Windsor Wealth Management LLC

Investment service in Topsfield, Massachusetts

Windsor Insights

Investing Perspectives Regarding the Middle East Conflict

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While we don’t comment on every geopolitical event, I’m connecting with you now given the scale of recent headlines.

I first want to recognize the deep human cost of these events; our thoughts are with the families and communities personally impacted.

During times of global unrest, I believe the best way I can support you is by providing the perspective needed to navigate these headlines and their relationship to your financial goals.

Therefore, here are a few key points to keep in mind:

Perspective Over Sensationalism

We know that geopolitical uncertainty causes market fluctuations, but your portfolio is specifically constructed to help absorb these shocks.

For perspective, the market is down only about 2% from its January high.

It’s important to remember that while media sensationalism drives clicks and views, it rarely reflects the reality of your portfolio.

Historical Market Resilience

Historically, geopolitical events don’t impact the markets long term.

In fact, the chart below illustrates how common unprecedented uncertainty truly is.

Whether it was the Cuban Missile Crisis in 1962, the Arab Oil Embargo in 1973, or the 9/11 attacks in 2001, each of these events felt like a permanent turning point for the world and the markets.

However, as the blue line demonstrates, the S&P 500 has a remarkable track record of moving through these shocks.

The Recovery Timeline: What History Tells Us

While every global crisis is unique, history shows a consistent pattern in how the S&P 500 processes shock.

According to LPL Financial research, dramatic world events tend to trigger market declines that are notable, but rarely catastrophic.

Since 1941, the average market reaction looks like this:

Initial Shock: The average one-day decline is 1%.

The Bottom: Markets typically find a floor within about 18 days.

The Recovery: Pre-event levels are usually restored in under 39 days.1

[RESOURCE]: See the “math” for yourself. In this LPL Financial research report, Iran Escalation: How Markets Have Reacted to Geopolitical Events, you’ll find a breakdown of 25+ major world events and the number of days it took for the market to recover from each.

Navigating Current Risks: Energy Costs

While history is on our side, we remain focused on a key economic risk: a prolonged conflict that keeps oil prices elevated.

Since energy impacts everything from manufacturing to shipping costs, these ripples can affect the broader economy.

However, there’s a small silver lining: the U.S. economy demonstrates far more resilience to energy shocks than in decades past. In the 1970s, energy costs accounted for nearly 10% of household disposable income. Today, it’s closer to 4%.

Also, the U.S. has transitioned from a dependent importer to a net exporter of energy, meaning our economy is no longer solely at the mercy of foreign supply.

Our Strategy: Discipline Over Reaction

Beyond daily portfolio oversight, we also leverage real-time briefings from Fidelity’s senior investment strategists. This collaboration helps us strengthen your strategy and prioritize your long-term goals over short-term market noise.

While geopolitical shocks often feel urgent, history shows that asset prices generally revert to their long-term trends. In fact, the S&P 500 has historically been higher one year after a major military shock 73% of the time, with a median gain of 9.7%.2

We recognize that “waiting it out” is incredibly challenging. It’s human nature to want to take action during volatility.

However, the most effective action is often disciplined patience. Rather than making premature adjustments, we believe the best path forward is to allow the strategy we’ve built to do its work.

Moving Forward

We’re watching the data closely so you don’t have to.

What’s more, our door is always open if you have questions or want to check in on your progress.

Please reach out—we’re here to help you stay focused and on track toward your goals.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: LPL.com, Iran Escalation: How Markets Have Reacted to Geopolitical Events, https://www.lpl.com/research/blog/iran-escalation-how-markets-have-reacted-to-geopolitical-events.html

2: HartfordFunds.com, Military Conflicts May Rattle Markets, But Not for Long, https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP114.pdf

The 3-Year “Buffer Strategy” for Portfolios

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When reviewing retirement projections, it’s easy to focus on average annual returns.

In reality, retirement outcomes are shaped less by averages and more by the timing of these returns—a concept known as sequence of returns risk.

