Don’t Worry, Be Happy
Our advice before the election was “Don’t Worry, Be Happy” and now that the Trump cabinet is coming together, we still feel that is the correct advice.
Many Democrats and Republicans feel like their party has left them behind, which explains the increasing number of voters choosing to register as independent. Unfortunately, the days of Tip O’Neill and Ronald Reagan sitting down and working things out are long gone, but we are not without hope.
From an economic perspective, the U.S. has been on the wrong road for a very long time. In our view, the collapse of Long-Term Capital Management (LTCM) in 1998 started us on this path. The Fed intervened in fear that catastrophic losses could spread through financial system and ‘too big to fail’ was born. Since then, Fed interventions have become successively more extreme with each new crisis. The culprit was not LTCM, or subprime lending, but a consistent reliance on the Fed to bail us out of a jam.
In most cases, the crux of the problem was too much leverage, i.e., too much debt. Each time, the crisis was repaired using government intervention, (read: money) and that new money increased the national debt. The last one was COVID, but the spending did not stop there! Now the debt problem is not limited to a certain sector, it belongs to all of us.
Albert Einstein defined insanity as doing the same thing over and over and expecting a different result. We see the Trump Presidency as trying something different. The organization of this second Trump term looks nothing like the first. He learned a few lessons during his first term and appears more ready to alter the status quo this time around.
If nothing else, Trump is an agent of change. Let’s see what he and his cabinet can do. What we’ve been doing from an economic perspective over the last 25 years hasn’t worked especially well. Time to try something else. He’ll make plenty of mistakes along the way, but it appears he is laying the big issues on the table, and if the big issues can begin to be addressed, we have chance to break out from the economic shackles of too much debt. Change is often hard, but change is often necessary, too.
60 to 63 Years Old? If So, Consider a Super Catch-up Contribution in 2025
The Secure Act 2.0 made numerous changes to retirement plans, including the start of RMDs (required minimum distributions) at age 73 and eventually rising to age 75. One of the lesser known changes is the ability to have a larger catch up contribution to your 401k or 403b.
Beginning in 2025, to qualify, you must be 60, 61, 62, or 63 by the end of the calendar year. If you fit that category, you could be eligible for increased catch-up contributions. Each plan sponsor can choose whether to implement this feature, so it may not ab available to everyone. You need to check with your plan to see if this applies to you.
The new catch-up contribution is limited to $10,000 or 150% of the standard catch-up contribution limit, whichever is greater. The standard catch-up contribution for 2025 is $7,500, which means that if you meet the age criteria, your catch-up contribution 2025 can be as high as $11,250. Ask your plan sponsor for details if you qualify.
Enjoy the balance of the holiday weekend!
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All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
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Donald Trump, National Debt, Trump AdministrationBy: Adam
