Man looking optimistic


Year-End Review

In 2022, together we faced not only the devastation of Hurricane Ian, but a storm in the financial markets as well. We’ve seen higher inflation, interest rate increases, uncertainty about a recession and a war in Ukraine – all happening at the same time. All these largely unexpected events created one of the most difficult and volatile market environments in recent history.

We can’t control the weather. But what we can do is ride it out together and find ways to keep us dry as the storm rages. Whether that’s through continuing tax-smart investment strategies; reviewing, discussing and possibly reevaluating your goals and financial plan; taking advantage of market volatility; or partnering with experts to help create robust insurance and estate plans that can provide for your family – we’re here to help.


– Warren Buffett


In this review, we’ll cover what happened in the markets, the economy and Washington in 2022 – and look at where we might go from here. And in our latest video, our Senior Vice President of Portfolio Management, Neil Gilfedder, CFA®, speaks with wealth planner Michelle Muhammed, director, financial planning, CFP®, ChFC® about the issues that mattered most to you in 2022 and what we are doing to help.

Watch Michelle Muhammed and Neil Gilfedder discuss the year’s events.


– Warren Buffett

Certified Financial Planner Board of Standards Inc. owns the marks CFP® certification and CERTIFIED FINANCIAL PLANNER™ certification in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.



No safe havens in 2022


There’s no sugarcoating the fact that the markets had a tough year. Stocks were down globally; bonds traded lower as well – not to mention at historically volatile levels. Simply put, there was no place to hide from negative returns in 2022.

Over most of the year, we saw a continuing cycle of higher-than-expected inflation, followed by concern over how the Federal Reserve would react, resulting in stock market volatility.

Higher rates from the Fed also led to unusual volatility in the bond market; yields on U.S. Treasuries soared and because yields move inversely to price, the market value of bonds declined significantly over the year. The increase in interest rates additionally contributed to a stronger U.S. dollar, which in turn put pressure on global stocks (especially in emerging markets) and constrained earnings for companies with international exposure. Overall, the high-wire act between inflation and interest rates kept investors jittery throughout 2022 and consequently had a negative impact on diversified portfolio values.

In many ways, it may have felt like an unprecedented year. But, as ever, we turn to the long-term view. It’s not the first time we’ve seen inflation rise and we’ve seen periods where stocks and bonds were both down (since 1926, large-cap stocks and long-term government bonds have both declined in six years, and both have risen in 51 years). Since the end of the global financial crisis in 2009, the S&P 500 (an index of U.S. large-cap stocks) was in an extended bull market until 2022. But even within that 13-year time frame, U.S. large-cap stocks saw declines of at least 10% or more seven times. That’s just one example that helps illustrate how stocks historically recover from short-term crisis events, to move higher over longer time periods.


Disappointing performance across nearly every asset class for much of the year caused many to wonder if there was still value in diversification or even if the traditional 60% stocks/40% bonds portfolio was dead. It's a strategy we still believe in and stand behind – in fact, we also use similar strategies that offer lower or higher levels of risk. As for the benefit of a long-term outlook, we need only look at the difference in returns between getting out of the markets during the global financial crisis and staying invested in a 60/40 blended portfolio through Nov. 30, 2022:

Data Spotlight


The number of times stocks dropped by 10% or more during the 13-year bull run

The cost of being out of the market chart


  • We remain committed to maintaining your portfolio’s diversification. Our Investment Management Team regularly monitors portfolios to see how market fluctuations may have impacted your asset allocation. When market conditions cause allocations to drift too far away from their targets, we rebalance the portfolio.
  • We provide ongoing tax-efficient and tax-aware management.

We know it was hard to see the advantages of diversification in 2022, because stocks and bonds largely moved in lockstep, which is not uncommon from time to time. Despite this, our philosophy remains intact: We believe a well-diversified portfolio of bonds and stocks should help achieve returns that can exceed inflation over the long run.

Data Spotlight


Additional gain for remaining invested through Nov. 30, 2022 vs. moving to cash after a 20% decline during the financial crisis and staying out of the market since.

Source: Ibbotson Associates SBBI, Morningstar Direct



Slow – but positive – growth

Woman shopping Even if we don’t see a technical recession, it may feel that way to some people.

