2024 Interest Rate Predictions & Retirement Changes for the New Year
by SGL Financial
Our 2 Cents – Episode #161
2024 Interest Rate Predictions & Retirement Changes for the New Year
Welcome to Our 2 Cents in 2024! We are ushering the new year with a great new episode. Today, Gabriel and Steve discuss interest rate predictions from some of the major banks on Wall Street. Then they share a couple big changes for retirement coming in 2024. Don’t miss Gabriel’s quote of the month to wrap up the show!
- 2024 Interest Rate Predictions:
- The Fed’s expected end-of-2024 interest rates.
- Bank of America’s prediction on the likelihood of a Fed rate cut by March.
- Goldman Sachs’ forecast on rate cuts.
- JPMorgan’s revised interest rate outlook.
- UBS’ expectation on a recession in 2024 and massive rate cuts.
- Big Retirement Changes for the New Year:
- Social Security’s COLA for 2024.
- Increased Medicare expenses for the new year.
- New rules for 529 plans that could add an interesting layer to your retirement planning.
- Gabriel’s Quote of the Month:
- “Don’t let money run your life, let money help you run your life better.” — John Rampton
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: Welcome to Our 2 Cents, and Happy New Year. You’ve got Gabriel Lewit here, Steven Lewit here.
Steve Lewit: 2024 version.
Gabriel Lewit: Producer Katie, 2024 version. All of us are here with you to celebrate and ring in a glorious new year.
Steve Lewit: Yeah, it’s-
Gabriel Lewit: Can you believe it?
Steve Lewit: No, I can’t. I hear this from everybody, 2023 zipped by.
Gabriel Lewit: It sure zipped.
Steve Lewit: It zipped.
Gabriel Lewit: Katie, can you believe it? She’s nodding her head “no” because you can’t hear her. Our goal, we’re going to talk about resolutions for this year. Maybe one of those is get Producer Katie on the show.
Steve Lewit: I am committed to that.
Gabriel Lewit: Even if all she says is, “Hello.”
Steve Lewit: Hello.
Gabriel Lewit: Maybe that would be a baby step for us here.
Steve Lewit: You folks have to hear her voice. It’s magnetic.
Gabriel Lewit: Yes.
Steve Lewit: Yes.
Gabriel Lewit: Sure. All right. Well, we are of course here in 2024.
Steve Lewit: Happy New Year. Did we say that?
Gabriel Lewit: Our first show of the new year. We couldn’t record last week because Mr. Lewit here was out on vacation of all things.
Steve Lewit: I was in-
Gabriel Lewit: How could he?
Steve Lewit: I was in California for a week, folks, and it was great.
Gabriel Lewit: Was it Sunny California, Steve?
Steve Lewit: Sunny California. It was 60, 65 degrees every day, and had a good time. Did a lot of writing. Did a lot of reading. Visited some friends and it was really nice.
Gabriel Lewit: Well, I noticed you didn’t bring the sunshine back with you.
Steve Lewit: I did not. I did not. I felt, we’re in Chicago and we have to live the Chicago life.
Gabriel Lewit: Yes. It seems like winter has finally arrived.
Steve Lewit: Winter’s arrived.
Gabriel Lewit: It’s snowed. It’s slushed. It’s going to get cold. It’s going to get more snowy. Hopefully-
Steve Lewit: The sun has disappeared.
Gabriel Lewit: Yes, sun has disappeared.
Steve Lewit: It’s never going to come again.
Gabriel Lewit: Now you brought something else back with you as well from California, did you not?
Steve Lewit: I think I know where you’re going.
Gabriel Lewit: Is this new year, new you?
Steve Lewit: I think I know where you’re going. Go ahead. Go ahead.
Gabriel Lewit: Well, folks, Steve of course did not bring back sunshine, but he did bring back a tattoo.
Steve Lewit: I did. Folks, I’ve been wanting to get a tattoo for years. I didn’t know what I wanted to get and I finally figured out what I wanted and a friend said, “Come with me to this guy who does tattoos.” And I said, “Okay.”
Gabriel Lewit: You did.
Steve Lewit: And I did. I have my first tattoo.
Gabriel Lewit: So, make sure if you see him, make him feel uncomfortable by asking him to show it to you.
Steve Lewit: Yep. It’s on my forearm so I don’t have to disrobe or anything like that.
Gabriel Lewit: Well, that’s positive news.
Steve Lewit: That’s good news. Right, it’s good news.
