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TRADITIONS WEALTH ADVISORS
  • Home
  • About
    • Our Team
    • What is a certified financial planner?
    • About our flexible fee system
    • What We Do
  • Services
    • Wealth Management & Financial Planning
    • Investment Planning
    • Spirit Fiduciary Partners
    • Retirement & Estate Planning for Texas A&M University employees
  • Current Clients
  • Internship Opportunities
  • Blog
  • Newsletters
  • Contact

U.S. Credit Rating Downgrade Marks a Historic Shift

5/28/2025

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Traditions Wealth Advisors
Jade Chapman/Brien L. Smith CFP©
Economic Analyst Intern/Chief Investment Officer
May 28, 2025
Howdy! My name is Jade Chapman, and I’m honored to serve as the Economic Analyst Intern at TWA for the 2025–2026 academic year, continuing the great work of Greysen Golgert. I’m a senior at Texas A&M, beginning an accelerated master’s program this fall. I join TWA at a dynamic time for the U.S. economy, and over the next year, I’ll provide analysis and commentary on key macroeconomic trends. As I begin this exciting chapter, I find myself analyzing a particularly consequential development in the macroeconomic landscape: the recent downgrade of the United States’ credit rating.
​
The United States’ credit rating has long served as a benchmark for fiscal strength and reliability. Ratings from the three major credit agencies—Standard & Poor’s (S&P), Fitch Ratings, and Moody’s Investors Service—assess the creditworthiness of sovereign nations, with AAA indicating the strongest capacity to meet financial obligations. Holding this top-tier rating has traditionally allowed countries to borrow at lower interest rates and demonstrated overall economic stability.

Historically, the U.S. maintained at least one AAA rating. That changed gradually: S&P downgraded the U.S. to AA+ in 2011, citing political disputes over the debt ceiling, and Fitch followed suit in 2023. In May 2025, Moody’s—the last of the major agencies to rate the U.S. at AAA—lowered its rating to Aa1, pointing to worsening fiscal trends and persistent political dysfunction. This marks the first time the U.S. lacks a AAA rating from any of the three major credit agencies.

Moody’s decision was rooted in several key concerns. Foremost is the growing national debt, which recently surpassed $36 trillion and is projected to push the debt-to-GDP ratio beyond 130% by 2035. Chronic budget deficits and rising interest payments, which may consume nearly a third of federal revenue within a decade, also factored heavily. These trends reduce fiscal flexibility and hinder the government's capacity to respond to future challenges. Additionally, Moody’s cited the intensifying political gridlock in Washington, where protracted disputes over budgeting and debt limits have cast doubt on lawmakers' ability to implement sustainable fiscal policy.

While largely symbolic, the recent U.S. credit rating downgrade reflects long-standing structural considerations rather than signaling immediate financial risk. U.S. Treasury securities continue to play a central role in global finance and are widely regarded as stable and liquid assets. The announcement was followed by a brief rise in 30-year Treasury yields to levels not seen since 2023. Although the Aa1 rating remains within investment-grade, some institutional investors with specific rating criteria may review their holdings. Broader market impacts, such as shifts in long-term interest rates or short-term volatility, may reflect evolving market perceptions rather than abrupt changes in economic fundamentals.

Despite the ratings shift, the U.S. financial system remains among the world’s most robust. Deep capital markets, a solid institutional framework, and the dollar’s international dominance continue to underpin investor confidence. Rather than a crisis, the downgrade should be viewed as a call for reform—an opportunity for policymakers to craft bipartisan solutions that address long-term fiscal imbalances and restore top-tier credit standing.
Sources:
 https://www.wsj.com/finance/global-markets-decline-after-u-s-credit-rating-downgrade-30af711c?mod=Searchresults_pos5&page=1
https://www.wsj.com/economy/central-banking/u-s-loses-last-triple-a-credit-rating-bfcbae5d?mod=Searchresults_pos2&page=1
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/notes-on-the-week-ahead/policy-and-the-investment-landscape-an-update/
https://www.yardeniquicktakes.com/economic-week-ahead-may-19-23/
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Is Social Security taxable?

5/23/2025

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Will you pay income tax on Social Security in retirement?
For now, the answer in many cases is yes.

This could change in the coming years as lawmakers debate changes to Social Security, including a proposal to eliminate the federal income tax on Social Security completely. While retirees might welcome this change, the idea faces political headwinds.
For now, about 2 out of every 5 Social Security recipients will pay federal income taxes on their benefits, usually because they have other income in addition to their benefits, according to the IRS.
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Some also will pay state income taxes, if they live in one of the few states that doesn’t exempt Social Security benefits.
Let's look at the formula for federal income tax and the states that still tax Social Security income.

