Episode Transcript
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Speaker 1 (00:00):
Welcome to the hidden world of wealth, where secrets of
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(00:22):
President of Prescott Private Wealth and Chartered Retirement Planning Counselor.
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(00:45):
hidden paths of prosperity together. Your financial enlightenment begins now.
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(01:06):
Four five one through sixth Street, Troy, New York one
two one eight zero.
Speaker 2 (01:18):
So when you look at the future obligations of social security,
the actual national debt is like double what people think
it is because of the future obligations. So Basically, people
are living way longer than expected, and there are fewer
(01:40):
babies being born, so you have more people who are
retired and get that live for a long time and
get work retirement payments, so the future obligations. So how
a bad the financial situation is right now for the
federal government, it will be much worse in the future.
Speaker 3 (02:03):
Today yet more examples that the Social Security Administration is
in turmoil because of the cunts that Elon.
Speaker 4 (02:08):
Musk and Doge are making.
Speaker 3 (02:10):
The Washington Post reports the Social Security Administration website crashed
four times in ten days this month.
Speaker 4 (02:20):
Welcome back, everybody, you're listening to your money matters. I'm
your host, Drew Prescott, chartered Retirement Planning counselor, a credited
wealth management advisor and president of Prescott Private Wealth located
in Troy, New York. And if that siren didn't jilt you,
in addition to the news that I've blended in there
(02:41):
for you, listen, if that didn't get to you, I
don't know what's going to get to you this Sunday morning.
So hopefully you were able to get out to church
and that got to you. But nonetheless, these headlines can
be a little bit frightening for some people. And it's
my job to share with you the insights that I
(03:03):
have and to make this all makes sense for you.
And today we're going to be tackling some very big
and explosive topics social security, we're going to cover the
economy in twenty twenty five, and why you should keep
your chin up even when the news feels like it's
countdown to doomsday. So you've seen the headlines the Social
(03:27):
Security Trust Fund might dry you up by two thousand
and thirty five. Tariffs are rattling the markets and the
stock markets doing its best impression of a nervous teenager
before a big test. But here's the real scoop. Okay,
I've been navigating this financial world for over two decades
and I've watched chaos turn into opportunity more times than
(03:52):
I can count. So grab your coffee, grab your tea,
or maybe even need to grab a stiff drink after
those sounds. But let's dive in together because we're talking
about resilience. We're talking about smart strategies and a hefty
dose of common sense to keep your wallet and your
sanity intact. So let's roll now. Picture this it's twenty
(04:16):
twenty five, and the economy is like a roller coaster
with a few loose bolts, thrilling, a little bit terrifying,
and you're just hoping that this thing holds together for
the entire ride. Well, President Trump's back at the helm
and he's flooring it with the tariffs. Twenty five percent
on Mexico and Canada, twenty percent on China. The headlines
(04:40):
are screaming trade wars and price hikes, and yeah, the
stock market's throwing a tantrum. We're seeing it. And as
of March twenty third, the S and P five hundreds
down three point three percent year to date, the Nasdaq's
down about seven point nine and the Dow off about
(05:00):
one point three percent. Sounds kind of grim, doesn't it.
But hold your horses. The markets love a good drama.
They freak out, they take a breather, and then they
climb right back up. I've seen this movie before and
it's always it always has a sequel. So let's break
(05:21):
it down and let's hunt for the silver lining today. Okay,
let's start off with Trump's tariff playbook. Now, these tariffs
are the talk of the town, and for good reason.
The idea, bring jobs back to American soil, juice up manufacturing,
and make the US the big dog on the global
(05:42):
block again. The downside, your shopping cart might feel the pinch,
so think cars, avocado or that shiny new TV that
you've been eye in. Now, it's a gutsy play, and
not everyone's waving pom poms here, But let's rewind the tape.
In two thoy and eighteen, tariff's on steel and aluminum
(06:05):
really kicked up a fuss. Prices jumped, and then what happened, Well,
we got the USMCA, a trade deal that's smoothed things
out short term pain for long term gain. And that's
the gamble, and I'm not betting against it just yet.
