Summary

• Another Month, Another Record
• Charitable Giving Under the New Tax Law
• Understanding College Merit Scholarships
• How (and Why) to Talk To Strangers

Another Month, Another Record

The stock market got fresh fuel during the last week of October in the form of positive earnings reports from large technology companies, which helped push stock indexes to a new all-time high.

Apple, Amazon, and Alphabet (Google) all posted revenues and profits that exceeded expectations and telegraphed solid outlooks for 2026. These three stocks combined make up 16% of the S&P 500 Index.

Thus far in 2025, the large company US stock index has closed at record levels on thirty six occasions – most recently on October 28.

The government shutdown, which persisted throughout the month and carried on into November, thus far seems to have had little impact on financial markets.

But the Federal Reserve’s decision to reduce interest rates has contributed to constructive market sentiment.

The Fed cut the Federal Funds Rate for the second time in 2025 on October 29, bringing the official target for short-term interest rates to a range of 3.75% - 4.0%.

Lower interest rates are generally viewed as supportive for stocks because when the Fed cuts rates, it often becomes less expensive for many companies to borrow money.

Cheaper loans can lead to increased investment in growth-related activities (like research, hiring, and expansion) which can boost company earnings in the future.

The Fed committee that determines interest rate policy meets again for the final time in 2025 next month.

Expectations are for another rate cut on December 10, which would bring the short-term interest rate target below 4% for the first time since 2022.

October was a positive month across the board for broad-based stock and bond market indexes, as the chart below shows.

Source: Moore Financial Advisors & Morningstar

And with ten months now behind us, 2025 is likely to be another strong year for financial market returns.

In fact, the last extended period of tough sledding for stocks happened more than three years ago. That bear market ended in October 2022, and stock returns have been stellar since then.

After three years of very strong returns, it’s natural to wonder: have stocks come too far, too fast? And, if so, is it time to sell risky stocks and move to the safety of cash before the tide turns and the next bear market arrives?

This type of inquiry centers around the idea of market timing: making buy or sell decisions based on predictions of future market movements.

If you can accurately predict what will happen tomorrow, making big moves with your money to “lock in gains” and “avoid losses” today is logical.

However, we’re unaware of anyone who can accurately and consistently predict what will happen in financial markets and to stock prices, especially over the near term.

Rather than trying to guess what will happen in financial markets tomorrow, or next week, or next month, taking a long-term approach to investing is a far better approach.

Building expectations for financial market returns, establishing asset allocation targets that support your financial plan, and ensuring that your portfolio reflects those targets are important elements of successful investing over the long term.

Attempting to “get ahead of the market” introduces the possibility of failing to capture future gains by not having enough stock market exposure, and falling short of the long-term returns required by your financial plan.

The well-regarded investor and author Peter Lynch has said: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections.”

These words of investment wisdom are worth paying attention to, particularly during extended periods of strong stock market returns.

Charitable Giving Under the New Tax Law

Charitable giving is a meaningful way to support causes you care about, and many charitably minded people decide to give for reasons above and beyond personal financial considerations.

However, it is worth knowing how donations can help reduce your tax bill.

With the One Big Beautiful Bill Act (OBBBA) signed in 2025, the rules for charitable deductions are changing significantly in 2026.

Understanding these changes, and planning ahead, can help you maximize both your generosity and your tax benefits.

The following article:

• discusses key changes in the tax law related to charitable giving
• lists some tax-smart strategies to keep in mind
• explains how Medicare costs can be impacted by Qualified Charitable Distributions (QCDs)
• provides “optimization scenarios” designed to show how charitable giving can reduce your tax liability

Key Changes in the Tax Law - Summary

Detailed Explanation of Key Tax Law Changes

Universal Deduction

Starting in 2026, taxpayers who do not itemize can still claim a deduction for charitable giving.

This universal deduction allows $1,000 for single filers and $2,000 for married couples filing jointly. It applies only to cash donations to qualified operating charities (not donor-advised funds or private foundations).

This deduction is not subject to the new 0.5% AGI floor for itemized deductions of charitable contributions.

This change broadens access to tax benefits for middle-income households who typically take the standard deduction.

Itemized Deduction

In 2025, itemizers can deduct all qualified charitable contributions without restriction.

In 2026, itemized deductions for charitable giving are allowed only for amounts that exceed 0.5% of Adjusted Gross Income (AGI).

This may discourage smaller donations from itemizers who do not exceed the income floor.

Income Floor

The 0.5% AGI floor introduced in 2026 means that only charitable contributions above this threshold are deductible for itemizers.

For example, a taxpayer with $200,000 AGI must donate more than $1,000 before any of the donation becomes deductible.

This rule is intended to limit deductions to more substantial charitable contributions.

Taxpayers may choose to make larger charitable contributions in 2025 to avoid the floor when it goes into effect in 2026.

High-Income Deduction Rate

In 2025, high-income donors in the top tax bracket (37%) receive the full benefit of their charitable deductions.

In 2026, the value of these deductions is capped at 35%, even if the donor is in a higher bracket.

This reduces the tax incentive for large donations from wealthy individuals and may affect overall giving levels.