Social Security and federal income tax. The IRS uses a “combined income formula” to determine if you must pay taxes on your benefits. Combined income includes typical forms of income such as wages, interest, dividends, pension payments, and taxable distributions from traditional 401(k)s and IRAs (less adjustments), as well as nontaxable interest and half of Social Security benefits.
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Whether you will have to pay federal income tax on your Social Security benefits depends on your combined income:
  • If you file as an individual:
    • Up to $25,000: No tax
    • $25,000–$34,000: Up to 50% of your benefits may be taxed.
    • More than $34,000: Up to 85% of your benefits may be taxed.
  • If you file a joint return:
    • Up to $32,000: No tax
    • $32,000–$44,000: Up to 50% of your benefits may be taxed.
    • More than $44,000: Up to 85% of your benefits may be taxed.
Tip: There are ways to save on taxes in retirement. Read Viewpoints on Fidelity.com: 2 ways to save on Social Security income tax.
​
Do states tax Social Security income? Most states do not tax Social Security income. But some portion of your benefits may be subject to state tax if you live in one of these 9 states: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, or West Virginia. The rules vary widely from state to state. Some states may allow you to exclude federally taxable Social Security benefits for state income tax purposes based on your adjusted gross income, or AGI, so keep this in mind when reviewing the information below.

Quick refresher: What is adjusted gross income? Your AGI is income for the year after you subtract amounts—or “adjustments”—that are not taxable. The IRS uses your AGI as a starting point for calculating how much income tax you owe for the year.
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Here's a closer look at how those states tax Social Security benefits for 2024:
Colorado
  • Under 65: Up to $20,000 of federally taxable Social Security benefits are not taxed by the state of Colorado. Beginning in 2025, individuals ages 55–64 will be able to deduct all federally taxable Social Security income if their AGI is $75,000 or less for an individual and $95,000 or less for a couple filing jointly. Above those thresholds, $20,000 of federally taxable Social Security income may be excluded.
  • 65 and older: No state taxation of federally taxable Social Security benefits.
Connecticut
Up to 25% of benefits may be taxed above these thresholds:
  • Single filers: Federally taxable Social Security benefits are not taxable in Connecticut if AGI is below $75,000.
  • Married filing jointly: No tax if AGI is below $100,000.
Minnesota
  • Single or head of household filers: Federally taxable Social Security benefits are exempt from Minnesota state income tax if AGI is $82,190 or below for 2024. Starting at $82,191 in income, federally taxable Social Security benefits receive a partial exclusion from Minnesota state income tax, and at $118,191 and above, all federally taxable benefits are subject to state tax.
  • Married filing jointly: Federally taxable benefits are exempt if AGI is at or below $105,380. Starting at $105,381 in income, federally taxable Social Security benefits receive a partial exclusion from Minnesota state income tax, and at $141,381 and above, all federally taxable benefits are subject to state tax.
Montana
  • Social Security benefits are taxed as they are at the federal level.
New Mexico
  • Single filers: No tax on federally taxable benefits if AGI is below $100,000.
  • Married filing jointly: No tax on federally taxable benefits if AGI is below $150,000.
Rhode Island
The following apply once residents reach their full retirement age (66 or 67, depending on year of birth):
  • Single filers: No tax on federally taxable Social Security benefits if income is below $104,200.
  • Married filing jointly or qualifying widow(er): No tax on federally taxable Social Security benefits if income is below $130,250. If only one spouse has reached retirement age and both are receiving Social Security benefits, only the percentage of taxable Social Security benefits attributable to the spouse who has reached full retirement age are exempt from taxation.
Utah
  • Single filers: Federally taxable Social Security benefits are taxed if modified adjusted gross income (What is MAGI?) exceeds $45,000. A state tax credit may reduce the amount of income tax paid.
  • Married filing jointly: Federally taxable Social Security benefits taxed if MAGI exceeds $75,000. A state tax credit may reduce the amount of income tax paid.
Vermont
  • Single filers: Federally taxable Social Security benefits are not taxable in Vermont if AGI is $50,000 or below. Federally taxable Social Security benefits are partially exempt from state income tax if AGI is above $50,000 and less than $60,000. If AGI is $60,000 and above, federally taxable benefits are fully taxable in Vermont.
  • Married filing jointly: Federally taxable Social Security benefits are not taxable in Vermont if AGI is below $65,000. Federally taxable Social Security benefits are partially exempt from state income tax if AGI is above $65,000 and less than $75,000. If AGI is $75,000 and above, federally taxable benefits are fully taxable in Vermont.
West Virginia
West Virginia is one of the latest states to phase out taxes on Social Security benefits. Single filers with AGI at or below $50,000 and married filers with AGI at or below $100,000 can exclude 100% of federally taxable Social Security benefits from West Virginia state income tax. If they have AGI above their respective thresholds, they can deduct the following percentages of federally taxable Social Security benefits until they are fully exempted for all income levels in 2026:
  • 2024: 35% exempt
  • 2025: 65% exempt
  • 2026: 100% exempt
State and federal income tax rules can be confusing, especially as they can change year to year. That’s just one of the things that can make managing taxes through retirement complicated. Working with a tax professional can help you better understand the potential tax impacts of any planning decisions. Please contact Laurie, [email protected] with questions.
Source: Fidelity Viewpoints. 28 March 2025. https://www.fidelity.com/learning-center/personal-finance/is-social-security-taxed?ccsource=email_weekly_0522_1037578_144_0_CV4
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Federal Reserve Meeting Debrief: May 2025