All Right, Tariffs are basically taxes on imported goods. They
(06:27):
jack up the price of stuff from overseas, nudging you
to buy American extent. So take cars for instance, tons
of parts roll in from Mexico and Canada, so twenty
five percent tariff could slap an extra couple grand on
that forty eight thousand dollars average new car price from
twenty twenty four, So think about that. Oof, that's things right,
(06:53):
But here's the flip side. If it convinces Ford or
GM to build more fact reason place like Ohio or Tennessee,
then we could see a wave of solid, well paying
jobs come back into our economy. And we'll talk about
Ford in GM here in a little bit. You'd be
(07:14):
completely shocked if you understood what portion of these vehicles
are manufactured and sourced here in the US. So before
we get to that, I want to share something with
you here. The Bureau of Labor Statistics PEG manufacturing at
twelve point nine million jobs in twenty twenty four, and
(07:38):
the question is could we nudge that up to thirteen
and a half million by twenty thirty. So they're saying
it's not a pipe dream, it's a slow burn, but
it's doable. So now let's zoom into your daily life
because we want to talk about Mexico for a second. Okay, Now,
Mexico sends US eighty percent of our avocados. Now, if
(08:00):
you have ever had them over in California, you know
they're they're awfully good. I would say they're just as
good those creamy green gems. They might jump though in
price because of this tariff, So we could see them
go from a dollar fifty currently to two dollars a
(08:20):
piece with a twenty five percent tariff. Now think about electronics.
We've got clothes, toy prices which could creep up across
the board. The consumer Price Index was up about two
point six percent in twenty twenty four, so tack on
tariffs and we might see that at three and a
half percent in twenty and twenty five. Now, companies might
(08:41):
eat some of that cost, but don't bank on it,
because remember, these are not charities. So still I'm not
hitting this panic button. Why because we've weathered bigger storms,
the oil shocks of the seventies, the Great Recession of
two thousand and even this COVID mess that we just
(09:02):
came out of from twenty twenty, and each time we adapted,
we innovated, and we came out even stronger. So let's
dig into some industries here. Let's take technology for a second,
and the tariff on Chinese goods could sting giants like
Apple who assemble iPhones across the Pacific. But here's the kicker.
(09:26):
Apple's already sniffing around India and Vietnam for new manufacturing hubs.
So it's not just about dodging tariffs. It's about spreading
their bet, making their supply chain tougher than a two
dollars steak. And we've got agriculture. That's another angle, right.
(09:47):
We've got farmers who might sweat if Mexico slaps tariffs
on our corn or soybeans in retaliation. But if Americans
start buying more homegrown goods, that could be bounce the scales.
Now it's a messy puzzle, but there's gold in the
cracks if you know where to look. The markets acting,
(10:11):
you know, a little bit crazy right now, we've got
techts taking it on the chin. The Nasdaq's down seven
point nine percent, Tesselas off about twelve percent because of
China's huge market and tariffs could crimp their style. Now
we're seeing apples wobbling to those iPhones. They might cost
more to churn out through this, but peak under the hood,
(10:33):
energy stocks are holding steady. We've got defense giants like
Lockheed Martin who are up about two percent. In utilities
like next Energy I'm sorry, yeah, Next Era Energy are
up about one point five percent. And people still need
lights on and planes in the sky. Tariffs are not well.
(10:53):
The S and P five hundred might be down three
point three percent, the Dow off by one point three percent,
but it's a hiccup, it's not a heart attack. So
flash back to twenty twenty COVID and when everything tanked,
and then we hit all time highs in twenty and
twenty one. So this dip that we're in now, it's
(11:16):
really a clearance rack because savvy investors buy when the
shelves are stocked cheap. And I'm calling a rebound right now.
So let's put this in perspective with a little history.
The stock market's really a drama queen if you think
about it, but it's got a killer track record. So
since nineteen twenty six, the SMP five hundreds averaged about
(11:41):
ten percent annually, So that's crashes, recessions and all. Now,
the Great depression that took a decade, but we climbed
out of it, the two thousand and eight meltdown. By
twenty and thirteen, we're back in business. And even the
COVID plunge turned into our rocket ride. Now, these tariff
(12:02):
jitters are just another chapter. Now, Remember, volatility is the
price of admission, but the payoff's worth it if you
have the stomach. So let's pivot to Social Security. How
we started off this show. You heard the headlines, you've
heard the chatter, and who remembers the voice that I
(12:24):
played at the beginning of that. Not Elon Musk. I'm
not talking about him. I'm talking about the lady. For
all you locals, how many of you remember it's now
Chris Jansen, but it was Chris Kopistashik And I remember
watching her when I was a kid and just had
a very distinct voice. And good for her for making
(12:45):
it onto the national stage. Now she's at CNBC. So
let's pivot to Social Security, as I said, and social
Security is the heavyweight champ of this episode. Okay, it's
tied to the economy like peanut butter to jelly. It's
a thriving When we have a thriving economy, it means
(13:09):
that more workers are paying in keeping this whole machine purring.