Tax-Smart Strategies for Charitable Giving

Universal Deduction

Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (married) for cash donations to qualified operating charities.

Bunching Donations

Combine multiple years of giving into one tax year to exceed the standard deduction and itemize.

Example: Instead of $5,000 annually for three years and claiming the standard deduction each year, accelerate giving plans: donate $15,000 in year one; itemize in year one to reduce tax liability; claim standard deduction in years two and three.

Giving Appreciated Assets

Individuals and couples with large brokerage (non-retirement) accounts can donate stocks, bonds, mutual funds, and exchange-traded funds that have increased in value directly to charitable organizations.

This approach avoids capital gains tax and allows donors to deduct the full fair market value of the donated securities, up to 30% of their AGI if the asset was held longer than one year.

If the asset was held less than one year, the deduction is limited to the cost basis of the asset.

Qualified Charitable Distributions (QCDs)

Individuals who are age 70½ or older can make donations directly from their IRAs. This approach is called a Qualified Charitable Distribution.

For those age 73 and older, the QCD counts toward the annual Required Minimum Distribution (RMD).

Also, the QCD is excluded from taxable income, so there is no need to itemize when utilizing this giving approach.

This strategy also helps lower the balance of the IRA, which could reduce RMDs (and taxable income) in future years.

QCDs are limited to $100,000 per person annually, and QCDs are not subject to the 0.5% “income floor” for those who itemize.

Why IRMAA Matters When Planning QCDs

If you’re on Medicare—or approaching eligibility—giving through Qualified Charitable Distributions (QCDs) can do more than reduce your tax bill.

It can also help you manage Medicare (Income-Related Monthly Adjustment Amount (IRMAA) surcharges.

IRMAA is an extra premium added to Medicare Part B and Part D for higher-income beneficiaries. It’s based on Modified Adjusted Gross Income (MAGI) from your tax return two years prior.

Crossing into a higher IRMAA bracket can increase your monthly premiums by hundreds of dollars per person.

QCDs from your IRA can lower your MAGI, and lower Modified Adjusted Gross Income may keep you below an IRMAA threshold, reducing or avoiding surcharges.

Note that giving away appreciated assets from an Individual or Joint brokerage account won’t have the same effect on IRMAA as donating from your IRA, because itemized deductions from charitable contributions are subtracted after AGI (and MAGI) is calculated.

Example: How Charitable Giving Can Lower IRMAA Costs

The example below presents typical Medicare costs for an individual with current income of $174,000, and with reduced income of $154,000 after completing a QCD from their retirement account.

In this example, the individual saved $1,570 because the $20,000 QCD is excluded from taxable income, reducing federal tax liability.

Optimization Scenarios

Below we present four scenarios designed to show how charitable giving can reduce tax liabilities and possibly lower Medicare premiums at different levels of income for individuals and couples.

Couple, Ages 45, Income $200,000

A charitably minded couple typically takes the standard deduction.

Strategy: Use bunching—donate $30,000 every three years instead of $10,000 annually.

Benefit: In the bunching year, they itemize and deduct the full $30,000, saving roughly $7,400 in taxes.

Individual, Age 55, Income $400,000

A high-income donor faces the deduction cap in 2026.

Strategy: Accelerate large gifts in 2025 to get full 37% deduction and donate appreciated stock.

Benefit: A $50,000 gift in 2025 saves $18,500 in taxes vs. $17,500 in 2026 while avoiding capital gains tax.

Couple, Ages 65, Income $250,000

A couple near retirement with a large balance in a Joint brokerage account wants to increase their charitable giving.

Strategy: Combine bunching with appreciated asset donations.

Benefit: Donate $40,000 in one year using appreciated securities, deduct full value, and avoid capital gains tax—potentially saving $10,000+ in taxes.

Individual, Age 73, Income $300,000

A charitably inclined individual will face a higher tax bill because Required Minimum Distributions will increase their taxable income.

Strategy: Use Qualified Charitable Distributions to donate $20,000 directly from IRA.

Benefit: Satisfies RMD, excludes $20,000 from taxable income, reduces AGI and possibly lowers Medicare premiums.

Understanding College Merit Scholarships

In the following article, our colleague Donna Cournoyer provides a detailed explanation of merit scholarships and the financial opportunities they present for families of college-bound students.

As a college and financial planner, one of the most common questions I hear from families is, “What exactly is a merit scholarship — and how do we get one?”

Let’s clear up the confusion.

Merit scholarships are scholarships given by colleges to attract strong students, and are not necessarily based on financial need.

Unlike need-based aid, which depends on your family’s income and assets, merit scholarships award qualities such as academic achievement, leadership, artistic talent, or community involvement.

What Merit Scholarships Really Are

Think of merit scholarships as a college’s way of saying, “We want you on our campus.”

They’re funded directly by the school, and they can significantly reduce the “sticker price” of attendance. These scholarships might cover a few thousand dollars per year or — in some cases — a lot more.

What many families don’t realize is that merit awards are also a strategic enrollment tool.

Colleges use them to attract students who raise the school’s academic profile or fill certain institutional goals. That means strong grades, test scores, or special skills can translate directly into financial savings.