5/23/2025

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Traditions Wealth Advisors
Jade Chapman/Brien L. Smith CFP®
Economic Analyst Intern/Chief Investment Officer
May 23, 2025
U.S. Credit Rating Downgrade Marks a Historic Shift
  • 3 major credit agencies: S&P, Fitch, Moody’s
  • Credit rating scale: AAA (highest) to D (default)
  • AAA rating benefits
    • Low borrowing costs
    • Investor confidence
    • Indicator of economic stability
  • Recent history
    • S&P downgrade: 2011 (AAA to AA+)
    • Fitch downgrade: 2023 (AAA to AA+)
    • Moody’s downgrade: May 2025 (AAA to Aa1)
    • Significance: First time U.S. has no AAA rating from any agency
Reasons for the Moody’s downgrade:
  • Debt levels:
    • $36 trillion national debt
    • Debt-to-GDP projected >130% by 2035
  • Chronic Deficits:
    • Ongoing gap between spending and revenue
  • Interest payments:
    • Expected to consume nearly 1/3 of federal revenue by next decade
  • Political instability:
    • Gridlock, shutdowns, debt ceiling standoffs
    • Lack of bipartisan fiscal reform
Macroeconomic Implications:
  • Symbolic but meaningful
  • Impact on Treasuries
    • Still seen as safe, but perceived risk has risen
    • Higher yields demanded by investors (30-year yield >5%)
  • Potential outcomes:
    • Increased borrowing costs
    • Crowding out of private investment
    • Weakened business/consumer confidence
    • Policy complications
  • Institutional effects:
    • Some funds may be restricted from holding Aa1-rated securities
    • Possible portfolio rebalancing
What this means for clients:
  • More of a signal than a shock
  • U.S. Treasuries remain among the safest and most liquid assets
    • Short term effects:
      • Modest changes in interest rates (especially on long-duration fixed income instruments)
      • Treasury yields have already risen slightly
      • Equity markets may experience short-term volatility
Conclusion & Reassurance
  • U.S. strengths remain:
    • Deep capital markets
    • Strong institutions
    • Dollar’s reserve currency status
  • Opportunity for reform:
    • Downgrade = wake-up call, not crisis
    • Time for long-term bipartisan fiscal policy solutions
    • Goal: restore AAA status and ensure stability 
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April Economic Outlook

4/24/2025

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Traditions Wealth Advisors
Greysen Golgert/Brien L. Smith CFP®
Economic Analyst Intern/Chief Investment Officer
April 24, 2025
It’s no secret that economic outlooks have shifted in the previous month as policy change generates extreme uncertainty in the United States and abroad. Optimism and all-time stock market highs in February have now finally shifted to bearish sentiment and more reasonably-priced equities. Uncertainty has more to do with this rapid change than any sign of fundamental weakness in the economy. American exceptionalism may have taken a hit over the last month in financial markets, but economic indicators have something to say about that. Labor market data remains strong as initial jobless claims ticked down from 224,000 in February to 215,000 in March, below the 225,000 claims that economists expected. The current 4.2% unemployment rate is well below the long-term average unemployment rate in the United States (5.68%) and the range of rates in which an economy is considered to be at full or normal employment (4.5-5.5%). The most recent employment situation report from the Bureau of Labor Statistics did begin to witness the effects of federal job cuts, but strength in other sectors led to a robust 228,000 jobs added in March. On the flip-side, both core and headline inflation seem to be moving in a favorable direction. Headline inflation ticked down to 2.4% year over year, and core inflation, which excludes volatile food and energy prices, hit its lowest 12-month increase since March 2021, dropping to 2.8%. Jobs and inflation are only part of the picture, but they are indicative of an economy that continues to chug along despite the trade turmoil.

