What Should Be on Your Wealth Management Watch List This Year?
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MARK RIEPE: It's a beautiful Sunday morning in San Francisco, and I'm sitting here in my office fulfilling my promise to get this podcast recorded this weekend.
While driving in, I crossed the San Francisco-Oakland Bay Bridge. In fact, as I look out my east-facing windows, I've got a nice view of it. This 8.4-mile engineering marvel was first built in 1936. It's actually one of eight massive Bay Area toll bridges, all of which were built to last many decades.
They are, in many ways, a long-term investment in the region's economy. But even though they are built to last, that doesn't mean that the governmental agencies responsible for them can adopt a "set it and forget it" mentality. These bridges require annual maintenance to keep them in good shape—in fact in 2018, that annual maintenance bill was $100 million.
These bridges are similar to many of the features of your financial life, and that's the subject of today's episode.
I'm Mark Riepe, and this is Financial Decoder, an original podcast from Charles Schwab. It's a show about financial decisions and the cognitive and emotional biases that can cloud our judgment.
The connection between bridges and your financial life might seem a little obscure, so let me try to connect the dots. There are many financial-planning and wealth management decisions we make that are long-term in nature. I'm talking about things like:
- buying a house or renting,
- who will be the guardians for our minor children that we put in our will, and
- who will be the beneficiaries of our life insurance policies.
These are the kinds of decisions that most of us don't revisit on a day-to-day or even a year-to-year basis.
But in the frenetic course of our lives, it's easy to lose track of them entirely and not pay attention to the fact that, over time, the decisions we made years ago may not match up with our current situation.
It's kind of like the rust that accumulates on a bridge, or rivets that were fastened many years ago, or aging welds.
The deterioration doesn't happen overnight, and a problem may not be visible right away, but deterioration does happen.
Your financial decisions can suffer the same fate and need to be periodically revisited to make sure they still make sense for current conditions.
Of course, we all have limited time, and we've got to be judicious with how we spend that time.
My guest is Rob Williams, who wrote a report recently that identifies some of the things that will happen in 2023 that should cause you to take a closer look at some of your financial-planning or wealth management decisions that normally don't get that much attention.
I've got a link to that report in the show notes and at Schwab.com/FinancialDecoder.
Rob is a managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. He's a CERTIFIED FINANCIAL PLANNER™ professional, a Chartered Retirement Planning Counselor℠, and a Certified Private Wealth Advisor®. He's regularly quoted in The Wall Street Journal, MoneyWatch, Kiplinger's, U.S. News & World Report, Investor's Business Daily, and elsewhere. Rob's been a guest on the show at least a couple of times before, and I think the last time we talked about Social Security.
Rob Williams, welcome back to the show.
ROB WILLIAMS: It's great to be here, Mark.
MARK: You know, before we get into the meat of the discussion, I just wanted to talk a little bit about how you got interested in investing in wealth management in the first place. You've been doing this for some time. What is it about this career that really continues to make it interesting to you?
ROB: Yeah, I love that question, Mark. And, you know, I started like a lot of people probably. I was a person just getting started in my financial life, was working to manage that first paycheck and what I had. And it didn't really start, initially, because I decided to do anything particular, like invest. It actually started, probably, when I was about 16 or so. And my father, for whatever reason, he had opened an investment account in my name. And he wasn't really an investor, he was a doctor, but he was a saver. And I just started from there. And, today, I think I still have that same account, and I have a retirement account; a 529 plan for my children; which I, strangely enough, started before I had kids, which probably says something about me; a savings account; emergency savings; all these investment accounts. So it really started there. And I remember thinking then that this investment account was really a form of ownership, a form of taking control, of taking control of my financial life. And I still feel that way today, in the work that we do. And then, really, that's why I still find it, find it interesting.
MARK: That's interesting because I think I opened my first account also when I was 16. It was a joint account with my dad. It was actually a Schwab account, believe it or not. I had no idea I'd end up working for the company decades later.