EXAMPLE: How Identical Savings Lead to Different Futures

The chart below shows two couples, each starting retirement with $2.5 million and withdrawing $100,000 per year. Over 25 years, they earn the same average return.

The difference, however, is the order in which these returns occur:

Couple A: Experiences a market downturn in the first years of retirement.

Couple B: Experiences the same downturn much later.

A market downturn hits harder when you’ve just retired.

When withdrawals coincide with losses, you’re forced to sell more assets to generate the same income. This shrinks your portfolio and reduces its ability to recover because you have less capital working for you when the market rebounds.

Conversely, declines occurring later in retirement are often easier to absorb.

At this stage, your portfolio has already done the “heavy lifting,” plus it’s continued to grow, creating a financial buffer that helps your savings survive future market turbulence.

Finally, by the time a later downturn hits, your portfolio doesn’t need to support as many future years of income.

Same average returns. Very different outcomes.

RELATED: In case you missed it, we published a new post: How to Make the Decision to Retire. Market behavior is one of several key factors to consider.

Managing Sequence of Returns Risk

Windsor Wealth Management helps you address this risk by setting aside two to four years of income in a conservative investment account. This “buffer” remains stable while still providing modest growth.

It allows retirement spending to continue uninterrupted during market downturns, giving the rest of your portfolio time to recover.

For Example:

If your annual spending is $90,000, we may earmark $270,000 to cover the first three years of retirement.

This upfront reserve helps protect your lifestyle by reducing the need to sell investments when markets are volatile.

Key Action: It’s critical to plan for the “when” of your retirement to help ensure there’s enough time to set these funds aside. (Ready to retire? Reach out as soon as possible.)

Generally speaking, average returns don’t retire people.

Cash flow timing does.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

How to Make the Decision to Retire

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Many people assume retirement is a single decision:

“I’m done. I’m retiring.”

In reality, retirement works best as a process, not a one-time leap.

The desire to retire often starts with a feeling: burnout, a personal milestone (e.g., reaching a specific age, becoming a grandparent, paying off a mortgage) or a realization that time matters more than it used to, especially after losing someone close.

The real question isn’t: Can I afford to retire?

Instead, it’s: How do I want this next chapter to look, and what financial options do I have?

Thoughtful financial planning makes a meaningful difference at this juncture.

Retirement Is a Series of Choices

Some people retire all at once.

Others work a few more years, shift to part-time or gradually step back (e.g., reduce from five days to three or cut back responsibilities while keeping key projects).

Some claim Social Security early. Others delay.

Interestingly, some people can look at the same financial data and make completely different decisions, because confidence, lifestyle and comfort matter just as much as the math.

Overall, approaching retirement as a process allows you to test different paths before committing to one.

Why Timing Matters More Than Most People Realize

Retirement outcomes aren’t shaped by a single decision.

Instead, they’re shaped by when decisions are made and how they interact with one another.

A few examples we routinely see:

Markets: Retiring just before or during a market downturn can put added pressure on your portfolio early, when withdrawals begin and flexibility is lowest. If markets decline in these early years, selling investments at lower values can permanently reduce how long your portfolio lasts, even if markets recover later. This is why Windsor Wealth Management focuses on proactive income planning and portfolio guardrails designed to help reduce this risk.

Taxes: The order and timing of withdrawals (taxable, tax-deferred and tax-free accounts) can quietly increase or reduce lifetime tax exposure.

Healthcare and Medicare Costs: The years before Medicare, Medicare enrollment and ongoing healthcare expenses all affect retirement cash flow.

In some cases, income that seems reasonable on paper can trigger higher Medicare premiums if certain thresholds are crossed, aka Income-Related Monthly Adjustment Amount (IRMAA). We explain this “income cliff effect” in our post: Medicare: The $1 Mistake that Costs $3,500

Social Security Timing: While delaying benefits increases income (roughly 8% per year after full retirement age until age 70), the “right” decision depends on longevity risk, health considerations, caregiving needs, portfolio size and tax strategy.