​President Trump has been open about his desire for the Federal Reserve to lower the interest rates. Economists, and especially those at the Federal Reserve, seem hesitant. The rate range has held steady at 4.25-4.5% through multiple FOMC meetings, underscoring the Fed’s commitment to its dual mandate of stable prices and maximum sustainable employment. Cutting the interest rate now would almost certainly guarantee higher inflation because of tariffs. If inflation gets out of control, then the Fed will be forced to raise interest rates back to an even more restrictive point than they are now. Investors know this and markets experienced a significant drop when Trump threatened to fire Fed Chair Jerome Powell. It is best for this economy if rates are held pat until significant weakness materializes in the labor market.

The price of gold futures briefly topped $3,500 per Troy ounce this week before pulling back slightly to $3,300 per Troy ounce as investors seek to hedge against equities risk or as a long-term safe haven. Gold is considered to be a good safety net during periods of extreme uncertainty. It has proven to be a solid investment since the 1990s, outperforming bonds consistently through the past three decades. The geopolitical implications of the trade policy blitz have been the primary driver of record-breaking demand for the commodity in recent weeks. Gold has also managed to challenge the performance of equities markets as well, outpacing the performance of the S&P 500 significantly when considering 3 and 10-year splits. It is now hovering around the highest price it has ever been, suggesting that investors should wait to buy it at a discount or consider it for portfolio diversification in the long-term or risk mitigation in the short-term.
Sources:
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/notes-on-the-week-ahead/recession-risks-resilience-and-american-exceptionalism/
https://www.reuters.com/markets/commodities/gold-maintains-record-rally-following-trumps-criticism-fed-chief-2025-04-22/
https://www.sofi.com/learn/content/dead-cat-bounce/

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7 Ways Women Can Build Wealth

4/17/2025

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Because I'm in the financial industry, my friends often come to me with questions about money, especially when something changes in their life-like when a girlfriend got a new job and had questions about her 401(k) or a baseball mom friend got an inheritance. Their financial situation had changed, and they weren't sure what to do.

My sister is a perfect example. She always let her husband handle the practical things, like decisions around money. When he died suddenly at the age of 49, she found herself facing a whole new financial reality. His life insurance left her with a million-dollar insurance payout, which put her in a new wealth category. But despite being financially secure, she was now in the driver's seat with no idea of what to do and no time to prepare. Fortunately, I could help. I put her through a financial planning process and helped her sell and buy a house, get invested, and understand the basics. While there was a learning curve, there were positive outcomes.

As women actively engage in their financial picture, there are benefits that extend beyond money. Overwhelming majorities of women investors say that managing their investments gives them a feeling of empowerment (91%) and that they enjoy investing (83%), according to the 2025 Charles Schwab Women Investors Survey.
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Seven ideas to help build wealth: 
1. Gain confidence through education 
It's easy to feel overwhelmed by your finances. The good news is, now more than ever before, there are tons of resources offering clear, simple financial information. Listen to podcasts from trusted providers like Schwab. Don't be afraid of the terminology. It doesn't have to be complicated and, the more you learn, the easier you'll find it is.

If you are in a relationship, both members of a couple should have complete knowledge of their individual and shared finances. Whether or not each of you is actively involved in financial decision-making, you should both know the big picture-things like net worth, cash flow, debt, insurance, investment accounts, retirement savings, and estate planning.

Not working outside of the home? Don't check out of your finances. If you leave the workforce temporarily or permanently, it's important to stay involved and be an active participant in your family finances. Consider scheduling money dates with your partner at least a couple times a year so you understand income, expenses, and where the accounts are located. Is your partner using a financial advisor? Attend the meetings too, and ask questions if there are things you don't understand. 

2. Invest in your career, and don't limit yourself 
Know your worth. Do some wage comparison research for your job, and don't be afraid to negotiate for fair compensation. Have a sense of the work you do and how your personal set of skills can apply to a variety of jobs. These are called "transferable skills," and knowing how to leverage them could open many new job possibilities. Also, building wealth isn't just about increasing your salary. It can also be about increasing your income streams beyond your day job. "Side hustles," like investing in real estate or starting side businesses, are becoming more popular with younger generations. Don't underestimate the value of what you can do or limit your wealth-building opportunities by thinking you can only go in one direction. 

3. Set a strong financial foundation 
Financial confidence starts with taking control of your money. So set a budget-and stick to it! Understand what's coming in and what's going out each month. Look at where you might be overspending, and make changes where you can. Create an emergency fund of at least three to six months of essential expenses so you're prepared for something unexpected like a job loss or illness. Make sure you have adequate insurance. Now you have a foundation to build on. 

4. Build your credit history 
Stay on top of debt. Sure, use credit cards, but don't charge more than you can pay off each month. Have a plan to pay down any high-interest debt you're carrying. Realize that your credit history can affect the interest rate you get on loans such as a mortgage. It can even be a factor in renting an apartment or getting a job. Your credit history follows you wherever you go. Make it a good one. 