But, anyway, let's get into the episode here. A few episodes back, we did an episode about our outlook for 2023, about the economy and the markets. But, you know, you and I both know that, you know, the market and the portfolio is really only a portion of what matters to someone's financial life. And in your 2023 Outlook, you identified five themes that people should especially pay attention to in 2023. And I thought it would be a great idea if we could just kind of kick off the new season and these new episodes by going through each of them. Does that sound good?
ROB: Yeah, I think that sounds right. Our five themes that we chose are focused on markets, but also the bigger picture. If you like, I'll just start by going through them.
The first was inflation. And we know that that's really top-of-mind issue for a lot of investors. It's certainly in the news, and we're certainly feeling it. It's a big concern for today. So we cover what you can really do about it.
The second is liquidity, which really means having money when you need it, especially when you need it soon. And that's really important when markets are volatile, in particular. We're saving for long-term goals, but we need money soon, as well.
And the third theme we hit on is one that you cover a lot in this podcast, which is the emotions of investing and assessing them when they're the most painful. And down markets, as we experienced in parts of the market last year, we saw those emotions kick in, and we have some tips on how to manage it.
And these last two are really sort of deeper dives. They go beyond markets to two issues that we hear, and we know are really important to a lot of investors, which is tax and estate planning. And those both may sound daunting, but they are parts of a comprehensive financial plan. And those are two themes where we provide some thoughts and talking points in our outlook for the year.
MARK: So let's pick it up there just with the first theme. You know, as you mentioned, inflation, you know, really high in 2022. Where is it now and what's the trend?
ROB: Well, it's been below 2% for more than a decade into the last year. So this last year was a big shock. Since the financial crisis, those of us who followed the news and the markets and the economy, it has been low, and the Fed had been really working to get it up. Well, whatever they did worked, and other things, so now it's jumped. It's starting to decline again, the rate of growth is falling to 6.4% year-over-year as of January, that's looking back 12 months, and it was up a half-a-percent for the month of January alone. That's below level that you said before. So it is falling. We definitely believe it's going to stay elevated for some time, and the Fed continues to keep rates going up to lower inflation, but, you know, still likely to remain elevated just because of the strength of economy and other factors. So we'll continue to watch that. But in planning, what we really focus on is it's important to be prepared for if inflation stays elevated and what could happen. And to have to be prepared for those possibilities, including persistently high inflation. What can we do to be able to be prepared for that? And then position investments, your spending, and, really, your financial planning to address these risks and the tools you have to address them.
MARK: Rob, you know, inflation is a number, and we can, of course, quantitatively evaluate the impact that inflation is having on people. But there's an emotional component to it. Can you talk a little bit about how inflation feels for people who are out there paying higher prices for all sorts of things?
ROB: I think there's a yin and yang sort of to investing and finances. One's math. One is emotional. You said that the number is high. Yes, that's true, but what we really feel is the emotions and the lack of control over inflation. And it feels particularly bad to us in anything in life, really, if it's something we feel we can't control or plan for, and in this case, that might derail us financially. So this is true for anyone, I think, in particular, to feel this way. We see it, in particular, in two big cases. You're trying to save and invest, and you can't because other things cost so much. And others we see with retirees who are feeling fearful that, "Hey, I'm not going to have a paycheck that's going up. How am I going to pay for this?" There are certainly other reasons, but these are emotional, understandable feelings that without a plan feel very stressful. And that can really derail your financial confidence, your health, and, as well, as the decisions you make.
MARK: All right. So with that in mind, you know, we know inflation has been going up now for the last few months, it's been coming down again, but it's still elevated. What should people do when inflation is at the levels it's currently at?
ROB: Well, first of all, we believe in investing. We believe in the power of investing to help us do what I said before, take control, take ownership, be a participant in the U.S. and global economy. That's the best way we believe over time to outpace inflation and achieve financial goals. So staying invested in stocks for a portion of your savings is still, you know, I think at least, the best and most consistent opportunity to beat inflation long term.