How Merit Scholarships Differ from Need-Based Aid

• Merit Scholarships: Based on student achievements and potential.
• Need-Based Aid: Based on family financial situation, as shown on the FAFSA and sometimes the CSS Profile.
• A student from a high-income family can still qualify for merit scholarships, even if they don’t qualify for need-based assistance.

Which Schools Do Not Offer Merit Scholarships

Many of the elite and highly selective colleges do not offer merit scholarships at all, focusing solely on need-based financial aid. Examples include:

• Harvard
• Princeton
• Amherst
• Brown
• Bates College
• Bowdoin College

These schools often state explicitly that all financial aid is need-based, and merit scholarships are not available.

Although many of these schools fill 100% of need based on the financial aid applications (FAFSA and CSS Profile).

Where to Find Merit Scholarships

If a school does not offer merit aid, it may not explicitly say so. However, language such as “all aid is need-based” is a sign that merit scholarships are not part of the financial aid package.

Careful investigation of a school’s website should reveal if merit scholarships are available.

Most merit scholarships come directly from colleges themselves, not from outside organizations.

Many private universities often have more generous merit programs than elite Ivy-type schools (which focus mostly on need-based aid).

Many public universities also offer strong merit packages to attract out-of-state students.

Families can use tools like the Net Price Calculator (NPC) on a college’s website to estimate whether a student might qualify for a merit scholarship based on GPA and test scores.

There simply is not a lot of transparency from schools about whether merit scholarships are offered, how much is offered, and how they are awarded.

Also, there is no single resource to help families find merit scholarships.

While comprehensive data that includes all U.S. colleges is hard to come by, based on available information we can say:

• A significant minority of colleges (especially elite private institutions) do not offer merit scholarships.
• Estimates suggest that roughly 15–20% of accredited colleges and universities do not offer any form of merit-based scholarships, though this varies by year and data source.

Using school-specific NPCs is a good starting point. Here are a few additional resources to help determine which colleges offer merit scholarships:

• BigFuture by the College Board- Offers a Scholarship search, including merit scholarships that you can search based on the criteria you select.
• The Princeton Review will tell you if a college offers “non-need-based scholarship or grant aid” is available if you click on “financial aid” for a specific school.
• Collegedata.com Search for a specific college from the “College Search” tab at the top of the page. When the school appears in results, click on the school name to see all information. You will see a lot of data on this page. If you click on the “Financials” tab in the school profile, you can scroll down to see the percentage of students who receive merit scholarships labeled “Merit-Based Gift”.

Planning Tips for Families

1. Build a smart college list. Include schools where your student’s academic profile places them in the top 25% of applicants — that’s where merit money is most likely.
2. Keep grades strong through senior year. Some awards are renewable only if a certain GPA is maintained.
3. Submit applications early. Some merit scholarships are automatic, while others require separate applications or early deadlines.
4. Ask directly. Admissions or financial aid offices can clarify whether merit awards are stackable with need-based aid or limited to tuition.
5. Complete the FAFSA. Especially in year one, as some colleges require it for the student to be considered for merit scholarships even though they are not based on financial need.

The Big Picture

Merit scholarships are not just “bonuses” — they’re part of a smart financial strategy for college.

For many families, it is possible to bring down the $70,000 cost of a private college closer to the $30,000 cost of a state school.

As a financial planner, I encourage families to think of merit aid as both an academic goal and a financial opportunity.

By understanding how colleges use merit awards — and positioning students strategically — families can turn achievement into affordability.

In short: merit scholarships reward effort, strategy, and fit. The earlier you start planning, the better your student’s chances of earning one — and the more manageable college costs can become.

How (and Why) to Talk to Strangers

In The Power of Strangers: The Benefits of Connecting in a Suspicious World, journalist Joe Keohane explores a simple idea: that talking to strangers can make us happier, healthier, and more connected.

Keohane conducted his research through a combination of immersive personal experience and extensive academic investigation.

As a journalist, he embarked on a self-described “quest to master talking to strangers,” which involved actively engaging with people in a wide variety of settings—from cross-country train rides to international seminars.

In addition to his fieldwork, Keohane drew on a body of interdisciplinary research.

He consulted studies from psychology, sociology, anthropology, biology, and even theology to understand the roots of our fear of strangers and the benefits of overcoming it.

He explored how social interaction affects mental health, happiness, and cognitive function, and he incorporated insights from leading experts in these fields to support his findings.

In the prologue, Keohane asks the questions: “Why don’t we talk to strangers? When will we? What happens when we do?”

And he answers: “we become better, smarter, and happier people, and strangers—and by extension, the world—become less scary to us.”

Keohane quotes the philosopher Kwame Anthony Appiah: “When a stranger is no longer imaginary, but real and present, sharing a human social life, you may like or dislike him, you may agree or disagree; but if it is what you both want, you can make sense of each other in the end.”

Ultimately The Power of Strangers is an uplifting reminder of our shared humanity.

In an era marked by division and digital echo chambers, Keohane’s message is clear: reaching out to those we don’t know isn’t just good for our society, it’s good for our souls.

Best regards,

Rob, Susan, Donna & Alex