Today’s job market is greeting graduates everywhere with ambiguity. Technology is advancing at a rapid pace, driven by Artificial Intelligence (AI), which, just a few short months ago, was mostly a mysterious concept for Americans. AI is now everywhere, adding to career uncertainty.
Employers of today are seeking changing skill sets from graduates. College as a necessity is losing popularity for many students and their parents, not to mention potential employers. Skilled trades are in demand, but most employers are experiencing shortages of potentially qualified trainees. Paid apprenticeships are not only available, but scholarship money is sitting idle.
Dirty Jobs creator Mike Rowe is sitting on pools of cash, awaiting applications for scholarships to learn such skills as welding, electrical, plumbing, etc. Check out his website mikeroweworks.org, and you will be greeted with this message: “AI-Proof Six-Figure JOBS.” This is an enticing prospect, and Mile Rowe has already demonstrated his sincerity and effectiveness over decades.
Today’s graduates, whether from high school, secondary education, or post-graduate school, are likely not well equipped to manage their future personal financial situations. For decades now, Americans have been undereducated in finance and economics, and the results have not been a pretty sight. Hopefully, that may be changing for the better.
Whether their eventual retirement realities will resemble earlier dreams likely depends primarily on their own lifetime of choices. Sadly, there are no “do-overs.” Individual actions and decisions throughout decades of working and saving direct outcomes for retirement lifestyles.
Today, whether entering the labor market or higher education, this is a time of high uncertainty. As a graduate of any level, you have no say in the conditions you find “on the ground.” Some graduating classes are fortunate to arrive into an economy that welcomes them with open arms and jobs galore. For others, hiring may be suspended for a time. A cyclical economy is to blame, but that is small consolation for unfortunate job seekers during bad times. However, we are not currently in bad times, and opportunities abound.
Our society is in a state of rapid change, which must be approached with flexibility and an open mind. Some universities are receiving applications for Engineering students more than any other discipline. Who saw that coming?
Above all else, graduates should go out into the world with a positive attitude and a very open mind. Congratulations to each and every one of you graduates. Those who embrace AI, and learn as much as they can as quickly as possible, should be rewarded.
As financial planners, we are frequently challenged to assist clients with their retirement plans. Americans are universally attuned to (and afraid of) the potential problem of running out of money while still alive. That was less problematic in the days of lifetime pensions, especially when enhanced with the promise of lifetime Social Security. However, times have changed. Pensions have become scarce, and Social Security is facing hard times ahead.
Employers have mostly transitioned from providing lifetime pensions (Defined Benefit Plans) to 401(k) and many similar Defined Contribution Plans. Today, relatively few Americans can look forward to lifetime income from a private pension (Social Security is essentially a public pension, but that discussion is for another day). Plus, an increasing portion of us are skeptical of Social Security’s continuing ability to pay our promised lifetime benefits, which may be reduced in excess of 20%. That would place further onus on individuals to increase and extend their own retirement income. This option is difficult for Americans to accept.
Preparing for a comfortable financial future must include saving and investing. Long-term personal investing is the most viable method of individual wealth accumulation. Success in long-term investing is largely a function of Asset Allocation, otherwise known as Portfolio Diversification. Everyone is familiar with the old saying, “don’t put all your eggs in one basket,” and with good reason. One dropped basket, and you go hungry.
Due to increasing longevity, a potential retirement period could rival the length of an average work life. Today’s retirees should be wary of the common practice of “becoming more conservative investors” as they approach and enter retirement. Not to say that no changes are warranted for investors as they finish out their careers, but they need to pay attention to the concepts that made them successful.
The Asset Allocation that makes an investor successful during working years should not simply be trashed and replaced. We all need to stay concentrated on what made us successful investors while working. That means allocating resources to last (and grow) for many more decades.
Entertainer James Hubert Blake, affectionately called “Eubie,” was born in 1887, but he preferred to have everyone believe it happened in 1883. Before his death in 1983, he is credited with having said, “If I’d known I was gonna live this long, I’d have taken better care of myself.” Notwithstanding the truth, upon his passing, the “official” record honored his personal preference by accepting the 1883 birth date. Why not? Attaining the age of 100 is an ambitious goal.
Take better care of your financial life while you tend to your health.
