There’s good news for older Americans at high-risk of developing dementia: simple steps to stay mentally and physically active improved thinking and helped keep Alzheimer’s disease at bay. And it didn’t take long.
Lifestyle changes including exercise, a better diet, and more mental and social activity yielded significant protection within two years, according to a large clinical trial published Monday. To qualify for the study, participants had to have various risk factors for brain decline, like consuming a poor diet and not exercising regularly. Others had a gene mutation tied to Alzheimer’s disease.
While brain function starts to worsen in a person’s sixties, the results indicate that switching up one’s routine even later in life can stall the onset of dementia. Making such changes appeared to slow the cognitive aging clock by one to two years, said Laura Baker, a professor of internal medicine at Wake Forest University of Medicine and one of the study leaders.
The key takeaways are to “move more, sit less, add color to your plate, learn something new, and stay connected,” Baker said at the Alzheimer’s Association International Conference in Toronto, where the results were presented. “Challenge yourself to do this on a regular basis.”
The findings were simultaneously published in the Journal of the American Medical Association.
The U.S. Study to Protect Brain Health Through Lifestyle Intervention to Reduce Risk, known as Pointer, is the largest lifestyle intervention trial for Alzheimer’s disease completed in the U.S. It included more than 2,000 adults between the ages of 60 and 79 in structured and self-guided intervention groups.
Cognitive function improved in both, but those getting structured support had a significantly greater benefit than those in the self-guided group.
The program recommended cardiovascular exercise for 30 minutes, four days a week, and a low-salt diet with a focus on brain-healthy foods like dark leafy greens, berries, whole grains and coldwater fish. Participants in the structured group completed “brain training” computer games three times a week.
The structured group had 38 meetings with their peers over the two-year study to set goals and keep others accountable. The self-guided group met much less often — six times over the two years — but received the same information.
The POINTER trial replicated the 2015 landmark FINGER study, or Finnish Geriatric Intervention Study to Prevent Cognitive Impairment, to assess whether those findings applied to the larger and often less healthy US population.
At Blakely Financial, maintaining the strong relationships we’ve built with each of our clients remains our highest priority. While Commonwealth is undergoing a change in ownership, I want to personally assure you that this will not impact the way we serve you. Our team remains the same, your investment strategy stays intact, and our commitment to your financial well-being remains as strong as ever. As part of our ongoing mission to serve you better, we are embracing new technologies that will enhance our ability to provide timely insights, streamline communication, and deliver even more personalized service. We’ll continue to keep you informed every step of the way, and if you have any questions or concerns about this transition, my team and I are always here to talk you through it. Most of the changes will occur behind the scenes and should be seamless for you.
May 19, 2025
Re: Consent to Assignment of Investment Advisory Agreement
Dear Valued Client:
We are writing to inform you of an upcoming change to the ownership of Commonwealth Financial Network® (“Commonwealth”). Through your financial advisor, Commonwealth serves as your investment adviser pursuant to an investment advisory agreement between you and Commonwealth.
In the second half of 2025, subject to customary approvals, Commonwealth’s parent company is expected to be acquired by LPL Holdings Inc. (“LPL Holdings”), the parent company of LPL Financial LLC (“LPL”), and a subsidiary of LPL Financial Holdings, Inc. (Nasdaq: LPLA), a Fortune 500 company. LPL, a registered broker/dealer and investment adviser, is a client-centric leader in wealth management, and provides an integrated platform of brokerage and investment advisory services.1
This ownership change may be deemed an “assignment” of your advisory agreement under the Investment Advisers Act of 1940, and, therefore, we are requesting your consent to the assignment. If applicable, we are also amending your existing advisory agreement with Commonwealth to provide that it may be assigned with your “negative” consent, which means the assignment will occur automatically unless you object. We want to assure you that the ownership change and assignment are not anticipated to result in a change to the personnel managing your account, your investment strategy, or the fees charged. The same team will continue to service your accounts with the same level of commitment and care.
If you object to the assignment or wish to terminate your advisory agreement, you must notify us before July 18, 2025, by emailing us at optout@commonwealth.com or writing us at Commonwealth Financial Network, Attn: Commonwealth Opt-Out, 29 Sawyer Road, Waltham, MA 02453-3483, including your name, address, and account number (if any). Please note that an objection will result in the termination of your advisory relationship, and we encourage you to speak with your advisor if you have any questions or concerns. Unless you contact us to object to the assignment or terminate your advisory agreement, your advisory relationship with your financial advisor and Commonwealth will continue in the same manner as before without interruption.
Further integration with LPL, including a change to account custodian, is not expected to occur until the second half of 2026. You will receive advance notice and additional details prior to this event.
