We’re approaching the end of a good year for stocks and bonds, both at home and abroad. Volatility has picked up in recent weeks, and anything can happen prior to Dec 31^st, but there’s still a tailwind pushing us into 2026 and that’s a good thing.

That said, excess performance of major market indices like the S&P 500 is (and has for a couple of years now) been coming from a handful of stocks. That’s not news, of course, and we’ve discussed it multiple times. But it’s important to monitor the evolution.

At last check there were nine trillion-plus dollar companies in the S&P 500 and, collectively, they make up about 40% of the index’s market value. Of those, Google and Broadcom are each up nearly 70% this year and Nvidia is up 36%. Not all the biggest companies are having a banner year, such as Berkshire Hathaway up a solid 11% and Amazon up only 4%. But the outperformers are big enough and are outperforming enough that the S&P 500 is up nearly 17% year-to-date while the rest of the market is fair to middling.

We can see this disparity when comparing the S&P 500’s return to an index fund that weights the same index components equally versus by size. A common example, Invesco’s Equal-Weighted S&P 500 fund, ticker symbol RSP, is up about 10% this year. Large cap dividend-oriented stock funds are up about 13%. Those are solid returns from the bulk of the rest of the market but the Tech sector’s 27% and Communication Services up 20%, plus their combined index weighting of about 46% as of yesterday, has added real oomph to the bottom line of lots of portfolios.

Given this performance imbalance, rebalancing is a good idea as we close out the year. I mentioned this last week as well but it’s worthy of repetition. This is especially true if you’ve been getting extra lift from AI-related stocks, perhaps through holding common stocks, larger positions in broad market index funds, or both.

Maybe you have outsized but low basis common stock or mutual fund positions in your non-retirement account. If so, try to work around these while rebalancing across your whole portfolio. Sometimes there’s a limit to how much you can rebalance because of potential capital gains taxes on those low basis positions but do the best you can. Remember, rebalancing is most easily done within retirement accounts because you don’t need to worry about capital gains taxes.

If doing this yourself, you could review your holdings to see how “overweight” you are in the Technology and Communications Services sectors. As mentioned above, they comprise about 46% of the S&P 500, which is generally used to determine the overall market weight. Consider cutting combined exposure by around half since that’s about where it was before the public launch of ChatGPT two-plus years ago. Perhaps diversify into something like an equal-weighted fund like RSP, a dividend-oriented fund, or anything else that keeps you invested in stocks while reducing exposure to overheated sectors. Major foreign stock indexes like the MSCI EAFE also offer a substantially reduced weighting to these sectors while enhancing diversification, so an index fund based on that could also be a great choice.

I’m not suggesting an imminent decline for AI stocks, by the way. There seems to be a tailwind here too. Instead, I’m suggesting that trimming from your winners and adding to good quality underperformers is prudent and works well when managing portfolios in the real world over the longer term. This is counterintuitive but reduces overall volatility while creating opportunities to generate spending cash – often when the market is high. And as the saying goes, you never go broke by taking a profit.

Also important this week is the Fed holding its final rate-setting meeting this year on Wednesday. As I type, the CME FedWatch tool indicates a roughly 90% chance of another quarter point rate cut. This has whipsawed around in recent weeks, but the current thinking is one more rate cut now and then a wait-and-see approach from the Fed until deeper into 2026, maybe next summer.

This is one of those good news, bad news dynamics when the markets love low rates so long as they’re for the right reasons. But the Fed doesn’t have much reason to lower rates further than where we’re expected to be tomorrow, which is ultimately a good thing for the economy. Still, the markets are known to throw tantrums when they don’t get what they want, so the Fed’s tone and specific verbiage will be closely studied in the days ahead.

Other than that, have a great week!

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Things are busy here this Thanksgiving week and I’m sure the same is true for you. Lots going on and lots to think about. Still, I often quip that, “all my problems are good problems”, and it’s true; family, friends, clients, projects, hopes and dreams, etc, all vying for time. But who can complain about that? I’d rather have too much than not enough and I’m thankful for all I have, all we have, and for a future full of possibility.

On that note I want to wish you and yours a happy Thanksgiving. I hope you can enjoy the opportunity to be with family and friends this week.

- Brandon

Good morning. There’s news on this Veterans Day that the government shutdown could be coming to an end. Let’s be hopeful because, among other reasons, as of last week we’ve blown past the record for the longest shutdown in our history. This holiday reminds us that we helped end WWI, so we ought to be able to run a government. Besides that, the day also calls us to remember those who served in the armed forces. Thank you for your service. 

