April showers gave way to flowers during the first half of May.

Stock market declines seemed to have been a function of early spring. As investors anticipated clearer, brighter weather ahead, they warmed up to stocks, though the warmth faded somewhat during the final week of May.

Large company US stocks, as measured by the S&P 500 Index, rose by 5% in May. Year-to-date, US stocks are in the black by 11.3%. Foreign stocks also returned 5% in May, and thus far in 2024 have gained 7.7%.

Small company US stocks climbed by 4% last month and are up by 4.5% so far in 2024.

Treasury bond yields were stable for shorter maturities but declined slightly for longer-term maturities in May.

For the month, the Bloomberg Aggregate Bond Index, the main benchmark for US investment-grade bonds, registered a positive return of 1.7%. Year-to-date, investment-grade bonds have declined by 1.6%.

The stock market can be viewed as a mirror of sentiment and as a measure of value, and new highs tend to be well received by investors. Strong demand for stocks has boosted prices and has created pleasing portfolio returns.

Regarding sentiment, most Wall Street prognosticators are bullish. In fact, the ranks of Negative Neds and Nellies recently faded from two to one.

Worried investors who are overly pessimistic about the economic, political, or social landscape might be tempted to say “enough is enough.” Acting on this conviction by selling a significant portion of stock holdings likely would provide an immediate sense of relief for those seeing the glass as half full.

But this type of action invites the “pain trade”, where financial markets punish investors for their decisions, typically in the form of substantial losses or a missed opportunity for upside.

The adage “it’s time in the market, not timing the market, that matters” might cause a wince or an eye-roll from experienced traders. But consider the chart below, courtesy of AMG, which tracks cumulative returns of US large company stocks.

Summing it up, DataTrek’s Colas offers the following: “In the end, the worst pain trade is being underinvested.”

As financial advisors, a frequent concern we hear from clients revolves around the future of Social Security benefits. Many are understandably worried about whether these benefits will be available when they retire, especially amidst reports of potential funding shortfalls.

We’ll share below the latest projections for Social Security funding and then explore the measures being proposed to ensure its long-term viability.

The Social Security program is primarily funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA). However, demographic shifts such as declining birth rates and increasing longevity are leading to fewer workers supporting more retirees, which puts a strain on the system.

According to the most recent Social Security Trustees Report, the Social Security trust funds are projected to be depleted by 2035, one year later than projected in last year’s report, if no changes are made.

At that point, incoming payroll taxes will be sufficient to pay 83% of scheduled benefits. This projection highlights the need for reform to ensure that full benefits continue to be paid.

Several measures have been proposed by policymakers to address the funding challenges faced by Social Security. These proposals typically fall into three categories: increasing revenue, reducing promised future benefits, or a combination of both. Here are some of the most discussed options:

One thing that’s important to note: all of the proposed measures described above would impact future Social Security recipients.

None of the measures that we have seen (except for the possible limit on the annual COLA) propose changes to benefits for those who are already receiving Social Security benefits.

For individuals planning for retirement, the uncertainty surrounding Social Security underscores the importance of retirement planning. Depending on Social Security alone for retirement income is increasingly risky.

Here are a few strategies to consider:

While the challenges facing Social Security are concerning, especially for those who have not yet retired, remedies are being considered.

With comprehensive financial planning, we can help you prepare for a variety of future scenarios. As your financial advisors, we are here to help you navigate these uncertainties and develop a retirement strategy that ensures your financial security, regardless of what the future holds for Social Security.

Applying to college can be a complex and multifaceted process, including several steps and requiring careful planning and attention to detail.

The most recent yearly cycle of the college admissions process has just finished, as high school seniors and their parents have completed the years-long college preparation and detailed application process by making a financial commitment to the school they will attend for the next four years this beginning this coming fall.

The current level of complexity of this process sent some families into procrastination mode, pushing off the inevitable facing of facts. For others, it means assuming an uncomfortable level of debt.

For those who started early and bravely committed to fully engaging and digging into the process- navigating all the steps and intricacies along the way- many found themselves completed exhausted emotionally, and unfortunately for some, financially.

How did we get here? Has the craziness finally peaked with the FAFSA debacle of 2024-2025? Not likely. Although we will learn more when the process starts up again this fall with the next application season.

The college application process in 2024 has been particularly tumultuous due to several key trends and changes that have intensified its complexity and competitiveness.

Overall, the college application process is a significant undertaking that requires organization, time management, and support from various sources.

The 2024 college application process has indeed been chaotic, driven by increased application volumes, evolving admission policies, and the integration of new technologies.

Preparing for the upcoming college admissions season: Staying informed and strategically planning your application approach can help navigate these challenges effectively.

Link: fdic.gov

Link: Mass.gov

Link: consumerfinance.gov

Link: cisa.gov

Link: Consumer.ftc.gov

Best regards,

Rob