Looking at these factors in isolation can be misleading.

Seeing them together across multiple scenarios helps clarify what’s realistic, what’s flexible and where risks truly lie. It turns uncertainty into clarity by highlighting which decisions matter most while changes are still possible.

The Emotional Side of Retirement Matters

Retirement isn’t just a financial transition; it’s a deeply personal one.

While you’ve likely focused on the “math” for years, many retirees are surprised by how much they miss the structure of a career. Some even feel a loss of identity.

That’s why it’s helpful to think not only about what you’re retiring from, but what you’re retiring to.

To help visualize this journey, watch Dr. Riley Moynes’ TED Talk.1 He explains four distinct psychological phases you’ll likely experience:

#1—The Vacation Phase: The initial excitement of total freedom.

#2—Feeling Lost: Realizing the “honeymoon” is over and missing your old routine.

#3—Experimentation: Trying new activities to find a new sense of purpose.

#4—Reinvention: Successfully creating a fulfilling new identity.

Ultimately, retirement is less about reaching a final destination and more about having the flexibility to evolve along the way. Part of this evolution involves overcoming one of retirement’s greatest challenges: the loss of social connection.

The Harvard Study of Adult Development (one of the longest-running studies on human happiness) highlights that our relationships are the strongest predictor of health and longevity.2

Income Confidence Is Not a Magic Savings Number

A common misconception is that retirement decisions hinge on reaching a single savings target.

In reality, confidence comes from understanding income; specifically, how much is coming in, where it’s coming from and how long it’s likely to last under different conditions. This is one of our core roles: helping you understand how much you can comfortably spend.

This answer is shaped by three key forces:

  • How long you live.
  • When you claim Social Security.
  • How retirement spending changes over time.

We’ve explored these dynamics in more detail here: 3 Critical Retirement Planning Dynamics

Spending With Purpose and Without Regret

Once income is clearly defined, the challenge for many retirees shifts from Can I afford to retire? to How do I spend confidently?

However, this shift isn’t just financial. Moving from a lifetime of saving to relying on your money for income can be a real psychological adjustment—even when the numbers say you’re ready.

That’s why a well-structured financial plan creates guardrails that help turn income into a reliable “retirement paycheck,” reducing the temptation to question every spending decision or react emotionally to market swings.

For Example:

Rather than wondering when or how much to withdraw, our retired clients typically receive predictable, recurring income deposited directly into their checking account each month.

This usually includes Social Security and other reliable income sources, combined with a coordinated monthly “paycheck” from their portfolio—designed around individual income needs and adjusted as conditions change.

If you’d like to see how confident retirement spending actually works in practice, read our post: 3 Steps To Help Your Money Outlive—You. It features a realistic example of a couple who began retirement with $2 million in savings and—after 30 years of steady spending—actually had $2.6 million remaining (more than what they started with).

Is Retirement on Your Mind?

If you’re starting to think about retirement or questioning whether now is the right time, we’re always happy to talk through your options.

In general, it’s helpful to start retirement conversations as early as 10 years out. Doing so creates more options.

For Example:

  • Adjusting how you save (e.g., shifting from a traditional 401(k) to a Roth 401(k)), allowing more control over when and how taxable income shows up in retirement.
  • Building cash reserves to support early retirement years, so you’re not forced to sell investments during a market downturn.
  • Modifying Social Security timing, by modeling multiple claiming scenarios to see how different choices affect income, taxes and long-term outcomes.
  • Planning for healthcare coverage before Medicare begins, while being mindful of potential IRMAA surcharges.

If your retirement is fast approaching, be sure to read: Planning Your Final Days of Work Before Retiring, which includes a short video with a practical tip on preparing for the transition.

In general, most retirement decisions don’t need to be rushed or permanent. However, a few carry lasting consequences if made too quickly.