On to this week's post... anxiety has been growing in some circles about how extended the stock market is getting and when, not if, the AI bubble fueling it will pop. Granted, there has been a huge amount of spending in this space and plenty more is planned, but is this a bubble like we saw back in the late 90s? While it’s easy these days to latch onto narratives that clearly guide us one way or the other, the reality is always more complicated.

I was initially going to add multiple layers of information to what I’m posting below showing an overall healthy economic backdrop for the AI boom, but my post was getting too long. I may include some of the other information next week. So today I’m sharing portions of a recent piece from JPMorgan that downplays comparisons to the Dot-com bubble. There are important differences, of course, but it’s important to remember that these things never play out in exactly the same way. The point is to keep paying attention.

I generally agree with the opinions below but, among other things, all of this speaks to the importance of diversification when managing a portfolio for the long run. Spread your investment money around prudently, monitor, rebalance/take profits, repeat. Artificial intelligence may well end up reinventing our economy the way the Internet did, but your financial future shouldn’t wholly depend on it.

From JPMorgan…

… the Magnificent 7 [Apple, Microsoft, Google, Amazon, Nvidia, Meta, Tesla] is looking less like a cohesive monolith, with more dispersion emerging underneath the surface in profits and performance. It is also giving way to a broader AI ecosystem.

Although massive investment in AI echoes the dot com bubble, this time, demand is real, financing is high quality and leverage-lite and circularity is strategic. 

As prices hit all-time highs, and announcements about more capex, billion-dollar investment deals and debt issuance fly around, investors are growing concerned we’re in a bubble. 

Railroads, electricity, landlines, cars, plastic, shale, internet. AI might be new, but innovations that spur capital investment cycles are not. Profits and productivity have always materialized eventually, but some of the time, though not all the time, markets have gotten ahead of themselves. It’s still early days for AI, but we’re not seeing too many signs of excessive exuberance.

In previous technological transformations, first movers haven’t always reaped the benefits. WorldCom, Global Crossing, and Level 3 built the internet we still use today, but two of the three went bankrupt. They grew investments faster than demand, prices collapsed, and a decade later, companies like Amazon and Google swooped in and built trillion-dollar businesses on that glut of free bandwidth. But today’s hyperscalers [big cloud service providers that operate massive data centers] aren’t just building the compute AI needs to run. They also own and operate the network, architect the software layers on top and control the distribution. The AI transition is different in a few critical ways: 

Profits are keeping pace with enthusiasm. Since the launch of ChatGPT, the info tech sector has risen 158%, supported by soaring profit growth. In contrast, returns became untethered from earnings growth during the dot com bubble. This doesn’t preclude a future AI bubble, but for now, price and earnings look reasonably aligned. 

Demand precedes – not succeeds – investment. The hyperscalers have already invested close to $600bn in AI, and the bill keeps on getting bigger. After 3Q25 earnings reports, consensus estimates for 2026 and 2027 capex [capital expenditures] have increased by $47bn and $61bn, respectively. But it’s still not enough to meet existing demand. This earnings season, cloud providers reported an aggregate $1,202bn in backlog. Google has “signed more deals over $1billion through Q3 this year than…in the previous two years combined,” and Amazon’s CEO highlighted, “AWS is growing at a pace we haven’t seen since 2022.” While Meta’s stock sold off after it raised both 2025 and 2026 capex guidance, CEO Mark Zuckerberg doesn’t think it will go to waste: “I think that it's the right strategy to aggressively frontload building capacity…That way, if superintelligence arrives sooner, we will be ideally positioned for a generational paradigm shift...If it takes longer, then we'll use the extra compute to accelerate our core business which continues to be able to profitably use much more compute than we've been able to throw at it.”

Financing is mostly cash – not debt. Hyperscalers are investing massive amounts into AI, but they generate massive amounts of cash each quarter too. Free cash flow is down from its 2024 peak of $238bn but still strong at $188bn, and growth is projected to inflect in 2026. Some of these companies have also started to tap both public and private debt markets to fund data centers. In and of itself, this isn’t a bad thing, as debt is part of an optimal capital structure, but it’s a risk worth watching, especially as less profitable companies lever up. 