We value your trust and look forward to continuing to provide you with investment advisory services. As always, should you have any questions, please contact your financial advisor.
Sincerely,
Trap Kloman
President and Chief Operating Officer
Commonwealth Financial Network®
1 For additional information regarding LPL and the transaction, please visit lpl.com. LPL’s press release announcing the transaction is available at lpl.com/news-media/press-releases/lpl-financial-to-acquire-commonwealth-financial-network.html.
From Robert Blakely, Founder of Blakely Financial:
“It is exciting to be celebrating 30 years in the financial planning and investment management field. I started in 1995 with no clients and just the desire to help make a difference in people’s lives through financial planning. As with any new business the first few years were tough. In 2000 I decided to partner with Commonwealth Financial Network which was an important decision for myself and our clients. With the network of Commonwealth advisors I was able to leverage years of experience of others and our growth truly began. I added my first employee in 2001 and another experienced advisor joined in 2002. My wife, Donna, who had been there with her support for years, joined us in 2003.
We can truly state that we have been blessed in ways that I never really imagined when I first started. We have been blessed with amazing friendships and meaningful relationships for which we will be forever grateful.
As excited and optimistic as I was when I started in 1995, today in 2025, I am as equally so for the future of our firm and our clients. We have great and caring team members. and with Emily Promise as President and Owner of Blakely Financial I truly believe the future for our clients and team is going to be even better.
Thank you to everyone for your friendship, trust, confidence and support for the past 30 years.”
A Legacy of Personalized Financial Planning
Since its founding, Blakely Financial has prioritized individualized financial strategies tailored to each client’s unique goals and needs. We believe in building lasting relationships and guiding clients through every stage of life, from wealth accumulation to retirement and succession planning.
This client-first approach has earned national recognition, including Blakely Financial’s recent honor as one of Forbes’ Best-in-State Wealth Management Teams. The firm’s success reflects the deep trust our clients place in us, and the firm remains committed to delivering financial strategies to support their present and future.
The Growth of Blakely Financial: Key Milestones
Over the past three decades, Blakely Financial has evolved, expanding our specialization and team to better serve our clients. Some of our key milestones include:
2009: Steve LaFrance joins Blakely Financial, bringing deep analytical knowledge to the team.
2017: Emily Promise joins Blakely Financial, bringing a fresh perspective and experience in financial planning.
2021: Larry Albert and Becky Linhart become partners, strengthening the leadership team and expanding the firm’s capabilities.
2023 & 2024: Emily is named to Forbes’ Top Next-Gen Wealth Advisors and Top Next-Gen Wealth Advisors Best-in-State, solidifying her reputation as a rising leader in the industry.
2025: Blakely Financial partners with Curran & Keegan, expanding its reach while maintaining its commitment to personalized service and multigenerational financial planning.
Blakely Financial as a Trusted Partner & Problem Solver
At Blakely Financial, we know financial planning is about more than investments. We work to build trust and guide individuals and families through life’s milestones to secure their financial futures. Our clients turn to us for:
Comprehensive wealth management strategies tailored to their evolving needs.
Succession planning and wealth transfer, ensuring their legacy is protected.
Multigenerational financial stability, helping families build a foundation for the future.
The firm’s commitment to acting as a fiduciary ensures that every recommendation is made with our client’s best interests in mind.
Looking to the Future: Leadership & Growth
Emily Promise, now leading Blakely Financial, is committed to continuing the firm’s legacy while embracing new opportunities for growth and innovation. With our team of experienced advisors, the firm is well-positioned to support clients through comprehensive financial planning, estate strategies, and long-term investment solutions.
Blakely Financial remains dedicated to our community-focused approach, ensuring clients feel supported, empowered, and confident in their financial futures.
Thank You to Our Clients & Community
Blakely Financial’s success over the past 30 years is a testament to the loyalty and trust of our clients. We are honored to be a part of their financial journeys and are committed to helping families, individuals, and business owners achieve their financial goals for generations to come.
As we celebrate this milestone, we look forward to the next 30 years of growth, innovation, and continued service as a trusted financial partner to our clients and community. To learn more about our services and how we can support your financial goals, contact the Blakely Financial team today.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
2025 Forbes Best In State Wealth Management Teams, created by SHOOK Research. Presented in Jan 2025 based on data from March 2023 to March 2024. 11,674 Management Teams were considered, approximately 5,300 teams were recognized. Not indicative of advisor’s future performance. Your experience may vary. For more information, visit https://tinyurl.com/3s5r8z87
Big changes are here for retirement planning in 2025! The SECURE 2.0 Act is designed to make saving for retirement easier and more accessible. Several key updates are taking effect this year that could impact your retirement savings strategy.
