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IN THIS ISSUE: IPOs, Social Security, and when to retire |
THE HEADLINES
Mixed signals
What’s happening: October’s Consumer Confidence Survey showed many Americans think a recession is “somewhat likely” during the next 12 months. But Fidelity pros say recession risk is low.
Here’s why: The economy remains strong, says Fidelity’s asset allocation research team. Some evidence: The labor market is resilient, real adjusted wages are growing, and consumers are still spending. But some Americans may not be feeling so upbeat right now given rising inflation and interest rates on borrowing costs.
What it means for you: Despite the strength, it’s worth keeping an eye on a few trends that could affect your portfolio, including: AI’s impact on economic growth and company profits, international investment opportunities, and how long inflation takes to return to the Federal Reserve’s 2% target rate (learn more about
how inflation works). As always, keeping your investments diversified and thinking long term can help too. Speaking of, here’s how to
balance future saving goals with rising expenses. |
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Public accessWhat’s happening: IPOs, aka initial public offerings, have been in the news. That’s when a private company “goes public” and starts selling shares to investors in a public market for the first time.
Tell me more: Artificial intelligence company IPOs are being especially closely watched. Building and operating advanced AI systems requires massive investments in data centers, computer chips, and computing power, which is one reason some AI companies may be turning to public markets for funding. These IPOs can help show whether everyday investors are willing to support the high valuations and infrastructure spending behind the next phase of AI growth. |
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What it means: There are unique considerations to keep in mind with IPOs. For example, an IPO’s stock can be particularly volatile in its first few months of trading. If you’re interested in an IPO, it’s important to check out a company’s prospectus. This document filed with regulators before the company goes public details what it does, how it makes money, its financial results, risks, and more that investors would want to know before deciding to buy in.
Thinking about investing in newly public companies? Get a step-by-step guide on how to participate in an IPO and learn what really happens during an IPO. |
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Saving Social SecurityWhat’s happening: The long-term future of Social Security could depend on what Congress does, and how fast. (Quick catch-up: Starting in late 2032, Social Security may pay out only 78% of benefits because, in short, retirees are taking out more than what workers are putting in.1)
Tell me more: Congress is considering 3 categories of solutions:
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Adjusting who receives benefits and when.
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Removing the payroll deduction cap. Currently, only earnings up to $184,500 are taxed.
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Expanding the participant pool to include state and local government workers who don’t currently contribute to the program.
What it means for you: It is too soon to know which proposal, if any, could become law. Some possible outcomes:
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Full retirement age, currently at age 67, could get bumped to 70 for the highest earners.
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Earnings over $250,000 could get taxed.
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Dependent spouses’ benefits could get eliminated.
While Congress has always acted to avert a shortfall, if it doesn’t in time for your retirement, an average married couple might lose out on $10,560 a year. Whatever happens next, learn how to prepare for a possible Social Security shortfall. Plus, here’s
how benefit cuts could affect your retirement savings. |
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FEATURE
When can you retire?These 7 signs could mean retirement can be closer than you think. |
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TOOL SCHOOLToday’s tool: Fidelity’s Tax-Loss Harvesting Tool2
What it does: Gives you step-by-step guidance to see if you can save on taxes through tax-loss harvesting. That’s when you sell investments that are down to help offset realized investment gains (as in, investments you sold for a profit and may be taxed on). The end result: Less of your money goes to taxes and more may stay invested and working for you.
How it works: To support your tax-loss harvesting decisions, the tool updates your estimated potential tax savings in real time as you add, remove, or adjust positions. The tool also shows your realized gains across your taxable Fidelity accounts and helps you identify unrealized losses (investments that dropped in value that you haven’t sold). It then helps you sell investments that could help save on taxes. After that, you can choose to reinvest the money in something else.
Good to know: You can’t use the loss to offset gains or reduce taxable income if you purchased substantially identical investments to the ones you sold within 30 days before or 30 days after the date of the sale. That’s called a
wash sale. To put investment losses to use in the current tax year, you’ll need to harvest your losses before December 31. Excess losses can be used to reduce up to $3,000 of ordinary income annually; the rest can be carried forward to future tax years. |