Strategic circularity. The hyperscalers spend 18% of their cost of goods sold on NVIDIA and represent 42% of NVIDIA’s revenue. Add to that multi-billion-dollar deals announced between chip makers, hyperscalers and LLM developers, and investors are growing rightfully concerned about who’s footing the bill. Some have even compared it to telecom carriers’ buying up each other’s excess fiber cable capacity during the internet bubble. However, today’s AI deals are strategic investments tied to real demand, built on exponential revenue growth. Rather than circularity, these deals represent competition, as leading LLM developers secure compute from multiple cloud providers, who have deals with other LLMs. 

Still, investors shouldn’t get complacent. Power and GPU supply could constrain growth to below expectations, though this could help prevent excess supply. Adoption appears to be rapid, but sticky revenues from paid subscribers with enterprise-driven use cases are not guaranteed. Faster chip obsolescence could also change the economics. Even a 1-year haircut on the useful life of AI infrastructure could be a 3% hit to earnings. And although circularity may be an essential foundation of investment today, one damaged link could have an outsized impact.

We might not be in another internet bubble, but today’s megacap tech giants aren’t destined for eternal domination either. They’re competing against each other, and disruptors will inevitably emerge. With valuations this high, and investments this astronomical, there isn’t much room for error.

Here’s a link to JPMorgan’s full article if you’re interested…

https://am.jpmorgan.com

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It’s that time of year again when the calendar seems to speed up as Dec 31^st approaches. Of course there’s lots of holiday spirit and fun in the meantime, but year-end also brings financial deadlines that can be stressful. Let’s take a few minutes to review some of the bigger ones from my perspective.

Leveraging capital gains…

Consider your spending needs. Do you need to generate cash for monthly spending into next year or do you have a large expense coming up? If so, look to your brokerage account to help fund this.

The stock market has done well and you likely have unrealized capital gains in your brokerage (non-retirement) account. This type of account can be cheaper tax-wise when you’re looking to generate cash because you can sell shares of an investment and only pay taxes on the gain. If you’ve held the investment for at least a year the gain is considered long-term and would be taxed at a 15% federal rate for most filers and 0% for those with low taxable income. If you held the investment for less than a year it’s considered short-term and taxed as ordinary income, so selling long-term gains is preferable. Your brokerage firm should have these details if you’ve bought your investments within the last dozen or so years.

The calendar matters because anything sold by Dec 31^st counts for this year’s taxes. Have you’ve looked at where you might be within the federal tax brackets? Are you in a low enough bracket that your capital gain rate is 0%? Whichever bracket you may be in, do you have a good amount of room before the next higher bracket?

Whatever the situation, you can use the calendar as a tool. Say you’ll need $40,000 for a purchase early next year. You could sell some of an investment this year to stay within your current bracket and the rest in the first days of 2026, straddling tax years while still getting your cash. This sort of maneuvering might seem too complicated but it helps your after-tax investment return over time.

The good news, at least from the standpoint of simplicity, is that calculating capital gains doesn’t really matter for IRA or 401(k) distributions, if that’s where your money is. However, regular distributions from retirement accounts are taxed as ordinary income so you should still try to manage your bracket position as we approach year-end.

Maybe you don’t need cash but want to rebalance after a good run for stocks. If so, it’s usually better to rebalance your household portfolio from within your IRA and 401(k) if possible because buying and selling within retirement accounts isn’t taxable year-to-year; only distributions are taxable.

Funding your retirement account…

Individuals get until next tax season to fund their IRA or Roth IRA for 2025, so that’s not necessarily a near-term deadline.

Employer-related accounts are another story. Employees have to fund their 401(k) and other workplace plans by Dec 31^st while their employers have until tax time the following year to make profit-sharing contributions. The same timing applies if you’re self-employed with no employees or maybe only have family as employees – you make contributions both as the employee (by year-end) and employer (by tax time).

The maximum 401(k) contribution as an employee is $23,500 this year with an added $7,500 if you’re age 50 or older (and maybe a little more if you’re 60-63). It’s common for people, especially busy self-employed folks, to assume they’re on track to fully fund their account only to find out too late that they’ve undershot, so take time to double check and make corrections prior to year-end.

Taking your RMDs…

The rules governing required minimum distributions have been evolving, and again earlier this year. However, the current required beginning age for RMDs is 73, so if you’ll be that age by year-end, you’ll want to take your taxable distribution by Dec 31^st or pay a hefty penalty. Granted, you get a slight reprieve if it’s your first RMD year because you can delay until April 1^st of next year. But then you’ll have to take two distributions next year (the late one and the current one) and pay taxes on both. While this sometimes makes sense from a tax planning perspective, I rarely recommend it.