Gabriel Lewit: All right. Let’s talk about new year, new you. Maybe new year, new money goals.
Steve Lewit: What’s your biggest resolution? Do you have one?
Gabriel Lewit: My resolution every year is to lose some weight. At least it has been for the last five years.
Steve Lewit: The last five years, it has.
Gabriel Lewit: But I actually think I’m really going to do it this year. I really, really think I can get to it this year.
Steve Lewit: I hope so. I didn’t mean it like that. It’s always good to lose weight and be fitter. I mean, that’s why I mean I hope so.
Gabriel Lewit: Well, as an example, I bought gym equipment for my furnace room during COVID. That’s the only spot I have in the house for it.
Steve Lewit: That’s the equipment that I saw that has all the dust on it?
Gabriel Lewit: Well, there was some dust being collected and I did dust everything off last night and did four sets of bench press. My kids like to go down there with me, and they of course make it so I can’t really work out. I have to monitor their activities.
Steve Lewit: Their work out.
Gabriel Lewit: They work out, and I have to make sure they don’t drop weights on their heads. But I did get four reps of bench press in.
Steve Lewit: Nice. Nice.
Gabriel Lewit: I’m on my way for 2024.
Steve Lewit: Congratulations.
Gabriel Lewit: Thank you. I felt very proud of myself. I actually spent the first 30 minutes I got down there cleaning all the dust-
Steve Lewit: All the dust.
Gabriel Lewit: … and vacuuming, so I wasn’t working out unless I-
Steve Lewit: You weren’t breathing dust. Excellent.
Gabriel Lewit: Yeah. What about you, Mr. Lewit?
Steve Lewit: My resolution, I am finishing my book this year. Seven years in the making.
Gabriel Lewit: Good for you.
Steve Lewit: Six different versions.
Gabriel Lewit: Should I hold my breath?
Steve Lewit: Nope. Nope. It will be published by September, October I think.
Gabriel Lewit: So I should hold my breath?
Steve Lewit: Well, it’s going to take a little bit, but it’ll be done this year and I can’t wait to announce it and then have everybody not buy it and not read it.
Gabriel Lewit: Well that’s optimistic.
Steve Lewit: Well, it’s philosophical. It’s not for everybody.
Gabriel Lewit: It’s not an easy read?
Steve Lewit: No, it’s kind of heady.
Gabriel Lewit: Gotcha. Okay.
Steve Lewit: It’s a good read. I think it’s a good read.
Gabriel Lewit: Well, that’s a good goal. Finishing a book’s a big project. Well, we would love to hear from you, our listeners, and we want to hear from you. So email us, info@sglfinancial. We’d love to hear some of your top resolutions for 2024 and if you happen to email us, we could share some of those on the next show with some of the resolutions that we receive from our listeners, might be.
Steve Lewit: Yeah, that would be a lot of fun.
Gabriel Lewit: As far as other work goals, we had our best year ever last year.
Steve Lewit: Thank you everybody.
Gabriel Lewit: Big thank you to our clients for valuing the services we provide and having trust in us.
Steve Lewit: And to our staff, because they are fantastic.
Gabriel Lewit: And every year, and I think this is a good thing, if you are wondering out there, how is SGL Financial doing? We’re doing great. We’re growing. Every year has been our bigger year than our prior year. We’re hoping to continue that trend into this year. Again, as always, our focus is providing world-class service, holistic comprehensive planning advice and making sure we never lose touch of close personal planning relationships with our clients no matter what size that we grow to.
Steve Lewit: Yeah, that’s really important for us folks because Gabriel and I spend time talking about where’s the company going, how big do we want to get? Because we are fortunate to have a fairly successful company and the conversation it always boils down to is we don’t want to lose contact with you guys. We don’t want to become-
Gabriel Lewit: We shall not.
Steve Lewit: … like a big company where everybody is part of a system.
Gabriel Lewit: We want to be a big-small company.
Steve Lewit: Big-small company.
Gabriel Lewit: Yes, exactly. So small feel-
Steve Lewit: Or is it small-big company?
Gabriel Lewit: I don’t know.
Steve Lewit: I don’t know.
Gabriel Lewit: Anyways. But yeah, that’s one of our resolutions for this year and we have other surprises in the works for you clients of ours as we continue to fine-tune services and improve deliverables and lots of little things here and there. Improve some communication. We’ve got some new ideas of things to send your way and share with you for this year. But yeah, many good things ahead. Many good things ahead. We’re hoping for a very wonderful 2024. It’s also an election year.