But not every goal—this is the second point—is long term. We talked about liquidity. We will more, hopefully, here in a moment. But you've got current spending needs, and inflation is a current cost. So separate those two and prioritize each. We'll invest to beat inflation long term, but then make a series of decisions to plan for your spending now and where you can manage the rising cost of things like gas and automobiles and travel, etc. That's more the short-term financing.
The third is really related to that, and it's surprising to a lot of people, but not if you think about it, is to track your spending first. Inflation is about costs; cost is about spending. Most people don't know what they spend, and if you don't know, that creates fear. So once you do do that, you can cut back, you can look at more discretionary expenses. Think of some examples like some periodicals you may not … you know, may not read, or the lower-hanging fruits that you cut … areas that you can cut back on. It's not fun, but you have to start with knowing what you're spending first and then cut back.
So those are a couple of the main steps, really, there's three of them we suggest. Don't overreact, have a plan, keep investing, and then know what you're spending and control what you can.
MARK: Well, we've got a number of listeners who are either taking Social Security or getting close to that point. How does inflation affect Social Security?
ROB: There's a few silver linings with inflation we mentioned and pushing it a little bit here to say silver lining, but inflation does drive Social Security benefits. They are tied to inflation. So a nice little benefit for retirees, and not just current retirees, future retirees, is that the benefit payment for Social Security went up this past year, as well as the year before, for the first time, really, in any meaningful way for over a decade. So benefits in 2022 were increased by 8.7%. So that's a nice little pay increase for Social Security. And that's after a 5.9% increase in 2021. Like I said, prior to that, the increase has been, you know, 0% or very small. So I'm not going to touch on how Congress is going to pay for all this in the long term, we'll certainly be watching it, but the benefits of these payments go forward for current and future retirees. So if you are retiree or in the future, you're not necessarily on a fixed income. That is rising with inflation. So that has been a bonus for this year.
MARK: As we're recording this, people are either working on filing their taxes for 2022, or, frankly, they should be. What impact does inflation have on taxes?
ROB: Well, this is another one of those places where the regulation is tied to inflation, and the tax bracket breakpoints—which just means the dollar amounts where the tax bracket rates, meaning the percent you're taxed, have gone up—those are tied to inflation. So that happened in 2022. It's happening again in 2023. And so this means, all in, when you file your taxes, all else equal, you're going to be paying a little bit less in tax. So that's a nice little bonus that inflation pays us in terms of preparing your taxes this year, at least.
MARK: You know, Rob, let's face it, tax brackets confuse the hell out of people. And the big point that you always make is you aren't subject to just one tax rate. You're actually subject to multiple tax rates. Do you have kind of an easy way or a kind of a metaphor to explain that?
ROB: Yes, that is confusing. So think of a cup or a series of cups, and a tax bracket is a bit like a cup, and it fills up with income, you know, like filling up with water. And that's the cup filling up for the purpose of calculating your tax bill. So when you have taxable income on your tax return, you report it, and it starts to fill up that tax bracket cup. Now, when the first bracket cup fills—let's say, it's the lowest tax bracket, which, today, is 10%, which maxes out, incidentally, at $10,275 for individuals and $20,550 for married individuals filing jointly in 2022—after you fill that amount up, you move to the next cup or the next bracket, which currently is 12%. And then that 12% cup starts to fill up. Then when the 12% cup fills up, you move to the 22% cup or tax bracket, and into the 24th, or 32nd, 35th. And, ultimately, for truly high earners, the 37th-percent tax bracket. And in 2022 and 2023, each cup just got taller. And that's with the inflation increase. And so as you said, Mark, we are paying rates on different amounts of each dollar, and that's how the tax brackets work. So cups is one way that I describe that.
