Summary

• Somnolent Summer - So Far
• Social Security Outlook
• College Planning: No Time Like Now
• Social Security - Further Reading

Somnolent Summer - So Far

During the summer of 2025, financial markets have been somnolent – so far.

In a typical month which has 21 trading days, the S&P 500 index of large company stocks registers a daily rise or fall that exceeds 1% on average four times (trading days).

This means that about 80% of the time, stock market movements are unremarkable.

Since the summer solstice through the end of July, there were only two days when stocks moved more than 1% - and both were in a positive direction.

In this period of calm, stocks have been trending up, and the S&P 500 reached a new all-time high on July 28.

Recently, stock prices have been supported by company earnings reports for the 2^nd quarter of 2025, which have validated that corporate revenues and profitability are generally strong, and in many cases have exceeded Wall Street’s earnings estimates.

Somnolence “took a break” on August 1^st, however, when the Bureau of Labor Statistics (BLS) released its monthly employment report showing significant weakness in the labor market – and stocks proceeded to drop by 1.5%.

Specifically, downward revisions to May and June showed that 253,000 fewer jobs were created in these two months than previously reported.

In July, a net 73,000 new jobs were added – well below a level of 100,000 or more new jobs added per month that is commonly viewed as a sign of a healthy, growing economy.

The BLS employment report followed an announcement on July 30 which showed that the overall rate of growth of the US economy had slowed during the first half of 2025.

The Commerce Department said the value of all goods and services produced across the economy, or gross domestic product (GDP) grew at an average annual rate of 1.2% in the first six months of this year, a step down from the 2.5% average pace in 2024.

The weaker labor market, and slower pace of economic activity, may be enough to convince the Federal Reserve to change its policy and reduce its target for short-term interest rates – commonly referred to as a “rate cutting cycle” – as we approach autumn and head into winter.

So, recent data releases and stock price movements seem to indicate that both the US economy and the financial markets are at an inflection point.

If the current economic expansion holds up, and if the Federal Reserve begins to reduce interest rates soon, the stock bull market could continue to charge forward.

But if consumer spending sours, if businesses retrench, and if the economy goes from expansion to contraction, it could mean tougher times for stocks – even if the Federal Reserve cuts interest rates.

JP Morgan Asset Management researchers looked at the relationship between Federal Reserve interest rate policy changes and stock market performance against the backdrop of economic expansions and recessions going back 40 years.

The research shows:

• Stocks have done well when Fed rate cutting cycles have coincided with slower (but still positive) economic growth – large company US stocks climbed on average by 18% in the year following the first Fed interest rate cut of a new cycle
• When rate cuts coincide with recessions, stocks have suffered – losing an average of 5% in the year following the first interest rate cut of a new cycle

The key takeaway: consumer and business activity, along with the direction of Fed interest rate policy, will strongly influence the path along which financial markets will travel in the months ahead.

For the month of July, US stocks delivered satisfactory returns. Technology stocks did particularly well, gaining 4.6% for the month.

Tech stock strength helped to boost US large company stock returns, which gained 2.3% for the month. Small company US stocks rose by 1.7%.

The US bond index return was slightly negative last month as longer-term bond yields edged up.

And some of the steam was taken out of foreign company stocks, which declined by 2.1% in dollar terms, due primarily to a stronger US dollar.

The US dollar snapped its 5-month losing streak versus major developed economy currencies and rose by an average of 3% in July.

The chart below shows financial market performance for the month of July and Year-to-Date (YTD).

Source: Moore Financial Advisors & Morningstar

The Outlook for Social Security

In this article, MFA founder Susan Moore demystifies the headlines and hype around Social Security, and answers questions that are on the minds of many people who are approaching, or already in, retirement

With Social Security often in the headlines, many of you have asked: Will it still be there when I retire? Will my benefits be cut?

These are valid concerns—and we’d like to share where things currently stand, what’s being discussed in Washington, and how it could impact your planning.

When Will the Social Security Trust Fund Run Out?

According to the 2025 Trustees Report, the Social Security Trust Fund is projected to be depleted by 2033. At that point, the program would rely solely on ongoing payroll taxes to pay benefits, which are expected to cover about 77% of scheduled payments.

If no changes are made, benefits would be automatically reduced by roughly 23% starting in 2033.

What Would Benefit Reduction Mean?

If reductions occur across the board, here’s what the estimated impact could look like by income tier:

Source: Moore Financial Advisors

These are generalized examples—actual amounts depend on earnings history and claiming age.

Will Cuts Affect Current Retirees?