What's the big scare right now? The big scare is
the trust fund slated to run dry by two thousand
and thirty five, leaving benefits at eighty three percent of
what's promised. That's your heart earned cash on the line.
(13:32):
But here's why I'm not sweating it. First of all,
if you've been paying attention and you don't have your
head in the sand, you've been looking at your statements anyways,
And it has said this for quite a while now.
Politicians love to play kick the can down the road,
right because nobody wants the egg on their face of
(13:53):
being the big bad wolf that makes some type of
a tweak to social security, because we've seen how this
is played out in the past, and it's political suicide.
So even if even if you're someone that is the
furthest right and you're completely anti government and you're someone
(14:17):
on the far left right, believe it or not, social
security is one of those things that I believe. It's
about seventy seven percent of US taxpayers say they do
not want to lose social Security, all right, So that's
overwhelmingly the majority of this country. The last time that
(14:41):
this came up, when there was privatization talk about social security,
that didn't end well, all right. As a matter of fact,
if you do a little survey, you'll see that all
the people that were behind that their political careers came
to a screeching halt. So I want to dive in
today and share with you why I don't want you
(15:04):
hit in that panic button, okay, because here's what you
have to remember that, according to the Social Security statement,
the fund is slated to run dry by twenty thirty five,
leaving benefits at eighty three percent of what's promised. Again,
that's your hard earned money on the line. But again
(15:26):
I want you to tell you I'm not sweating it.
Social Security is a fighter, and I'm going to take
you through the history of that because it has not
really should have been knocked down at least, if not
knocked out, several times, but it has dodged some significant
punches going back to nineteen seventy seven, nineteen eighty three
(15:49):
and even beyond. So the doomsday crowds loud, we're hearing it, right,
but history has a louder megaphone. So let's unpack that
for you. Social Security is most people's financial lifeboat. And
you and your boss each toss six point two percent
(16:11):
of your paycheck into this up to a gross income
of one hundred and sixty eight thousand, six hundred dollars,
and this goes into the trust fund. Now it gets
parked in government bonds and it earns a little interest,
and it flows out to sixty five million folks, retirees,
(16:32):
disabled workers, and survivors. And right now it's sitting on
a cool two point eight trillion. But here's the hitch.
Baby boomers are retiring faster than gen Z can clock in.
So by two thousand and thirty five, payroll taxes might
(16:53):
only cover eighty three percent of the benefits. Not great,
but it's not armageddon either, So break it down. Let's
get started with a little story.
Speaker 5 (17:08):
Everybody sit down, listen carefully, everybody sit down, Sit down,
please sit Story time, Story time.
Speaker 4 (17:24):
So here we have it. It is nineteen sixty five
workers propped up every retiree. Today it's three, and that
number is shrinking. Plus we're living longer, more years of payouts.
So say you're pulling two thousand dollars a month now,
(17:49):
so that's twenty four thousand dollars a year. A seventeen
percent cut in two thousand and thirty five drops you
to sixteen hundred and six sixty dollars monthly or nineteen
nine hundred and twenty dollars a year. So that's a
haircut of four thousand and eighty dollars per year. So
(18:11):
for a couple, that's banking forty thousand dollars from Social
Security annually. That's sixty eight hundred dollars that's gone, and
that's real, duh, no doubt about it. But even at
eighty three percent, it's a godsend. Before social Security, half
(18:31):
of the seniors were really kind of scraping by and
they didn't have this Social Security benefit. So now poverty
is under ten percent for that crowd, and we're not
tossing that lifeline overboard, I can assure you of that.
So let's start to take a little bit more of
(18:53):
a stroll down history here. We've got Social Security kicked
off back in nineteen thirty five courtesy of Franklin D.
Roosevelt smack in the middle of the Great Depression, and
it was a lifeline for these seniors who had lost everything.