MARK: You know, it can seem a little wonky, but I think actually understanding these brackets is pretty important, especially if you're in a position where you can be flexible in terms of when you recognize income. And you're only going to be able to do that if you really understand what tax bracket you're in. And I'm getting ahead of myself because I know the fourth theme is taxes, so we'll … when we get there, we'll talk a little bit more about multi-year tax management.
But before we get there, let's go back to your second theme, and that is to manage liquidity. That's really important for our listeners because we know that many are retired or nearing retirement. '22 was a tough year … 2022 was a tough year, with both stocks and bonds going down in price. And if you're living off your portfolio watching your principal decline, you know, that hurts. And so my question to you is how do you make sure your portfolio is structured properly if you're in a situation where you're regularly pulling money from it?
ROB: Well, you're right. I think watching stocks and bonds fall on price and your principal decline hurts quite a lot, especially when you're withdrawing money from your portfolio. And having a cushion of cash or cash-like investments, really what we call the more stable investments, in a portfolio helps. So even if those more stable investments don't grow, typically, as quickly or as much as stocks over time, or if they feel like they're a relatively boring part of the portfolio, they're still really important. And this really, we believe, is one of the key points that's key in personal finance and wealth management that goes above and beyond just investing or trying to boost your returns every day and with every investment. It's also a critical point this year, just given the shifting economic climate, inflation, Fed policy, and a lot of other factors in the market this year. A good advisor in a market like this should generally ask, "When do you need this money?" And you may have some money for retirement, but you may need some money that you need to spend, too. And CEOs think this way, businesses think this way, and so should investors. So in any market, really, it makes sense to have money when you need it. And this includes cash.
MARK: We've heard a lot of different opinions about how much money people should have in cash in terms of how they're investing their savings. You know, a few years ago people … you know, you would hear headlines … or see headlines saying, you know, "Cash is trash." And then I've seen headlines, "Cash is king." What's your perspective on all that?
ROB: Well, in our outlook and commentary, we recommend that individual investors and their families determine, first, how much money they're going to need just to spend in the next three to six months. And that could be from a paycheck, but set that aside in an emergency fund. That should be invested in a relatively safe place. It might be a savings account. You should be able to get access to that quickly. Then, second, determine how much money you might need from savings beyond a paycheck the next roughly two to four years. And not everyone needs this. You may not need any money from your investments. But if you do, track your spending first and then determine how much you're going to need from your portfolio, and then put that money into some cash that's for investment. You may not need it tomorrow, but it's there for liquidity needs, meaning you can get access to it quickly at a relatively predictable price in the short term and then invest the rest.
MARK: Well, it sounds like you're saying cash should be managed just like any other investment. So how does that work? How do you approach managing your cash?
ROB: Cash management is just as important as investment management, and as you look at a broader sense of your finances to think about financial planning, cash management is part of that equation. So beyond it being just a best practice, it's a really important story in 2022 and 2023 because interest rates on cash and cash investments are a lot higher than they have been in some time. Now, cash management involves the range of options you can choose from for cash, as well, from very short-term cash in a checking account, for example, to manage everyday spending, to cash for investment shorter term, say, less than a year that you might need soon, but not tomorrow, and want to access it quickly. And, last, there's money that we really think should be invested in the portfolio for the long term. And even in those portfolios, we believe that some cash in the portfolio makes sense. So all this is part of a sound cash management plan, and, really, it includes all three.
MARK: All right, let's move on to your third theme, and that is to manage your emotions. And, obviously, that's a theme near and dear to us here on the podcast. 2022 was a, you know, kind of a tough year to live through for many investors. We've mentioned many times the importance of not overreacting. But what was interesting to me about your piece was the fact that there have been regulatory changes that actually make it easier to not overreact. Can you describe that in more detail?