Higher Catch-Up Contributions for Ages 60-63
Starting in 2025, individuals ages 60 to 63 can contribute more to their retirement plans. The new limit allows you to contribute up to $10,000 or 150% of the regular catch-up contribution limit for that year (indexed for inflation). This applies to 401(k), 403(b), and similar plans, providing a valuable opportunity for those nearing retirement to boost their savings.
Mandatory Automatic Enrollment for New Plans
To encourage retirement savings, newly established 401(k) and 403(b) plans must automatically enroll employees at a contribution rate of 3% to 10%, with automatic annual increases of 1% until reaching 10% to 15%. Employees still have the ability to opt out or adjust their contribution rates.
Emergency Savings Linked to Retirement Accounts
Employers can now offer Emergency Savings Accounts (ESAs) linked to their retirement plans. This allows employees to save up to $2,500 in post-tax contributions.
Withdrawals are penalty-free to provide financial flexibility in case of emergencies and any unused ESA funds can be rolled over into the employee’s retirement account for long-term savings.
SIMPLE and SEP Plan Enhancements
Employers offering SIMPLE IRAs can now:
Provide higher contribution limits for employees.
Make additional employer contributions beyond the standard match.
Additionally, both SIMPLE and SEP IRAs will allow Roth contributions, giving employees more tax-planning flexibility.
Starter 401(k) Plans
For employers without retirement plans, starter 401(k) plans offer an easy alternative. These plans feature auto-enrollment with contributions between 3% and 15% of salary.
This option expands access to retirement savings for small businesses and employees without existing plans.
Long-Term, Part-Time Worker Eligibility
Part-time employees now have an easier path to retirement savings. Workers only need 500 hours per year for 2 consecutive years, down from 3 years, to be eligible for employer-sponsored retirement plans.
Roth Treatment for Catch-Up Contributions
Employees earning over $145,000 annually must now make Roth catch-up contributions (post-tax) rather than pre-tax contributions. This ensures tax revenue is collected upfront but allows for tax-free growth in retirement.
These important updates to the SECURE 2.0 Act can expand savings opportunities, encourage automatic enrollment, and provide more flexibility for both workers and retirees. If you’re unsure how these changes will impact your financial plan and future, reach out to the Blakely Financial team today to discuss strategies tailored to your goals.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
To celebrate National Nonprofit Day on August 17th, we are recognizing the amazing and impactful work of nonprofit organizations within our community and around the world. Read on to learn more about our favorite local organizations and how the Blakely Financial team gives back to the community.
Kiwanis
Steve LaFrance, former President of Kiwanis of High Point, believes in improving the world, one child and one community at a time. Steve and the BFI team continue to support the Kiwanis’ mission.
With clubs in nearly 80 nations and geographic locations, Kiwanis strives to be a positive influence in communities worldwide, so that one day, all children will wake up in communities that believe in them, nurture them, and provide the support they need to thrive. Kiwanis clubs are local groups of like-minded volunteers who love serving together to change children’s lives. When club members serve kids, they support the Kiwanis causes of: health and nutrition, education and literacy, and youth leadership development. Kiwanis clubs partner with each other and with organizations whose missions align with theirs all around the world to serve the kids who need it most and make an impact that lasts from infancy to adulthood.
SPUR North Shore
Blakely Financial is proud to support SPUR North Shore, where Emily Promise serves as the Treasurer and is also an active board member. SPUR strives to remove barriers to volunteering by providing a platform to cultivate a community of doers across the North Shore and nurturing the desire to make a difference.
Founder Jocelyn Cook wanted to create an organization where young children, families, and individuals could dive into giving back through opportunities that embraced busy schedules, varying experiences, and interest levels. The result is SPUR: an organization mobilizing volunteers in service and enrichment opportunities to support the needs of the North Shore community, embracing the notion that we don’t have to change the world on our own, we simply need to do our little bit of good to make a difference.
Junior League of High Point
Since joining in 2000 and serving as Past President, Donna Blakely, along with the Blakely Financial team, has remained dedicated to supporting the Junior League of High Point’s mission to advance women’s leadership for meaningful community impact through volunteer action, collaboration, and training, and their commitment to breaking down barriers that hinder women from achieving success.
Members of JLHP share a commitment to voluntarism and building a better community. Above all else, their goal is to promote and perpetuate social change in the High Point communities that will benefit the most. JLHP empowers women and provides valuable leadership training to give local women the tools they need to get involved, put their talents to work, and positively impact the Greater High Point Region.