Steve Lewit: You know, Gabriel-
Gabriel Lewit: Don’t know if anyone noticed that.
Steve Lewit: You said that and for a minute my mind stopped and said, “Yeah, it is.”
Gabriel Lewit: It is. Yes, yes. This year is an election year.
Steve Lewit: It’s like I don’t want to pay attention to it because it’s so nuts.
Gabriel Lewit: Well, it’s going to get nuttier, I think. We’re obviously not going to get into the left/right politics here, but of course there’s-
Steve Lewit: Well, the big question is how does that affect the economy? How does it affect the stock market? How does it affect international?
Gabriel Lewit: Well, and of course, not that this isn’t left or right or it’s just acknowledging it, there’s a leading candidate that’s mired in many, many lawsuits and things going to the Supreme Court to even see if he’s going to be on the ballot.
Steve Lewit: Yeah. He may not be on the ballot. We don’t know.
Gabriel Lewit: It’s just shaping up to be a very-
Steve Lewit: Interesting.
Gabriel Lewit: … rollercoaster-y year, I feel, from the political perspective.
Steve Lewit: More than interesting.
Gabriel Lewit: Yeah. Well, let’s talk about the other big news on the horizon for this year, which is, is it going to be the beginning of the dropping of interest rates? Okay, so it is very likely, as based on the Fed that we have reached peak interest rate raising. It does seem to be that inflation is starting to come under control. That was the story of the year still last year in 2023. So going into this year, they’re projecting, the Fed, a lowering of interest rates.
Steve Lewit: Yeah, well yeah, they are. I don’t think it’s going to be very much, but just the fact that they’re lowering them is a big deal for the economy and for the stock market. The stock market responded really well to that news.
Gabriel Lewit: Well, yeah. I’m going to give you some data points here in a second. Now, speaking of the stock market, of course when the Fed last met, they didn’t raise interest rates and there was a very strong recovery in December. Now whether those two were directly correlated, no one specifically knows for sure, but they certainly might’ve been connected.
Steve Lewit: They are. Yes.
Gabriel Lewit: It is important to notice and recognize, however, everybody, that the S&P 500, as much as it rebounded last year, and I think this is very important as we talk about other planning goals along the way this year, the S&P is still not back to where it was on January 1st, 2022.
Steve Lewit: Which is amazing because-
Gabriel Lewit: Two whole years ago.
Steve Lewit: … because we get so infatuated with [inaudible 00:09:29].
Gabriel Lewit: It was up 24% last year, right?
Steve Lewit: Yeah. “Oh, I’m doing great. I’m doing great.” Well, yeah, no. I mean, you’re doing great and you got your money back. Well, not quite.
Gabriel Lewit: Relative to one year ago…
Steve Lewit: You’re doing great.
Gabriel Lewit: You’re doing great. But relative to two years ago, you are still likely slightly down.
Steve Lewit: And that’s the same thing that happened in the years 2000 to 2013. If you take the S&P in the year 2000 at the, I don’t know the exact level, but it was the same level in 2013-
Gabriel Lewit: 13 years later.
Steve Lewit: 13 years later, the S&P-
Gabriel Lewit: We’re hoping that’s not the case for the next 13 years.
Steve Lewit: Exactly, but you had two down markets and two really good up markets, and during the up markets, everybody forgot the down markets. And people think they made money over those 13 years when they really didn’t.
Gabriel Lewit: And we’re not trying to depress you, but it’s very important when measuring relative success and investment returns and how you’re doing to keep some of those hindsight starting point and ending points of when you measure returns at the front and center to give yourself a full picture of what’s going on.
Steve Lewit: Yeah, it’s very easy to fall in love with the fact that you made money last year.
Gabriel Lewit: And the risk there going into this year is if you just look at one year ago, you say, “Wow, I made 24% in the S&P 500. What am I doing in bonds? Or what am I doing in safer options? If I can make that much money…” And I actually had a client say this to me, say, “I should probably move back to the S&P. It’s starting to do better.” And I had to say, “Look, let’s look at the graph. It’s still not back to where it was two years ago.” And that really opened his eyes. And I think a lot of people just get this short-term memory, we’ve called it, short-term memory, where you just look back one year and you see how the market’s done and it looks like it’s done great and you forget that there was a minus 20% proceeding the positive 24%. And that of course is going to be market math where even if you lose 20 and gain 24, you’re still below where you started.