ROB: Yeah, we could go into a lot about the emotional issues with investing, but you cover that in every one of your podcasts. On the regulatory side, really, one thing we focused on is the increased focus and really continued focus from Congress on creating retirement accounts and other tax-advantaged vehicles that make it easier … it already is pretty easy, but even more options to save and invest in tax-advantaged ways for retirement, for a college education for a child, in some cases, some options to pay off student loans, and also to have employers contribute to that, as well, to a degree.
So why is this an emotional issue? Well, it's because I believe that when you have an account that's earmarked for retirement, you pay from a part of your paycheck before you get paid into that account. You have an investment plan, it's not on autopilot, but certainly you picked a long-term allocation that works for you, that that regulation and those accounts are making it easier for us to manage the inevitable emotions of markets up and down. That's what those accounts are created for. And the regulations that we've seen in the Secure Act 2.0 that was part of the 8,000-plus-page bill, that omnibus bill that was passed at the end of December, there are a lot of provisions in there that just make it easier for us to, hopefully, remove those emotions, identify goals, save and invest for them, and use those tax-advantaged accounts to do so.
MARK: Rob, you've used the phrase "goal-based planning, investing, and financial management." I think that's actually in the report. What do you mean by that? Or connect it, if you will, to what you were just talking about in terms of some of the legislation and the types of accounts.
ROB: Right. And by account choice, mental accounting is a concept you've mentioned a lot, and it's one we use. And goal-based planning, investing, and wealth management means determine what your goals are—and retirement might be one, you might have one for a college education, a house down payment—and then pick the accounts that you need and the investment plans and strategies you need for each one. That's what goal-based planning, investing, and wealth management is. Not just one bucket of money where you try to increase it and it goes up, but to have accounts and have plans that allocate money to various goals, to various investments. I call that a technique that regulation encourages by having 401(k)s, etc., but it also is a mental accounting exercise that makes it very powerful. You can set those goals, you can create accounts, and then you can put money aside into those. And, conveniently, many of them have names like an IRA, an individual retirement account, they have the name on them, retirement account. That helps us account for those goals and really stay invested for those. And that's one way of thinking about goal-based planning and investing.
MARK: Let’s move on to your fourth theme, and that is taxes. And one of the things I've learned from you and your team over the years is don't think about taxes as kind of an isolated, one-year-at-a-time event. It's important to have a multi-year perspective. And I was wondering if you could kind of … you know, kind of elaborate that and explain what you mean by that.
ROB: Tax planning is a year-round activity, and, as you said, it goes over multiple years. That's making mindful choices about how we choose account types, how we manage our investments, how we sell and realize gains on our investments to realize taxes. We believe that we can't control markets. We can certainly control our goals, we can control our asset allocation, but we do have some, you know, control, to a degree, over things like fees, taxes, etc. So when we mean, you know, multi-year or, you know, tax planning that goes over the full year, it's not just waiting until now when it's often too late. It's planning these and making, you know, tax-aware steps and decisions throughout the year and over multiple years to reduce taxes over time. How you pull money out of those accounts has tax implications. And so having a sound plan year-over-year of when to pull from what account is a really critical and integral part of a retirement income plan.
MARK: What are some of the other account types, and how do they connect, if you will, to some aspect of the tax code?
ROB: The two that come to mind for me that are most common are the tax-advantaged 529 plans that allow for tax-advantaged savings for K-12 education and college education. The Secure Act we mentioned has a few additional provisions in there that makes them even more flexible. The other that's probably less known but is even more powerful are health savings accounts, and they're tax-advantaged accounts that are available to workers who are part of high-deductible health insurance plans from an employer usually. And so you can save in those accounts. You can use money to spend pre-tax on healthcare expenses, but you can also invest, generally, and grow that money for future healthcare expenses in a really tax-advantaged way. So those are really powerful two types of accounts for tax-advantaged savings, as well.
MARK: So what made taxes especially important this year?