5. Start saving (or increase savings) ASAP 
Setting goals and saving is part of establishing a strong financial foundation. Write down your goals: short, medium, and long term and for each, give yourself a timeline and amount you need to save. The more concrete your goals are, the more likely you are to achieve them. And make sure saving for retirement is on the top of your list. 85% percent of women say they wish they had started investing sooner, and 65% say they delayed saving and building wealth because they didn't have enough extra earnings to set aside, the Schwab survey found.

There's tremendous wealth-building power in the tax-deferred earnings offered by retirement accounts. Consider contributing enough to a 401(k) or other company plan to at least get the company match, more if possible. No company plan? Consider an IRA. One way to fund that could be to set up automatic payments from your checking account. If you start in your 20s, aim to save 10-15% of your salary. And if you keep saving at that level, you may not have to increase that percentage for the rest of your working years. It will automatically go up as your salary increases. Start later and you'll likely want to contribute more. For those 50 or older, catch-up contributions are a great way to max out your savings. 

6. Invest early and don't be emotional 
You don't need to have a lot of money to start investing, so don't be afraid to start small. For example, you could consider starting by investing $100 or $500 and go from there. Don't let your emotions get the best of you. When you're young, you have time to help ride out market ups and downs. 

The three biggest investing lessons women investors say they have learned, according to the 2025 Schwab Women Investors Survey, are: 
Staying invested through market volatility (58%), 
Acknowledging their risk tolerance (57%), and 
Diversifying their investments (54%)

7. Work with a professional 
An advisor could help you with an overall financial plan and help make sure your savings and investments are on track to meet your goals. Sometimes all it takes is a consultation or two, or you may want ongoing advice and check-ins to make sure you're on track. Either way, talking to a professional can give you greater confidence that the decisions you're making financially are helping you build the life you want. 

Create your own support system 
These are the steps I share with my friends to help them actively engage with their finances. Take them one at a time, and as you understand more, your confidence in your ability to make good financial decisions will grow. Need a little extra moral support? Reach out to your friends. About one in five women investors (19%) frequently discuss financial information with others and almost half (46%) say they discuss finances on an occasional basis, the 2025 Schwab Women Investors Survey found. 
​

Share stories, and learn from each other's experiences. To me, despite the financial challenges women can face, we have the ability to take financial control and build wealth for ourselves. We just have to decide to do it! ​
Source: Bidner, Jeannie. 16 April 2025. Charles Schwab.
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Retirement readiness score points to troubling gaps

4/17/2025

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Employees are reaching retirement age with little preparation of what's to come. According to fintech provider IRALOGIX Retirement Readiness Index, the national retirement readiness score is 45.8 out of 100. The index measured retirement preparedness across five key areas, including savings and investments, healthcare readiness, lifestyle and spending, emotional well-being and economic and policy confidence. 

Scores under 50 point to a "moderate risk" zone, according to their data, and should be a "wake up call" for those nearing retirement and the employers and policy makers that have influence on retirement benefits and programs, said Peter de Silva, CEO of IRALOGIX. "It's not just a number - it's a mirror held up to the financial anxieties, gaps in planning and uncertainty that millions of Americans face as they approach one of life's most important milestones: retirement," de Silva said in a press release. "Our data shows that too few are prepared for both the financial and personal impact of aging-related issues, and are struggling with saving enough, planning for healthcare, and trusting that essential benefits like Social Security will be there when they need them." 

To create a full retirement score, IRALOGIX assigned each key area a maximum number of 
points that it could potentially contribute to the total retirement readiness score. Savings and investments, for example, have the biggest influence on a person's retirement readiness, and IRALOGIX assigned this area a maximum of 35 points toward the total score. However, Americans scored just 15.1 points in this area, meaning the majority of savers are not saving enough for the long-term, and lack confidence to boost their savings. 

Another category was healthcare readiness, which was given a maximum of 15 points. Yet Americans across the board scored just 6.3 points in this area. Inadequate healthcare preparation is a widespread problem for employees approaching retirement, and one that will only become more dire, with cuts to Medicare expected in the coming years and healthcare costs on the ride. According to IRALOGIX data from 2024, 37% of retirees said healthcare costs were their biggest challenge. 

"Retirement readiness is not just a personal issue, it's a societal one," de Silva said. "When 
individuals are unprepared for retirement, the ripple effects are felt across families, workplaces, communities, and the broader economy." Yet there were some bright spots in their survey: Americans scored higher - though still below average in areas of economic and policy changes, as well as emotional well-being. IRALOGIX found that half of the respondents expect Social Security to remain intact, and there is wide-spread concern around the impact of inflation on retirement savings. 