Steve Lewit: Right, you’re still not breaking. So I don’t want to go down a rabbit hole on the S&P, but I do want to mention that the S&P, everyone says, well, that’s the stock market, the S&P. Well, the S&P is driven right now by seven companies called the Magnificent Seven. And most of the other companies of the 500 companies in the S&P are not doing that great. So even if you go into the S&P, you’re really going into seven stocks that are really driving the way the S&P goes.
Gabriel Lewit: Well, and as you said, we’re not going to get into the rabbit hole here of S&P 500 and stock returns for today, but the point being is where is this year going to take us with interest rates, with the stock market, with the bond market?
Steve Lewit: Wait, wait, wait, wait. I have my crystal ball.
Gabriel Lewit: I know you do.
Steve Lewit: Hold on.
Gabriel Lewit: Always carry it.
Steve Lewit: Hold on, let me rub it. It’s smoking. It’s fogging up. It’s still fogged up. It won’t give me an answer.
Gabriel Lewit: Oh, boy. Broken again.
Steve Lewit: Broken again.
Gabriel Lewit: So, let’s go back to interest rates, right? This is one of the drivers of the market. They’re very connected in many ways. So here’s some predictions for the year. We love talking, and then making fun of later, all the various incorrect predictions that are put out there by companies. It’s hence why our crystal ball is very cloudy.
So let’s look here. So the Fed has projected a decrease from 5.1% down to 4.6% by the end of 2024. Okay, hinting at multiple rate cuts. Now that’s what’s interesting here is that’s coming from the Fed, but there’s a different consensus on Wall Street, and all these different big banks, big firms have their own consensus opinions of where they think the Fed’s going to end up. So for example, Bank of America thinks that there’s going to be first and foremost, a 90% likelihood of a Fed rate cut by March. How do you think they come up with that? There’s a 90% likelihood-
Steve Lewit: I have no idea.
Gabriel Lewit: … of a fed rate cut by March.
Steve Lewit: Here’s what you do. You go into a little room, you sit down in the dark and say, what would sell, what would sell, what would get me readership? And that would get me readership.
Gabriel Lewit: Yeah. Well, here’s another one for you. So Goldman Sachs, okay, they’ve revised their forecast and they’re predicting earlier and faster rate cuts expecting three consecutive 25 basis point cuts in the first half of the year, according to Goldman Sachs.
Steve Lewit: Okay, yep.
Gabriel Lewit: We’ve got JP Morgan. They foresee that the first rate cut would occur in June, sooner than previously thought, at least according to them, with a target range of 125 basis points lower by year end. And then you’ve got Macquarie Group, who I’m not super familiar with-
Steve Lewit: I think they’re a research-
Gabriel Lewit: Macquarie, yeah. Expects nine 25 basis point rate cuts in 2024, translating to significant easing. And they think that the rate hike cycle is complete, but more cuts are going to come, of course, throughout 2024.
Steve Lewit: You know what’s interesting about all of these, Gabriel, is that if you look at the research behind it, if you read it and look at the logic behind it, they all are logical. In other words, they all have data that supports their point of view.
Gabriel Lewit: Well, and I was saving the best one for last. I’m not done yet.
Steve Lewit: Oh, I thought you were done.
Gabriel Lewit: UBS.
Steve Lewit: Yes.
Gabriel Lewit: Okay. Says that they think there is going to be a recession that will hit in 2024.
Steve Lewit: Second half, right?
Gabriel Lewit: And as a result of that, they think that the Fed is going to have to respond to “falling inflation and an economic slump by slashing rates” by 275 basis points, nearly four times the 75 basis point reduction that was previously expected by most people.
Steve Lewit: But wait, but wait, I have my crystal ball here. Wait, wait.
Gabriel Lewit: All right, so here we’ve got, so let’s look at these names. We got UBS, Goldman Sachs, JP Morgan, Bank of America. Who’s right?
Steve Lewit: All reputable, classic economists, all smart people, all looking at the glass in a different way, all having different results.
Gabriel Lewit: So, what I do with this, and what we do with this is we look at this, say, at least there is a consensus. If you step above a 30,000-foot view, go a little higher here, we would see that there’s a consensus, at the very least, across everybody, that rates are coming down this year.
Steve Lewit: Yes.