ROB: Taxes are important every year. Now that said, tax has been top of mind in a lot of the discussions in Washington. Certainly, the discussions about the debt ceiling and things like that always bring up, you know, tax issues. And it's that time of year for us in terms of tax preparation.
They are also, and it's a little too late for 2022, the year is past, but in down years for investors, it may actually be a silver lining when you have a down market because you can sell investments in brokerage accounts for losses. And tax-loss harvesting is a really powerful strategy to be used to offset gains from other investments. It can also be used to offset up to $3,000 in earned income. Now, you need to do that before the year ends, so it's too late for 2022. But looking at taxes and where you could have taken losses in 2022 is a really powerful strategy we were talking, you know, to investors and clients about.
MARK: Rob, the last theme you covered is estate planning. And you had a nice line in the report where you said something like, "Estate planning is really about planning for what you want to accomplish with your excess funds." And I thought that's just a great way to think about it. And I was wondering if you could elaborate on that theme a little bit more for those people who haven't read the report yet.
ROB: Yeah, estate planning is one of those morbid things we don't want to think about often, and, as a result, we don't really do it. But if you think about it more opportunistically, it's about protecting the wealth you have and then having it be distributed as you intend it. And that could be true whether you're sick and you need someone to manage your money for you or when you pass away, and it can even be how you use some of your money while you're alive. Estate planning doesn't have to be passed when you're gone. It can be for things like charitable giving and for other strategies like that, as well. So thinking about it, you know, more that way in terms of an opportunity to say, "Look, I'm saving for retirement, but I may have other wealth, even the wealth I have if I am incapacitated, etc." Those are really important to have a plan and a strategy and take very basic steps. Everyone really needs some form of estate plan, even if it's just completing your beneficiaries on your retirement accounts, having simple documents and a will. Do that, because if you don't, a court will generally decide for you.
MARK: One last question, Rob. We talked about taxes earlier. Are there any tax considerations connected to estates that are especially relevant in 2023?
ROB: Not as much in 2023, although this is one of those areas that can get very deep very quickly, especially if you're a higher net-worth investor. There's many, many more advanced trust and estate-planning strategies that certainly will be right to talk about, that would be helpful to talk with a trained professional in estate-planning strategies. What we are watching, though, is the sunset of the estate-planning tax cap, basically, that was increased in the Trump administration, and it's scheduled to expire not next year, but in 2026. So absent any other change from Congress, there will be a decrease again in the estate tax minimum, which will make more people potentially subject to that estate tax when they die. We're recommending that if you're in that situation, you talk to a wealth advisor or a wealth strategist, an estate planner, and talk about the strategies you can do to get ahead of that. It's never too early, even if that doesn't expire next year.
MARK: What about … I believe within the Secure Act, there were some changes to the retirement ages. Is that correct?
ROB: That's the big one, really, that we've been watching. In the Secure Act, so-called Secure Act 2.0, we talked about before, they increased the required minimum distribution age from age 72 that was increased from Secure Act, the first Secure Act, which was passed in 2020, to age 73, starting in 2023, so this year. So it moves that out a bit further than it was. Some people might call that a tax cut or more flexibility to wait longer to take from your retirement accounts. I think of it a little bit more as a tax deferral or just more flexibility to wait. The important point we want to make is that you will, ultimately, have to take some withdrawals at some point, and we find that a lot of investors, if they wait to age 72 or 73, they suddenly realize they have very large retirement accounts and then a very large tax bill.
So working with planners and to create a retirement distribution plan—that's part of that multi-year tax planning we talked about—that would say, "Well, maybe I shouldn't wait until 73 or 72. Maybe I should be taking those a little bit earlier," and smoothing out those taxes can be an important and powerful step. So the age was increased, that was the big change in Secure Act 2.0, Mark, to 73. Our takeaway is take it with a grain of salt. Make sure you have a distribution plan that works for you so you don't suddenly have a big jump in your tax bill.
