After the Webinar: Final 2022 Personal Finance Events

Barbara O’Neill, Ph.D., CFP®
Martie Gillen, Ph.D., MBA, AFC^®, CFLE

On December 6, 2022, OneOp held its eighth annual Personal Finance Year in Review webinar. During the 3½ weeks between the webinar and December 31, several additional noteworthy events occurred. Below are five topical updates:

U.S. Savings Rate – As of early January 2023, the latest reported U.S. personal savings rate (personal saving as a percentage of disposable monthly income) was 2.4% in November, 2022, about half the 4.7% rate in January 2022 and a small fraction of the 20% savings rate in January 2021.
Federal Reserve Interest Rate Hike – The Federal Reserve increased interest rates (again) in mid-December 2022 for a total of seven rate increases last year. The final increase was 0.5% with a target federal-funds rate between 4.25% and 4.5%. Interest paid (loans) and earned (savings accounts) by consumers was affected. The Fed also signaled plans to continue increasing interest rates into Spring 2023.
Consumer Price Index (CPI)- As of early January 2023, the latest reported 12-month percentage change in the CPI was 7.1%, down from a high of 9.1% in June 2022 and slightly lower than the 7.5% rate in January 2022. Some economists see this as a sign that U.S. inflation is cooling and will continue to do so, while others say it is too soon to know for sure.
Stock Market- The U.S. stock market experienced its worst year since 2008 when the Great Recession was underway. The Dow Jones Industrial Average index (DJIA) was 36,338.30 on 12/31/21 and 33,147.25 on 12/31/22. In percentage terms, the DJIA fell 8.8% in 2022 while the S&P 500 index and tech-weighted Nasdaq Composite index fell 19.4% and 33.1%, respectively.
SECURE 2.0 Act- This package of measures, designed to make it easier for Americans to save for retirement, was signed into law in late December as part of a $1.7 trillion government appropriations bill. Included in SECURE 2.0 are the following provisions:
- RMDs- Starting in 2023, the deadline age for required minimum distributions from tax-deferred retirement savings plans (e.g., Thrift Savings Plan) was pushed back from age 72 to age 73 for people born between 1951 and 1959 and to age 75 for those born in 1960 or later.
- Catch-Up Savings– Starting in 2025, workers age 60 through 63 can contribute the greater of $10,000 or 50% more than the catch-up amount (in 2025) to tax-deferred employer plans. The 2023 catch-up is $7,500.
- Emergency Access- Also starting in 2025, workers will be able to withdraw up to $1,000 from their retirement savings plan for emergency expenses without owing the 10% penalty. One such withdrawal will be allowed per year.