United Way
Blakely Financial is proud to support the United Way and its twenty-five partner agencies that do so much for our neighbors in need. We LIVE UNITED with the United Way of Greater High Point.
The United Way’s mission is to develop resources and partnerships to make measurable differences in people’s lives, fighting for the education, health, and financial stability of every person in every community. Programs funded by United Way help children learn and families thrive, build self-sufficiency and independence, create stronger and safer neighborhoods, and improve the health of our communities.
How Blakely Financial Gives Back: Serving Nonprofit Organizations, Endowments, and Foundations
As an independent financial planning firm, we serve our clients with objectivity, integrity, and experience with the goal of providing clarity, insight, and guidance regarding their financial goals. We act as fiduciaries for our clients by providing financial planning and advisor-managed investment solutions through Commonwealth Financial Network®.
For nonprofits, endowments, and foundations, Blakely Financial provides trusted advice and professional guidance to maximize your group’s financial resources. We help you address the challenge of finding the correct balance of risk and rewards in the management of your assets to support your mission for generations into the future.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
We’ve discussed the debt ceiling crisis in past articles, and now it’s back in the headlines. What does this mean, and why are we watching it now? Several months ago, the U.S. borrowed as much money as it’s legally allowed to borrow and, since then, has been prohibited from borrowing more. In the language of the headlines, we have hit the debt ceiling.
If that sounds like an awkward situation, it is. It also raises very real economic and market risks, which are being played out in the news. Let’s analyze in detail what this all means.
The Current Situation
The U.S. government runs a deficit, meaning it spends more than it brings in. So, it continually borrows more to pay the outstanding bills. The problem is that Congress has put a limit on the total amount the government can borrow, also known as the debt ceiling. Congress needs to raise that limit on a regular basis to account for approved deficit spending. Raising the debt limit has become a regular political football, which is why we’re having this conversation again. Congress has not raised the limit, and we have reached the debt ceiling again.
Once the debt limit is hit, the Treasury cannot issue any more debt but must keep paying the bills. There are “extraordinary measures,” tested in previous debt-limit confrontations, which would allow this to be done in the short term. These include shifting money among different government accounts to fill the gap until more borrowing is allowed. Two examples of this are affording the debt by suspending retirement contributions for government workers or repurposing other accounts normally used for things such as stabilizing the currency. The idea is that this will buy time for Congress to authorize more borrowing. This is where we are now, and where we have been for the past several months.
The Consequences If Congress Doesn’t Act
At a certain point—tentatively estimated to be around June or July, but this is very uncertain—the Treasury will run out of money to pay the bills. Among those bills are salaries for federal workers. So, at some point, the government will largely shut down. Some bills will get paid, but many government obligations will go unpaid.
Why We Should Care
Setting aside the political aspect of the situation, this affects investors for several reasons. First, cutting off government payments will hurt economic growth. Limits on social security payments, for example, would severely hurt economic demand and confidence. Although social security would likely be the last thing cut, other cuts would also hurt growth and confidence. We saw this in prior shutdowns, and the damage was real.
The bigger problem, however, is if payments to holders of U.S. debt are not made and the Treasury market goes into default. U.S. government debt has always been the ultimate low-risk asset, where default was assumed to be nearly impossible. Adding a default risk would raise interest rates, potentially costing the country billions over time. The economic risk, both immediate and long term, is very high—and that’s what the headlines are emphasizing.
Possible Solutions
We have been down this road before, and while the ending could be bad, we’ve resolved the problem every previous time. There are a few ways we could do this without systemic damage.
The easiest and most likely course of action is for Congress to cut a deal. At this point, it seems the group of Congresspeople really looking for an extended confrontation is quite small. If that’s true, a deal is very possible, and even likely, as pressure mounts.
On the other hand, if Congress cannot or will not come to an agreement, there are other ways the government can resolve the problem before it blows up. These range from the reasonably credible, such as using a line from the Fourteenth Amendment of the U.S. Constitution to justify ignoring the limit entirely, to the reasonable but iffy, such as issuing lower face value bonds with higher coupons. There are also borderline crazy solutions, such as issuing a $1 trillion coin. In short, there are many options other than default. As we saw in the financial crisis, the government is willing to do many things that were previously unimaginable to avoid a crisis, and I am quite certain that will be the case here as well.
