Windsor Wealth Management LLC

Investment service in Topsfield, Massachusetts

Stock Market

2025 Tax Planning Resources & Key Financial Data Spreadsheet

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Happy New Year!

As we kick off a new year, it’s time to turn our attention to the upcoming tax season.

This post is intended as a year-long resource, so keep it handy.

2025-Tax-Planning-Resources

2025 Tax Planning Resources

Today, we discuss:

  • 2025 key financial data, including tax brackets, retirement plan distribution limits, Medicare premiums, standard deductions, child tax credit, and more. (Summarized in an organized spreadsheet.)
  • Changes in the IRS 2025 retirement contribution limits and a new “super” catch-up contribution for those aged 60-63.
  • Using QCDs earlier in the year.
  • The HSA’s triple tax benefits.
  • Why income taxes “may” increase in 2026.

2025 Key Financial Data (Useful Spreadsheet)

Keep this spreadsheet (links to our website) handy throughout the year. (Updated post President Trump signing the One Big Beautiful Bill Act (OBBBA) on July 4, 2025.)

Within it, you’ll find 2025 tax brackets, retirement plan distribution limits, Medicare premiums, standard deductions, child tax and education credits, tax rates for long-term capital gains and qualified dividends, tax on Social Security benefits, and much more.

If you’d like a quality hard copy, let us know. We’re happy to mail one to you or feel free to stop in.

IRS 2025 Contribution Limit Changes & New “Super” Catch-Up Contribution

We encourage maximizing your retirement savings contributions. If you’re unsure how, reach out. Let’s explore strategies to increase your savings.

401(k), 403(b), 457, TSP & SIMPLE IRAs Limits:

General Limit: $23,500 (401(k), etc.)

General Limit SIMPLE IRA: $17,600 (< 26 employees) or $16,500 (> 26 employees)

Age 50+ Catch-Up: $7,500 most plans; $3,500 (SIMPLE IRAs)

Ages 60-63 “Super” Catch-Up: $11,250 most plans; $5,250 (SIMPLE IRAs)

Traditional & Roth IRAs:

General Limit: $7,000

Age 50+ Catch-Up: $1,000

Key Change: The “super” catch-up contribution allows individuals aged 60-63 to increase their retirement savings by contributing more (generally $11,250) to their employer-sponsored retirement plans.

Use QCDs Earlier in the Year

With a Qualified Charitable Distribution (QCD), you can transfer up to $100,000 directly from your IRA to a charity tax-free. It’s often beneficial to take your QCDs before your Required Minimum Distributions (RMDs), since it can lower your taxable income.

Here’s how it works:

RMD: Let’s say your RMD is $20,000.

Donation: You donate $3,000 to charities directly from your IRA.

Deduction: This $3,000 is deducted from your $20,000 RMD.

Taxable Amount: You only pay taxes on the remaining $17,000.

There are other benefits to using QCDs earlier in the year, including avoiding potential delays that can sometimes occur during the busy year-end season.

Also, if you have a charity in mind, making your QCD early in the year provides the charity with the funds sooner, putting your donation to work faster.

Important Note: When using Fidelity for a QCD, you won’t receive a tax form. To claim the tax deduction, you’ll need to inform your tax advisor.

At Windsor Wealth Management, we regularly facilitate QCDs for our clients, and we’re happy to engage with your accountant.

HSA: Triple Tax Benefits

Health Savings Accounts (HSAs), offer several tax benefits to help you save money on health care costs.

Keep in mind, HSAs are only available to individuals enrolled in a high-deductible health plan, have no other health care coverage, and are not enrolled in Medicare or claimed as a dependent.

Here are the triple tax benefits:

#1—Tax-Deductible Contributions: The money you contribute to an HSA is tax-deductible, meaning it reduces your taxable income, which can lead to tax savings in the present.

#2—Tax-Free Growth: Any investment earnings your HSA accumulates grow tax-free, allowing your savings to potentially build up more quickly over time.

#3—Tax-Free Withdrawals: When you use your HSA funds to pay for qualified medical expenses, such as doctor’s visits, prescription drugs or hospital stays, the withdrawals are tax-free.

Also, HSAs have no “use it or lose it” rule. The funds can roll over indefinitely from year to year. (Whereas, unused funds in a Flexible Spending Account (FSA) are typically forfeited at the end of the plan year.)

