Yes, I’m sure you have seen many headlines over the years that have to do with reducing Social Security costs. Of course, it is no surprise that the number and frequency of such arguments increases as the country faces another round of elections.

For this week’s newsletter we would like to share with you some commentary on the subject that was put together by the good folks at horsesmouth.com:

“The turn of the decade to 2020 brings us one year closer to 2034, the year the Social Security trust fund is expected to run dry, at which time there will be a 20% across-the-board cut in benefits unless the system is reformed before then. There’s been some activity in Congress to reform Social Security, but not much. With over $2.8 trillion sitting in the Social Security trust fund, benefits are not in imminent danger of being cut, so what’s the rush?

A few proposals have been submitted to the Office of the Chief Actuary for analysis. These proposals give us some insights into bills that might eventually make their way onto the floor of Congress, but following their movements is like watching molasses. The Social Security 2100 Act now has 210 sponsors and was expected to come to a vote this past fall, but I guess Congress has been busy with other things.

Still, this bill seems to have the greatest likelihood of making substantial changes to the Social Security system. It would raise benefits for everyone by increasing the first bend point multiplier to .93 from .90 and basing the COLA on the CPI-E. And it would restore solvency by withholding FICA taxes on earnings over $400,000 while gradually raising the FICA tax rate to 14.8% from the current 12.4%. I think it’s a good proposal and is just a matter of time before it comes to a vote.”

Keep in mind that there is nothing imminent going on that should be a cause for concern. Nevertheless, it’s a good idea to keep up with potential changes and the various ideas that may eventually come to fruition.

Ron’s Market Minute – The Fed Meeting and the Super Bowl

In a normal sort of environment this week’s Fed Meeting would have had more prominence. However, it was eclipsed by the virus, the SUPER BOWL, and perhaps the circus going on in DC. 

The Fed Meeting was a snoozer. Only a few words changed in the Fed’s comments vs. the prior meeting. In a nutshell, no changes to interest rates or expectations. That is a bullish environment for stocks. 

And, speaking of stocks, as I mentioned that in the past couple of weeks there may have been a bit of exuberance in the air, as most headlines turned to positive expectations. We have expected a bit of levelling out, and markets appear to have found it in the Coronavirus. Or it may have been something else, but markets moved a bit too far too fast over the past four or five weeks. However, the fundamental economics are still looking good, and with that in mind, we might look for a short-ish pullback to bring consumer sentiment back to the middle. 

It seems unlikely that we’ll see the market rocket to new highs from this point, and that would not be good in my opinion anyway. Better to have a bit of back and forth for a while, till Ms. Market sets her sights on new higher prints. The ongoing bull market continues, so we won’t be having a discussion about that- at least not yet.

And the market leader is still the large caps, with the mid and smaller caps generally showing less strength. Defensive sectors are rotating back into a leadership position, but only energy is looking ugly.  Guess we’ll wait and watch, as usual. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@]denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

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