Last week, we discussed reasons why taxpayers should not just file a Tax Return on April 15, then immediately forget about Tax Planning until next year. Ignoring Tax Planning is never a good idea. There are special circumstances this year that may reward Americans in ways not seen before. In addition to improving current year results, some people may be able to save enough from the Tax Return already filed to warrant filing a Corrected Return.
On July 4, 2025, President Trump signed the 2025 Working Families Tax Cuts Act (commonly known as the One Big Beautiful Bill Act, or OBBBA.) Provisions of OBBBA were retroactive to January 1, 2025, and the IRS did not have time to incorporate all the taxpayer-friendly provisions into the 2025 Form 1040 Individual Income Tax Return. Instead, taxpayers and their tax preparers were left to do their own research to assure best results.
OBBBA provisions so-called “no tax on tips” and “no tax on overtime” were made retroactive to January 1, 2025. Both are capped for each taxpayer and are gradually phased out according to overall income. That fact should not deter any taxpayers from understanding and utilizing the formulas. These exclusions can provide what is essentially “found money” for workers who earn tips and/or work overtime hours.
For taxpayers ages 65 and up, there is also a new $6,000 per person deduction from Taxable Income. This deduction is based on the concept of “no tax on Social Security,” and is available to seniors (must have attained age 65 by year-end), regardless of filing status. Additionally, even seniors who are not receiving Social Security monthly benefits qualify for the new deduction.
It is not necessary to itemize deductions to have this extra deduction reduce Taxable Income. Eligible taxpayers should all take advantage of the provision.
To put it mildly, OBBBA was a Godsend for both working and retired Americans. Not taking advantage of our new tax savings would be wasteful. For tax year 2025, there is an additional burden on taxpayers to know and apply the savings, but there is light at the end of the tunnel.
Employers will be required to issue a new style W-2 income reporting form at the end of 2026. Income from tips and/or overtime that may be excluded from Federal Income Tax will be itemized. Responsibility for claiming the exclusions will no longer be solely upon the taxpayer and the preparer, tax software, or tax professionals. While no analysis is yet available, I suspect that many people missed at least part of the 2025 tax savings.
These new provisions are taxpayer-friendly and should not be overlooked, even for last year. Go back and take a look at your 2025 Tax Return to be sure. You just might save some “extra” cash.
Last week, we covered the propensity of Americans to set Tax Planning on the shelf after April 15, only to dust it off and start over in about 50 weeks. Doing so can be costly, as these taxpayers may be ignoring opportunities to save on taxes for the next cycle. Retirement Planning can also be slighted by ignoring Tax Code changes and contribution increases available to taxpayers.
Tax Planning in the modern era goes back to the 1990s, with the passage of the Taxpayer Relief Act of 1997. In my opinion, Congress never received sufficient credit for this law, which granted taxpayers (and savers) opportunities to enhance our financial futures. It was in the 1997 Act that the Roth IRA was created, ushering in an era of tax-free growth and income.
Additionally, in the 1997 Act, qualified sellers were treated to an exemption from gains realized on sales of primary residences, up to $250,000 for singles and $500,000 for married couples. In our day jobs as financial advisors, we have suggested that most Members of Congress likely failed to read the Bill before signing on, as most of them would never have agreed to such a taxpayer-friendly provision.
Following the 1997 Act, every few years, Congress produced significant Tax Code changes, mostly favorable to taxpayers. This past week, Americans filed their Tax Returns (except for those who chose the available Automatic Extension) in the most favorable taxation environment I can remember. According to the IRS, tax refunds are the largest in recent memory, reflecting policy changes codified by recent legislation.
Speaking of refunds, taxpayers who receive large refunds should be triggered to engage in immediate Tax Planning. While fun to receive (and to spend), large refunds are indicative of sub-optimal preparation. The most obvious (and frequently discussed) improvement in the financial lives of the high refund group is to stop making interest-free loans to Uncle Sam. While Money Market interest rates are down from last year, they remain significant, and the interest income should be realized by the taxpayer, not by Uncle Sam.
Other possibilities can be even more financially rewarding. Increased limits for contributions to Qualified Retirement Accounts enable taxpayers to reduce current taxes and increase eventual retirement income. Debt reduction is also a money saver, and can be enhanced by reducing paycheck tax withholding to accelerate monthly debt payments from stronger cash flow.