For 2025, HSA contribution limits are:

Self-only: $4,300

Family: $8,550

Individuals aged 55 and older can make an additional $1,000 catch-up contribution.

Income Taxes May Increase in 2026

The Tax Cuts and Jobs Act (TCJA) is a tax law passed in 2017 that made significant changes to the US tax code.

Many of the individual tax cuts under the TCJA are set to expire at the end of 2025. If Congress doesn’t extend these provisions, income tax rates for many Americans could increase starting in 2026.

Under the TCJA, marginal tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.

If the TCJA expires on 12/31/25, then marginal tax rates will revert to their permanent pre-TCJA levels of 10%, 15%, 25%, 28%, 33%, 35% and 39.6%, according to a Congressional Research Service report.

Want to see how the potential expiration of the TCJA might affect your taxes?

Our software can illustrate the potential tax implications of different income levels.

Contact us if you’d like to see how your tax burden could change under various circumstances.

Quick Look: 2024 Market Performance

In short, 2024 was a great year for the stock market, with the S&P 500 finishing up 25.02% for the year, and 3% in the last quarter.

Communication services and big tech led the way, consistently outperforming the rest of the market, largely due to the rise of artificial intelligence. Compared to 2023, there was broader market participation in 2024, with sectors beyond communication services and big tech contributing more evenly to the market’s growth.

Looking ahead to 2025, company valuations are high, so we may not see as strong a year.

Fidelity does a nice job recapping 2024 in their article, 2024 Stock Market Report. It’s an easy read too.

–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.

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.

What’s the Santa Claus rally phenomenon? 5 Potential Factors

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Ho, Ho, Ho.

The year just isn’t complete without mentioning the Santa Claus rally.

Santa Claus Rally
Photo by Microsoft’s AI Image Creator

Santa Claus Rally

The Santa Claus rally is a stock market seasonal trend; specifically, stocks tend to rise during the last five trading days of December and the first two days of January.

The Santa Claus rally phenomenon is often attributed to several factors, including:

Increased Optimism: Investors are feeling festive.

Vacations: Many institutional investors are on vacation, (i.e., fewer large trades reduce market volatility).

Less Tax Activity: Tax-loss harvesting typically slows down in late December, compared to early December.

Window Dressing: Financial firms may make strategic buys in December to improve the appearance of their portfolios.

Year-End Bonuses: Many individual investors use their year-end bonuses to buy stocks, which can boost market activity and prices.

Will it be a jolly good December for stocks?

Only time will tell!

While we’re waiting, here’s a quick look at the last 26 years:

Santa Claus Rally
Source: Investor’s Business Daily

Related: For more stock market seasonal trends, check out our blog post, Stock Market Seasonality and the September Effect.

Happy Holidays

As the year winds down, I hope you find time to relax and recharge. Reach out anytime.

With gratitude,

–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.

Three 2025 Financial Projections and New Trend

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Before delving into our new year projections, Julie and I would like to wish you and your family a wonderful holiday season and a prosperous new year.

Photo by Clever Visuals/Unsplash

In today’s discussion, we:

– Provide a brief 2024 reflection.

– Offer three 2025 financial projections.

– Expose a new financial trend.

Related: Windsor Wealth Management’s 2024 projections. They all came true!

2024 Financial Reflection

The market has soared 29% this year, building on the 26% gain in 2023 and recovering from the 18% downturn in 2022.

Much of this growth has been driven by AI and the tech giants: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, aka the Mag 7.

Interestingly, the market’s surge has defied expectations, surprising most Wall Street analysts.

Bonds have also made a comeback this year, with the Bloomberg Aggregate Bond Index (Agg) up 3.02% year-to-date.

Still, our bond portfolios have really shined, gaining a solid 4.7% year-to-date.

Why are our bond portfolios outperforming the average?

Because we construct your bond portfolio with high-quality bonds, focusing on short-term (1-3 years) and intermediate-term (3-10 years) maturities. Overall, shorter terms are more stable.

Longer-term bonds can be a bit of a rollercoaster ride. They can go way up, but they can also go way down. Therefore, we stick with shorter-term bonds for a smoother ride.

Windsor Wealth Management’s

2025 Financial Projections

Given the time of year, it’s always fun to make new year projections.