This is one of the most frequent questions we’re asked. So far, Congress has never reduced benefits for current retirees

Most proposals focus on future beneficiaries or apply gradual changes, such as adjusting the retirement age or benefit formulas for younger workers.

However, if lawmakers do nothing, all beneficiaries—current and future—would face automatic cuts in 2033 due to the trust fund running dry.

What Is Being Proposed to Fix This?

There are several ideas on the table, but no consensus yet. Here are a few commonly discussed options:

1. Raising the Full Retirement Age (FRA) Budget proposals supported by the Republican Study Committee and Project 2025 have called for increasing FRA from 67 to 69; some versions of these proposals would roll out before 2033. This effectively cuts benefits for many, especially low- and middle-income workers, even if reductions aren’t framed as “cuts.”
2. Lifting the Payroll Tax Cap Currently, wages above $176,100 (2025) are not taxed for Social Security. One proposal would apply payroll taxes on income up to $250,000.
3. Targeted Cuts for Higher Earners Some reform plans propose benefit reductions for higher earners while preserving or increasing them for lower earners. These reductions would go into effect around 2029 for new beneficiaries with higher incomes, phasing reductions up to 50% for individuals earning over $180,000 in modified adjusted gross income (MAGI) or joint earners over $360,000.
4. Increasing Payroll Taxes Slightly Raising the 6.2% payroll tax to 6.4% or higher to bring in more revenue.
5. Means Testing Some proposals suggest reducing benefits or slowing the cost of living adjustment (COLA) for retirees with high net worth or income from other sources.
6. Backdoor Privatization Plans Recently Treasury Secretary Scott Bessent said that "Trump baby accounts" or child savings accounts are a back door for privatizing Social Security, although he later back-peddled on that statement. This raised concerns about eventually shifting FICA payroll tax funding into private investment vehicles—undermining Social Security’s defined-benefit structure and reducing program coverage over time—even if not explicitly cutting current benefits.
7. Alternative Funding Models Republican Senator Bill Cassidy and Democratic Senator Tim Kaine have proposed an alternative funding model for the safety net program, which would supplement the program's Trust Fund with a new diversified pool of investments. Their proposal would create a new, parallel investment fund for Social Security. They estimate that the fund would require an up-front federal investment of $1.5 trillion, and propose that it be given 75 years to grow. The Treasury would shoulder the burden of supporting current benefit levels through borrowing during those 75 years. At the end of 75 years, the fund would pay the Treasury back and supplement payroll taxes to help fill the future gap.

Important: No plan has been signed into law yet—but there is broad bipartisan agreement that something must be done before 2033.

If I’m Eligible, Should I Start Benefits Now?

If you’ve reached Full Retirement Age (FRA, currently 67) and are waiting until age 70 to claim your maximum benefit, you may be wondering if you should claim now to avoid possible benefit reductions in the future.

Here's our advice:

• There’s no clear reason to change course—yet.
• For now, the rules remain unchanged. By waiting until age 70, you still earn delayed retirement credits, increasing your benefit by up to 8% per year between FRA and 70.
• Current beneficiaries are the least likely to face reductions.
• Starting benefits now doesn’t necessarily “lock in” protection against cuts—but neither does waiting expose you to significantly more risk. Historically, any benefit reductions or reforms have applied to future retirees, not those already collecting. Some proposals (see below) include making changes before 2033, but none to date include cuts for current beneficiaries before 2029.
• Cuts (if they happen) would likely be phased in or income-based.
• Congress has options. For example, they could preserve full benefits for those already collecting, or protect lower earners while modifying formulas for higher-income individuals.
• We recommend continuing to base your claiming decision on longevity, tax, and income needs, not on speculation. If your plan supports delaying until 70, it likely still makes sense to do so—unless there’s a sudden policy change (which we will monitor closely).

What Does This Mean for Your Financial Plan?

While the uncertainty surrounding Social Security is real, it's important to remember:

• Cuts are not guaranteed, and changes are likely to be phased in
• If you’re already collecting—or soon will be—you are less likely to see reductions
• For younger clients, we plan with a margin of safety—factoring in modest benefit reductions as part of our retirement projections

As always, we are monitoring developments and will adjust your plan if needed.

If you have questions about how Social Security fits into your personal plan—or if you’re nearing retirement and want to discuss timing your benefits—please reach out.

It Is Always a Good Time to Start College Planning

In this article, College Planning specialist Donna Cournoyer makes suggestions for how to begin to think about college planning for your student, no matter where you are in the process

Beginning college planning can be an overwhelming thought for anyone. The thing about college planning is – the sooner you start, the better and calmer you will feel about the whole process.