Your brokerage firm (and humble financial planner) can tell you what your RMD is so it’s usually straightforward to get this done on time.

Or Gifting them…

One alternative to paying taxes on your RMD is to give some or all of it directly to charity from your IRA (not from your checking account, and up to $108,000 per year per individual or double that for a couple assuming the spouse has their own IRA). Doing so negates income tax on the distribution. The catch is that checks sent to charities by your brokerage firm must be cashed by Dec 31^st to qualify for this tax year. So contact your IRA custodian to get these out asap if you’ve been on the fence.

Or gifting appreciated stock…

Another way to give to charity is via shares of stocks that have done well within your brokerage/non-retirement account. Ideally, these would be your highest gain shares so the charity gets the full value of the gift while you don’t need to worry about eventually paying the capital gains taxes yourself; it’s a win-win but the transfer has to complete before year-end to count for this tax year. You can do this via your brokerage firm usually within a few business days and it shouldn’t cost anything but your time.

The One Big Beautiful Bill Act made some changes to the rules for gifting appreciated stock so you should consult with your tax advisor before doing anything. That said, if you normally itemize your deductions, aren’t in the highest tax bracket, and plan to give more than, say, a couple of thousand to charity, this likely makes sense for you.

Or batching your gifts…

The aforementioned OBBBA makes it advantageous for some taxpayers to “batch” several years of their charitable giving of appreciated stocks into 2025. The reason is that starting next year some taxpayers may find themselves no longer itemizing their deductions and only getting to write off up to $2,000 (for joint filers) of charitable giving. So talk with your tax advisor and consider batching gifts directly to charitable orgs or giving to a donor advised fund, both by Dec 31^st.

I’ve breezed through a bunch of details so let me know of any questions. Otherwise, good luck as we finish out the year!

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It seems like more now than ever how the economy is doing depends on who you ask. People with assets like houses and stocks have been saying they’re doing well even if many are worried about the health of the republic. The wealth effect (the psychological boost from rising asset prices) is in full force for affluent folks. This shows up in consumer surveys and spending on categories like premium seats on flights, fancier cabins on cruises, and “sustainable luxury” versions of electronic vehicles, to name a few.

Many of these people are also in the top 10% of earners who account for nearly 50% of all consumer spending in our economy. The rest are in the next 10% and add roughly another 10% to spending and round out the 20% of those considered affluent.

Perhaps capturing responses more from this affluent cohort, the Wall Street Journal had an interesting survey-based article in recent days. Here's a link: https://www.wsj.com/politics/policy/economic-outlook-sentiment-poll-quiz-99d71df8?st=8AZjVe&reflink=share_mobilewebshare

All this spending has been buoying the economy for a while and helps reduce recession risk, but the rising tide hasn’t been lifting all boats.

The other 80% of consumers cover the remaining 40% of spending and many (maybe most) of these folks are strained. Sustained inflation in key areas, a tight job market and stagnant wages, high borrowing costs, and repaying student loans – one or all these are hitting the average American consumer pretty hard. And the impacts tend to worsen as you go down the age spectrum.

This is an important structural issue within an otherwise healthy economy. While not necessarily new information, numerous sources have been reporting lately how the yawning wage and opportunity gap continues to widen. This is especially important with emerging AI technology and the lofty expectations for how it might impact the workforce.

My research partners at Bespoke Investment Group came out with a good piece last week looking at how younger Americans are doing economically when compared to other generations. Some of their findings are interesting, such as high unemployment rates for 20-somethings with a college degree versus their high school educated peers. This post is a little longer than normal due to several charts, but I’ll appreciate your patience.

From Bespoke…

There’s nothing new about concerns over “kids these days”. We can go back at least as far as the late Roman Republic and their fear of novo homo (new men) like Julius Caesar for conflict over and between generations. Today we’re going to take a look at the plight of younger Americans and how they’re performing economically.

First, we’ll start by looking at the distribution of wealth. With younger or first-time home buyers largely locked out of the housing market which has for so long been an engine of wealth for the American middle class, it’s easy to assume that Millennials (and their younger peers in Gen Z) will forever be locked out of the housing market. For now, that’s not what’s happening. As shown below, Millennials’ (defined as Americans born in 1980 or later) share of real estate wealth in aggregate is ahead of where Gen X (Born 1965-1980) was at the equivalent point for their generation. Granted, Gen X is much smaller than the Millennials, and both are well behind compared to the Baby Boomers (1946-1964).

