Some Highlights from Retirement Watch 2023

We covered a lot of ground in Retirement Watch during 2023. I’m closing out the year by reviewing some key and popular items from my updates over the past 12 months.

This might remind you of some forgotten points or highlight some you might have missed the first time. Interest in annuities soared in the last few years as the Federal Reserve increased interest rates, making safe, guaranteed income more attractive than it has been in years.

Despite the record sales of many types of annuities, there’s still a lot of misinformation about them. To separate the facts from the myths, I wrote “How to Customize Annuities” in the January 2023 issue and followed it with “7 Reasons Not to Buy an Annuity” in the March 2023 issue.

They’ll help you decide whether an annuity should be part of your retirement finances and, if so, which type of annuity.

I reminded readers in the June 2023 issue that the 2017 tax law is set to expire at the end of 2025, and they should be putting together and implementing a two-and-a-half-year plan (now a two-year plan) to minimize income and estate taxes.

Changes in interest rates alter the effects of estate planning strategies, making some more powerful, while reducing the benefits of others. Details were in the November 2023 issue.

A very popular article was “There are Four Ways You Can Make Tax-Free Gifts” in the March 2023 issue. Many readers are surprised by the different tax-free ways assets can be removed from an estate.

A perennial question from readers was addressed in the April 2023 issue, “Which is Best for You: A Will or Trust?” Most people should have both. The real question is: Which should control most of your assets?

I also reminded readers of some estate planning issues that usually don’t receive adequate attention. These include whom to appointment to the key positions of executor and trustee (May 2023 issue), who will take over management of your investments (also May 2023) and when a gift tax return should be filed (October 2023).

I advised readers to direct their attention this year to the two most important parts of every estate plan, the advance medical directive (July 2023 issue) and the financial power of attorney (June 2023 issue).

The SECURE Act 2.0 made significant changes to IRAs. I presented an overview in the February 2023 issue. In March 2023, I discussed what I view as the trap laid for many of my readers in the law’s postponement of the starting date of required minimum distributions from retirement plans.

Strategies to avoid that trap and turn it to your advantage are in the April 2023 and May 2023 issues.

During the year, I discussed the details of key provisions in the SECURE Act 2.0, such as the Legacy IRA, changes to qualified longevity annuity contracts (QLACs) and more. A review of and guide to those articles was in the January 2024 issue.

Two popular questions about IRAs were addressed: gold IRAs (September 2023) and conversions of traditional IRAs to Roth IRAs (November 2023).

Reducing income taxes is important to maintain financial independence in retirement, and Retirement Watch is there to help with recommendations.

I reviewed ways to minimize the Stealth Taxes that beguile many retirees in the May 2023 issue. I focused on a key Stealth Tax in the December 2023 issue.

Many retirees give generously to charity, so I revealed how to increase giving by increasing the tax benefits of gifts in the June 2023 and July 2023 issues.

The Solo Years are one of the most overlooked issues in retirement plans for many married couples. I review what you need to know in the September 2023 issue.

This year, I also discussed reverse mortgages (September 2023), the safety of your money (April 2023) and key strategies you need to know about Social Security (June, July and September).

Of course, throughout the year, I provided updates on the economy and investment markets, along with my recommendations for your portfolio.

In 2023, the markets and economy confounded investors.

Most investors continued to misread the Federal Reserve’s intentions, expecting interest rates to be cut throughout the year. I advised that inflation would be stickier than markets expected, and that would keep interest rates high and rising.

That was the case for the first 10 months. But markets reversed course sharply during the last week of October through the end of the year.

Intermediate- and long-term interest rates fell sharply during that period, delivering a greater-than-15% return in the long-term treasury ETF (TLT).

It is only the sixth time in 20 years that TLT had a 15% or higher return within 50 trading days, according to Bespoke Investment Group. What’s unique about this period is that it followed a 15% decline in the immediately preceding 50 trading days.

Stocks joined in the rally. The S&P 500 had eight consecutive weeks of higher returns to finish the year, the longest winning streak in six years.

As I’ve explained, I believe these rallies in stocks and bonds (and digital currencies, among other assets) are another instance of investors collectively being too optimistic about the Fed’s likely future actions.

It will become apparent that the Fed isn’t bringing short-term interest rates back near 0% anytime soon. That should bring a reversal in the prices of financial assets.

I discussed this journey in economy and markets each month in Market Watch and Portfolio Watch.

These are the articles I deem most important or that caught the attention of a large number of readers. They’re only a sample of the range of advice and information delivered to you.

You can read these articles and all the others from the past in the Archive on the members’ section of the Retirement Watch website.

