Month: January 2024

Corporate executives have unique financial needs and opportunities. An opportunity that sets them apart from other corporate employees is their access to corporate benefits and compensation packages, which can have a significant impact on their financial well-being. As we start a new year, it’s an ideal time for corporate executives to evaluate their corporate benefits and make informed elections. Below is a comprehensive guide to help corporate executives make the most of their corporate benefits. 

Understand Your Benefits Package 

  • Stock Options: Corporate executives often receive stock options as part of their compensation. It’s important to understand the types of stock options you have, vesting schedules, and tax implications. 
  • Retirement Plans: Review your company’s retirement plans, such as 401(k) or deferred compensation plans. Consider maximizing contributions to benefit from employer matches and tax advantages. 
  • Insurance: Evaluate your health, life, and disability insurance policies. Ensure your coverage aligns with your family’s needs and future financial goals. 
  • Health Savings Accounts (HSA): If you are utilizing a HDHP (high deductible health plan) you should be able to contribute to an HSA. These accounts are triple tax advantaged, meaning you get a deduction for your contribution, growth is tax deferred, and if used for qualifying medical expenses distributions are tax free.  
  • Flexible Spending Accounts (FSA): These accounts allow you to put money aside for healthcare or daycare expenses, while receiving a tax deduction for your contributions, further reducing your taxable income. Be mindful that the balances in these types of accounts do not rollover, so be sure to contribute only what you will use.  

See our Financial Resources Page for a 2024 Reference Guide on contribution limits. 

Tax-Efficient Compensation Planning 

  • Tax Planning: Consider the tax implications of your benefit choices. For example, you may have the option to defer bonuses or other compensation to a future year, potentially reducing your current tax liability. 
  • Stock Grant Timing: Timing the exercise of stock options or the sale of vested shares can impact your tax liability. Consult with financial and tax professionals to develop a tax-efficient strategy. 

Estate and Wealth Transfer Planning 

  • Estate Planning: High-earning corporate executives should have an estate plan in place to protect their wealth and ensure their assets are distributed according to their wishes. 
  • Beneficiary Designations: Review and update beneficiary designations on retirement accounts and insurance policies to reflect your current wishes. 

Investment Strategy 

  • Diversification: Ensure your investment portfolio is diversified to manage risk effectively. Diversification can also help you achieve long-term financial goals. 
  • Risk Tolerance: Your risk tolerance may evolve over time. Reevaluate your risk tolerance to ensure it aligns with your current financial situation and objectives. 

Seek Professional Guidance 

  • Financial Advisor: Consider working with a financial advisor experienced in advising corporate executives. They can help you navigate complex financial decisions and tailor strategies to your unique needs. 
  • Legal and Tax Professionals: Consult with legal and tax professionals to ensure compliance with regulations and to create effective tax and estate planning strategies. 

Corporate executives have access to valuable corporate benefits that can significantly impact their financial future. To make the most of these benefits, it’s important to understand your options, plan strategically, and seek professional guidance when needed. By taking proactive steps and optimizing your corporate benefits, you can enhance your financial well-being and work toward achieving your long-term financial goals.  

If you have any questions or need assistance with your corporate benefits planning, don’t hesitate to reach out to our team at SBC Wealth Management. We’re here to help you navigate your financial journey with confidence. 

I hope you are doing well as we kick off 2024. 2023 was an eventful year in the U.S. financial markets, to say the least.

Given this, I imagine you may have some questions about what’s to come in 2024. With that, I present the Q4 2023 recap and 2024 outlook.  

 
U.S. Equities 

Strength, resilience, and logic-defying are words that come to mind for equities in 2023. March and October of 2023 had bears on the offensive, courtesy of regional bank concerns and high interest rates, respectively.

But fast forward to the end of the year, the S&P 500 had a 2023 return of 24.23%, the Nasdaq 100 rose by an astounding 53.81%, and the Dow Jones Industrial Average rose by 13.70%. 

Likely to be a headline theme heading into 2024, there is a lot of cash on the sidelines (i.e., uninvested cash). How much is a lot? Around a record $6 trillion, according to some measures compiled by Fundstrat. That figure is more than the sum of all non-housing debt (~$4.8 trillion) held by all Americans. 

This cash could help to provide equity market support in 2024 if it is invested into stocks this year. 

There’s been some tough sledding in the bond markets as investors have endured a three-year bear market with the benchmark 10-year Treasury yield trading in a wide range between 3.253% to approximately 5.0% throughout the year. Bond buyers were likely feeling better once interest rates moved lower toward the end of 2023 based on forecasts of interest rate cuts by the Fed in 2024.

 
Inflation

Commodity Prices: Broadly measuring commodity prices using the S&P Goldman Sachs Commodity Index, we see that the index fell in 2023, indicating lower wholesale prices across a broad range of commodities. Ideally, this trickles down to the consumer if those corporations do not mark things up too much.    

