Tax Survey, Contribution Limits for 2023, Market Update, and Fun Retirement News

This post is a transcription from a video I recorded. You can watch the video by clicking here.

We just finished our fall reviews and had a great time catching up with everybody, hearing about your summer and plans for the holidays. Of course, the main reason we meet is to review and update the financial plan and portfolio, but I really enjoy the personal side of it as well. I’m already looking forward to reviews in the Spring. 

I wanted to send out an update with a few thoughts on my mind:

Tax Survey

First, if you click on this link here, it will take you to a one-question Google form. We’ve always been really focused on tax planning with every client; however, we’ve never done the tax preparation and filing. We’ve always outsourced that to partners we have, or to the CPA that you already work with. We’ve been getting the request more and more to prepare and file the tax return. We’re thinking about bringing that service in house, but before we start looking for somebody to hire, we want to get a true indication of who would be interested in that across our client base. We won’t be able to see whose answers are whose, so don’t feel like you’re committing to anything.

Max Contribution Limits for 2023

A few weeks ago the IRA released the new max contribution limits for 2023. Employer-sponsored plans like 401(k)s, 403(b)s, and 457s now have a max limit of $22,500 and $30,000 if you're 50 or older.

Traditional and Roth IRAs have a max limit of $6,500 and $7,500 if you’re 50 and older. 

SIMPLE IRAs, which a lot of our doctors and their employees participate in have a max contribution of $15,500 and $19,000 if 50 and older.

The contribution limits are all significantly higher. I fyou need help updating those through your employer, let me know. I’m happy to do a screen share and show you how to do it. For those clients who max out Traditional or Roth IRAs with us, we’ll be in touch about getting those contributions updated.

Market Update

The inflation report came out today and year-over-year inflation is 7.7%. That’s still high, but trending down, which is what we want to see. The market popped on this news and is up almost 5% at the time of this writing.

That puts us down about -18% this year-to-date. So far, we hit the low point on September 30 when we were down -25% from the high. On that day, I went back and looked at how many times the market had dropped -25% from its high since 1950. It’s happened 9 times, which means, on average, once out of every 8 years it experiences a drop like this.

I then looked at how the market typically responded after going down -25%. On average, one year after the drop, the market had gone up 23%. Over a 5-year period it had gone up 64%. And over a 10-year period it had gone up 143%.

Those returns are all significantly higher than the average 1-, 5-, and 10-year periods. The takeaway from this, is the best returns typically come after the most difficult phases in the stock market. One of the most important things we can make sure to do right now is be positioned for the eventual rebound. This is a message I’ve been repeating over and over, and will continue to repeat.

Fun Retirement News

Despite the, the tough year we've had in the market, we have had quite a few clients retire. One of my favorite parts of the job is helping clients through that transition. My first recommendation is to read a book called How to Retire Happy, Wild, and Free. This book talks about finding meaning in retirement and that next phase in life. I love hearing about what my newly retired clients do in their new free time. The other day I received a text with a video from a client, who on one of his first days in retirement went to swim laps at the pool. And so, with his permission, I thought I’d share this with everyone, and especially those who are nearing retirement and looking forward to that phase of life (for that video, click on the link at the top of the page).

Out of the Office

Last, I’ll be out of the office next week, Monday, Nov 14 through Friday, Nov 18. My associates Dan, Brent, and Mark will be in the office so if anything comes up feel free to reach out to them.

Thanks everyone and have a great November!