Approaching retirement as an ongoing process gives you time to explore options, understand trade-offs and move forward with confidence, knowing your plan can adapt as life evolves.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:        

1: 4 Phases of Retirement…and the Psychological Challenges, https://www.ted.com/talks/dr_riley_moynes_the_4_phases_of_retirement

2: Good genes are nice, but joy is better. https://news.harvard.edu/gazette/story/2017/04/over-nearly-80-years-harvard-study-has-been-showing-how-to-live-a-healthy-and-happy-life/

Medicare: The $1 Mistake that Costs $3,500

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Most people assume Medicare premiums rise gradually as your income goes up.

However, this isn’t the case.

Instead of a smooth ramp, Medicare uses Income-Related Monthly Adjustment Amounts (IRMAA).

Think of IRMAA as a “cliff penalty.”

While standard income taxes are marginal, IRMAA is all-or-nothing. If you cross an income threshold by even one dollar, you “fall off the cliff”—triggering a significantly higher surcharge on your entire premium for the rest of the year.

(See our example below of how crossing a threshold by a single dollar costs a couple almost $3,500 in 2026.)

Chart Overview

The following chart highlights how 2026 Medicare premiums (based on 2024 income) behave in real life.

Your income can remain flat for years, and then suddenly trigger a meaningful jump in both Part B and Part D premiums.

How?

Keep in mind, households with $2–$10 million portfolios (or more) generally draw income from multiple sources: RMDs, realized capital gains, Roth conversions, interest and dividends, and liquidity events (e.g., business sales or real estate transactions).

Individually, each decision may make sense. Taken together, they can quietly push your income into a higher IRMAA tier.

At Windsor Wealth Management, Medicare premium thresholds are something we factor into planning conversations alongside taxes, income needs, required distributions and more.

The goal isn’t to avoid income.

Instead, it’s to control when and how income shows up, so healthcare costs don’t unnecessarily erode retirement cash flow.

CHART: Medicare 2026 Part B & D Premiums by Income

Things to know:

  • Premiums are per person.
  • The income used to determine your 2026 premium is your Modified Adjusted Gross Income (MAGI) from your 2024 tax return.
  • The Part B column is your total monthly premium. The Part D column is an extra surcharge paid to Medicare; you add this amount to whatever you already pay your private provider for drug coverage.
  • Medicare premiums “roll forward” each year and are based on income from two years prior (e.g., 2027 premiums are based on your 2025 MAGI, not when you first enrolled).

DEEP DIVE RESOURCE: Check out Fidelity’s Medicare Information Portal, which includes step-by-step resources to help you prepare for Medicare.2

One Dollar Can Cost You $3,500

Medicare premiums might seem like a small detail when managing a large portfolio, but the “cliffs” are steep.

If a married couple has a 2024 income of $274,000, they stay within their current bracket.

However, if they cross that threshold by just one dollar ($274,001), they trigger a higher tier for the entire year.

Here’s how that $1 “mistake” adds up for a couple in 2026:

  • Part B Jump: +$121.70/month per person
  • Part D Jump: +$23.00/month per person
  • Total Monthly Increase: $289.40 for the couple
  • Total Annual Cost: $3,472.80

This is nearly $3,500 in stealth taxes caused by a single dollar of extra income—money that could instead fund a family vacation or your grandkids’ 529 college savings plans.

If you’d like a better understanding of how Medicare fits into your overall retirement plan, reach out anytime.

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S.— We recently took a deep dive into this season’s tax preparation. Read the post: 2026 Tax Planning Resources & Key Financial Data

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: Medicare.gov, 2026 Medicare costs fact sheet, https://www.medicare.gov/publications/11579-medicare-costs.pdf

2: Fidelity.com, Fidelity Medicare Services®, https://medicare.fidelity.com/home

2026 Tax Planning Resources & Key Financial Data

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Happy New Year!

As a new tax season begins, we’ve pulled together updates and resources you may find helpful to reference throughout the year.