"The good news is that retirement readiness isn't out of reach, but it does require action," Pete Littlejohn, president of IRALOGIX, said in the release. "Americans can start by getting informed, setting clear goals, and using the tools available to them, from workplace retirement plans to personal savings and trusted financial advice." 

As employees look for support and solutions from employers, it will require a multi-pronged approach to ensuring employees are financially prepared today and into the future. Offering retirement plans with autoenrollment options, as well as access to financial wellness programs with personal advisory services, are critical steps for employees to get on the right track as soon as possible. 

"Preparation is power," Littlejohn said. "Every step taken today helps build the confidence and security needed for tomorrow." 
Source: Place, Alyssa. 15 April 2025. Financial Planning Magazine.
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March Monthly

3/28/2025

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Traditions Wealth Advisors
Greysen Golgert/Brien L. Smith CFP©
Economic Analyst Intern/Chief Investment Officer
3/28/2025


President Trump has been insistent that reciprocal tariffs are on the way, but their reported scope and scale changes every week. Dramatic rhetoric and calls for extreme taxes on various imports have been swallowed hook, line, and sinker by investors. When the implications of a potential trade war with the EU became clear in early March, stock markets entered what Wall Street calls a “correction” (the S&P 500 had fallen over 10% by that point) by March 13th . That knee-jerk reaction to President Trump’s spat with the EU was likely overblown, but it makes sense that high-stakes geopolitical machinations are spooking investors. Stagflation—low growth with high inflation—is the top-of-mind concern for financial institutions at the moment. Stagflation might become a real threat if every tariff proposed by President Trump were to actually make it out of the Oval Office, but that has not been the case. The only tariffs Trump has effectuated are a 20% tariff on all Chinese goods, a 25% tariff on non-USMCA-compliant products from Canada and Mexico, and a 25% tax on all steel and aluminum imports. Those are not insignificant figures by any means, but they are certainly less severe than President Trump had initially promised and mostly represent a continuation of his approach to trade policy in his first term.

​April 2nd is purportedly the day when a new, comprehensive tariff plan will be revealed by the Trump Administration. Markets made up some of their losses from weeks prior when reports came out that this plan will cover a narrower scope than previously expected. They will focus primarily on the “dirty 15”—the 15% of nations with persistent trade imbalances with the U.S.—instead of on the entire breadth of U.S. trade relationships as the president had initially directed them to do. Despite the slight let off, industry leaders are still seeking clarity when it comes to sectoral tariffs such as those placed on steel and aluminum. These can have a more disruptive effect than country-specific tariffs because companies based in the U.S. that rely on cheaper foreign steel (or aluminum) for production will be forced to eat the additional 25% cost that importers now face. What April 2nd has in store for investors remains to be seen, but it is worth remembering that Trump can change executive orders in an instant. Members of that “dirty 15” may elect to remove their current tariffs on U.S. goods in order to appease President Trump and get themselves removed from the reciprocal tariffs list. The only
certainty regarding this tariff plan is that it will heavily whipsaw financial markets, either generating a rally or opening up the possibility for another “correction.”

These trade policy swings have created choppier waters going forward, but there is reason to trust in the resilience of this United States economy. Sentiment may be declining because of the geopolitical element, but hard economic data reveals a fundamentally strong economy. Unemployment is still extremely low at 4.1%, retail sales are up 4.2% as of the year ended January 2025, and inflation surprised to the downside in February
(2.8% year-over-year). These figures give the Federal Reserve plenty of room to maneuver with rate cuts if the contractionary effect of tariffs proves significant.

As always contact us at Traditions Wealth Advisors with any questions or concerns.

Sources:
https://www.wsj.com/politics/policy/trump-tariff-reciprocal-deadline-industrial-delay-97508838?mod
https://www.yardeniquicktakes.com/us-economy-is-still-resilient-but-tariffs-pose-risks/
https://www.stifel.com/Newsletters/AdGraphics/InSight/Sightlines/2025/SL031325.pdf
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How much do you need to save for retirement?

3/27/2025

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March Madness is not just about basketball, as you are finishing your taxes, why not re-evaluate your retirement plan. How much do you need to save for retirement? It's one of the most common questions people have. And no wonder. There are so many imponderables: When will you retire? How much will you spend in retirement? And for how long?