Remember, though, our primary focus is on planning. Specifically, building resilient financial plans and investment portfolios that can adapt to changing market conditions, since the only constant is change.

Let’s dive into our three projections…

#1—Continued Economic Growth

We’re expecting another robust year for 2025.

Currently, the U.S. economy benefits from a strong labor market, rising corporate profits and easing inflation.

The International Monetary Fund (IMF) projects a 2.2% GDP growth rate for 2025. What’s more, the global investment firm Capital Group’s estimates are even higher at 2.5%-3%, according to the firm’s economists.

A key factor impacting future growth will be the new administration’s policies, including potential tariff increases, tax cuts and deregulation.

#2—Limited Interest Rate Cuts

As of early December, the Fed has cut interest rates twice: 0.50% in September and 0.25% in early November.

We expect the Fed to cut rates again in early 2025, but more likely by a smaller margin. Much of the timing and extent of cuts will depend on economic conditions.

The Fed is worried that further rate cuts could reignite inflation. Also, increased tariffs can exacerbate this risk by increasing the cost of goods.

As an aside, 30-year mortgage rates have fluctuated recently. They peaked at 7.29% a year ago, dipped to 5.95% a few months ago, and currently sit at about 6.81%.

#3—Minor Inflation Movement, But Continued Price Pressure

Inflation has improved, but prices are still rising, just at a slower pace.

Inflation was 3.24% a year ago, it’s now around 2.6%. That’s a decrease of approximately 19.1% year-over-year as of late November.

It’s unlikely, however, we’ll see significant price decreases in 2025, especially for food and housing.

The housing market, while slowing, remains strong. Many sellers are largely able to get the full asking price, especially where there’s low inventory. This can contribute to higher inflation, as rising home prices can drive up costs for things like moving, furniture and appliances.

Related: See our post discussing limited housing inventory and the “why” behind it.

In general, a strong economy typically leads to increased demand for goods and services, which can drive up prices. Also, when companies are profitable, they can pass on increased costs to consumers, potentially causing inflationary pressures.

What’s more, if inflationary pressures and/or supply chain issues occur in 2025, then you’ll likely see more shrinkflation.

For example, last year a regular box of cereal shrank 22.0%, from 10 oz. to 7.8, and 48% of American shoppers have abandoned a brand due to shrinkflation, according to Capital One shopping research.

Seriously, could the packaging get any smaller or emptier?!

We’d love to hear your thoughts about this.

Have you recently stopped purchasing from a brand that you used to favor, perhaps due to a decline in value or quality?

New Financial Trend

We’re seeing more diversification within portfolios.

Specifically, companies beyond the Mag 7 are increasingly driving growth, and we’re anticipating this trend will continue in 2025.

This broader market participation is a healthy sign for the economy.

For a deep dive, read T. Rowe Price’s article, Unlocking opportunities: Market broadening and a new chapter for emerging markets.

Wishing you a wonderful holiday season.

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.

Capitalizing on Market Peaks, Investing in High Markets

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As of 9/4/24, the S&P 500 has hit 33 new all-time highs this year, which may leave some wondering if it’s too late to invest.

While the market may seem overvalued, historical data tells a different story…

Consider this chart showing the S&P 500’s rising highs over time:

While the chart reflects periods of volatility and temporary downturns, the long-term trend is characterized by a series of higher highs.

Recent upward trends have been fueled by economic growth, technological advancements—especially in AI—rising corporate profits and strong consumer spending.

Remember, if we wait for the market to decline before investing, we’d be engaging in market timing, which we avoid since it’s nearly impossible to consistently predict short-term market movements.

Related: Understand the stock market’s seasonality, read last month’s client letter: Stock Market Seasonality and the September Effect.

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.

Stock Market Seasonality & the September Effect

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We’re anticipating a bumpy September, aka the September effect.

Certainly, the past doesn’t dictate the future. However, data collected since 1928 show the market often dips in September.

S&P 500 Monthly Returns from 1928 through 2023
(See the full set of charts here.)

The Truth About Stock Market Seasonality

In reality, slower stock market activity in late summer through September is likely due to financial professionals taking vacations.

Less people working means less trading. This can also cause bigger market swings, since there are less trades to neutralize stock fluctuations.