Today, we discuss:

  • The SALT deduction increase and why more families will likely itemize taxes this year.
  • The new senior “bonus” deduction for individuals aged 65 and up.
  • A catch-up curveball impacting high earners.
  • The new $1,000 charitable deduction, even if you don’t itemize.
  • Why early-year QCDs create a “double” impact.
  • Deductions impacted by filing status.
  • 2025 withholdings and strategically positioning yourself for 2026.
  • Why January is a great time to adjust retirement contributions.
  • Required Minimum Distributions (RMDs).
  • Key financial facts for the 2025 and 2026 tax years, including standard deductions, retirement contribution limits, Social Security taxation, Medicare premiums and more. (2 handy handouts)

Reassess Itemizing Under the Expanded SALT Deduction

As a result of the One Big Beautiful Bill Act (OBBBA), the state and local tax (SALT) deduction cap has quadrupled to $40,000. For many, this makes itemizing a viable option again, offering potentially greater savings than the standard deduction.

(Note: This higher cap begins to phase down for households with a modified adjusted gross income (MAGI) over $500,000, eventually returning to the $10,000 limit for those earning over $600,000.)

If you:

  • Pay High State & Local Taxes
  • Own Your Home
  • Make Regular Charitable Contributions
  • Pay Mortgage Interest

…then itemizing may be a savings option for you.

EXAMPLE: See a side-by-side comparison of the standard deduction versus the new $40,000 SALT cap for married couples filing jointly in our recent post: 2025 Tax Changes: One Big Beautiful Bill Act (OBBBA)

Leverage the New Senior “Bonus” Deduction

Given the new OBBBA laws, those aged 65 and older can claim a new $6,000 senior bonus deduction ($12,000 for married couples).

This temporary benefit starts in 2025 and expires after December 31, 2028.

The full deduction is available to single filers with a MAGI up to $75,000 and married couples up to $150,000. It gradually phases out after, and is completely eliminated at incomes of $175,000 (single) and $250,000 (married).

This H&R Block article discusses the deduction in detail: New $6,000 deduction for seniors.1

Navigate the SECURE 2.0 Catch-Up Curveball

There’s a new twist for building your retirement nest egg starting in 2026.

If you earned more than $150,000 last year, the IRS now requires your “catch-up” contributions to be made as Roth (after-tax) instead of pre-tax.

While you won’t get the upfront tax break, the payoff is that this money will be tax-free when you retire, including any growth.

Finally, don’t forget about the “Super Catch-Up.” If you’re aged 60, 61, 62 or 63, you’ve hit a special four-year window that allows you to contribute a much higher limit of $11,250 to your 401(k) for tax year 2025.

RESOURCE: For a deep dive, Schwab has a great guide titled: Catch-Up Contributions 2025 and 2026. It breaks down these numbers and the new Roth requirement in detail.2

Claim the New $1,000 Charitable Deduction (No Itemizing Required)

You can deduct up to $1,000 (single filers) or $2,000 (married couples filing jointly) for cash donations to qualified charities, even if you take the standard deduction, starting in tax year 2026.

For tax purposes, “cash” includes donations made by check, credit card or electronic transfer—not property (e.g., clothing, furniture) or securities.

Accelerate Impact with Earlier QCDs

Qualified Charitable Distributions (QCDs) are an efficient way to manage RMD-related taxes.

By donating directly from your IRA, you can reduce taxable income, satisfy RMD requirements and support causes you care about.

However, timing matters.

Because of how the IRS applies annual distribution ordering, any IRA withdrawals taken before a QCD count as taxable income and are applied toward your RMD first. That leaves less room for a tax-free QCD later in the year.

For Example:

If your total RMD for the year is $150,000 and you withdraw $150,000 for personal use in February, this entire amount is taxable. Even if you make a $25,000 donation to charity in October, you cannot “swap” the two; the February cash has already satisfied your RMD with taxable dollars.

Instead, by prioritizing QCDs earlier in the year, you help ensure these first dollars go directly to charity, rather than accidentally triggering taxable income through personal withdrawals.

This approach also helps avoid year-end processing delays and gets your charitable dollars working sooner.