Assets also don’t account for the debt that underpins them and in that respect the share of mortgage debt held by Millennials is an indication that they are at somewhat of a disadvantage relative to older generations. As shown in the chart top right, share of mortgage debt is far higher than Gen X was at this point (though again, well below that of Baby Boomers).

The Fed’s Distributional Financial Accounts are the source for this data and they don’t break out Gen Z yet; they are likely less than 1% of any net worth or asset figure given their age and the experience of Gen X and Millennials. That said, Millennials hold a greater share of net worth at present than Gen X did at their equivalent age. While their share of net worth is about half what the Baby Boomer’s was at this stage, the difference is much less significant than the current share of net worth controlled by the Baby Boomers compared to younger Americans.

The DFA data also lets us look at specifically under40s share of net worth and assets. As shown below, it has trended higher over the past 15 years, a stark contrast to the 1990s and 2000s (this data begins in 1989). In short, from a wealth perspective, younger Americans look to be worse off than previous generations in terms of share, but not dramatically so, and are building wealth on a trajectory similar to prior generations.

What about income? In the chart at right we show the median same-worker hourly wage growth by age, which is reported in the Atlanta Fed’s Wage Tracker as 12m moving averages for these demographic slices. As shown, the hot 2020-2021 labor market led to massive wage growth for younger workers, easily the highest since at least the late 1990s. Since, we’ve seen a massive decline. It’s important to keep in mind that the youngest workers always see the fastest wage growth. By virtue of both educational attainment happening early and low hanging fruit of productivity improvements happening earliest in a given worker’s career, every cohort of workers always experiences their fastest wage and salary growth in their 20s, before settling down into a much slower pace of growth that reflects the aggregate labor force.

That same dynamic is still true today, but we do note that young workers are seeing weak relative wage growth. Their advantage in the Atlanta Fed data is similar to what we saw in the extremely weak labor market of the early 2010s when national unemployment was still in a 6%-10% range and aggregate wage growth was much weaker. We should probably discount some of the weakness given the “overshoot” of wage growth in the early 2020s, but by any measure this labor market is generating relatively weak wage growth for the youngest workers, which implies relatively soft aggregate income growth as well. In other words: something is going on.

What about unemployment? Teenage unemployment looks relatively normal and similar to unemployment for 25-34 year-olds in terms of historical percentile. But 20-24 year olds have unemployment rates above the historical median and they’re rising quickly. That’s even more evident when we adjust for the national unemployment rate. After doing so, some things jump out. Teen adult unemployment is slightly lower than history on that relative basis, while 20-24 unemployment is near the 90th percentile! 25-34 unemployment is also higher than 76% of history relative to the national rate. What’s even more remarkable is that these spreads tend to be cyclical; we are not in the midst of a recession (when they historically tend to spike).

Recent announcements of job cuts from major companies have repeatedly come for the white collar labor force; in general this looks like reduced corporate head count with no impact on line or production workers. That helps illustrate a key dynamic in the labor market right now: the problem is less youth unemployment and more college educated unemployment. To illustrate, in the chart below we show the current percentile reading of unemployment relative to the national rate. Lower readings mean less joblessness for a given demographic relative to history and vice versa. As shown, for 16-24 year olds not enrolled in college and without a high school diploma, unemployment is historically low, in the bottom 4% of readings. Compare that to those not enrolled in college but with a high school degree, where unemployment is more elevated at the 70th percentile. And for 16-24 year-olds who are not enrolled in college having already earned a degree, unemployment relative to the national total is in the 95th percentile!

What makes this so striking is that we see the same pattern play out for older, more seasoned workers. Those with less than high school have low unemployment relative to the national economy and history, while those with college degrees are in a much tougher spot (again, relative to the total picture and compared to history).

The hot 2020-2021 labor market may have been a taste of what is to come given the rising unemployment among college graduates. Until that period, it was extremely unusual for college-educated workers to see wages rise slower than those with less education. But lesseducated workers outperformed dramatically in that tight labor market. Normalcy has returned over the past couple of years but recent data shows college-educated workers starting to lose ground again.

