers to those questions depend on each person’s circumstances, some patterns are emerging in savings habits among those in their 20s, 30s, 40s, 50s, and beyond. Check these numbers to see whether you are on track.1

Age 20 to 29

Average 401(k) balance of $10,500 while contributing 7% of income

Age 30 to 39

Average 401(k) balance of $38,400 while contributing 8% of income

Age 40 to 49

Average 401(k) balance of $93,400 while contributing 8% of income

Age 50 to 59

Average 401(k) balance of $160,000 while contributing 10% of income

Age 60 to 69

Average 401(k) balance of $182,100 while contributing 11% of income

Age 70 to 79

Average 401(k) balance of $171,400 while contributing 12% of income

These numbers are simply averages—they do not account for income, sector, or cost of living. They also do not include assets in individual retirement accounts (IRAs), taxable accounts, or other savings accounts. But knowing what those in your general age bracket save, on average, might give you a better idea of your progress toward retirement savings.

You should notice that as workers grow older, they tend to contribute a greater percentage of their total income to retirement.

Pay Down High-Interest Debts

With interest rates continuing to rise, credit cards, home equity lines of credit, and other variable-rate loans are likely to grow more expensive.2 If you have any adjustable-rate loans, now is a good time to begin paying them off more aggressively.

Calculate Your Cash Reserves

It is a good idea to have some cash held for emergencies during turbulent times. From an unexpected medical bill to a new appliance, having cash on hand may help avoid the stress of paying for sudden expenses. Assessing your cash reserves at the beginning of the new year may give you a good baseline for setting cash accumulation goals.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05337697.

Footnotes:

1 The Average 401(k) Balance by Age, Investopedia, https://www.investopedia.com/articles/personal-finance/010616/whats-average-401k-balance-age.asp

2 What Rising Interest Rates Mean For You, CNN, https://www.cnn.com/2022/09/21/success/what-rising-interest-rates-mean-credit-mortgage/index.html

If you struggle to find a gift for the person who has everything—or want to do your holiday shopping without having to leave the house—consider giving stock as a gift. Doing so is easier than you think, and it may offer a few benefits for you as well. Here is some information on giving stock as gifts and the benefits of doing so.

What Are the Benefits of Gifting Stock?

When it comes to giving stock as gifts, there is one key benefit for both the giver and the recipient.

1. Stepped-Up Cost Basis

If you held a stock until it increased in value, selling it could mean paying capital gains taxes. But giving the stock to someone else means transferring these gains to the recipient, allowing them to take possession of the stock at its appreciated price.1

For example, if you purchased 100 shares of a stock and each share is now trading for more than the purchase price, cashing the stock might mean paying capital gains taxes on the amount the investment increased. If you give this stock to someone else, this person begins with a stepped-up-per-share cost basis. If they later sell the stock once it goes up more, they may only owe taxes on the profits-per-share difference.

2. Transfer of Wealth

Giving stock as gifts may also be a good way to begin passing down wealth to the next generation while minimizing your tax obligation. Cashing out stock and passing along the cash may mean paying capital gains taxes. The proceeds may also be subject to income taxes. This tax may depend on the type of account holding the stock and how long the investment was in the account.

Transferring stock to your children, grandchildren, or other loved ones may help them learn about investing in the stock market while reducing the assets you may eventually want to pass down through the inheritance process.

How To Get Started Gifting Stock

There are a few different ways to give stock as gifts, but the simplest ones involve setting up a brokerage account.

If you plan to give stock as gifts to your children, a custodial brokerage account allows you to transfer shares and buy and sell stock on your child’s behalf. Your child may take control of the account once they are a certain age, usually 18 or 21.

If you want to give stock to an adult with no strings attached, you may transfer them to that person’s existing brokerage account—or open and fund a brokerage account for them yourself. Talk to your financial professional for more information on giving stock as gifts this holiday season.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Stock investing includes risks, including fluctuating prices and loss of principal.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05337702.