Verify Your Filing Status

Life changes often drive tax outcomes.

Marriage, divorce, the loss of a spouse, or a dependent aging out could impact your:

  • Standard Deduction
  • Tax Brackets
  • Eligibility for Credits and Deductions

A solid understanding of your filing status is critical in order to optimize your tax situation.

Fine-Tune 2025 Withholdings for 2026

Your tax return doesn’t just close the books on 2025; it informs smarter decisions for 2026.

Reviewing withholdings now helps you:

  • Avoid Surprises Next April
  • Align Tax Payments with Actual Income
  • Adjust for Bonuses, Side Income and Retirement Distributions

Overall, reviewing your withholdings now is especially important if your 2025 income fluctuated more than expected.

Optimize Retirement Contributions Early

January is the ideal time to revisit retirement contributions.

Increasing them early spreads savings evenly across the year, reduces decision fatigue and helps keep your financial plan on track automatically.

At the same time, if your income came in higher than expected in 2025, confirm you didn’t exceed contribution limits. Remember, over-contributions can trigger avoidable penalties, but they’re much easier to fix when caught early.

Prepare for Required Minimum Distributions (RMDs)

If you take RMDs—or will for the first time—this deserves early attention.

Taking RMDs increases your taxable income, which can:

  • Push You into a Higher Tax Bracket
  • Increase Medicare Premiums
  • Trigger Social Security Benefits Taxation

Also, if this is your first RMD year, timing matters.

Delays can result in two RMDs landing in the same tax year, increasing taxable income.

Download 2025 & 2026 Key Financial Data (Handouts)

To make your life easier, we have two handy spreadsheets highlighting key numbers you’ll likely need throughout the year.

They include:

  • Standard Deductions by Filing Status
  • Retirement Plan Contribution Limits
  • Educational Credits and Deductions
  • Medicare-Related Thresholds
  • Health Savings Account (HSA) Limits*
  • Capital Gains and Dividend Tax Rates
  • Social Security Taxation Thresholds
  • Tax Deadlines

*When possible, max-out this contribution, given its triple tax benefit: tax-deductible contributions, tax-free growth, tax-free qualified withdrawals.

Here are the handouts:

2025 Key Financial Facts — What to Know This Tax Season

2026 Key Financial Facts — Planning Ahead

If you’d like hard copies, please let us know. We’re happy to mail them to you, or you’re welcome to stop in. We’d love to see you!

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: H&R Block, New $6,000 deduction for seniors, hrblock.com/tax-center/irs/tax-law-and-policy/one-big-beautiful-bill-senior-tax-deduction

2: Charles Schwab, Catch-Up Contributions 2025 and 2026, https://www.schwab.com/learn/story/what-to-know-about-catch-up-contributions

Bay Colony Advisors, DBA Windsor Wealth Management, is not a Certified Public Accountant and does not provide tax, legal, or accounting advice. Any tax-related information provided is for general informational purposes only and should not be construed as legal or tax advice. Each individual’s tax situation is unique, and you should consult with your own tax, financial, or legal advisors before making any decisions. We strongly recommend seeking the advice of a qualified CPA or other professional for personalized tax advice.

A Key Trend Worth Watching & Your Portfolio

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There’s been no shortage of noise lately about an “AI bubble.”

Yet, the data suggests we’re seeing a structural shift in how the economy operates—driven by steady, long-term investments rather than speculation.

As the chart below shows, technology and R&D spending as a share of the U.S. economy is now higher than it was during the dot-com era, currently led by massive investments in AI infrastructure.

However, unlike the 90s, today’s tech leaders are backed by robust earnings and significant cash reserves—capital that’s available for acquisitions, stock buybacks and weathering downturns without needing to raise outside funding.

Chart Source: Capital Group1

Who will win? A key trend to watch.

All this spending begs the question: how does this build-out translate into shareholder returns?

While current winners include the companies building data centers and power grids that supply the computing power AI requires, history suggests the biggest beneficiaries may not even exist yet.