What Happens If We Default
Defaulting is not the end of the world, and here’s why. First, a default happened in 1971 for technical reasons. Since the reasons weren’t economic, investors looked through the default and the long-term consequences were minimal. Second, a default this time around also would not be economic; it would be political. When countries default because they can’t pay, that is a systemic problem—the lenders won’t be getting their money. In this case, though, we can and will pay. It will just take some time to get through the political process. If you think about it in personal terms, a late mortgage payment is quite different from foreclosure. No one is talking about repudiating or actually defaulting on U.S. debt over time, and the markets are reflecting that. Real default won’t happen, even if temporary default does
The Takeaway Message for Investors
Don’t panic. This has happened before and will likely happen again. The headlines are making the most of potential consequences, and the worst case would indeed be bad. But there are enormous incentives to cut a deal before we reach the worst-case scenario. And even if a deal is not cut, there are other non-default options. If we do get to default, the likely market volatility will drive a deal at that time. Failure to solve this problem really isn’t an option.
This is a big deal, and worth watching, but not worth worrying about yet. We’ll be keeping an eye on it and writing about any developments. In the meantime, keep calm and carry on.
Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.
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Blakely Financial, Inc. is located at 1022 Hutton Lane Suite 109 High Point, NC 27262 and can be reached at 336-885-2530.
Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.
Authored byBrad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network®.
Americans have suddenly witnessed three very large bank failures in only a few days’ time. The first was the collapse last week of Silvergate, also known as “the Crypto bank.” Soon after, we read the news of both Silicon Valley Bank (SVB) and Signature Bank collapsing. These are some of the largest bank failures in U.S. history. What is going on here? Should we be worried? Is another financial crisis on the horizon? The short answer is no.
Why We Shouldn’t Press the Panic Button
Let’s start with the bottom line before we get into the details. This is something to keep an eye on, but it’s not the start of the next financial crisis. Unlike in the great financial crisis of 2008, the government is getting ahead of the problem rather than trying to clean up afterward. That is a very positive sign. We can certainly expect market turbulence—in fact, we’re seeing it already—but the systemic effects will be limited, and we’re not set for another major crisis.
Instead, the takeaway so far is that regulators and the federal government are on the case and are willing and able to support the financial system. Sunday night, the U.S. Treasury announced that depositors would be fully protected in the interest of maintaining systemic confidence and that funds were being made available to support banks under stress. Again, this quick action is what differentiates this situation from that of 2008.
What Will Happen Now?
Many people have written good descriptions of how and why these banks collapsed, and I won’t try to replicate those. To investors, the “why” is interesting, but what we really need to know is what it all means for the future.
The Federal Reserve’s (Fed’s) interest rate hikes are indeed affecting the financial system. The fact that the collapses have principally been in the tech and crypto spaces suggests that these sectors are even more at risk than the economy as a whole. While other banks will likely move to replace SVB, they will not be as focused or as dedicated to the sector, and things will slow down in the tech sector going forward. In short, one of the primary enablers of the tech boom is now gone.
Do These Failures Indicate a System-Wide Problem?
The answer to this question is good news. To set the stage, let’s look at the three factors that caused the financial system to lock up in 2008:
There was little transparency around asset values, which caused a lack of liquidity for those assets.
Banks didn’t have sufficient capital to weather a crisis.
There wasn’t enough available credit in the early stages of the crisis to support the banks until liquidity came back.
We’re in a very different place now on all three.
In terms of the liquidity issue, U.S. banks generally now hold very liquid assets, dominated by U.S. Treasury notes. Those values are clear, and there is a large market for them. Banks can raise cash, if necessary, simply by selling or borrowing against those assets.
Regarding sufficient capital, U.S. banks are, by and large, very well capitalized. They have the money to weather storms and, as noted, they can access those funds. These circumstances are both very different from those of 2008.
The third cause, lack of available credit, is where we must be careful. Banks have seen those Treasury notes decline in value significantly as rates rose, and there are questions in some cases about whether the value of the bank capital still covers the liabilities. This is what drove the collapse of SVB. What the Treasury did Sunday, however, was to solve this problem by providing a way for banks to borrow against long-term assets, like Treasuries, based on the par value, not the current market value. That largely eliminates the insolvency problem and will provide the credit that was missing in 2008. It will not eliminate the entire problem, though, as banks may still need to rebuild their capital bases. But it will allow the banks time to recover, which will be key to rebalancing the system.
Explained differently, the system is more transparent and has a more solid foundation compared to 2008. The government has also identified the remaining problems and put programs in place to deal with them. From a depositor’s perspective, the government’s decision to stand behind all deposits also reduces the risk of further bank runs. With a stronger system in place, and the government being aggressively proactive, there looks to be little systemic risk right now. We won’t see another great financial crisis.
What Comes Next?
