Financial Insights

Could There Be a Shift from Growth to Value?

Growth stocks have dominated the market for two decades, led by large technology companies and recently riding investor enthusiasm for artificial intelligence. While this trend may continue — and no one can predict the market — extreme volatility among tech stocks in the summer of 2024 led to a period when value stocks outperformed growth stocks. Some analysts believed this could mark the beginning of a more substantial shift to value stocks, which have outperformed growth stocks during much of the market’s history.1 However, growth stocks bounced back quickly and ended the year with returns almost three times higher than value stocks (see chart).

Phased Retirement Can Help Smooth the Transition

In a recent survey, 52% of workers said they would prefer to gradually decrease their hours as they transition to retirement. The percentages were even higher for Gen X (67%) and millennials (56%).1

Accounts for Two: A Team Approach to Retirement Savings

Almost half of U.S. families headed by a married couple include two working spouses.1 With dual careers, many spouses accumulate assets in separate retirement accounts. Each might have funds in an employer-sponsored plan and an IRA. Even if most of a married couple’s retirement assets reside in different accounts, open communication and teamwork can help them craft a unified retirement strategy.

Key Retirement and Tax Numbers for 2025

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2025.

HOT TOPIC: Tariffs: How They Work and Potential Economic Effects

On February 1, 2025, President Trump authorized an additional 25% tariff on all goods entering the United States from Canada and Mexico (except for a lower 10% tariff on energy resources from Canada) and an additional 10% tariff on all goods from China. Nine days later, Trump authorized a 25% tariff on steel and aluminum, which strengthened and elevated tariffs levied by the first Trump administration in 2018.1 These were the opening salvos in what promises to be a period of aggressive moves that is likely to shake up the global trade environment.

Read a Good Beige Book Lately?

The Federal Reserve has been at the forefront of economic news since the spring of 2022, when the central bank started aggressively raising interest rates to combat inflation. Now that the Fed has begun to lower rates, each move will continue to be analyzed for its potential effect on the economy.

Is Tip Fatigue Wearing You Out?

Traditionally, tipping has been a way to reward workers for providing good service. But the norms around tipping are changing, and if you’ve recently felt more pressure to tip, you’re not alone. A survey by the Pew Research Center found that 72% of adults said that tipping was expected in more places today than it was five years ago, a phenomenon known as “tip creep” or “tipflation.”1

Indexed Annuities: Potential for Growth with Some Downside Protection

Following a record year in 2023, U.S. annuity sales increased by 23% during the first three quarters of 2024 and were expected to set another annual sales record, due to investor concern with potential market volatility and still-high interest rates that allowed insurance companies to offer more appealing withdrawal rates. Indexed annuities, which can offer growth in a rising stock market while helping to provide protection when the market is falling, set a quarterly sales record for the third quarter in a row and rose 56% year over year.1–2

What’s New for 2025?

To help you stay informed, here are five changes you can look forward to in the new year.

Financial Safety Nets: Exploring Available Sources of Emergency Funds

In moments of unexpected financial turmoil, having access to emergency funds can be the difference between a minor inconvenience and a major life disruption. Whether you have a sudden medical bill, car repair, or job loss, knowing where to turn for emergency financial support is crucial. However, not everyone has access to a financial safety net — nearly 60% of U.S. adults are uncomfortable with their level of emergency savings.1 Fortunately, there are options when it comes to exploring available sources of emergency funds.

Three Market-Moving Economic Indicators to Watch

Among all of the economic indicators released each month, three reports in particular can move the market: the Employment Situation, gross domestic product, and Personal Income and Outlays.

HOT TOPIC: The Social Security Fairness Act Increases Benefits for Millions

Under the Social Security Fairness Act signed by President Biden on January 5, 2025, almost 3 million Americans will receive a boost to their Social Security benefits.1 This bill, which had bipartisan support, restores full Social Security benefits to some public-sector employees, including teachers, law enforcement officers, firefighters, and others who have been affected by two provisions of current federal law — the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).

HOT TOPIC: Data for Sale: Tips to Help Protect Your Private Information

On December 3, 2024, the Federal Trade Commission (FTC) announced a proposed settlement in legal action against a data broker named Mobilewalla, which was accused of using location data obtained through online advertising auctions to identify consumers by factors such as private home address and visits to health-care clinics and churches.