(19:13):
They had no four oh one K, they had no iras,
just grit and prayers. And over the decades it's grown,
adding disability benefits, survivor payouts, you name it. It's grown
quite a bit. And it's funded by those payroll taxes
with the trust fund as a rainy day stash. But
(19:36):
that stash is starting to shrink, and we've got to
figure out how to keep the boat afloat. So here's
the sunny side of things. We've pulled Social Security out
of the fire before. Let's go back to nineteen seventy seven.
It was flat broke. Congress had hike taxes and boom
(19:57):
crisis averted. Then in nineteen eighty three, benefits we're teetering.
Reagan and Tip O'Neil teamed up. They bump the retirement age,
taxed some benefits and save the day. So you see,
we've got options right now. So we can lift that
one hundred and sixty eight six hundred tax cap so
(20:20):
that big earners chip in more, nudge the twelve point
four percent tax rate, which is the employee and the
employer port should combined. We can move that to thirteen
or fourteen percent, or slide the retirement age from sixty
seven to sixty eight. Now, they're all tough pills, but
(20:42):
we've swallowed worse. So I want to chew on these,
on these fixes here for a second. Okay, Now there
are plenty more. There are a ton of different ways
that we can attack this. Now I'm sharing this with
you because if you're at home and uh, you know,
(21:02):
maybe you feel like you need a little peptobysmo from
everything that you're hearing, and you don't know how to
make sense out of this. I'm going to help you.
So again, let's think about these things that I just
shared with you. Okay, So raising the tax cap means
folks that are making over one hundred and sixty eight
six hundred dollars pay Social Security tax on every dollar,
(21:24):
not just the first chunk. So it's a cash infusion.
But high earners might grumble about that. So upping the
payroll tax, say to thirteen percent, means a thinner paycheck
for everybody, but it keeps the system humming and the
retirement age well. Back in nineteen thirty five, life expectancy
(21:46):
was sixty one and the retirement age at that time
was sixty five. So now we're living to seventy nine
on average and pushing it to sixty eight or seventy.
It makes sense on paper, but try telling that to
a construction worker with aching knees. And it's a debate
(22:10):
that's worth having because here's the ace up our sleeve.
A booming economy, more jobs, fatter paychecks, bigger tax haul
and these tariffs might sting. But if they ignite manufacturing,
that's more workers feeding the trust fund. That's more innovation,
(22:34):
and that's a game changer too. So AI for example,
even green energy new industries could really swell the workforce.
And the economy grew by two and a half percent
in twenty twenty four. So crank it up to three
percent or three and a half percent, and social securities
got some new breathing room. Okay. Plus, remember what I
(22:59):
said a moment ago. Politicians know that social security is untouchable.
So call it the third rail of politics, if you would,
because if you mess with it, your toast. And I'd
wager that we'll see it fixed by two thousand and
(23:19):
thirty five, will probably be between some tax tweaks, some
benefit trims, whatever it takes. We've danced this dance before
and we're going to do it again. So what I
want to let's transition into something here. Okay, I was
gonna do I was gonna do a little show today,
by the way, talking about some covered calls, strategies, some
(23:42):
naked puts, maybe some limit order stuff like that. But
then I thought, eh, that's not where you are right now,
That's not where the American mind is. So let's let's
go to where you're concerned. And I'm hoping that I'm
meeting you right there. I think that i am. But
here's what I want to share with you about these tariffs.
(24:04):
All right, So you know, we all have real life stories,
we all have our own thoughts, and sometimes sometimes people talk,
and when they talk, sometimes they actually show how little
knowledge they have about a topic that they run around
(24:24):
talking about all the time. And I want to share
one with you. So let's talk about tariffs. You know,
if you're paying attention, everybody has their take on it.
Everybody has something to say about it. And what I
found is that a lot of people are wrong. So
I'm here to straighten out. So let me give you
a Let me give you a little story about what
(24:45):
happened the other day. So I'm over, I'm over having
a drink with some friends over at the nineteenth Hole,
and there's a fella that's sitting in the corner, not
associating with anybody. And as we're having some drinks, one
(25:05):
of the fellows gets a glass of wine and then
out of the shadows in the corner there this voice
chimes in and says, you know that's going to cost
more on April, and I said, what's that and he
says the wine. So I turned to Ernie the bartender.
(25:27):
I said, Ernie, where's that from? And he says California.