What we can expect to see is continued turbulence. The primary purpose of diversification is to mitigate risk. By spreading your investment across different asset classes, industries, or maturities, you are less likely to experience market shocks that impact every single one of your investments the same. Our approach is to maintain a disciplined commitment to well-diversified portfolios. It may be a bumpy ride, but one that will eventually end. This story is not over yet, and we don’t fully know how it will play out. We do know, however, that we will make it through.
Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. All indices are unmanaged and investors cannot invest directly into an index.
Steve LaFrance, CFP®, AIF®, ChSNC®, MBA | Blakely Financial
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.
The IRS recently announced an increase in the maximum amount you can contribute to your employer-sponsored retirement plan in 2023.
Due to high inflation, the cost-of-living adjustment means maximum retirement contributions will be rising almost 10% in the upcoming year. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has been increased to $22,500 ( which is up from $20,500 in 2022). Annual contribution limits have also been increased for traditional and Roth IRAs, up to $6,500 from the $6,000 limit of 2022.
What Does This Mean For Me?
If you are already making the maximum contribution to your 401(k) each year, this is good news for you, as you will be able to set aside even more money for retirement. If you are looking to maximize your retirement fund, you may want to consider contributing to both your employer-sponsored retirement plan and an IRA.
If you cannot contribute the maximum amount to your retirement plan in 2023, don’t be concerned. Though the number has grown in recent years, only about 10-12% of people maximize their 401(k) contributions each year. Simply participating in an employer-sponsored plan puts you in a great position for a successful retirement, especially if you start early and remain consistent with your contributions. Remember that this increase is due to the high cost of living, so you may not have the funds left over to make your ideal contribution in 2023.
Making the Most of your 401(k)
One of the most important financial planning strategies in saving for retirement is to maximize your employer’s 401(k) match. Taking advantage of that extra money can be a huge help to your retirement fund, especially if you are consistently contributing enough money to get the maximum match. If you are unsure about the specifics of your company’s plan, take the time to read over it thoroughly, perhaps with your financial advisor, so you can make the most of your money.
A few key points to remember about a 401(k): it is a retirement savings plan, so once you put money in, it is always best to leave it in. There are penalties if you take the money out before retirement age. Also keep in mind that if you change employers, you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.
If you have questions, it is always a great idea to call your financial advisor for guidance. But no matter what, please take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals.
Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.
Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.
In March 2022, the Consumer Price Index for All Urban Consumers (CPI-U), the most common measure of inflation, rose at an annual rate of 8.5%, the highest level since December 1981.1 It’s not surprising that a Gallup poll at the end of March found that one out of six Americans considers inflation to be the most important problem facing the United States.2
When inflation began rising in the spring of 2021, many economists, including policymakers at the Federal Reserve, believed the increase would be transitory and subside over a period of months. One year later, inflation has proven to be more stubborn than expected. It may be helpful to look at some of the forces behind rising prices, the Fed’s plan to combat them, and early signs that inflation may be easing.
Hot Economy Meets Russia and China
The fundamental cause of rising inflation continues to be the growing pains of a rapidly opening economy — a combination of pent-up consumer demand, supply-chain slowdowns, and not enough workers to fill open jobs. Loose Federal Reserve monetary policies and billions of dollars in government stimulus helped prevent a deeper recession but added fuel to the fire when the economy reopened.
More recently, the Russian invasion of Ukraine has placed upward pressure on already high global fuel and food prices.3 At the same time, a COVID resurgence in China led to strict lockdowns that have closed factories and tightened already struggling supply chains for Chinese goods. The volume of cargo handled by the port of Shanghai, the world’s busiest port, dropped by an estimated 40% in early April.4
Behind the Headlines
Although the 8.5% year-over-year “headline” inflation in March is a daunting number to consider, monthly numbers provide a clearer picture of the current trend. The month-over-month increase of 1.2% was extremely high, but more than half of it was due to gasoline prices, which rose 18.3% in March alone.5 Despite the Russia-Ukraine conflict and increased seasonal demand, U.S. gas prices dropped in April, but the trend was moving upward by the end of the month.6 The federal government’s decision to release one million barrels of oil per day from the Strategic Petroleum Reserve for the next six months and allow summer sales of higher-ethanol gasoline may help moderate prices.7
Core inflation, which strips out volatile food and energy prices, rose 6.5% year-over-year in March, the highest rate since 1982. However, the month-over-month increase from February to March was just 0.3%, the slowest pace in six months. Another positive sign was the price of used cars and trucks, which rose more than 35% over the last 12 months (a prime driver of general inflation) but dropped 3.8% in March.8
Wages and Consumer Demand
For the 12 months ended in March, average hourly earnings increased 5.6% — not enough to keep up with inflation but enough to blunt some of the effects. Lower-paid service workers received higher increases, with wages jumping by almost 15% for nonmanagement employees in the leisure and hospitality industry. Although inflation has cut deeply into wage gains over the last year, wages have increased at about the same rate as inflation over the two-year period of the pandemic.9
One of the big questions going forward is whether rising wages will enable consumers to continue to pay higher prices, which can lead to an inflationary spiral of ever-increasing wages and prices. Recent signals are mixed. The official measure of consumer spending increased 1.1% in March, but an early April poll found that two out of three Americans had cut back on spending due to inflation.10-11
Soft or Hard Landing?
