The Parker Group
Quarterly Newsletter
"Don’t get caught picking up pennies in front of a steamroller.”
- Drew M. Parker
A Social Security Administration Update
The Social Security Administration (SSA) plays a vital role in many retirees’ lives. One of its main functions is to pay out a retirement benefit to those over a certain age who worked at least 40 quarters. During those working years, the SSA collects a tax from each employer and employee (you’ll see this labeled “FICA” on your pay stub) and deposits it into a trust fund. The fund that holds your retirement benefit funds is called theOld-Age and Survivors Insurance (OASI) Trust Fund. Each year, that fund brings in more tax dollars (and interest from investments) but must also pay out benefits to its retirees.
For the first time in almost 40 years, the OASI Trust Fund began to operate at a deficit in 2021. This means more money was being paid out to retirees than was coming in from FICA tax revenue. In June, the SSA released a projection that estimated that the fund would be depleted in 20333. This means that incoming tax revenue would only be enough to cover 77% of the benefits needed to be paid to retirees.
IMPORTANT: The sky is not falling. I know this report seems rather grim. For the average retiree, this benefit pays +40% of their income. Luckily, there are many options to remedy the issue at hand. The list below is certainly not exhaustive, but it does comprise many of the solutions that are more frequently discussed.
Raise the Income Ceiling.
o At the moment, workers only pay FICA taxes on the first $176,100 of their income. Many have proposed increasing this cap significantly or even removing it altogether.
Increasing FICA Tax Rate.
o The current FICA tax rate is 6.2% on the employee and 6.2% on the employer. This rate could be increased in order to increase income to the OASI Trust Fund.
Raising the Retirement Age.
o At the moment, retirees have the option to begin drawing a benefit between the ages of 62 and 70. Some have proposed raising some of these ages.
Changes to High Earners.
o For those who are relying less on their Social Security income to retire, many have suggested delaying the retirement age for these earners, increasing the percentage of the Social Security income that is taxable to them, or possibly reducing their benefits.
These possible changes would come in the form of legislation from Congress. At the moment, we don’t hear much interest in addressing this issue from political commentators, but hopefully that will change soon.
Strategas Market Gauge
Each month, a research firm called Strategas puts out a Market Gauge. The gauge looks at 16 important factors that have an influence on the stock market. Then they assign each of those factors a favorability rating. Are those factors helping us right now, or hurting us? They categorize those 16 factors into three hierarchies of importance:
In June, those 16 factors came in at an 8-8 tie. They reflect the data that shows mostly positive economic data paired with precarious situations in DC (national debt, unclear policy plans) and abroad (multiple overseas wars and global trade uncertainty).
If you found this interesting, just click here to see details on each category. This report can be found each month by searching for “Strategas Market Gauge” in your browser.
Chart of the Quarter- Federal Reserve Dot Chart
The Federal Reserve released its projections on the future of the Fed Funds rate (a baseline for interest rates as a whole) on June 18th. This chart reflects the projections from each of the Federal Reserve Board members2. While this is just a “best guess” by each member, it does carry weight in the markets as business leaders look for guidance on the future. You can see that the average estimation shows rates being lower by .5% by year-end and dropping another .5% lower in 2026.
Baird Online Tip
Did you know you could nickname each of your accounts on Baird Online? When you first create your account, Baird automatically gives a name to each account on the homepage. At any time, you have the option to customize each account name to help keep you organized!
Simply select the “Account Services” tab, then select the “Account Nickname” button. This takes you to the screen where you can edit each account name. You can use your monthly statement to help you identify your different accounts. Need help? Just reach out to us at theparkergroup@rwbiard.comto let us know what you’d like each account to be named, and we can then make the adjustments for you.
Market Review
On June 27th, the market completed its rebound. The S&P 500 fell over 19% in the first half, only to completely recover in just 55 days. Let’s review some headlines from a few of the wildest days we’ve seen during that time frame:
After reading those headlines, you probably saw a trend. This has clearly been a year driven by political news. Tariff news brought about two sets of fears for investors. In the short term, many feared the effect that tariffs might have on inflation. What likely rattled many of us was the fear of the unknown regarding international trade. What would the future of global trade be for the U.S. if our deals with friend and foe were scrapped in favor of new agreements? We’ll discuss this and more below.
What We’re Watching
Interest Rates
One of the most consistent indicators of stock market movement has been tied to interest rate changes, but it’s also important to note what environment those changes take place. Some of the most severe interest rate cuts have come when the economic outlook is grim (see 2001, 2008, 2020). If we were to see interest rate cuts this year, it would hopefully be for a different reason. The Fed has made it clear that they view current rates to be higher than they’d prefer over the long term. If they were to see inflation continue to drop lower (and stay lower), we’d likely begin to see a series of cuts. Right now, Fed Funds Futures contracts show a 50% chance that rates fall from 4.25% to 3.5% by year end1.
Tax Bill
As of the end of the month, Congress is still wrestling with a tax bill that doesn’t seem to want to get passed. The bill is like its predecessor in 2017, containing a large number of varying policy changes. At the moment, the Tax Policy Center4 estimates that the bill will create $2,900 in tax cuts for the average household. While consumers will welcome this tax cut, the Congressional Budget Office4 estimates the bill will increase the budget deficit by $3.3 trillion.
Tariff news
The most important date in the tariff conversation is July 9. This is when the 90-day pause ends, and most countries are subject to a variety of tariffs that were paused in April. Many of our largest allies and foes are still working to create a trade deal that keeps the larger tariffs in check. The EU is signaling that they’ll accept the 10% universal tariff. Canada showed signs of easing off when it scrapped their tax on digital services from the US. But the bottom line is that the UK is the only foreign government to firm up a trade deal with the US.
Economic Data
There are some signs of a worsening economic situation. Bankruptcies and the unemployment rate have hit their highest point since COVID. This is all happening while the Richmond Fed Manufacturing and Service indexes find themselves in contraction. The annual inflation rate has come down to 2.4% in line with the idea that the explosive growth of the post-COVID years is at an end for now. This isn’t to say that we are on a crash course with a recession. Oxford Economics places the odds of a recession in the next 12 months at just 35% (odds for any given year are 15%).
Sources and Disclosures
1 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
2 https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20250618.htm
4 https://www.cnn.com/2025/07/01/politics/congress-senate-bill-tax-spending-trump-gop-explainer
Fixed income is generally considered to be a more conservative investment than stocks, but bonds and other fixed income investments still carry a variety of risks such as interest rate risk, credit risk, inflation risk and liquidity risk. In a rising interest rate environment, the value of fixed income securities generally declines and conversely, in a falling interest rate environment, the value of fixed income securities generally increases. High-yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Municipal securities investments are not appropriate for all investors, especially those taxed at lower rates.
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Investors should consider the investment objectives, risks, charges and expenses of each money market mutual fund carefully before investing. This and other information is found in the prospectus and summary prospectus. For a prospectus or summary prospectus, contact your financial advisor. Please read the prospectus or summary prospectus carefully before investing.
Rates are subject to change.
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