Gabriel Lewit: That’s the point I’m looking to make here. So what does that mean for you, mister and missus investor? It means that your money market account that you’re probably in love with right now-
Steve Lewit: I wonder why.
Gabriel Lewit: Right? 5%, FDIC insured, fully liquid. That means that rate’s going to come down. I had somebody just yesterday say, “Should I wait until the rates drop before I make any changes with my money market?” And I said, that’s actually the worst thing you could do is wait until they drop to make changes, because then you’re going to be buying other investments, whatever they are, CDs, fixed rates, bonds. If interest rates drop, what happens to bond prices? They rise. So you’re going to be paying more for your bonds. If you go to buy a CD after interest rates drop, you’re going to get lower rates on your CD. So everything is telegraphed for us here for taking advantage of moving money out of fixed rates before they drop into something… Sorry, floating rates into fixed rates that’ll lock in those rates for a longer period of time.
Steve Lewit: Yeah.
Gabriel Lewit: Okay. Just talking about an actionable goal to start off the year for you, based on what we’re seeing in the data that’s out there and everybody’s consensus.
Steve Lewit: So, what would you do, Gabriel? I have money. I have money in savings. I have money in the market. I have money in annuities. I have money in CDs.
Gabriel Lewit: Well, the first thing you’ve got to do is-
Steve Lewit: What do I do?
Gabriel Lewit: … you’ve got to turn off your individual autopilot mode.
Steve Lewit: What does that mean?
Gabriel Lewit: It means being on cruise control is easy. Doing nothing is easy. “Okay, I’ll just wait.” It’s a good rate right now. I’m going to just wait. Good rate? Just wait.
Steve Lewit: No, no, no.
Gabriel Lewit: No. Don’t do that.
Steve Lewit: Folks, just ignore that. Please, please. Poetry is not your-
Gabriel Lewit: What you want to do-
Steve Lewit: You’re not a poet. I’m sorry.
Gabriel Lewit: And I know it.
Steve Lewit: That’s why.
Gabriel Lewit: So, you want to find something, if you don’t need that cash immediately for this year, maybe you need it in two years, three years, five years, find something with a fixed rate and lock it in, if you like the safety of fixed rates and fixed yields. Even bonds, right, before interest rates start to drop. So you want to take advantage of the forecasting that we’re seeing here from a bigger picture and use that to your favor to make more money.
Steve Lewit: Still understanding, still understanding that it may not work that way at all because it’s just a forecast.
Gabriel Lewit: Well, the likelihood of interest rates going higher, very low. The likelihood of them staying flat, maybe a little bit stronger. The likelihood of them dropping is pretty high.
Steve Lewit: But the magic word there, Gabriel, is likelihood. Likelihood is just a guess. It’s a problem with-
Gabriel Lewit: I’m going to push you. So are you advocating people shouldn’t make a change?
Steve Lewit: No, I am not.
Gabriel Lewit: ‘Cause I’m not sure where you’re going with that.
Steve Lewit: Where I’m going is to understand that things don’t work out the way we plan. We try to get to A to B, and then something comes out of the woodworks. There’s always something going on, and all of a sudden, things could be different. So even if you’re acting based on the forecasts that are really reasonable… Well look, that’s what people do. They try and time the market.
Gabriel Lewit: Well, this is different. This isn’t timing the market.
Steve Lewit: But it’s the same… Well, I think the market’s been up for three years.
Gabriel Lewit: So, to push you, to press you, are you suggesting that people shouldn’t move from safe money markets and cash into locking in the longer-term fixed rate?
Steve Lewit: I’m suggesting like you’re suggesting, what is the goal for your money? What is the goal?
Gabriel Lewit: I’m suggesting that if you have money in floating-
Steve Lewit: Are you picking on me?
Gabriel Lewit: I am picking on you.
Steve Lewit: I feel a lot of pressure all of a sudden. I feel under pressure here. You’re very aggressive today.
Gabriel Lewit: Hey, I don’t want to see people lose money, and I think there’s opportunities here to make money.
Steve Lewit: Exactly. But I would step one step further back. I would say, what is your goal for… If your goal is to make 4% on your money, then you may do the strategies that execute your goal. If your goal is to make 6%, then use those strategies. What’s your safety goal, what’s your growth goal, and what’s your risk goal? So I know I just made it a little more complicated and you’re rubbing your eyes and rolling your head, but-
Gabriel Lewit: I was trying to make a very simple point.