Just as the internet reaching critical mass enabled companies like Facebook (Meta) and PayPal, today’s AI infrastructure build-out is setting the stage for a new generation of high-growth businesses.

So who will they be?

That’s the key question—and only time will tell.

In the meantime, we’re focused on data and research—tracking where investment, earnings and innovation are converging.

You can read more about this concept and the data behind it in Capital Group’s article, 4 charts on why the U.S. economy could stay resilient.2

Your Portfolio: Rebalancing Is Critical During Aggressive Growth

One of our core disciplines during periods of strong growth is frequent rebalancing.

Specifically, trimming positions and taking profits when portfolios drift out of alignment, rather than chasing what’s already run up.

As always, our focus remains the same: staying invested, staying balanced and keeping your long-term plan on track—regardless of the headlines.

Final Thought

It’s important to remember that roughly $7.5 trillion is sitting in money market funds and cash equivalents waiting to be invested.

This sidelined capital adds a significant layer of economic stability, especially during times of loud “AI bubble” noise.

If you’d like to talk through how this trend fits into your portfolio, reach out anytime.

Happy Holidays,

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S. — I recently spent some time analyzing the year ahead. If you’re curious about what’s coming next, you can find my breakdown here: Rate Cuts, Jobs and Growth: A Look at 2026.

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1 & 2: Capital Group, 4 charts on why the U.S. economy could stay resilient, https://www.capitalgroup.com/ria/insights/articles/4-charts-us-economy-resilient.html

Rate Cuts, Jobs, Growth: A Look at 2026

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As we wrap up 2025, we’re closing the books on a year that delivered strong markets and a few surprises along the way.

More importantly, the trends taking shape now will help guide the decisions we make together in 2026.

Today, we discuss:

  • How the markets performed in 2025.
  • Why the Fed is likely to cut rates again.
  • Where the job market is showing quiet signs of stress.
  • What GDP growth and corporate earnings suggest for 2026.

2025 Market Review: Better Than Average

It’s been another impressive year for the stock market.

Year-to-date, we’ve seen growth of about 16.5%, following a strong 24% gain in 2024.

For perspective, the market usually averages around 8% to 10% each year, so we’re well ahead of the curve.

The one major bump we faced was a steep (but short-lived) drop in April when new tariffs were announced. This created a lot of uncertainty. Companies that rely heavily on global suppliers, like Walmart, saw their stock dip instantly.

In anticipation of the tariffs first mentioned in February, Walmart’s stock had already begun its decline from a high of $105 per share. When the tariffs were officially announced in April, the stock dropped further from $89 to a low of $82 per share, but it bounced right back. It’s currently trading strong at $115 per share, driven by people looking for better deals and the company’s leadership in online shopping and delivery.1

The good news is that many companies have adapted to the new tariffs.

For example, Walmart has successfully shifted a great deal of its product sourcing from China to India and Southeast Asia, including Vietnam and Thailand.

Ultimately, the tariffs caused uncertainty, but the market bounced back strongly.

Let’s switch gears now, and talk about three financial projections and key themes for 2026…

#1—Continued Rate Cuts

The Fed has a tough job: they must balance keeping inflation near their 2% target (now about 2.8%) while also ensuring the job market stays strong.

This balance is currently fragile.

To counteract the current risks in the economy, the Fed will likely continue to cut interest rates both in December and in early 2026. These cuts aim to lower borrowing costs, give the job market a lift and restore consumer confidence.

As long as the job market doesn’t weaken too fast, these cuts should help maintain steady economic conditions throughout 2026.

Related: We took a closer look at the delicate balancing act of rate cuts in our recent post, Today’s Economy: What’s Actually Going On?

#2—Labor Market Fragility

A key risk to the economy right now is the pressure placed on jobs, with the primary labor market weakness being concentrated in job cuts at small businesses.

This development will likely continue in 2026.