Decreasing payroll withholding (or reducing Form 1040-ES Quarterly Tax Deposits) leads to smaller refunds, which isn’t as much fun, but financially, those lesser refunds rock. Don’t delay Tax Planning if you are serious about retirement income.
Americans’ annual day of reckoning is here. Taxes, some say, represent the cost of living in a free society. Decades ago, as a young adult, I remember long lines at the U.S. Post Office in the waning hours of April 15, as taxpayers rushed to get a timely postmark on their Individual Income Tax Returns.
In some areas, temporary drop boxes were made available, which would be closed at midnight, at which time postal workers took the envelopes inside and postmarked them by hand with the April 15th date of arrival. These days, we mostly perform those functions on home computers, and let the computers’ operating systems acknowledge the delivery date over the Internet.
Americans fear the Internal Revenue Service (IRS) more than any other branch of government, and with good reason. Non-compliance with the 70,000+ page Tax Code leviathan leads to economic and social penalties. Knowing all the rules is virtually impossible, but the tax due date is clear.
Too many Americans perform their annual filing ritual in a last-minute (and often haphazard manner), and then forget all about taxes for nearly 12 full months. Many taxpayers “leave money on the table” due to a lack of attention.
The Tax Code is tweaked by Congress and the IRS so often that it averages out to about once every day. Significant changes are much less frequent, and in recent years have been largely favorable to taxpayers. Massive overhauls of the Tax Code include SECURE 1.0 and SECURE 2.0, as well as the One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cut Act. Taken together, most Americans have been granted tax reductions and opportunities for improved retirement savings.
Tax planning can save significant sums of hard-earned dollars, but most taxpayers don’t even know where to begin. Many taxpayers turn to their tax preparers for suggestions and receive mostly good advice. But preparers are not necessarily involved with the totality of their clients’ business and financial situations. Clients of Certified Financial Planners® (CFPs®) are often better served with Comprehensive Tax Planning (remember that we are not qualified tax preparers nor tax advisors, so we work with clients’ preparers).
Congress is well aware that they have been negligent on fiscal policy, resulting in a National Debt in excess of $39 Trillion (12 zeros). Despite this macroeconomic problem, Congress has long encouraged individual responsibility through tax-advantaged saving opportunities.
Taxes are here to stay, and failure to prepare for your future is unforgivable in the current economic environment. Excellent planning is readily available in conjunction with qualified financial advisors. We suggest a CFP® doing business as a Registered Investment Advisor (RIA).
From its low-profile introduction in 1997, the Roth IRA has become a behemoth among Americans’ savings and investment vehicles. Americans have more than $2 Trillion (12 zeroes) at the end of 2024 invested in Roth IRAs. Along the way, the Roth has added a cousin in the Roth 401(k). While not for everyone, the Roth concept has given a boost to savers in many situations.
Americans need to be responsible for their own economic futures. Sure, there is Social Security and Medicare, but try living on that package, and you’ll be disappointed and miserable. Social Security has never been able to support a decent retirement lifestyle, and was not designed for that purpose. Medicare doesn’t pay all your medical expenses, either. Everyone has a personal responsibility to supplement social program benefits with their own resources.
Opening a Roth IRA is easy, but first, you must have Earned Income in the year of the contribution. Earned Income consists only of money you receive for work, including wages, salaries, tips, commissions, bonuses, and net earnings from self-employment. Without Earned Income, no IRA contributions are allowed. If you do qualify but have not yet opened a Roth IRA, there are valid reasons for doing so, sooner rather than later.
Aside from offering tax-free growth and eventually tax-free income, Roth benefits are many and varied. Early withdrawals are tax-free for certain specific purposes, including first-time home purchases, disability, qualified higher education expenses, and several others. Starting the Roth IRA early allows your investment time to grow, eventually providing more funds for any of the exceptions, as well as for later retirement income.
Maximum flexibility and tax savings are available to Roth IRA owners once the account has been opened and funded (even with a small dollar amount) for at least 5 years. One year is credited for every calendar year in which the account holds contributed and/or earned dollars.
All contributed funds in a Roth IRA are available to the account owner at any time, for any reason. Those funds were already taxed prior to being contributed, and may be removed tax-free and without penalty.
Earnings and growth become available totally tax-free when the 5-year period has been reached, and the account owner has reached 59-1/2. Roth earnings and growth withdrawn from the account by someone under age 59-1/2 are subject to a 10% early withdrawal penalty. The above-mentioned exceptions to the penalty do apply to these qualified withdrawals.