Apathy likely plays a role too.

Some people simply don’t work as hard in the summer.

Also, when vacations are over, many financial professionals start rebalancing portfolios.

This often includes selling underperforming stocks, which can create downward pressure on the markets.

Santa Claus Rally

The chart also highlights a common Q4 occurrence: the Santa Claus Rally, when the market tends to swing upward.

Remember, consumer spending makes up two-thirds of the economy. The markets tend to increase at year-end in anticipation of holiday spending. (Roughly 19% of annual retail sales happen in November and December.)

Also, another common December occurrence you don’t often hear about is: window dressing.

Essentially, financial firms buy well-known and well-performing stocks to make their financial statements look better. There are legal measures to curb these activities, but it still happens. Either way, the activity adds to the December upswing.

Embrace Volatility

We view volatility as an opportunity.

While it’s not always the case, periods of volatility can be a great time to purchase stocks at attractive prices.

Of course, volatility is just one factor to consider when choosing investments.

Other considerations include market performance year-to-date, the political environment, the situation in the Middle East, the economy overall, interest rate changes and more. (Remember, it’s our job to worry about all these factors for you, so you can focus on enjoying yourself.)

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.

Q2 Stock Market Results, Job Creation Cooling, Rate Cut Likely

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It’s hard to believe it’s already August.

Where does the time go?!

We hope you’re enjoying a healthy and relaxing summer.

Acadia National Park
Acadia National Park
Photo by Peregrine Photography

Today, we’re discussing:

– Last quarter’s stock market results.

– Factors driving market movements.

– Noticeable slowdown in new jobs.

– Reasons for the early August market correction.

– Potential September interest rate cut.

– Changes we’re making to your portfolio.

Q2 Stock Market Results

The market performed well last quarter.

From January through June, it saw an overall increase of about 15%, with Q2 contributing 4.25% of this growth.

The Magnificent 7 (Apple, Microsoft, Amazon, Nvidia (computer component manufacturer), Tesla, Alphabet (Google) and Meta (Facebook/Instagram/Threads) continue to drive the market’s growth.

However, in the past several days the tech giants are down roughly 20% compared to the overall market.

Why?

Because they’re overvalued.

The other 493 stocks in the S&P 500 are generally performing well. While they haven’t seen the 100%+ gains like the Magnificent 7, their steady performance is a positive sign, reinforcing the benefits of diversification.

Recent Development

A new trend we’re seeing is the sell-off of tech stocks.

Investors are rebalancing by taking profits from these stocks and shifting their investments to more stable, dividend-producing stocks.

Berkshire Hathaway Sold 50% of Its Apple Shares

Speaking of selling tech stocks, Warren Buffett, chairman and CEO of Berkshire Hathaway, supported the sale of roughly 50% of the firm’s Apple stake since the start of the year. Keep in mind, the firm still owns about 400 million shares of Apple stock!

What’s driving the tech selling?

A few things are likely: economic caution, profit taking and maneuvers spurred by the recent jobs report.

July 2024 Jobs Report

According to the Bureau of Labor Statistics (BLS), the U.S. economy added 114,000 jobs in July, a noticeable slowdown from June’s 206,000 jobs.

The unemployment rate also rose to 4.3% in July from 4.1% in June.

Unemployment Rates at a Glance (Last 20 Years)

Job Creation Is Cooling Unemployment Trends
Explore more unemployment factors here, including unemployment by age and education.

Another Interesting Fact From the BLS Jobs Report:

The number of people employed part time for economic reasons rose by 346,000 to 4.6 million in July.

These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

Suffice it to say, the labor market is cooling some. Also, much of the recent job creation is government and health care jobs.

Early August Stock Market Activity

August started with a market correction.

Interestingly, 94% of years have a decline of 5% or worse (see chart). Said differently, the U.S. stock market experiences a correction almost every year.

By definition, a market drop of 10% is considered a correction, while a drop of 20% signals a bear market, the latter occurring about every four years.

Even with the correction, we’re still up about 13% on the year.

Remember, the stock market dislikes uncertainty—the jobs report, upcoming elections, recession rumors and geopolitical turmoil (Iran-Israel tensions) often cause market movements in every direction.

Will the Fed Cut Interest Rates This September?