So I spinned back to the guy and I said, well, Frankly,
you're wrong because from California, not France or Germany, so
tariffs don't touch it. So he kind of slinked off,
and you know, I savored my little sip. And that's
(25:48):
the type of noise that we're hearing out there. People
are freaking out. They're completely misinformed, all because the media
loves a good scare. Remember, bad news sells. All right,
take your time and educate yourself. Don't just go with
you know what somebody said at lunch hour, or the
(26:10):
loudest voice in your family, because you know they they
don't like anybody to challenge them. Do your own homework
before you lose your cool, all right. I just had
a meeting with a client the other morning, and he
is getting completely attacked on these tariffs he has He
(26:36):
doesn't right, he doesn't have a great understanding of them himself.
But he's got a family member that's very boisterous and opinionated,
and so he said, man, you know, can you share
some stuff with me about these tariffs? So what I
did was and I'll share the same thing with you. Okay. Uh,
(26:59):
you know you gotta do. You gotta do your own research,
all right. If you're listening to just CNN, C n AN,
C n b C, Foxnews, Bloomberg, whatever, you know, you're
missing out, h take take your time, do your own research.
I'm gonna pull this up here. I'm kind of buying
(27:20):
myself a little time because I'm trying to get into
the source that I want to share with you here. Okay,
So here's here. It is right here. So I want
to share some numbers with you. Maybe you're aware of them,
maybe you're not. And if you don't believe that that
these are real numbers, that's okay. I'll tell you where
you can go to look them up. Go to Canada
(27:41):
dot c A, go to the White House dot gov.
You can go to ah nbcnews dot com, WITS, dot
World Bank, dot org, PM, dot g C, dot c A. Yeah,
I've BBC dot com. This is all coming from the
these different sources, all right. So again, I don't mean
(28:04):
to to continue to beat a dead horse here. But
things are not as doom and gloom on these tariffs
as others are trying to make them out to be.
Here's why. So let's just look at this for a second.
Did you know that Canada has historically imposed high tariffs
on dairy imports from the US to protect its domestic industry.
(28:26):
Because these include tariffs that are approximately two hundred and
seventy percent on milk, two hundred and forty five percent
on cheese, and two hundred and ninety eight percent on butter.
Now let's go step further. How about poultry and eggs. Well,
(28:48):
the tariffs on chicken can reach up to two hundred
and thirty eight percent, while eggs face a tariff of
around one hundred and sixty three percent usage on the
other hand, yeah, not so bad, seventy percent. What about cars?
Canada imposes a tariff of around twenty five percent on
(29:09):
US made vehicles. What about steel and aluminum, Well, Canada
has applied a retaliatory tariff of twenty five percent on
steel and up to forty five percent, oh pardon me
on aluminum from the US. Now, what about general consumer
(29:34):
goods like TVs and HVAC equipment. Well, it's been cited
that they have tariffs up to forty five percent, and
it goes on and on barley, barley seed fifty seven percent,
wheat ninety four percent, bovine and meat products twenty six
and a half percent. All of those faced tariffs and
(29:55):
when you average it out, it's about a six point
one percent and tariff on US imports. So is it
really bad that we're trying to institute tariffs? I don't
think so. I think that it's a good plan. Again,
(30:19):
they're retaliatory. So if all of a sudden, Canada decides, hey,
you know something, you know, maybe we're being a little
bit ridiculous. Maybe two hundred and seventy percent tariff on
milk is a little bit crazy. Maybe we're going to
be complete gentlemen and go to two hundred percent. Okay, Well,
(30:41):
then we go to two hundred percent on that item. Right,
if they want to go to zero, guess what we do.
We go to zero. That's retaliatory. Okay. Now, it doesn't
take a lot to use common sense. So I would
encourage you to stay in that vein keep everything at
a common sense level. Now, don't worry about the wine
(31:05):
and things like that. Now, anybody that's a wine lover
knows that California has some of the best wine in
the country, coming from Napa Valley and Sonoma. It really
turns out some class reds and whites. And have you
ever heard let me ask you this, have you ever
heard of the Judgment of Paris in nineteen seventy six.
(31:29):
That's when California wines went toe to toe with French
heavyweights and a blind taste test, and California walked away
the winners. So if tariffs bump up the price of
a Bordeaux, just grab a Napa Valley vintage instead, and
you're gonna save cash and put the American growers back
in a position of strength. So you know that that's
(31:54):
enough on wine. I'm bored. Let's move on to something else,
all right, all right, so let's you know what here,
let's let's do this. Let's talk about ways to dodge
the tariff bullet. So let's say you want to go
American and you're in the clear, right Ford or GM
(32:14):
built in Detroit, not shipped from overseas. Correct, well, not
so much. You're gonna be paid. That's gonna have an
embedded cost inside of there. Now, seventy eight percent of
the vehicles and parts are manufactured here in the United States.