So, I will say it again… it is ALWAYS a good time to start.

I have met with and counseled many families for their college planning needs, as a financial advisor, and while working at universities.

One common theme I have found in speaking with parents is that many are really overwhelmed and do not know where to start.

Also, many families delay taking the initial steps due to the paralyzing fear of paying the high price of a college education and finding the perfect school for their student.

Some basic strategies listed below are designed to help parents with students of any age as they begin (or continue) to plan and prepare for the college process.

Early Planning and Saving

• Open a 529 College Savings Plan account: This will give you tax advantages, as well as compounding growth over time- even with small contributions. And especially if you can start early.

Start Talking About College - Frame It as a Goal

• Begin conversations about education after high school and explore all options.
• Keep it positive, age-appropriate, and flexible. This approach will help keep you all informed on perspectives as time goes on.

Focus on Academics and Study Habits

• A strong academic foundation is important; it will support the student and allow for further growth during their college career.
• Encourage strong study skills, reading habits and time management early on.
• Good grades and test scores help improve chances of admission.

Get the Student Involved

• Teach the basics of a budget, and the value of saving.
• Encourage part-time work or a summer job to contribute to expenses or savings.

Have Students Get Involved in Interests

• Hobbies, extracurricular activities, volunteering and sometimes sports will help a student develop and find areas of interest.
• This will help build character and leadership skills and prepare for future college applications.
• This also helps a student’s potential for acceptance and merit scholarships. Many schools take a holistic approach to reviewing applications, and involvement and leadership roles are highly valued.

Understand Total College Costs

• Begin looking at a variety of public and private schools online and review total Cost of Attendance. It may be shocking when you start out, but it is necessary to be informed before you begin.
• As your student gets older, start to use Net Price Calculators on school websites for estimates of financial aid and possibly merit scholarships.
• Also, when you approach the planning stages in high school, learn how the FAFSA and CSS Profile work.
• FAFSA
• CSS Profile
• Understand the different types of aid, grants, scholarships, loans, work study, etc.

Understand your financial situation and what you can afford

• Be realistic about your budget, what you can contribute and avoid unnecessary debt.
• Start family discussions on expectations early. Be clear on what you are willing and able to contribute to college for your student. This avoids big disappointments late in the decision-making process.
• Apply for private scholarships early and often.
• Here are a few:
• Fastweb
• RISLA
• Scholarship America

College Selection and Prep

• Focus on fit, not prestige.
• Consider multiple types of schools, including in-state schools which offer lower tuition.
• As you get further into the process and start your list, be sure to focus on academic programs, size, campus location and culture, and student activities and support resources.

Prepare Your Student with Good Life Skills

• Help your student with organization for college application season but let them own the process.
• Help by being supportive and help them explore options rather than choosing for them.
• Foster independence by teaching life skills- the basics include laundry, budgeting, and problem-solving.
• Discuss self-care and mental health and how to stay healthy while at college.

While there is much more detail to the college process, if you are beginning to think about college for your student, or you are just starting to get into the steps in the process, hopefully you find some good takeaways here.

Remember this really is a marathon, not a sprint, so try to stay calm and focused but remember to enjoy this time and have some fun as well. It will all go by so much faster than you imagined!

Social Security – Further Reading

For this month’s reading selections, we focus on sources that can help build a better understanding of Social Security: from current benefits; to the state of the Social Security system; to policy proposals that may place the system on firmer ground in the future

Understanding the Benefits – published by the Social Security Administration, this pamphlet explains Social Security benefits in a straightforward, approachable way.

Social Security’s Financial Outlook: the 2025 Update in Perspective –  Boston College has a well-regarded Center for Retirement Research; this publication brings some perspective to the 2025 Social Security Trustees Report.

Analysis of the 2025 Social Security Trustees Report – The Committee for a Responsible Federal Budget is a non-partisan, non-profit organization committed to educating the public on issues of significant fiscal policy impact; this link provides another summary of the most recent Trustee’s Report.

What the Data Says About Social Security – Pew Research Center is a non-profit, non-partisan “fact tank” that provides information on social issues, public opinion, and demographic trends. Although the Pew Charitable Trusts are non-ideological, Joseph Pew and his sons were politically conservative.

Fixing Social Security: Blueprint for a Bipartisan Solution – The Brookings Institution is generally considered to be a centrist or liberal-leaning think tank.

Social Programs – Peter G. Peterson Foundation was founded by the former Secretary of Commerce under the Nixon Administration; this article claims that “many policy solutions exist for improving the financial outlook of Social Security’s retirement program.”

Best regards,

Rob, Susan, Donna & Alex