It’s likely they will, as well as in November and December. Given the recent jobs report and signs of economic slowing, there’s increasing pressure on the Fed to cut rates.

Keep in mind, the Fed’s focus is managing inflation and maintaining full employment. In general, they’re not supposed to care about the stock market.

Your Portfolio

We’re focused on balancing portfolios.

Recently, portfolios have become overweighted in tech stocks due to the sector’s rapid growth over the past few months.

It’s time to take some profits.

After extensive financial modeling, we’re also pulling out of the Vanguard Health Index (VHT). While it’s been one of our favorite investments, it’s now causing health care to be overweighted in portfolios as other funds have added more health care stocks to their mix.

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.

Maintaining Retirement Lifestyles: Compound Interest’s Role

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Compound interest is vital both during your working years and in retirement.

Many people concentrate on saving during their working years, however, it’s as important for your money to continue growing during retirement.

This growth helps ensure you maintain your lifestyle for the next 30+ years, including keeping up with inflation and taxes.

The below chart reflects the power of compound interest. Specifically, growth of $100K over 30 years using different interest rates.

In general, holding too many cash-equivalent investments or trying to time the market by moving all your money into cash can cause you to miss out on the compound interest your portfolio needs to outpace inflation.

Compound Interest Chart
This hypothetical example assumes an initial $100,000 contribution, with no additional deposits, and compound interest from 1% to 10%. It does not suggest nor recommend that an individual allocate 100% to equities. The ending values do not reflect taxes, fees, inflation or withdrawals. View the full 30-year compounding chart.

What happens if you try to time the market?

Studies show that missing the stock market’s 10 best days over a 30-year period can lower an investor’s average annual total return by 2.72%.

Missing the best 30 days lowers an investor’s return by 6.14%!

(Source: Bloomberg and Wells Fargo Investment Institute. Daily S&P 500® returns from 9/1/92–8/31/22.)

Realistic Approach That Supports Your Retirement Lifestyle

Instead of market timing, the 60/40 portfolio remains a reliable basis for asset allocation.

In fact, it’s achieved a compounded annual growth rate of 7.3% over the 200 years’ worth of analyzed data (from 1820 to September 30, 2023), according to Morgan Stanley research.

Certainly, the past doesn’t predict the future.

60/40 Example

In a recent client communication, we provided an approximate 60/40 portfolio example using a conservative 6% annual return to show how a couple with $2 million in retirement savings could grow their wealth to $2.6 million while adhering to the 4% annual withdrawal rule. See the realistic example here: 3 Steps To Help Your Money Outlive—You.

Stay the Course

Trying to time the market, i.e., moving all your money into cash, can be detrimental to your long-term investing success, including missing out on compound interest.

Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it. – Attributed to Albert Einstein

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.

Windsor Money Minute: Cash & Your Portfolio

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Image created using Microsoft’s Image Creator

How does a stash of cash waiting on the sidelines affect you?

Let’s find out…

Investors’ cash held on the sidelines is at an all-time high of $23.6 trillion. To put this in perspective, the stock market is valued at about $50 trillion.

This cash is in money market accounts, CDs and other short-term savings vehicles.

Investors stash cash out of caution. Plus, you can earn roughly 5% on cash today, compared to just 0.01% in 2010.

Why share this fact?

Because when sidelined cash comes back into the markets, something wonderful will likely happen.

Specifically, when cash flows back into the markets, stock prices typically rise, which benefits us since we’re invested in stocks and bonds.

Consequently, many of the stocks you own will likely increase in value. While we do keep some cash reserves, they’re only to ensure we meet your financial goals.

When will cash start pouring back into the markets?

No one knows for sure.

However, two key triggers are likely:

#1—Falling interest rates: When rates go down, investors will no longer be able to earn 5% on their cash and, therefore, they’ll be looking to reinvest in equities or similar.

#2—Increased confidence post-elections: Once we know who the next president is, we’ll likely get back to business-as-usual.

Keep in mind, the Fed is unlikely to cut rates because it knows that the impact of raising and lowering interest rates can benefit a political candidate, and it doesn’t want to appear biased politically. Therefore, the Fed may wait for the election to be settled before acting again.

Overall, we’re optimistic about our investments.

Cash flowing back into the markets will likely boost your portfolio’s performance.

Sincerely,

Dave

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.