Consumer Price Index (CPI): Government data shows that consumer inflation, as measured by the Consumer Price Index, peaked year-over-year in June of 2022 at 9.1% and declined steadily throughout 2023. However, it may not feel like it when you purchase goods and services. “Stuff” is still expensive, with service pricing and shelter pricing remaining stubborn. Core CPI (which excludes volatile food and energy) showed a rise of 3.9% year-over-year, according to the last release in 2024 of December data.

 
Election Year

On the note of the presidential election, associated volatility could find its way into markets. According to U.S. News, the S&P 500 has yielded an average of a 7% return in election years dating back to 1952. 

The election cycle could add more headlines to a market already massively driven by headlines, with investors weighing the economic policy of the potential presidential winners.

 
Federal Reserve Outlook

As major U.S. market indexes rose impressively in November and December, so did expectations for Federal Reserve (Fed) rate cuts. High hopes surrounded Fed rate cuts, but there was some disparity between the Fed’s commentary and the market’s pricing at year’s end.   

At the end of 2023, market expectations were for cuts to begin in March of 2024, with a total of six to seven quarter-point rate cuts priced in, according to the CME FedWatch Tool (CME FedWatch Tool, 2023). Yet, the Fed has broadcasted a message of three cuts in 2024. 

In fact, while Fed members see rate cuts as likely in 2024, the path remains highly uncertain, according to the December meeting minutes released on January 3rd. 

Fed officials were optimistic about the path of inflation in the meeting minutes, but market bulls who expected a super-dovish-sounding Fed ready to cut rates quickly and rapidly were left somewhat disappointed.  

Perhaps we have indeed seen a market that has gotten a bit ahead of itself on rate-cut hopes. On the day of the Fed meeting minutes release, markets were still pricing in the first rate cut of 2024 to occur in March to the tune of a 66.5% probability of a quarter-point cut at the March 20th meeting.

 
Long-Term Effects

As always, we will keep you apprised of what we know when we know it, with a focus on how what happens in the news and in the markets impacts your investments.  

However, I do encourage you as a long-term investor to keep in mind the markets of March 2020, and more recently, March and October 2023, when world events led to dips. Selling assets in a panic during Covid days, regional bank pressures, or times of rapidly rising interest rates has proven to be the wrong choice time and time again. 

Remember, in its 66-year history, the S&P 500 has delivered positive annual gains roughly 70% of the time. That’s not to say that the bumps in the road don’t deliver brutal news headlines and trigger emotions — but historically, remaining level-headed and disciplined puts the odds in an investor’s favor. 

 

Armed with that wisdom, let’s keep in mind the benefits of long-term investing as we head into a new year. And, of course, if there is anything on your mind regarding stocks, interest rates, the Fed, or your portfolio, please feel free to reach out to your advisor. We are always here as a resource for you. 

 

Be Well,

Andrew Fairman Signature

Andrew Fairman, CFA, CFP®

Chief Investment Officer

As we head into 2024, there are some important changes to retirement limits that you should be aware of. Staying informed about these changes is crucial to ensuring your savings plan remains strategically on track with your retirement goals. So, let’s dive into the key updates. 

 
401(k), 403(b), 457 Plans, and Thrift Savings Plan 

For those of you contributing to employer-sponsored retirement plans, the contribution limit has increased to $23,000 for 2024. That’s a slight rise from the previous year’s limit of $22,500. 

If you’re aged 50 or older, you can still make catch-up contributions, and this limit remains at $7,500. This catch-up provision allows older individuals to contribute more to their retirement accounts, bringing the maximum contribution for 2024 to $30,500. 

 
Traditional and Roth IRAs 

If you have a Traditional or Roth IRA, the annual contribution limit has been raised to $7,000 for 2024, up from $6,500 in 2023. This increase allows you to save even more for your retirement. 

Just like with employer-sponsored plans, if you’re 50 or older, you can take advantage of a catch-up contribution. This allows you to contribute an additional $1,000, bringing your total contribution limit to $8,000. 

 
Income Phase-Out Range for Roth IRAs 

Another important change to note is the modification in the income phase-out range for Roth IRA contributors. For single filers and heads of household, the range is now between $146,000 and $161,000. If you’re married and filing jointly, the updated range is between $230,000 and $240,000. 

 

As we enter 2024, we encourage you to review your retirement plans considering these new limits. Ensuring that your savings align with your retirement goals is crucial for financial success in your golden years. 

If you have questions or need assistance with your retirement savings strategy for 2024, don’t hesitate to reach out to our experienced team at SBC Wealth Management. We’re here to help you navigate the ever-changing landscape of retirement planning and make the best decisions for your financial future. 

Remember, the key to a comfortable retirement is informed decision-making and a well-thought-out savings strategy. Start your 2024 financial planning on the right foot by staying informed and taking proactive steps towards securing your retirement.  

Here’s to a successful and prosperous retirement journey in the year ahead!