(32:36):
For Ford, GM, on the other hand, shockingly just barely
squeaks into that American column in my opinion, because they're
fifty two percent. Okay, so I would say just barely
in the majority. Now, who are the ones that, if
you buy, you won't get hit with tariffs? Ready, drum
(32:59):
roll please, it's going to be Tesla and Rivion Now
think about that. Hold on a second, hold on, hold on,
that's interesting. Why is that interesting? Well, because where is
all the hatred going right now? And another reason because
(33:27):
the electric cars are to be championed. Correct. Isn't this
a wonderful way to drive sales towards electric vehicles. You
don't have to worry about embedded tariff taxes. That's a
good thing. Now, what about groceries? You know, I'm kind
(33:50):
of I'm reaching here, I'm reaching Okay, So we'll go
with some California avocados instead of Mexico Florida oranges, Texas beef.
No terrifikes there, clothes? How about flip the tag made
in America, skip the text ooze NAPA and Sonoma rat
(34:11):
wines here and they outshine plenty of European bottles, and
Kentucky Bourbon is a heavyweight champ. So it's not just
while it's smart, it's really a flex for the homeland. Now,
what about tech. Yeah, there's a lot of gadgets out
there that definitely come from China, but there is hope.
(34:32):
Now we've got Texas Instruments who pumps out semiconductor statewide,
and Apple's flirting with US production, so tariffs might nudge
that along at a quicker pace, which would be a
beautiful thing. And we've got pricier imports could mean that
homegrown innovation could be a new wave. And you can't
(34:56):
ditch imports entirely, right, But stocks, you know, they'll what
I want to say. I don't want to say that.
That's not what I want to say. Here's what I'd
like to say. If you stock up before the price
tags climb, or you hunt for US swaps like Wisconsin
(35:19):
cheddar that holds its own against European cheese and Vermont
leather goods give Italy a run for its money. So
here's a pro tip for you. Skip the wine if
you're really pinching pennies and your wallet and your liver
are going to give you a high five. And that's
just some common sense coming from your friend Drew. And
(35:41):
don't tell me, don't say I never gave you anything.
Gave you some good advice on this financially and health wise.
Now it isn't just about dodging costs, okay, It's really
about spotting the upside. And tariffs could light a fire
under US companies. So after the nineteen seventies oil crisis,
(36:05):
we got fuel efficient cars. Now tariffs on Chinese tech
might spark a five G or a chip boom here
short term squeeze, but a long term jackpot. So what
is the bottom line? Keep the faith because optimism wins
(36:26):
and social security has got some bumps ahead, but it
is definitely not circling the drain. The economies looks a
little bit wobbly, but it's a launch pad for growth.
Tariffs are pain, but you can outmaneuver them. And America's
been through the grinder with depression, wars, crashes, and what
(36:52):
have we always done? We're resilient people, were resilient nation.
We always dust ourselves off and we keep moving ahead.
And your grandparents they didn't throw in the towel, and
neither should you. And let me just get personal for
one second. Okay, back in, Let's say, you know, two
(37:16):
thousand and six I was I was a green horn
in financial services, and we had some student loans, you know,
that were right up to our eyeballs. And the market
was at two thousand and eight, the market was in
a free fall, and the world was just kind of
looking like it was toast. But I dug in, I
(37:40):
kept learning, and I wrote it out, and by two
thy and thirteen things were humming again. And that taught
me something. Tough times are temporary, but tough people stick around.
And if you're jittery about twenty twenty five, I want
you to lean on that resilience because it's baked into
(38:02):
who we are. If you've got social security worries and
you're working, bulke up your four to one K, kick
off an IRA, snag some dividends stocks, build your own
safety net markets, dipping suite stocks are on sale, tariffs
are bugging, you buy local, boost American workers. It's not
(38:27):
just about hanging on, it's about coming out ahead. And
here is a quick playbook for you. If you're saving,
challenge yourself to save more, because one thing that we
know is that with social security, it has seen its challenges,
(38:53):
it will continue to see its challenges. And if you
want to take this to an extra stream level, adopt
the mindset that this will be a pay as you
go system and that social Security will be for those
(39:14):
This is a worst case scenario. I'm saying a worst
case scenario that if you really want to adopt this mindset,
then you need to do two things. Consider it going.