The Federal Open Market Committee (FOMC) of the Federal Reserve has laid out a plan to fight inflation by raising interest rates and tightening the money supply. After dropping the benchmark federal funds rate to near zero in order to stimulate the economy at the onset of the pandemic, the FOMC raised the rate by 0.25% at its March 2022 meeting and projected the equivalent of six more quarter-percent increases by the end of the year and three or four more in 2024.12 This would bring the rate to around 2.75%, just above what the FOMC considers a “neutral rate” that will neither stimulate nor restrain the economy.13
These moves were projected to bring the Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index, down to 4.3% by the end of 2022, 2.7% by the end of 2023, and 2.3% by the end of 2024.14 PCE inflation — which was 6.6% in March — tends to run below CPI, so even if the Fed achieves these goals, CPI inflation will likely remain somewhat higher.15
Fed policymakers have signaled a willingness to be more aggressive, if necessary, and the FOMC raised the funds rate by 0.5% at its May meeting, as opposed to the more common 0.25% increase. This was the first half-percent increase since May 2000, and there may be more to come. The FOMC also began reducing the Fed’s bond holdings to tighten the money supply. New projections to be released in June will provide an updated picture of the Fed’s intentions for the federal funds rate.16
The question facing the FOMC is how fast it can raise interest rates and tighten the money supply while maintaining optimal employment and economic growth. The ideal is a “soft landing,” similar to what occurred in the 1990s, when inflation was tamed without damaging the economy. At the other extreme is the “hard landing” of the early 1980s, when the Fed raised the funds rate to almost 20% in order to control runaway double-digit inflation, throwing the economy into a recession.18
Fed Chair Jerome Powell acknowledges that a soft landing will be difficult to achieve, but he believes the strong job market may help the economy withstand aggressive monetary policies. Supply chains are expected to improve over time, and workers who have not yet returned to the labor force might fill open jobs without increasing wage and price pressures.19
The next few months will be a key period to reveal the future direction of inflation and monetary policy. The hope is that March represented the peak and inflation will begin to trend downward. But even if that proves to be true, it could be a painfully slow descent.
Projections are based on current conditions, are subject to change, and may not come to pass.
1, 5, 8-9) U.S. Bureau of Labor Statistics, 2022
2) Gallup, March 29, 2022
3, 7) The New York Times, April 12, 2022
4) CNBC, April 7, 2022
6) AAA, April 25 & 29, 2022
10, 15) U.S. Bureau of Economic Analysis, 2022
11) CBS News, April 11, 2022
12, 14, 16) Federal Reserve, 2022
13, 17) The Wall Street Journal, April 18, 2022
18) The New York Times, March 21, 2022
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This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.
Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser
Whether you’ve seen the prices at the pump, clicked on the headlines, or overheard discussions in the grocery store, you know the rising cost of gas has everyone talking. At the start of the summer driving season, the average price of regular gasoline in the U.S. reached an all-time high, surpassing $4.50 per gallon. Inflationary pressures, including strong demand, supply chain disruptions, and low inventories, have caused price spikes for many consumer goods. As the cost of filling your tank rises, you’re likely wondering which markets factors caused the spike in gasoline prices.
Costs and Taxes
Crude oil is the most important input cost for gasoline. This commodity is primarily refined into gasoline and other transportation fuels, including diesel and jet fuel. Ethanol, a fuel made from corn, is blended with crude oil to represent 10 percent of gasoline volume on average, according to the Energy Information Administration (EIA). Operating costs associated with refineries, transportation (e.g., pipelines, tankers, trucking), and gas stations, as well as federal, state, and local government taxes, contribute to gasoline prices. Differences in operating costs and taxes explain the wide range of gasoline prices across states.
Higher Gasoline and Crude Oil Prices
Figure 1 illustrates the strong correlation between the prices for gasoline and crude oil, which is currently around $115 per barrel for West Texas Intermediate (WTI), the U.S. index. Prices for both commodities have just about doubled since early 2021. Covid-19 lockdowns in China and plans by several countries to release strategic oil reserves helped ease oil prices in recent months. The price of gasoline, however, has continued to increase.