Even with a crystal ball, predicting the events of 2022 would have been a challenge. Remember, at the beginning of the year, we were still emerging into the post-lockdown landscape: prices began to rise as consumer spending picked up, and the Federal Reserve kept interest rates low as it attempted to stimulate the economy back to growth. As it turns out, the U.S. had its strongest economic growth in four decades at 5.7% gross domestic product for 2021. At the time, the consensus was that higher inflation was a temporary result of this growth.

By early 2022, however, this perception began to shift. Supply chain issues, already in place from the global economic shutdown in 2020, were heightened by Russia’s invasion of Ukraine in February, leading to higher energy and food prices. In an attempt to slow the rate of inflation, the Federal Reserve began to increase interest rates once again – but not so much that it risked slowing the economy to the point of recession.

GDP (the measure of the U.S. economy’s growth) was negative for the first two quarters of 2022 but was higher than expected for the third quarter at 2.9%. The labor market and wage growth generally remained robust, which - while positive news for workers - also helped keep inflation high.

Data Spotlight


Fed funds rate at beginning of 2022

Looking ahead, of course, the big question is whether we are facing a recession in 2023. If we define a recession as two consecutive quarters of negative GDP, that seems less likely as of this writing. But we would expect slowing economic growth as a result of Fed actions and their impact on housing costs, corporate earnings and consumer sentiment. So even if we don’t see a technical recession, it may feel that way to some people.


There’s a reason “saving for a rainy day” is a sound financial principle. No one can control or predict what will happen with the economy but following the action steps you set with your planner – from your emergency savings to your long-term retirement strategy – grants you the peace of mind of knowing that you’re doing all you can to ride out the storm.

Data Spotlight


Fed funds at beginning of 2023



Some relief for inflation-hit Americans

Capitol building Retirees can keep more of their Social Security benefits.

If there was a silver lining to the higher prices that 2022 delivered, it came in the form of legislative changes from Washington.

In response to the pressures created by persistently high inflation, the Social Security Administration announced a cost-of-living increase of 8.7% starting in 2023, the highest such hike since 1981, providing a significant boost to those in or nearing retirement. The yearly cost-of-living adjustments are often offset by higher Medicare costs. But instead, Medicare actually lowered Part B premiums and the deductible, meaning retirees can keep more of their Social Security benefits.

Meanwhile, the IRS has set higher standard deductions for 2023. The standard deduction will increase to $27,700 for married couples filing jointly and to $13,850 for single taxpayers. The IRS often adjusts tax rates to account for inflation, but in most years, it’s a modest amount. This year, the shift represents a significant jump of about 7%.

In other policy news, the Inflation Reduction Act was signed into law, offering various “green energy” related rebates and a handful of other changes that may provide some relief to taxpayers in 2023.

Finally, SECURE 2.0 was passed at the end of 2022. The bill extends retirement savings opportunities for American workers by increasing catch-up contribution limits, enabling them to invest more in their employer retirement plans. Regular contribution limits for 2023 were announced: The amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022.


We believe that an integrated financial plan – one that takes a broad view of your financial life – is your best defense against any storm clouds on the horizon. That’s why we monitor policy developments and take action when changes might affect your financial plan. For example, your planner can work with you to adjust your systematic withdrawals in line with the Social Security increase. Your planner works closely with in-house subject matter experts in tax and estate planning, insurance, Medicare, Social Security and more. Our teams work together to ensure that your financial plan is positioned for any ongoing developments that could help you reach your goals.

Data Spotlight


Social Security cost-of-living increase for 2023



Action steps for the new year

2 women having a conversation
Be sure to hit key deadlines and take advantage of money-earning or tax-saving opportunities.


The legislative changes brought in during 2022 provide an opportunity to review and adjust your financial plan. Your planner can answer your questions and help you decide which of the following steps might be right for you:

  1. Increase contributions to your retirement plan in 2023

    If you’re still working, consider putting as much as you can into your employer-sponsored retirement plan, such as a 401(k), 403(b), 457 or TSP.  You can now contribute up to $22,500 (up from $20,500 in 2022), and for those over 50, the IRS also increased the catch-up contribution value for 2023, from $6,500 in 2022 to $7,500. In total, employees above the age of 50 can contribute up to $30,000 to their 401(k).