Steve Lewit: Well, I’m not a simple guy.
Gabriel Lewit: And you’re really-
Steve Lewit: Sorry. Sorry.
Gabriel Lewit: … confusing the issue here.
Steve Lewit: Sorry folks. Okay. All right, I’ll back off.
Gabriel Lewit: All I wanted to talk about was interest rates and if you know or have a very high probability that they’re likely to come down, my point was you can take advantage of that.
Steve Lewit: Yes, you can.
Gabriel Lewit: Okay. Do you concur with that?
Steve Lewit: I concur.
Gabriel Lewit: Okay.
Steve Lewit: A hundred percent.
Gabriel Lewit: All right, good.
Steve Lewit: But no, I’m not going to put a “but” in this time.
Gabriel Lewit: No but. No but.
Steve Lewit: No buts.
Gabriel Lewit: Thank you. Thank you.
Steve Lewit: Okay.
Gabriel Lewit: Okay. Now how about the stock market?
Steve Lewit: How about it?
Gabriel Lewit: Now, this one, I would agree with you, you just cannot predict any way you slice it, right? The probability of the interest rates coming down is very high. We have zero data on the probability of what the market’s going to do this year, really. So there’s interesting… I’m not going to share it on this show today. I’ve got another piece that I found that was a whole host of big banks’ projections for the S&P 500 for the year.
Steve Lewit: All different.
Gabriel Lewit: You know we love to share these every year, in January.
Steve Lewit: Every one of them is different.
Gabriel Lewit: Every one of them is different. So there is no consensus. So it’s very, very difficult obviously to time the market, as you were saying earlier. And so from a market timing perspective, that’s different than macro, big picture, cash, interest rate type conversations.
Steve Lewit: So market, any way you slice it, Gabriel, and I know you believe the same thing, the market is a long-term investment. You don’t make decisions on short market cycles, whereas you can make decisions on interest rate cycles.
Gabriel Lewit: More easily.
Steve Lewit: More easily, and with a higher probability of success. But the market, we don’t know. I remember I had a question this morning from a client, said, “Well,” again, not political here, “but if Trump gets elected, what’s the market going to do?” And I said, “Well, when Trump got elected the last time, everyone said the market was going to tank and there was a big selling spree and the market went straight up.” So we don’t know. We don’t know.
Gabriel Lewit: So as far as goal planning for the year for you with your money, I would agree. It’s good to update your plan. It’s up to you to figure out what you want each of your accounts to serve as a purpose. What do you use? A long-term, short-term, income, cash accounts. But let’s make this the year where we don’t leave money on the table, we make smart decisions, we think ahead a little bit, and we make very meaningful strategic choices with our money and we put it to good use.
Steve Lewit: And to your point, you don’t want to put your money on cruise control. It needs to be watched and wise decisions made as things change and you start pulling the strings in a very wise way where you’re not trying to guess the market, but you’re using probabilities in your favor.
Gabriel Lewit: Yes, exactly. Alrighty. So that’s a bit about markets, it’s a bit about interest rates, the economy, will there be a recession? What do you think about that, Mr. Lewit?
Steve Lewit: I’m tending to believe there might be a recession near the end of the year.
Gabriel Lewit: You think?
Steve Lewit: I think… So a lot of the data is very positive right now.
Gabriel Lewit: Still positive. I think the last jobs reports still added more jobs.
Steve Lewit: And I keep saying this, there are underlying things happening in terms of money supply and more technical stuff that its questionable. So I could see a recession at the end of the year. I absolutely don’t subscribe to any of the people that are saying there’s going to be a recession in March or April.
Gabriel Lewit: Doesn’t look like it so far. Yeah.
Steve Lewit: I don’t see that at all.
Gabriel Lewit: Okay. All right, so let’s talk about some other changes for the year ahead. Other updates here that are very important for you for the year 2024, so we’ve got a few here to share with you. Number one is going to be cost-of-living adjustments for Social Security.
Steve Lewit: Yes.
Gabriel Lewit: We probably touched upon this briefly, but just to bring it back to the surface here for you, it appears that the COLA for this year is 3.2%.
Steve Lewit: Love that rate.
Gabriel Lewit: Okay, so you get a nice 3.2% increase this year.
Steve Lewit: You don’t get anything.
Gabriel Lewit: I do not get anything.
Steve Lewit: You do not.
Gabriel Lewit: I get no social security yet.
Steve Lewit: Us special people get it.