We haven’t talked at all about the causes of this shift yet, but the data supports the view that something is driving down demand for collegeeducated workers relative to supply of those workers. We see a range of possible explanations. One could be that more remote work has reduced the labor bargaining power of college educated workers in a given geography, eroding their wage premium or demand for their labor in aggregate. Another is that far higher prevalence of college educated labor (given that Millennials are by far the best-educated generation in terms of attainment and Gen Z is similar) means supply is outweighing demand. A third explanation is that the processes of management intensification and financialization in the 1990s through 2010s overshot and firms are now focused on simplifying operations to focus on line production. And AI is a final potential catalyst, though we note that this process appears to have been underway long before ChatGPT was released let alone widespread adoption of LLMs.

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The Social Security Administration has announced a 2.8% cost of living adjustment (COLA) for benefits beginning in January 2026. This is up from the 2.5% increase for 2025 but lower than the longer-term average of 3.1%.

This 2.8% COLA will bring the average monthly Social Security benefit to $2,071 for an individual and $3,208 for a couple.

SSA’s COLA is based on a particular version of the consumer price index, CPI-W, generated by the US Bureau of Labor Statistics from the third quarter to third quarter each year. CPI-W tracks spending on a basket of goods by urban wage earners and clerical workers and covers roughly 30% of the population. This contrasts with CPI-U, the widely reported inflation metric that tracks urban consumers and covers over 90% of the population.

The inflation metric being used is important for the obvious reason that a higher number means more money for Social Security beneficiaries the following year. But it also means, more or less, an additional drag on the Social Security “trust fund” we hear so much about.

Long-term funding problems for Social Security are nothing new. According to the recent annual trustees report to Congress, Social Security’s reserves are projected to be depleted by 2035, a year later than last year’s projection but still only ten years out. Benefit payments would be impacted if nothing is done between now and then, according to the trustees. But the trustees forecast the problem over a 75-year timeframe, so it isn’t like benefit payments would simply stop in 2035. Instead, the trustees speculate there might be a cut of 25% to future benefits. That’s probably the worst-case scenario given that current income for the plan is nearly enough to cover expenses, but the “nearly” part really adds up over time.

So there needs to be better alignment of income and expenses within the projections to close the current and projected annual deficit. Social Security trustees have repeatedly suggested to Congress that raising payroll taxes and reducing benefits could solve the problem, but there hasn’t been much political will for either regardless of which party is in power.

This is where tinkering comes in, or wonky changes around the edges of the problem to help bend the curve, so to speak. Examples include raising the full retirement age from 67 to 68 (it was originally 65 anyway) or older and maybe indexing it to longevity (I’m unsure how they’d do that, but it’s an interesting concept). There could be various forms of means testing, such as limiting benefit growth for higher income people, assessing higher payroll taxes on higher earners or a mix of tweaks, all trying to peck away at the big changes nobody in power wants to make.

Another example of tinkering is changing which CPI metric is used to calculate the annual COLA. The replacement metric often discussed is “Chained CPI”, or C-CPI-U. Chained CPI is preferred in some circles to CPI-U because its methodology captures consumers substituting cheaper items for more expensive ones as inflation heats up, reducing the overall inflation number. This potentially lower inflation reading would reduce COLAs and trust fund expenses by incrementally reducing benefits, especially over a 75-year period. That cherry-picking of data might seem a little underhanded but if it ultimately helps support the system, maybe that justifies the means? Others suggest using CPI-E, an inflation gauge targeted on spending by seniors. While that makes good sense at a higher level because it more accurately reflects the inflation being seen by actual beneficiaries, it could lead to higher COLAs and more of a drag on the system, so that’s probably a nonstarter. Can you sense the irony there?

I think (and hope) Congress will eventually figure this out because they need to. It’s just a question of exactly what they do and when, so plan ahead for various contingencies.

Ultimately, Social Security beneficiaries are getting a pay raise next year and that’s great. However, it’s wise to factor some sustainability stress tests into your plan if you’re currently receiving benefits or plan to do so soon. Tests could be lower COLAs over time to match up with Chained CPI, benefit reductions in 2035 and beyond, and so forth. I usually do this for clients anyway, but it never hurts to keep checking!

And for those who are still working for the foreseeable future, I suggest continuing to factor Social Security into your plans, just don’t rely too heavily on it. Test your plan for this and make strategic decisions as needed. And remember that Social Security was never meant to replace all of your pre-retirement income – it’s one leg on the retirement income stool and you should try to have as many legs as possible.

Have questions? Ask us. We can help.