The Data

The Fed’s preferred measure of inflation, the Personal Consumption Expenditure (PCE) Core Price Index (which excludes food and energy) increased 0.1% in November, the same rate as in October.

The 12-month change in the Core PCE Price Index was 3.2%, down from 3.4% in October.

The full PCE Price Index declined 0.1% in November after being unchanged in October. Over 12 months, the PCE Price Index was up 2.6% through November after being up 2.9% through October.

Personal income increased 0.4% in November, following a 0.3% increase in October. Compensation climbed 0.6% in November and 0.2% in October.

Personal spending increased 0.2% in November after rising 0.1% in October. Spending on services increased, while spending for goods declined.

The Consumer Sentiment Index from the University of Michigan was 69.7 at the end of December. It was 69.4 at mid-month and 61.3 at the end of November.

December’s reading was the highest since July 2023.

More optimistic expectations about inflation accounted for much of the improvement. Consumers now expect inflation to be 3.1% over the next year, compared to 4.5% in November.

The S&P Corelogic Case-Shiller Home Price Index rose 0.1% in October, following a 0.2% rise in September. Over 12 months, the index was up 4.9% through October after climbing 3.9% through September.

The House Price Index from the Federal Housing Finance Agency (FHFA) increased 0.3% in October after rising 0.7% in September. Over 12 months, the House Price Index rose 6.3% through October and 6.2% through September.

New home sales had their biggest monthly decline since April 2022 in November, dropping by 12.2%.

The Philadelphia Fed Manufacturing Index for December was negative 10.5, down from negative 5.9 in November. The index has been in negative territory for 17 of the last 19 months.

The Kansas City Fed Manufacturing Index was negative 4 in December, down from negative 3 in November. Survey respondents said they expect activity to improve in the coming months.

The Dallas Fed Manufacturing Index was negative 9.3 in December, an improvement from negative 19.9 in November.

The Richmond Fed Manufacturing Index fell to negative 11 in December from negative five in November. December’s is the lowest level since February.

The Conference Board’s Leading Economic Indicators index declined 0.5% in November after falling 1.0% in October.

The index dropped 3.5% during the six months ending in November.

The Conference Board signaled that the data indicate a short, shallow recession is likely in the first half of 2024.

Durable goods orders jumped 5.4% in November, after falling 5.1% in October. November’s gain in orders was the largest since July 2020.

Most of the increase was due to the volatile transportation sector. After excluding transportation, orders rose only 0.5% in November.

After excluding both transportation and defense, which is considered a good proxy of business investment, orders increased 0.8% in November after declining 0.6% in October.

The third and final estimate found gross domestic product (GDP) grew at an annualized rate of 4.9% in the third quarter, the same as the first estimate and down from the second estimate of 5.2%.

The final estimate is the highest rate since the fourth quarter of 2021. The growth rate for the second quarter of 2023 was 2.1%.

New unemployment claims increased by 2,000 to 205,000 in the latest week.

Continuing claims, which lag a week behind new claims, decreased to 1.865 million from 1.866 million.

The Markets

The S&P 500 rose 0.17% for the week ended with Tuesday’s close. The Dow Jones Industrial Average lost 0.04%. The Russell 2000 increased 1.96%. The All-Country World Index (excluding U.S. stocks) added 0.92%. Emerging market equities advanced 0.38%.

Long-term treasuries lost 0.13% for the week. Investment-grade bonds increased 0.26%. Treasury Inflation-Protected Securities (TIPS) added 0.09%. High-yield bonds gained 0.54%.

On the currency front, the U.S. dollar declined 0.48%.

Energy-based commodities increased 0.49%. Broader-based commodities rose 0.23%. Gold gained 1.35%.

Bob’s News & Updates

My latest book is “Retirement Watch: The Essential Guide to Retiring in the 2020s.” Learn more and order by clicking here and here. You can be among the first to write a review.

My previous book, “Where’s My Money: Secrets to Getting the Most out of Your Social Security,” is receiving mostly five-star reviews on Amazon for telling you clearly what your benefit options are in different situations and how to determine the best choice for you. You can find it on amazon.com or Regnery.com.

The number of regular viewers for my Retirement Watch Spotlight Series continues to increase. You should sign up because I make in-depth presentations of key retirement finance topics. You can watch these online seminars from the comfort of your home or office at times you choose. To learn more about my new Spotlight Series, click here.

A recent five-star review of my book, “The New Rules of Retirement” on amazon.com said, “A complete retirement guide! One of the best books on this topic!” Click for more details about the revised edition of “The New Rules of Retirement.”

If you’re interested in my books, check my amazon.com author’s page.

I’m a senior contributor to the Forbes.com blog. You can view my contributor page here.