Our savings factors are based on the assumption that a person saves 15% of their income annually beginning at age 25 (which includes any employer match), invests more than 50% on average of their savings in stocks over their lifetime, retires at age 67, and plans to maintain their preretirement lifestyle in retirement. Based on those assumptions, we estimate that saving 10x (times) your preretirement income by age 67, together with other steps, should help ensure that you have enough income to maintain your current lifestyle in retirement. That 10x goal may seem ambitious. But you have many years to get there. To help you stay on track, we suggest these age-based milestones: Aim to save at least 1x your income by age 30, 3x by 40, 6x by 50, and 8x by 60. Your personal savings goal may be different based on various factors including 2 key ones described below. But these guidelines can provide a starting point to help your build your savings plan, and assess your progress.

1. When you plan to retire?
The age you plan to retire can have a big impact on the amount you need to save, and your milestones along the way. The longer you can postpone retirement, the lower your savings factor can be. That's because delaying gives your savings a longer time to grow, you'll have fewer years in retirement, and your Social Security benefit will be higher. Of course, you can't always choose when you retire—health and job availability may be out of your control. But one thing is clear: Working longer will make it easier to reach your savings goals.


2. How you want to live in retirement?
In other words, do you expect your expenses to go down when you retire? We call that a below average lifestyle. Or will you spend as much as you do now? That's average. If you expect your expenses will be more than they are now, that's above average. 

Our simple widget lets you see the impact of these 2 variables—when you plan to retire and what kind of lifestyle you want to live in retirement—on how much you need to have saved when you do retire, and on all the intermediate milestones. What if you're behind? If you're under age 40, the simple answer is to save more and invest for growth through a diversified investment mix. Of course, stocks come with more ups and downs than bonds or cash, so you need to be comfortable with those risks. If you're over 40, the answer may be a combination of increased savings, reduced spending, and working longer, if possible.

No matter what your age, focus on the goals ahead. Don't be discouraged if you aren't at your nearest milestone—there are ways to catch up to future milestones through planning and saving. The key is to take action, and the earlier the better!

Source: 
https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire?ccsource=email_weekly_0220_1037578_132_0_CV1

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Back-and-Forth February Financial Markets

2/27/2025

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Traditions Wealth Advisors
Greysen Golgert/Brien L. Smith CFP®
Economic Analyst Intern/Chief Investment Officer
February 27, 2025
It has been a back-and-forth February for financial markets. First, it is important to note that equities volatility has historically been higher in the year following an election in which the incumbent party loses. A change in administration naturally creates uncertainty for investors and can muddy up the macroeconomic models that economists use to anticipate growth or inflation metrics. That said, the headwinds financial markets have faced this month are not solely related to uncertainty within the domestic political sphere. Sticky inflation, major geopolitical changes, and technological innovations have all been complicit in providing minor shocks to stocks this February. Corporate earnings continue to buoy the equities markets, as 74% of companies managed to exceed their earnings estimates last quarter. The corporate earnings tailwind has persisted through January and February, but most firms have lowered earnings expectations for future periods because of uncertainty.
​
The Trump Administration has hit the ground running. If anything, February has shown us that we should not expect business as usual from the executive branch or from President Trump. Tariffs, or the threat of tariffs, have been sending shockwaves around the world. As a tool for achieving foreign policy goals, President Trump is perfectly comfortable wielding the threat of tariffs against friend and foe alike. This spooks financial markets because trade wars stifle domestic growth and increase prices for the consumer. Thankfully—barring tariffs on Chinese goods that have already gone into effect—each tariff threat appears to be negotiable with the Trump Administration. Domestically, the Trump budget bill squeaked through the House of Representatives, and a government shutdown is unlikely at this point. As stated earlier, this administration is moving fast. The Department of Government Efficiency, or DOGE, has torn through red tape and flipped bureaucracy on its head in an attempt to reduce “government waste,” making news headlines every day. Regardless of opinions on DOGE or Elon Musk, the federal debt problem requires a solution, and spending less is a good place to start. Unfortunately, reducing labor costs is unlikely to put much of a dent in the ever-increasing federal deficit. A combination of severe spending cuts and increased government revenues is needed to begin making significant progress.