    For IRAs, the IRS increased the limit on annual contributions in 2023 to $6,500, up from $6,000 in 2022. The IRA catch‑up contribution limit for individuals aged 50 and over is not subject to an annual cost‑of‑living adjustment and remains $1,000. The same applies to Roth IRAs but remember that the $6,500 limit is a combined total.

  2. Review your cash reserves

    Higher interest rates mean more attractive yields on savings and money market funds. Talk to your planner about which options are best for you.

  3. Take Required Minimum Distributions

    Determine if you are required to take RMDs this year. The age to begin taking Required Minimum Distributions will increase from 72 to 73 in 2023 (for people who reach age 72 after Dec. 31, 2022). The penalty for failing to take RMDs will decrease from 50% to 25% of the RMD amount, and 10% if corrected in a timely manner for IRAs.

  4. Consider making charitable contributions with Qualified Charitable Distributions

    If you need to take a RMD in 2023, consider a QCD using part of your RMD.

  5. Annual gift allowances have increased

    Consider making gifts to your family members. The IRS has increased the annual gift allowance to $17,000 in 2023 so you can make a gift up to that amount to as many people as you like without incurring a federal gift tax. Your spouse could do the same, if you chose to make gifts to each of your children or grandchildren, for example.

  6. Adjust your HSA and FSA pretax savings contributions for 2023

    The annual inflation-adjusted limit on HSA contributions for self-only coverage will be $3,850, up from $3,650 in 2022. The HSA contribution limit for family coverage will be $7,750, up from $7,300. The adjustments represent approximately a 5.5% increase over 2022 contribution limits, whereas these limits rose by about 1.4% between 2021 and 2022. If you’re still employed, you can save $3,050 in an FSA in 2023, an increase of about 7% from the $2,850 limit in 2022. (Remember, unlike an HSA, you can’t take your FSA with you when you leave a job.)

  7. Consider Social Security and pension cost-of-living adjustments

    The 8.7% COLA raise for Social Security takes effect in 2023. Government CSRS pensions also received an 8.7% increase and FERS pensions received 7.7%. Military retirees and disabled veterans will also see their monthly checks increase by 8.7% for 2023. With these increases, you may be able to reduce your portfolio distributions (RMDs or systematic withdrawals), so contact your planner to discuss this further.

  8. Medicare premiums will decrease (slightly)

    Each year, the Medicare Part B premium, deductible, and coinsurance rates are determined according to the Social Security Act. The standard monthly premium for Medicare Part B enrollees will be $164.90 for 2023, a decrease of $5.20 from $170.10 in 2022. The annual deductible for all Medicare Part B beneficiaries is $226 in 2023, a decrease of $7 from the annual deductible of $233 in 2022.

  9. Review your property and casualty insurance coverage

    2022 saw significant increases in home prices, as well as an increase in natural disasters like fires and hurricanes. Discuss your property and casualty coverage with your insurance agent to be certain you have adequate coverage. Discuss replacement costs, deductibles, flood insurance options and revised appraisals for jewelry and other high-priced personal property.

  10. Review your life, disability and long-term care insurance coverage

    Determine if there are any changes needed, that your beneficiaries are up to date, and that you have sufficient life insurance coverage to help secure the financial future for your dependents. Consider adding disability insurance in the event you are no longer able to work. Be sure to add a third-party notification to your policies in case you miss a payment.

  11. Review your estate plan

    If you have had a life event this year, like a birth, divorce, death, marriage, retirement or relocation, be sure the beneficiaries on your accounts are correct and your POA or medical directive updated. Create or, if needed, update your will, and remember to consider the handover of your digital assets, such as online accounts and social media.

  12. Check in with your planner

    Set up a call or meeting with your planner if you have any questions or concerns about anything on this list, or if you have experienced or expect any major life changes in the new year that could affect your financial strategy in 2023 – and beyond.

Diversification does not ensure any investment strategy will be protected from market risk. Investing strategies, such as diversification, do not assure or guarantee better performance and cannot eliminate the risk of investment losses. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies.