Facing down another government shutdown, the House and Senate passed a new budget deal last week that suspends the debt limit until 2017 and increases funding levels for a number of federal programs. President Obama is expected to sign the deal into law early this week.
Unfortunately, though the deal averts a debt default and reduces the risk of a December government shutdown, it includes provisions that may cut into Social Security benefits for millions of Americans. By negotiating the deal in secret, lawmakers have prevented affected retirees from having their say. To say that we're disappointed is an understatement.
The new regulations will prevent retirees from using two advanced Social Security claiming strategies: file-and-suspend and applying for a restricted claim for spousal benefits. Both of these strategies are designed to increase lifetime income for retirees and are being counted on by many Americans.
Here's what we know so far:
- As of May 1, 2016, spousal or child benefits will no longer be payable unless the primary earner is also collecting Social Security benefits. Spouses will also no longer be able to file restricted claims for spousal benefits at their full retirement age.
- Workers and spouses who are currently using these strategies (e.g. have already filed and suspended claims) are grandfathered in under the deal and will not be affected.
- Retirees who will be age 62 or older by December 31, 2015 may still be able to file a restricted application for spousal benefits.
- Retirees who will be age 66 or older before May 1, 2016 may still have time to file and suspend and trigger benefits for their spouse or dependents.
If you are eligible to file and suspend before May 1, 2016, please contact us to discuss your situation.
As always, we will update you as we know more in the coming weeks.
Monday: PMI Manufacturing Index, ISM Mfg. Index, Construction Spending
Tuesday: Factory Orders
Wednesday: ADP Employment Report, International Trade, Fed Chair Press Conference 10:00 AM ET, ISM Non-Mfg. Index, EIA Petroleum Status Report
Thursday: Jobless Claims, Productivity and Costs
Friday: Employment Situation
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Q3 GDP shows slow growth. Our first look at third-quarter economic growth showed that Gross Domestic Product grew a paltry 1.5%. This is just a preliminary report, and economists will revise the data several more times; however, we can see that weak business spending affected growth last quarter.
Consumer spending misses in September. Personal spending data showed that Americans increased their spending at the slowest rate since January, indicating they may be cautious about economic turmoil.
Consumer confidence rebounds in October. After a weak September reading, consumer confidence jumped in October as lower-income households grew more optimistic. Wealthier households were less confident due to concerns about financial markets.
Pending home sales drop in September. The number of contracts on previously owned homes fell unexpectedly in September in a potential warning sign about the housing market.
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.
The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
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