November Newsletter to Clients

Enjoy this month’s edition that features a review of investment returns through October, a short checklist of end-of-year tax tips and a reminder about Social Security.

“The first million is the hardest” is an expression “rich” people supposedly say. For the Dow Jones Industrial Average, now approaching 50,000, the first 10,000 was the hardest. Now, the Dow isn’t the perfect market bellwether by any stretch as the index only tracks 30 companies, mostly so-called blue-chip companies. Think JP Morgan, IBM, Johnson & Johnson, Verizon, 3M. But, it was just March 30, 1999 that the index first reached 10,000 and it now stands above 48,000. It may not represent the entire U.S. stock market or even the largest U.S. companies – we prefer the S&P 500 for large, U.S. companies – but it stands as a symbol of what some consider a roaring bull market, and others fear is a historic bubble. 

As I’ve written many, many times, we believe trying to time the market is a fool’s errand. Even if the stock market is over-valued – meaning stocks are priced higher than company earnings can justify – that doesn’t mean the market is destined to fall. For now, we will continue to focus on the individual needs of each of our clients and their specific goals. And, we’ll enjoy the year-to-date returns of the stock and bond markets:

•    S&P 500 – up 17.5% through October;
•    Russell 2000 Index of small company stocks – up 12.4%;
•    MSCI EAFE Index of international company stocks – up 27.2%;
•    U.S. Aggregate Bond Index – up 6.8%.

Now is a great time to check if you have done everything possible to help decrease your 2025 income tax liability. Here is a quick check-list:

•    Are you on schedule to contribute the maximum allowed to your 401(k) or 403(b)? The IRS limit for personal contributions for 2025 is $23,500;
•    Catch-up contributions for those 50 and over allow you to contribute an additional $7,500 this year;
•    Do you plan on making any charitable contributions for 2025? The tax deductibility of those contributions will depend on whether you will itemize your tax return or take the standard deduction. If you intend to itemize in 2025, it may make sense to accelerate your giving this year since the new federal law includes slightly more restrictive deduction rules after this year;
•    Starting in tax year 2026, cash charitable contributions of $1,000 for single filers and $2,000 for married filers will qualify for a deduction;
•    For those 70 ½ and over, Qualified Charitable Distributions (QCD) are a great way to help your favorite charity and save money on taxes at the same time. If you make a charitable contribution directly from your IRA you won’t pay any income tax on that distribution. If you are old enough to have Required Minimum Distributions RMD)then the QCD also satisfies that portion of your RMD for the year.

Tax questions? Give us a call. 

A recent survey by the firm Allianz showed the majority of Americans over 25 admitted they don’t know much about Social Security. Just 39% of respondents said they have a plan for when they’ll start taking their benefits. Furthermore, more than half the respondents said Social Security will be a major source of their retirement income and 21% believe their benefits are all they’ll need in retirement. According to Allianz, “Social Security replaces only about 40% of the average worker’s wages.” 

Another misconception by 55% of respondents was that 65 is the age to receive full Social Security benefits. Full retirement age varies but, if you were born in 1960 or later, your full retirement age is now 67 and benefits increase if you wait to start taking benefits until age 70. 

When to start taking your benefits is one variable – an important one – in your overall financial plan, so let us help. 

Thank you for your continuing confidence.