Gabriel Lewit: And the good news is hopefully that’s a sign, again, since that’s tied to inflation data, that’s a good sign that inflation has started to ease going into this year. Okay. There’s also going to be some, of course, higher Medicare expenses. Well, generally they go up, I should say. Last year they went down. But this year, the Part B is going to increase from $164.90 cents to $174.70 cents. Okay?
Steve Lewit: Yep.
Gabriel Lewit: So your COLA that you receive will be reduced by that $10 per month for your Medicare.
Steve Lewit: Yes.
Gabriel Lewit: And the increase in the annual deductible will be up $14 from $226 to $240 for your Medicare deductible. Okay. Alrighty, you will also see here that there is… Where is it here? Oh, potentially a new strategy for you with your 529s.
Steve Lewit: I didn’t read that. What is that? What is that?
Gabriel Lewit: This got introduced last year, but it’s now in place where you can, if you have excess money in a 529, you can roll that over into a Roth IRA.
Steve Lewit: Yeah, you can. It’s got to be there, what is it, 15 years? A long time.
Gabriel Lewit: Well, yeah. So there are, yes, rules around this. It’s got to be in there for 15 years. But it’s an interesting strategy. Let’s say you’re a younger person. I mean, it’s not a huge amount of tax-free money, but let’s say you’re a younger person with a high income and you cannot contribute to a Roth IRA. You could contribute a certain amount so that in 15 years it’s 35,000 and you convert it to a Roth.
Steve Lewit: Yes, you could.
Gabriel Lewit: So, hey, there you go. But you don’t get the unlimited cap of whatever amount you want to convert or anything like that.
Steve Lewit: It’s a very slow process. And I think the 529, when it gets converted, correct me if I’m wrong, Gabriel, does that belong to the student rather than to the person who… I think it’s a 529 conversion, but it goes to the student.
Gabriel Lewit: Well, it goes to whoever I believe the beneficiary-
Steve Lewit: The beneficiary is, yes.
Gabriel Lewit: … is of that 529. What I have to check into is if you can make yourself the beneficiary of the 529 and then roll it over to yourself.
Steve Lewit: Yeah, check into that. My gut says no.
Gabriel Lewit: Yeah, well you could always do it for your kids.
Steve Lewit: Yes.
Gabriel Lewit: There’s ways of using it for sure, whereas, you can’t necessarily just gift a grandchild 35,000 in a Roth IRA. Here’s another way that you could do it very strategically.
Steve Lewit: You can get it to them. Absolutely.
Gabriel Lewit: I think it creates some cool little planning opportunities. Let’s say you’ve got a five-year-old grandkid. You give them 35,000 by the time they’re 20 years old that’s in a Roth IRA.
Steve Lewit: That’s nice.
Gabriel Lewit: And then that grows unchecked for 40 years.
Steve Lewit: Yeah.
Gabriel Lewit: That’s pretty cool. All tax-free.
Steve Lewit: That’s very cool.
Gabriel Lewit: Yeah, yeah.
Steve Lewit: I like it.
Gabriel Lewit: So if you’re a grandparent and you’re thinking-
Steve Lewit: I didn’t do that for you.
Gabriel Lewit: It’s not too late to do it for your grandchildren.
Steve Lewit: You’re right. It isn’t.
Gabriel Lewit: You’ve got a few of them.
Steve Lewit: Only seven.
Gabriel Lewit: So yeah, that’s a pretty neat one here. Let’s see here. What else can I talk to you about for this year?
Steve Lewit: This is all on you because I didn’t read the article.
Gabriel Lewit: Well, this particular article didn’t have much more than that. So those are your key updates for this year.
Steve Lewit: Maybe that’s it then.
Gabriel Lewit: That’s what we got for you for now for key updates. There’s probably more. We’ll share them with you when we discover what they are.
Steve Lewit: We sure will.
Gabriel Lewit: All right, well let’s end today with some nice quotes.
Steve Lewit: All right.
Gabriel Lewit: We always like to do some quotes from time to time. I hope you’ve enjoyed our prognosticating about 2024 here. Oh, before I get to that though, this is very important. Okay? January 10th was National Peculiar People Day.
Steve Lewit: No.
Gabriel Lewit: Yes, it was.
Steve Lewit: No.
Gabriel Lewit: Yes. I don’t know if you knew this.
Steve Lewit: I did not know this.