MARK: Rob Williams is a managing director here at the Schwab Center for Financial Research. Thanks for being here today, Rob.
ROB: Thank you, Mark.
MARK: Rob covered a lot of ground in that interview, and here are four things that I wanted to highlight.
Number one. Review your budget in light of inflation. Even though inflation is coming down and we expect it to come down further, the fact remains that your expenses are probably going up, so revisit your spending plans and adjust as needed.
Number two: Manage liquidity. This means making sure you have access to a stable source of funds in case of a short-term emergency like reduced hours or a job loss that affects your money coming in. It also means making sure you're managing your cash balances appropriately given that there are different ways to invest your cash that have different features.
Number three: Pay attention to after-tax returns. It's what you keep after taxes that matters the most. Make sure you understand any tax law changes that have happened and whether they affect you.
And number four: Estate planning. It's not a fun topic, but it's important because it's your chance to decide how to protect, use, and distribute wealth during your life, and it's important to create a plan because if you don't, a court will create one for you.
There's one more thing I want to cover that is kind of related to today's episode. It's a classic illustration of the optimism bias that we've discussed periodically on prior episodes. I've got a clipping from The Wall Street Journal from last November that I've been hanging onto until we started doing new episodes again.
But before I get to that, I want to make sure that I thank the many people who make this podcast happen. This episode was edited and produced by Matt Bucher and Kory Hill. Supervising producers are Patrick Ricci, Tami Dorsey, and Helen Loh. Colette Auclair is our associate producer, with support from Pete Knezevich, Deborah Hinton-Brown, Mary Fong, and Alice Ng.
OK, now back to The Wall Street Journal article I was mentioning before.
Last November the Journal published a survey where they asked three groups of investors what the long-term rate of return they expected from the U.S. stock market.
This, by the way, is an important number when it comes to long-term financial planning and wealth management.
Many of you have probably used online retirement calculators that estimate what your wealth will be many years down the road based on various assumptions. If you haven't done it yourself, your advisor has probably done it for you.
It's an important exercise because it helps you decide how much you need to save and what kind of spending you can expect to have once you start to wind down your career and are drawing down your savings and living off your portfolio.
Here are the numbers from that survey.
- Millennials and Gen Z expected a 16.8% per year return over the next 10 years,
- Gen X expected a return of 14.9%, and
- Baby Boomers expected a 10.7% return.
At Schwab, our expected annual rate of return over the next 10 years is 6.1% for large-cap U.S. stocks and 6.5% for small-cap stocks.
I'd be the first to admit that making these kinds of forecasts is exceedingly difficult, and any forecast should be taken with a high degree of skepticism.
That's why when I recommend that you prepare a plan for the future, you include a variety of scenarios because none of us know exactly what's going to happen.
Having said that, these estimates in the survey of individual investors are quite high by historical standards.
There's nothing wrong with being an optimist. But it's better to be a realistic optimist.
Thanks for listening. Check out Schwab.com/Plan, which has important information about the planning process, retirement calculators, and the option to get a free plan for any Schwab client.
If you'd like to hear more from Rob Williams and keep up with more insights from Schwab, check out our email newsletters at Schwab.com/Newsletters. There you can sign up for our monthly investing insights newsletter delivered right to your inbox.
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For important disclosures, see the show notes and Schwab.com/FinancialDecoder.
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There are many long-term financial-planning decisions we can lose sight of as we navigate the unexpected avenues of our lives. If left unchecked, these choices we made years ago may not match up with our current situation. Is there anything to consider in 2023 to help determine if these past decisions still make sense?
In this episode, Mark Riepe is joined by Rob Williams, a managing director of financial planning, retirement income, and wealth management at the Schwab Center for Financial Research. They discuss five themes you should monitor in 2023 that should cause you to take a closer look at some of your financial-planning or wealth management decisions that normally don't get that much attention.
Read Rob Williams' "2023 Planning and Wealth Management Outlook."
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