Figure 1. U.S. Gasoline and WTI Crude Oil Prices, 2007–2022
Source: Bloomberg
Decreased Refinery Capacity
Demand for transportation fuels, such as gasoline, dropped sharply early in the pandemic when consumers stayed home, causing several refineries to close permanently. Global refinery capacity fell in 2021 for the first time in 30 years, according to the International Energy Agency (IEA). U.S. refinery capacity dropped to 2015 levels, as shown in Figure 2. Additionally, existing U.S. refineries have limited spare capacity with utilization rates above 93 percent, the highest since December 2019. Meanwhile, refiners are generating record profits from strong demand, capacity constraints, and a higher spread between prices for oil and refined products, such as gasoline.
Figure 2. U.S. Refinery Capacity, 2007–2022
Source: Bloomberg
Lower Inventory and Higher Demand
Both U.S. gasoline and oil inventories are at low seasonal levels compared to the five-year range, as shown in Figure 3, which highlights U.S. gasoline inventories. Gasoline and oil demand recovered faster than supply over the past two years while the economy bounces back from the pandemic. Refineries typically boost output before demand peaks during the summer; however, capacity constraints limit supply increases. Although the U.S. still imports oil because its refineries were initially designed to process heavy crude produced from other countries, such as Canada and Venezuela, higher U.S. exports have reduced inventories as Europe seeks to reduce its reliance on Russia for energy imports.
Figure 3. U.S. Gasoline Stocks, 2020–2022
Decline in Oil Supply
Global oil producers quickly cut capital expenditures early in the pandemic to preserve cash for debt servicing and other operating expenses amid highly uncertain oil demand and plummeting prices that fell to around $20 per barrel. Figure 4 illustrates the decline in oil production from the OPEC and the U.S., the world’s two largest groups of producers. Supply from Russia, the world’s third largest oil producing country behind Saudi Arabia, also declined after its invasion of Ukraine.
Figure 4. OPEC and U.S. Oil Production, 2012–2022
Source: Bloomberg
Oil Production Constraints
Global oil production is slowly recovering as producers have been more cautiously investing in long-term projects, such as offshore drilling, due to a highly uncertain demand outlook for oil. Traditional automakers, for instance, are investing heavily in electric vehicles amid policy support and plans by several countries to phase out internal combustion engines (e.g., gasoline, diesel) in the coming decades.
Furthermore, shareholders have forced publicly traded oil and gas producers to focus on capital discipline, profitability, reducing debt, and investor returns through dividends and stock buybacks. Production growth was the prior objective from a capital allocation standpoint, but producers struggled to generate positive cash flow and earnings following the 2014–2016 crash in oil prices.
Several other market developments have contributed to a slow recovery in oil production:
S. oil producers focused on drilled but uncompleted wells (DUCs) to limit costs when oil demand began to recover after the pandemic. In other words, producers sacrificed future supply growth by completing existing wells at a faster rate than drilling new wells.
A large portion of U.S. oil supply is produced from shale regions, such as the Permian Basin. Compared to conventional wells, shale wells have high depletion rates that average around 70 percent by the end of the first year, according to asset manager, GMO. This requires continuous capital expenditures to maintain or increase production levels by drilling new wells.
Small private oil producers have been the main source of production growth in the U.S. as opposed to larger publicly traded producers given shareholder demands for capital discipline.
Inflationary pressures and shortages for labor and materials, such as steel, reduced the operating capacity for oil field service companies, which supply oil rigs and other equipment to producers.
U.S. Production Forecasts
The U.S. is the world’s top oil-producing country with supply averaging 11.9 million barrels per day over the past two months. Forecasts from the U.S. EIA imply moderately higher production of about 200,000 barrels per day for the remainder of 2022. Oil production growth is expected to accelerate in 2023 and reach an all-time high, averaging more than 12.8 million barrels per day.
A Look Ahead
For the immediate future (this summer), it looks like gas and oil prices will remain high due to global supply issues, low inventories, and increased travel. There is hope for an ease or decline of prices later in the year with the potential for more supply and lower demand. Please contact my office with any questions or requests for more information on current prices or future forecasts.
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This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide for your financial well-being.
Robert Blakely is located at 1022 Hutton Ln #109 High Point, NC 27262 and can be reached at 336-885-2530
Securities and Advisory Services offered through Commonwealth Financial Network®,
Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products
and services are separate from and not offered through Commonwealth Financial Network®.
Authored by Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network®.
