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Market-Moving News[i]
This Thanksgiving, as families gather around the table, the festivities provide a welcome reprieve from the political tensions of recent months. With Americans expected to spend nearly a trillion dollars spreading holiday cheer, this spending showcases their resilience in a shifting economic landscape.
While holiday spending is projected by the National Retail Federation to hit a record high, sales growth, as shown by the chart of the week, is expected to fall slightly below the pre-pandemic average of 3.6%. However, this moderation reflects easing inflation rather than weakening demand. In fact, when adjusted for inflation, real sales are set to exceed last year, buoyed by record shopper turnout and an anticipated rise in per-person spending to around $900. Driving this is real wage growth, which has remained positive for a year and a half. Furthermore, stock market gains and recent Fed rate cuts have lifted consumer confidence. That said, elevated prices, along with the depletion of pandemicera savings cushions, may cap spending growth for some households.
Retailers, for whom the holiday season drives a disproportionate share of annual sales, face a mixed outlook. Dealhunting consumers are turning to discount retailers, boosting revenue and profit forecasts. Conversely, those reliant on discretionary categories like apparel and specialty goods are seeing softer demand as shoppers focus on essentials.
Despite challenges, this season reflects a broader economic trend: slowing but not stalling. As winter sets in, consumer spending is cooling but remains far from frosty—underscoring the resilience of the U.S. economy as we head into 2025.
The Week Ahead: Nov 25-29[ii]
- S&P Case-Shiller home price index
- Consumer confidence
- New Home sales
- Minutes of Fed’s November FOMC meeting
- Initial jobless claims
- Durable-goods orders
- Q3 GDP (first revision)
Philosophy Quote of the Week[iii]
Hope And Fear Are the Same
“We are like many pellets of incense falling on the same altar. Some collapse sooner, others later, but it makes no difference.”
Marcus Aurelius, Meditations, 4.15
What’s the difference between you and the richest person in the world? One has a little more money than the other. What’s the difference between you and the oldest person in the world? One has been around a little longer than the other. Same goes for the tallest, smartest, fastest, and on down the line.
Measuring ourselves against other people makes acceptance difficult, because we want what they have, or we want how things could have gone, not what we happen to have. But that makes no difference.
Some might see this line from Marcus as pessimistic, whereas others see it as optimistic. It’s really just truth. We’re all here and we’re all going to leave this earth eventually, so let’s not concern ourselves with petty differences in the meantime. We have too much to do!
Tax Tips[iv]
Carryover Option for Health Flexible Spending Arrangements (FSA)
As they say, health is wealth! In matters of wealth, health is very important! The IRS offers some carryover to Health Flexible Spending Arrangements (FSAs). The carryover can be advantageous but like all IRS rules this one is complicated. There are some important limitations you need to know before taking advantage of a Health FSA.
Employers may allow plan participants to carryover up to $500 of their unused Health FSA balances at the end of a plan year to the next year. This choice is not mandatory for the employer – it is optional! It’s also an alternative to offering a grace period (waiting period) as many employers already do. Employers can offer the carryover, the grace period or nothing.
Health FSAs are common benefits under employer-sponsored cafeteria plans. A Health FSA may be credited or funded with employer contributions or pre-tax employee salary reductions. Health FSA dollars can be used for a variety of qualified medical expenses including, but not limited to, chiropractors, dental, vision, over-the-counter medicines, or prescription drugs. Amounts in a Health FSA at the end of the plan year generally cannot be carried over to the next year. This is known as the “Use It or Lose It” Rule.
In 2013 the IRS noted that Health FSAs were not utilized to their fullest extent because the use-or-lose rule was the greatest hurdle. Many taxpayers cannot predict their future needs for medical expenses and are reluctant to open a health FSA for fear of forfeiting the unused funds. In 2017 the Affordable Care Act put a $2,600 cap on allowable annual contributions, further stressing participants to manage their FSA dollars carefully. The IRS then announced a change to the use-or-lose rule in 2013..
For 2023 an employer may amend its cafeteria plan to provide for the carryover to the immediately following year of up to $570 of any amount remaining unused as of the end of the year in a health FSA. The carryover does not count against or otherwise affect the $3,050 salary reduction limit, adjusted for inflation, for health FSAs applicable to each plan year.
The IRS set $570 as the maximum carryover amount for 2023 and increased it to $640 for 2024 and $650 for 2025. Don’t forget – an employer may choose to do nothing!