Making the Most of Your Credit Card

A growing number of Americans are moving towards a “cashless” society. As a result, credit cards are being used more often than ever — especially by those with higher incomes.1

Treasury Yields Off 17-Year Highs

As the Federal Reserve raised interest rates to combat inflation, yields on U.S. Treasury securities climbed to levels not seen since before the Great Recession (see chart). Now that the Fed has begun lowering rates, yields have dropped, but they remain at relatively high levels. Considering how stubborn inflation has been, the Fed might move gradually in decreasing rates, but as they do, you can generally expect Treasury yields to decline. In the longer term, Treasuries purchased in the current higher-rate environment could offer higher yields than new issues, potentially increasing their value on the secondary market.

If You Don’t Have a Will Yet, Why Not?

A will is a fundamental estate planning document. It outlines how you wish your property to be distributed, who should handle matters related to settling your estate, and who you want to care for your children after you pass, among other things.

FAFSA for 2025-2026 School Year Opens December 1

For the second year in a row, the Free Application for Federal Student Aid, commonly known as the FAFSA, will be delayed. The FAFSA for the 2025–2026 school year will open on December 1 instead of the typical October 1 date. Last year, despite a redesigned FAFSA that was supposed to be easier to complete, families faced a perfect storm — a delayed rollout, technical glitches, and processing delays, which led to confusion and late financial aid packages from colleges. By one estimate, as of March 2024, FAFSA completions for the class of 2024 were down 40% from the prior year, with only about 27% of the class of 2024 successfully completing a FAFSA, compared to 45% for the class of 2023.1

Do You Know Your Medicare Coverage Options?

There are two ways to obtain Medicare coverage: (1) Original Medicare (Part A hospital insurance and Part B medical insurance), often combined with a Medigap supplementary policy and a Part D prescription drug plan; and (2) Medicare Advantage (Part C), which replaces Original Medicare and often includes prescription drug coverage as well as features similar to those provided by a Medigap policy.

Higher Rates Pressure Borrowers and Some Banks: Is Your Money Safe?

In March 2023, two of the largest bank failures in history alarmed savers who worried their own bank accounts could be at risk and investors who feared a wider financial crisis. To help restore confidence in the U.S. financial system, the federal government pledged to make all depositors whole and to support other banks that might face liquidity issues stemming from the rapid rise in interest rates.1

HOT TOPIC: The Fed Finally Cut Interest Rates

On September 18, 2024, the Federal Reserve’s Federal Open Market Committee (FOMC) lowered the benchmark federal funds rate one-half percentage point to a range of 4.75% to 5.0%. It was the first rate cut since the Fed raised the funds rate aggressively from March 2022 to July 2023 to help control inflation.1

Can You Put the Brakes on Rising Auto Insurance Premiums?

When your auto insurance policy renews, chances are that your premium will be going up, possibly by a lot. Rates vary by state and location, but nationwide, premiums increased more than 18% between July 2023 and July 2024.1

Do You Have Enough Life Insurance?

Your life insurance needs change as your life changes. When you are young, you may not have a need for life insurance. However, as you take on more responsibility and your family grows, your life insurance needs increase but then decrease after your children are grown.

HOT TOPIC: High Foreign Investment in the U.S. – Will It Last?

According to data from the International Monetary Fund, the United States received almost one-third of all global foreign investment from 2021 to 2023. This compares with an average of just 18% before the pandemic. The dramatic increase is even more remarkable considering widespread concern about the dominance of the U.S. dollar as a global currency.1

A Pension Strategy That May Boost Your Income

If you have a traditional pension — also called a defined benefit plan — when you retire, your plan may offer several payout options, including a qualified joint and survivor annuity (QJSA) if you are married. A QJSA is an annuity that pays a dollar amount (usually monthly) for the rest of your life, with at least 50% of that amount continuing to your spouse after your death.

What’s Your Real Return?

As an investor, you probably track the return on your investments. But it’s likely that you look at the nominal return, which is the percentage increase or decrease in the value of an investment over a given period of time, usually expressed as an annual return. To estimate actual income or growth potential in order to target financial goals — for example, a certain level of retirement income — it’s also important to consider the real return, which includes the effects of taxes and inflation.

HOT TOPIC: Dreaming of Retirement? Consider Maxing Out Your 401(k) in 2025

About 70% of U.S. private-sector workers have the option to contribute to a retirement plan such as a 401(k), 403(b), or 457(b) plan provided by an employer. Unfortunately, many of them don’t take full advantage of this tax-friendly opportunity to save for the future.1