Footnote

1 How to Give Stock as a Gift (And Why Tax Pros Like the Idea), Nerdwallet, https://www.nerdwallet.com/article/investing/gifting-stock#

The end of the year can be a chaotic time for business owners. It is a time to compile data, review the numbers, evaluate strengths and weaknesses, and determine growth opportunities for the future. A business owner would be keen to review several factors in preparing year-end documents and preparing for the following year. Here are five tips that may assist with organizing a strategy.

1. Tax Planning –Have necessary steps been taken toward filing required business and individual tax returns, so they get filed on time? The type of business will determine the tax consequence. There are five general types of business taxes and tax changes that can be applied.

• Income Tax

All businesses aside from partnerships file an annual income tax return. Partnerships file an information return.

• Estimated Tax

This tax comes from income generated by interest, dividends, alimony, self-employment income, capital gains, prizes, and awards.

• Self-employment Tax

Owed if earnings were $400 or more or church employee income was $108.28 or more.

• Employment Taxes – These taxes include:
  • Federal income tax withholding
  • Federal unemployment (FUTA) tax
  • Social security and Medicare taxes

• Excise Tax
  • Manufacture or sell certain products
  • Operate certain kinds of businesses
  • Use various kinds of equipment, facilities, or products
  • Receive payment for certain services

*Several forms may be required depending on the type of business.

• Tax Changes
  • The Tax Cuts and Jobs Act of 2017 (TCJA) lowered the corporate income tax rate from 35 percent to 21 percent. If the business is, for example, an LLC and has grown considerable it may be possible to elect to be taxed like a C corporation while the tax rate is low. This act is set to expire January 1, 2026.
  • Some business can take advantage of the qualified business income deduction (QBI) that offers a deduction worth up to 20 percent of their share of the business’s income. However, specified service trades or businesses (SSTBs) may not be eligible for this deduction if their income is too high. Some example of STTBs are Financial Professionals, Law Firms, Accountants, Investment Managers, Medical Practices, and more. i Determining if you can claim it and calculating the deduction amount is complex and it is highly encouraged to seek the assistance of a financial professional.

2. Understanding the value of Life Insurance –

Life insurance is not just about preserving lost wages for surviving family members and evaluating how loved ones may transfer the business to them. Life insurance cash values can potentially become an asset that can be used to, for example, finance a buy-out or borrow against the policy or multiple policies to help cover business expenses. ii

3. Cybersecurity is a way of life now. Are you staying on top of new threats and measures to lower the possibility of attacks?

Breaches within the cyberspace of companies have become a real threat. Hackers are sophisticated and regularly create innovative techniques to break into company databases. What steps are being taken to stay updated with the evolving threats and means of protection against cyberattacks? iii

4. Whether to defer or accelerate income?

Smaller businesses often use the cash method of accounting on their books and tax returns. If the business is expected to be in a lower tax bracket the following year, consider deferring income to the following year. However, if the expectation is that the business will be in a higher tax bracket, consider accelerating income into the current year, for example, sending invoices and attempting to get paid sooner so income will be taxed at the current tax rate.

5. Record of Out-of-Pocket “Business” Expenses

• Mileage log – A record of tracking miles to show to the IRS
• Money spent out of personal accounts
• Cash receipts (Gas, Uber or taxi cab, and other expenditures.) iv

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Please keep in mind that insurance companies alone determine insurability and some people may be deemed uninsurable because of health reasons, occupation, and lifestyle choices. Guarantees are based on the claims paying ability of the issuing company.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

Tracking # 1-05341284

Footnotes: i Tax Cuts and Jobs Act, Provision 11011 Section 199A – Qualified Business Income Deduction FAQs | Internal Revenue Service (irs.gov) ii How Can I Borrow Money From My Life Insurance Policy? (investopedia.com) iii 6 Ways Cybercrime Impacts Business (investopedia.com) iv Reimbursable out-of-Pocket Costs Definition (investopedia.com)