Important Considerations
- Health FSAs are employer options (cafeteria plans) offered to employees
- Contributions to Health FSAs can be made by employees, employers or both
- Contributions made to an employee benefit plan are tax-free
- Money used by Health FSA accounts is for medical, dental or vision expenses
- Employees that use Health FSA accounts must use or lose the amount contributed to the plan by year-end or lose the remaining money
- There is an exception that allows up to $640 (2024) of money in employee accounts to be carried over to the following year
Remember – always contact your tax professional for help! That’s what you pay them for!
Long-Term Care Planning Month[v]
Caring for an Aging Spouse: Unique Challenges
Caring for an aging spouse can often be the most challenging decision ever made in a marriage. It forces the couple to have to rewrite the relationship’s expectations, which can be hard to do after years of partnership.
While one spouse has taken on the role of caregiver in light of the waning health of their partner, the other spouse feels guilty at being a burden. The illness or age-related decline can overtake the relationship causing the caregiving spouse to be ignored or overlooked in favor of the ill partner at a time when they need assistance the most.
Recent studies suggest that while a spouse will protect and care for his or her partner, they often report more depression, anxiety and financial loss than other married couples of the same age but without the medical issues. Because of the sudden nature in this shift in relationship duties, the caregiving spouse also is not prepared for the mental toil this change can have on their emotional well-being.
But there are ways that spouses can prepare each other for this possibility and ways the caregiving spouse can cope if the situation has already reached this point.
Have a conversation about aging
When a marriage is new, thoughts of aging are at the backburner as the couple plans a new life together. Then comes the living – buying houses, raising children and working. These things may get in the way of having a conversation about what is expected should the day come when one spouse must care for another. However, making time to have this discussion can save heartache later. Planning for aging care is just as important as planning for retirement or death. Talk to your spouse about this as part of other planning activities.
Get needed help
The burdens of taking care of a spouse can build, making it harder to have patience with daily tasks, doctor’s appointments and unexpected issues. This is when the spouse needs a break. When possible, asking a friend or family member to help, or even hiring a professional caregiver for a short period of time can give the caregiver a much-deserved break to recharge. Seeking advice on how to cope with both the change in the relationship and with the actual process of caregiving is also recommended. Join a group that caters to spousal caregivers, talk with a mental health expert or bring children or other family members into the discussion to help alleviate the burden.
Allow time to accept the relationship’s changes
Certainly, the caregiving spouse must manage any medical care their husband or wife needs immediately, but the caregiver also needs time to process the relationship’s new roles. In much the same way people need time to grieve the death of a loved one, a new caregiver needs time to mourn the loss of their former lifestyle. Call on family or friends to commiserate or lend an ear. If necessary, consult a doctor or support group for help in accepting this huge change.
Become informed about the spouse’s physical needs
In addition to the aging process, often the spouse has other ailments that need treatment. Learning more about the condition affecting the partner will make the caregiver better able to handle any issues that come up during care. Talking to the spouse’s doctors and researching the condition on trusted medical websites like the Mayo Clinic or disease-specific sites like the Alzheimer’s Association will arm caregivers with knowledge. Many of these sites also have links to local support groups.
Include the ill or aging spouse in decisions when possible
Many times, the spouse in need of care is still mentally agile and can help with decision-making even if they are too physically ill to act. Don’t assign the ill spouse to a passive role simply because they require care. If the aging spouse is able, plan events as a couple. An indoor date night with dinner and a movie, playing board games or participating in an activity the couple enjoyed together before the illness can remind partners they are still a couple even if the dynamics have changed.
Retain the aging spouse’s dignity
Maintaining the relationship as a couple should include acknowledgment that the ill husband or wife is still a human. Allow the spouse to do tasks they can perform and don’t expect to do everything for them. If there are tasks the aging spouse can still do, they should be given the opportunity to do them. Some spouses resent or feel guilty that their partner is doing so many chores for them, so allowing them the dignity to do what they can is encouraged.
The key to caring for an aging or ill partner is to realize that this is no longer an isolated situation and help is available. A serious illness or aging issues should not rock the foundation of a marriage. Find comfort in the knowledge that being a devoted partner to an aging or ill spouse until the very end is the very embodiment on which most marital foundations were built.
[i]https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/market-insights/wmr/weekly_market_recap.pdf. Accessed 11.25.2024. See page 2 for important disclosures.
[ii]https://www.marketwatch.com/economy-politics/calendar. Accessed 11.25.2024.
[iii] Holiday, Ryan. The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living. Kindle edition, pages 351. Accessed 11.25.2024.
[iv] Hockensmith, Robert F. 52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money. Kindle edition, page 205-206, accessed 11.25.2024.
[v]https://caregiver.com/articles/aging-spouse-challenges/, accessed 11.25.2024.