Fed officials are beginning to change their tune as it becomes clearer that they cut the Federal Funds Rate too hard and too fast. The last Consumer Price Index report surprised significantly to the upside, showing that prices increased by 0.5% in January and by 3% over the last 12 months. The Fed is likely to hold firm at the current 4.25-4.5% borrowing rate until the end of the year (barring significant shocks). The anticipated weakness in the labor market has not materialized and the unemployment rate is holding firm at 4%. Corporate and government layoffs might be making the headlines, but February’s Consumer Confidence Index survey (CCI) confirms the present strength of the current labor market. 83.7% of respondents said jobs are either mostly available right now (50.3%) or plentiful right now (33.4%), with the remaining 16.3% saying that jobs are hard to get right now. People are less optimistic about the state of the jobs market in 6 months, with 25.9% saying they believe there will be less jobs by then. Providing inflation refuses to make progress towards the 2% target rate, a persistently strong labor market could give the Fed the confidence it needs to reverse course and begin hiking rates again. Monetary policy is a key driver of the economy, and the cost of borrowing affects financial markets more than anything else does. If the Fed’s preferred inflation metric, the PCE index, confirms the inflation surprise, the interest rate will be going nowhere fast.
Sources:
Dolls-Deliberations-Weekly-Investment-Commentary_022425_FINAL.pdf
https://www.yardeniquicktakes.com/in-10-charts-consumer-confidence-jobs/
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/notes-on-the-week-ahead/the-growth-drag-from-policy-uncertainty/
https://www.troweprice.com/financial-intermediary/us/en/insights/articles/2024/q2/how-do-us-elections-affect-stock-market-performance.html
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January – Looking Ahead

1/26/2025

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​As each new January arrives, there is always a level of uncertainty that comes with it as we consider the passing of another year. At Traditions Wealth Advisors, we alleviate that uncertainty as best we can by keeping you informed and up-to-date on the macroeconomic forces at work in this world and the effect they may have on your investments.

With a little bit of assistance from 2024, 2025 started off on a relatively good note for the United States economy. The inflation and employment reports for December were both viewed positively by investors, as our robust domestic situation continues to support the new heights that financial markets seem to be reaching every day. Yes, headline inflation surprised to the upside, rising 0.4% on the month and bringing the twelve-month inflation reading to 2.9%, but this was carried primarily by a rise in volatile food and energy prices. When that volatility is removed from the equation, prices only rose 0.2%, lowering the year over year rise in Core CPI to 3.2%. As it stands, headline and core inflation are trending towards a 3% year over year increase. The unemployment rate held steady at 4.1% and total nonfarm payroll employment increased by 256,000. Something worth consideration is that a large chunk of backend 2024 employment gains were made in the healthcare and government sectors specifically. Do not be surprised if employment in those sectors begins to level off in 2025 as the new administration implements return to office mandates and attempts to improve government efficiency.

The upcoming Fed rate decision on January 29th should provide clarity on how far their current “policy adjustment” will extend. In the most recent speech from a member of the Federal Reserve Board of Governors, Michelle Bowman expressed “concern that the current stance of policy may not be as restrictive as others may see it.” She remarked that the current borrowing costs and interest rates do not appear to be providing a meaningful restraint to economic growth and advised caution moving forward. Also, inflation is not making significant progress towards the Feds espoused year over year target inflation rate of 2%. So what does this mean for 2025? Investors seem to think the Fed will assume a much more measured approach to this cutting cycle. Markets are pricing in only two more rate cuts for the entire year, with the first one predicted to occur in June. These cuts may not end up happening at all, which is probably for the best if the stock market and US GDP continue their robust growth.

 As far as the global outlook is concerned, much ado is being made of the “Trump Tariffs” and how they could disrupt international trade. At the moment, Trump has threatened to impose 25% tariffs on Canadian and Mexican goods beginning February 1st. He has also said he will slap a 10% tariff on Chinese goods that day too. These tariffs would be in response to what he has said are the failures of each nation to prevent fentanyl and migrants from illegally entering the United States. However, he had also promised to impose tariffs on those nations and many others the day he returned to the Oval Office. That did not happen. The threat of tariffs may materialize into actual tariffs, and February 1st could be the day they do, but financial markets are pricing in a low probability of this occurring. If he does decide to impose those tariffs, we would likely be in for a day or two of extreme stock market volatility that would ultimately settle down in the following weeks as corporations and small to medium-sized businesses adjust to the new reality. As for Mexico and Canada, 25% tariffs on all of their exports to the United States could be enough to send both countries into a recession immediately.
           
At the end of the day, 2025 should be approached with cautious optimism. Caution because of a changing political situation and the looming debt threat. Optimism because the underlying strength of this exceptional United States economy continues to defy all expectations of what it can achieve propelling growth and equities to places they have never been before. Through it all, Traditions will be keeping an eye on everything to make sure you are as informed as possible for decision-making purposes.
​Traditions Wealth Advisors
Greysen Golgert/Brien L. Smith CFP®
Economic Analyst Intern/Chief Investment Officer
January 26, 2025
Sources:
https://www.wsj.com/economy/central-banking/week-ahead-for-fx-bonds-fed-ecb-decisions-in-focus-c42d243b?mod=economy_lead_story
https://www.troweprice.com/financial-intermediary/us/en/insights/articles/global-markets-weekly-update.html?
https://www.mauldineconomics.com/frontlinethoughts/a-possible-storm
https://www.federalreserve.gov/newsevents/speech/bowman20250109a.htm

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