For almost every saver, the benefits of Roth IRA ownership are best realized by reaching the 5-year period. Start early and get that clock ticking.
Becoming an employer is not everyone’s dream, but Americans are commonly entrepreneurial in spirit. Starting a business is part of both our capitalistic economic system, as well as our individual dreams. Many business startups fail, but an incredible number succeed, at least to some extent. Everyone starts small, but most successful startups eventually are able to hire people to handle daily chores in a growing business.
Becoming an employer changes a person in ways probably unanticipated prior to hiring anyone. Suddenly, a grave responsibility burdens the newly minted employer. While there are legal requirements for every new employer, there is also a moral calling and responsibility. The owner is suddenly charged with making payroll, and the financial weight of the new responsibility can be overwhelming. You can trust me, but ask any business owner how he or she feels about ongoing responsibility for employees’ paychecks.
Recognizing that a majority of Americans have never experienced the responsibility of making payroll, events of the past few weeks have presented a golden opportunity for me to discuss the concept. We hear frequent complaints from political candidates that their opponent has never signed the front of a paycheck. To many of us, that is a profound statement.
Sacrosanct is the word that comes to mind regarding making payroll. Business owners have a legal responsibility, but also a moral and ethical duty, to pay employees on time, and in the correct amount, every week.
When occasional bad times hit a business (inevitable for nearly every enterprise, large or small), the owner often must scramble to make payroll. The Number One responsibility of a business owner is to live up to the promise of compensating employees. If that means borrowing money personally, mortgaging the owner’s house, taking early withdrawals from Qualified Retirement Accounts, foregoing personal bill payments, or whatever, you do it.
Having a personal multi-decade family history of making payrolls, it is a frequent topic in our daily lives and business dealings. So, what’s triggering this conversation at this particular moment? Congress has “evolved” into an entity that appears to have overcome any sense of responsibility for making payroll for their hundreds of thousands of Federal Government employees. (Note that Congress gets paid no matter what, under a separate law.)
Even people who have never signed the front of a paycheck know what it would be like to not receive their earned compensation in a timely manner. Not providing government employees what they depend on, and are due, is unforgivable.
Last year (2025), our Stock Market suffered a dramatic pullback in April, then reversed quickly, and climbed up until year-end as if all had been forgotten. We appear to be somewhat ahead of that schedule in 2026, as world events have caused investors to go on a selling spree in March.
Israel and the United States decided that Iran had reached the end of its leash. Years of lying, deception, secrets, and threats pushed our powers that be over the edge. We are currently living through the process of punishing Iranian bad behavior by destroying their capabilities. We now know that Iran had tools of destruction beyond what they had heretofore acknowledged.
Two kinds of people (and their money) are in the stock market at any given time; investors and speculators. Speculators are frequent traders, attempting to “beat the market” with their insight and risk tolerance. True investors are people with their resources in the market for a minimum of 5 years. These people must live through volatility caused by the other group. Nothing we can do or say will change that relationship.
Long-term investors experience anxiety in tumultuous times. Imagine what speculators are going through as world events fly at them with little or no notice given. To me, the volatility often seems like a heart attack on a plate.
As financial advisors, our hardest days come when volatility jumps like a scared rabbit. Yet we know from training and experience that attempting to outsmart the market is a waste of time and money. And, most likely, it will take years off your life.
One old piece of market wisdom states that investors will feel the pain of a loss twice as much as they will feel the pleasure of a gain. Failing to contain those emotions is a costly mistake, a lesson learned primarily through experience. Good investor behavior is enhanced in many cases by following advice from a qualified and experienced financial advisor.
Words are well and good, but illustrations can be useful as well. In the past 12 months, the point range for the Dow-Jones Industrial Average (DJIA) ranged from 36,612 to 50,513, a spread of about 38%. How can any investor be expected to manage that variability through frequent trading?
Despite the range of ups and downs, calendar year 2025 produced a return on the DJIA of about 13%, and the S&P500 returned over 20%. These gains were earned by avoiding panic selling during down days and weeks.
Our markets have undergone frequent and harsh bad times for decades, so consider this. On Ronald Reagan’s inauguration date (January 20, 1981), the DJIA closed at 950, and recently the same index closed over 50,000. Despite many major setbacks, time in the market is still your best friend.
