Elliot Kallen, CEO and President of Prosperity Financial Group
It’s February, and love is in the air.
That means people all across the country are opening their wallets to spend big bucks for loved ones on candy, chocolate, fancy dinners, jewelry, flowers and greeting cards as Valentine’s Day approaches.
According to the National Retail Federation, consumers are expected to spend $25.9 billion on Valentine’s Day in 2023, up from $23.9 billion in 2022 and anticipated to be one of the highest-spending years ever. On average, an individual consumer will spend $192.80 this year, although those in the 35-to-44 demographic are expected to spend an average of $335.71 this Valentine’s Day.
But with an expected recession looming, is it smart for the typical consumer to spend more this Valentine’s Day? Is it wise to shell out hard-earned money when you really should be saving to weather the impending storm? If your partner really loves you, won’t they understand if, instead of flowers and greeting cards (which will undoubtedly go into the trash bin in a couple of weeks), you give them the gift of financial security instead?
How about in 2023, as we head into uncertain times, we reinvent Valentine’s Day? Instead of splurging, what if we focus on building wealth for the future?
After all, financial hardship is one of the major causes of divorce, and nobody wants to deal with the financial repercussions of that.
Finance professionals like Elliot Kallen, CEO and president of Prosperity Financial Group, agree that people should have at least six months’ worth of living expenses in their emergency funds.
Instead of flowers or chocolate, Kallen suggests, perhaps you could replenish your partner’s emergency funds to help them better deal with an economic roller coaster. Or, instead of letting an expensive dinner eat away at your savings, you could help your spouse invest in a fixed-index annuity, which would earn indexed interest while protecting your principal from market losses. Fearing inflation? You can even add a Cost-of-Living Rider (COLA Rider) to your annuity to provide for an increase in monthly payments based on a measure of inflation.
Kallen, who won the Ronald Reagan Gold Medal Award in 2006, believes certain stocks will thrive in 2023 — even in a down market.
“Mergers will take off positively later this year, making the mid-cap markets—especially those that pay dividends—a great place to leverage success,” Kallen says. “The Defense Industry will receive new contracts from the Pentagon as we have given so many armaments to Ukraine and need to rebuild, and the Energy Sector still has room to grow. Yes, expect a slowdown, but not a meltdown.”
Or instead of shiny jewelry, which will lose its luster and its value over time, Kallen suggests helping your spouse save on taxes by considering a Roth conversion. If earnings were negatively impacted in 2022, for instance, a Roth conversion allows for more tax diversification for retirement income. Tax-free income from a Roth IRA also protects you against future tax rate increases.
Depending on the type of IRA, your spouse can benefit from one of two huge tax parks: tax-deferred growth, so you can postpone taxes until you withdraw money from your account, and tax-free growth, so you won’t owe taxes on your investment earnings.
Fine, Kallen concedes—maybe these “gifts” aren’t sexy enough for Valentine’s Day. Maybe your partner wants more spice in their life. In that case, he says, a gift that promotes health can indirectly help with wealth.
Along with Dr. Bill Lloyd, the National Health Director for Transamerica, Kallen hosted the Health & Wealth Educational Dinner Event this month, where Lloyd highlighted lessons that have emerged from the pandemic and introduced smart strategies individuals can implement to elevate their families’ financial and physical well-being.
So, maybe instead of a steak dinner, you do a pilates or yoga class, Kallen suggests—or a couples massage with your loved one.
Kallen celebrates Prosperity Financial Group’s 30th anniversary on March 3 with a networking power hour. Join him to learn from a seasoned professional how to maximize your wealth and sustain it over time—for yourself, and for those you love.