Signs of this trend were apparent in the November 2025 ADP report, with Reuters reporting an unexpected decline in private payrolls. (ADP processes payroll for 1 in 6 workers in the U.S.)2

This data suggests that while big company layoffs make headlines, the real pressure is happening quietly: small businesses are cutting jobs and offering fewer openings.

Read the full Reuters article here: US private payrolls post largest drop in more than 2-1/2 years in November.3

This pressure can create a dangerous self-fulfilling prophecy, consisting of a three-part cycle:

  1. Small businesses cut jobs due to uncertainty.
  2. People who are worried about losing their jobs start spending less money.
  3. The consequent slowdown validates the initial fear, making the prophecy self-fulfilling.

Keep in mind, small businesses are the main source of new jobs.

According to the U.S. Small Business Administration Office of Advocacy, “The U.S. contains 36.2 million small businesses, which account for almost 46% of private sector employment [share of employees]. From March 2023 to March 2024, U.S. small businesses created approximately 9 out of every 10 net new jobs.”4

If this massive engine pulls back on hiring or starts laying off, the overall job market quickly loses its critical source of new growth.

Two Other Points to Consider:

  • The low 4.4% unemployment rate doesn’t yet reflect what’s happening on the ground. Small business layoffs usually take a few months to show up in data, and the recent government shutdown added an extra delay. We’ll see some clarity when the November jobs report is released in mid-December.
  • We’ve yet to see any broad, hard data (enough to say there’s a clear trend) reflecting the real labor efficiency gains that artificial intelligence (AI) is expected to create. Up until now, the evidence we do see is largely anecdotal.

#3—Moderate Economic Growth

Most analysts’ forecasts for 2026 show U.S. economic growth ranging from 1.8% to 3.2%.

Even at the low end, a growing economy generally makes things easier because there’s more “pie” to go around for everyone.

This projected growth is supported by strong corporate earnings and by the fact that the tariffs didn’t lead to the severe economic damage many feared back in April. Remember, market sentiment also drives growth.

Finally, the housing market could provide a significant lift to the economy.

If the Fed continues to cut rates in 2026, it should cause interest rates and mortgage rates to keep coming down—possibly falling into the 5% range (optimistic but plausible). This could encourage more people to buy homes.

When the housing market picks up, it creates a ripple effect across the entire economy: demand increases for repairs, furniture, appliances and other home improvement projects, which in turn boosts thousands of businesses.

Lastly, on the investment side, several major banks are forecasting a 10% to 12% return for the stock market next year. As always, these are just estimates, but they reflect a generally healthy outlook for corporate earnings and valuations as we head into 2026.

Sincerely,

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: Nasdaq.com, Walmart Inc. Common Stock (WMT), nasdaq.com/market-activity/stocks/wmt/historical

2: adp.com

3: Reuters, US private payrolls post largest drop in more than 2-1/2 years in November, reuters.com/business/us-private-payrolls-unexpectedly-decrease-november-adp-says-2025-12-03

4: U.S. Small Business Administration Office of Advocacy, New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 million, advocacy.sba.gov/2025/06/30/new-advocacy-report-shows-the-number-of-small-businesses-in-the-u-s-exceeds-36-million

Happy Thanksgiving + Power of Gratitude, Explained

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With Thanksgiving around the corner, we wanted to take a moment to say how genuinely grateful we are for you.

We truly look forward to working with you every day.

Image by Priscilla Du Preez, Unsplash

Thank you for your trust, your great questions, and the chance to be part of your financial journey.

It means the world to us.

We hope the long weekend brings you time to relax, enjoy good company (and maybe too much pie!).

Happy Thanksgiving to you and your family!

If you have downtime this holiday, you might enjoy this quick, inspiring read on what science says about the power of being thankful. Research shows cultivating an ‘attitude of gratitude’ is a great way to boost overall well-being. Read the article, An attitude of gratitude: What science says about being thankful.1

Warmly,

Dave and Julie

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1: Florida International University, An attitude of gratitude: What science says about being thankful, https://news.fiu.edu/2024/an-attitude-of-gratitude-what-science-says-about-being-thankful