Watching the stock market erase recent portfolio gains is deeply frustrating, both for investors and advisors. When pullbacks occur, which they do frequently, investors become understandably concerned. When declines continue into the territory of Market Corrections (10% lower than recent highs), and occasionally into Bear Market Territory (20% retreat from recent highs), investors’ emotions can outweigh their logic and common sense.
However annoying and scary bad times become, riding out the storm is the safest process to follow. Unless, of course, your funds aren’t long-term investments with a time horizon of at least five years. Money exposed to extreme market volatility needs at least that amount of time to ameliorate risk.
Investors with dollars intended for near-term expenses or purchases need to find alternative, less volatile investment vehicles. Money Market Mutual Funds, ultra-short-term bond funds, Certificates of Deposit (CDs), and other lower-risk vehicles can protect principal while providing at least a modest return. Even yields below the rate of inflation are preferable to incurring short-term loss of needed principal through stock market volatility.
Human behavior is reasonably predictable, at least when large populations are being studied. During bad stock market years, there are observable trends. In prolonged downturns, selling activity accelerates among individual investors. As frustration grows, investors inch ever closer to making bad decisions. The final (and predictable) phase of a long, harsh down market is called Capitulation, and is observable when panic selling reaches its zenith. Many people simply take their ball and go home.
Predictably, shortly after Capitulation, institutional and other high-volume buyers emerge. Market recovery begins and quickly drives up prices, leaving shell-shocked investors behind. Watching reduced (and/or destroyed) account balances suspended in time, many investors will be afraid to re-enter the market until the recovery is mature. Assets sold during Capitulation are no longer recoverable at their selling prices, and the financial futures of many individuals and families suffer long-term impairment.
History and logic provide clear guidelines for long-term investing success. Unfortunately, human emotions run the gamut in stressful market conditions. In our financial advising business, we have been faced with pullbacks, corrections, and Bear Markets. Our job is to control panic activity (if possible).
Clients of qualified advisors tend to avoid Capitulation, though a degree of frustration is unavoidable. We can help avoid Capitulation disaster.
For several recent weeks, the stock market has been rather docile, with few outsized gains or losses. That pattern was suddenly broken in response to military action occurring far from home. While Iranians were asleep at the wheel, and Israel was on high alert, on a recent Saturday morning, we (jointly with Israel) decimated layers of Iranian “leadership.”
Financial markets detest uncertainty, and nothing projects uncertainty better than huge black clouds billowing upward where occupied buildings stood scant minutes before. Black smoke columns became especially evident on the otherwise cloudless horizon when recent attacks in Iran took place. The carefully timed (I believe) Saturday attack minimized reaction on our Stock Exchanges. Fortunately, traders did not “freak out,” and the first two trading sessions revealed very little panic selling. In fact, Wednesday turned in a solid green market performance and appeared to set the table for a minimal weekly decline. Thursday and Friday did produce a mild sell-off, and major market indices were down modestly for the week.
Where we go from here is anybody’s guess, and I expect more volatility. For frequent traders, there is money to be made during volatile times, but those frequent traders have to be correct in stock picking and timing.
For long-term investors, history tells us that patience is a virtue. There is more to riding out volatile times than merely “buy and hold.” We leave the speculators to trade their individual stock choices in a rough market. Our game plan is (always) to diversify, diversify, diversify. Rather than making bets on individual stocks, we prefer holding Exchange-Traded Funds (ETFs), mutual funds, Sector Funds, and index shares.
Thoroughly diversified portfolios are certain to include market losers in tumultuous times, but in the mix of shares will be winners as well. We want to own the winners, without having to determine (guess) which issues will become new Wall Street darlings. We diversify holdings to avoid having to guess.
Some investors look at a diversified portfolio as “going nowhere.” Some parts up, others down, and overall, results can often be relatively boring. We know that minimizing losses during volatile periods in the market makes the inevitable recovery period more profitable. Diversifying our portfolios provides a measure of stability during down and/or uncertain times.
Volatility is likely to remain high until a true settlement is reached in the Middle East. Since that day is unpredictable (at best), we’ll handle the ups and downs by exercising the fundamental principle of diversifying assets. This, too, will pass, preferably sooner rather than later. Good times will return, and we’ll be ready for the inevitable rising tide in our markets.