Gabriel Lewit: So, if you missed it, which most people probably did, it’s your opportunity to appreciate the peculiar… I can’t say the word, my gosh.
Steve Lewit: Peculiar, peculiar.
Gabriel Lewit: Peculiar people in your life.
Steve Lewit: So do you give a gift and say, “Hey, I think you’re peculiar in today’s National Peculiar…” Now you’ve got me doing it. Do you give gifts? How do you recognize…
Gabriel Lewit: I think it’s up to you. Yeah. Yeah. It’s up to you.
Steve Lewit: Did someone get paid to think of this?
Gabriel Lewit: If you look online, there’s actually, every day is some kind of thing.
Steve Lewit: Is a national day of something?
Gabriel Lewit: Is a national day of something, yes. You could even look it up today. Let’s see, Katelyn, what’s January 11th’s national day? Let’s see, is today the 11th?
Steve Lewit: Pre-Peculiar Day.
Gabriel Lewit: Oh, today is the 10th. Sorry, I thought today was the 11th. No, by the time you get this, it’ll be in the past. My apologies.
Steve Lewit: Yes.
Gabriel Lewit: Oh, yeah. So today is, yes, National Peculiar People Day.
Steve Lewit: It’s today? It’s today.
Gabriel Lewit: Why did I think that today was the 11th?
Steve Lewit: I’ll have to run out and buy gifts. I know a lot of peculiar people, including myself, so I have to give me a gift.
Gabriel Lewit: There you go. There you go. Okay. I like this one quote here for you folks. I don’t know who this guy is. Katelyn, can you look up John Rampton? Has anybody here heard of John Rampton?
Steve Lewit: Nope. Not on my list of famous people.
Gabriel Lewit: John Rampton. He’s a media person.
Steve Lewit: All right, that’s impressive. We have a quote from the media person.
Gabriel Lewit: He’s a entrepreneur who has started and sold a number of successful businesses and currently operates an online invoice and payments company. Okay, well, he has a quote for himself online. How about that?
Steve Lewit: All right.
Gabriel Lewit: “Don’t let money run your life. Let money help you run your life better.”
Steve Lewit: Nice. I like that. It’s kind of what we say. It’s not about the money, it’s about life.
Gabriel Lewit: That’s why I brought it up.
Steve Lewit: Yeah, no. What’s his name?
Gabriel Lewit: John Rampton.
Steve Lewit: I’ll have to read more about John.
Gabriel Lewit: I don’t know. How do you get-
Steve Lewit: Why don’t I have a quote?
Gabriel Lewit: … successful enough where you can have a quote online?
Steve Lewit: I want an online quote. Kate, can we work on that?
Gabriel Lewit: Who do you even submit it to?
Steve Lewit: Facebook. I guess you just call it your quote of the day, like Gabriel’s quote of the day.
Gabriel Lewit: Is this like the old Twitter where you have to be verified to be able to make a quote?
Steve Lewit: You have to belong to the Quote of the Day Club.
Gabriel Lewit: I don’t know. Okay. Well, I like this one a lot. So maybe this is the year where you don’t let money run your life and you don’t sweat the small things maybe with your money, but you think of how do I make my money allow me or enable me to live a better quality life.
Steve Lewit: Yeah. And that’s really a very different headset than having money on your mind all the time. “Can I afford this? Can we spend that money? Can we go on the vacation? Maybe we should delay fixing the basement.” That’s very different than having money support you without all that worry and aggravation attached to it.
Gabriel Lewit: It sure certainly is.
Steve Lewit: Sure certain. Surely. Surely.
Gabriel Lewit: There you go.
Steve Lewit: Surely is.
Gabriel Lewit: Well, that’s our show here for you today. We’ve enjoyed chatting about the year ahead, what the trials and tribulations may be, what good news lies ahead for us, what amazing news lies ahead for us. Only the year will tell. All we know is that we are very happy and excited to have you on the journey with us-
Steve Lewit: Definitely.
Gabriel Lewit: … as our valued listeners and as our valued clients. And as always, if there’s anything big or small that we can help you with in any way, shape, or form, we are here to help you with those this year.
Steve Lewit: Amen to all of that, Mr. Gabriel.
Gabriel Lewit: Yes. So mazal tov to you. Happy 2024. Have a wonderful year ahead and we will talk to you on the next show.
Steve Lewit: Stay well everybody. See you soon.
Gabriel Lewit: Bye now.
Steve Lewit: Bye.
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