Don't plan on it. I don't think you should do that,
(39:34):
but again, if you want to act that way. Secondly,
if you want to take that mindset that social Security
is going to be gone and it's gone forever, and
you do have money, but you already live on that
social Security income, how can you replace that? The only
(39:58):
tool that is availed to do that that will guarantee
that you are paid as long as you are breathing
is an annuity. So if you need to double down
and make sure that you have guaranteed fixed income for
(40:19):
your life, the only way to do that would be
with a form of an annuity. So if that's something
that's of concern to you, give me a call. Let's
put together a financial plan for you. Let's walk through
what it would look like if there were a cut
(40:39):
to Social Security, if there were no Social Security, and
what is your plan of attack for yourself? Okay, because
as you know, nobody owes us anything now, we could
very well have put all that money into this program
for ourselves and not have anything there. Again, like I said,
(41:01):
very unlikely. I was looking at the other day. Let
me see if I can pull this up for you again.
So I'm sorry. I sit here as I'm doing the show.
What I like to do is I've got my notes,
and I like to look things up, and I want
to share with you something here, and I'll try to
talk as I do it at the same time. I've
(41:22):
become a little bit better at that. I used to
not be able to chew them and walk at the
same time, but I'm getting better as.
Speaker 1 (41:26):
I get older.
Speaker 4 (41:27):
All right here it is, This is what I was
looking for. So for those of you who are out
there and you're really concerned that there's going to be
something major that happens with Social Security on an overhaul,
there has been so many situations where the simply the
talk of making an amendment to social Security has been
(41:50):
the downfall to people. That's why they call it the
third rail of American politics is again, touch it and
you're likely going to get electrocuted and die right on
the scene. So one notable example goes back to nineteen
thirty six with Guy Gillette. He was a Democrat US
Senator from Iowa, and he opposed certain aspects of the
(42:12):
social Security system, and his stance, among other disagreements with
Roosevelt's administration contributed really to his defeat in the nineteen
forty four election, and he ended up losing to Republican
Governor Bork Hankenlooper. And similarly, in the nineteen eighty one
Mississippi's fourth Congressional district special election, Republican candidate Lyles Williams
(42:39):
faced Democratic candidate Wayne Dowdy. Now, Dowdy opposed the Reagan's
administration on proposed tax cuts and specifically citing concerns about
cuts to social security and education. And this position of
his really resonated with the voters and it led Dowdy
to a narrow victory a runoff election. And then even
(43:02):
as far as when we go into most recent times,
you know George W. Bush talked about privatizing Social Security,
and they were pushing on this hard, and they were
facing some strong opposition with groups like ARP and others.
And really that kind of led to the Democrats taken
(43:26):
over power again. But then we even see it from
Barack Obama. Now what had happened was he too was
really pushing to make a change to the calculation of
social securities cost of living adjustments and that's known as
the CPI or the chained CPI, I should say, which
(43:49):
would have resulted in smaller annual increases for beneficiaries. So
the proposal faced immediate backlash from members of his own
party in addition to advocacy groups, eventually led to his
withdrawal of the idea. Now, this didn't it wasn't the
demise of him because it was his second term. Had
that had happened in the first term, it may not
(44:13):
have been so good for him. But additionally, let's think
about the Clinton administration. Now, Bill Clinton and the House
Speaker Knuke Gingrish at the time had reportedly reached a
deal about Social Security which include benefit cuts in addition
to some privatization elements. However, so one thing he can
(44:35):
be thankful, well, a couple things he could be thankful
for with Monica Lewinsky, but specifically that because of this
being such a distraction, it actually allowed him to abow
face and not make the reform to Social Security that
(44:57):
he had planned on doing, and if if he had,
I'm quite convinced that that would have been political suicide
for him. So with that being said, remember when this
first started in nineteen thirty five with Social Security, life
(45:20):
expectancy was sixty one. Today it's seventy nine, So we've
tacked on eighteen years thanks to medical advancement and medicine,
medicine and healthcare. So we got to stay sharp, stay hopeful,
and keep tuning in, all right, because you have got
to prepare for yourself. Now I've shared with you different
(45:45):
ways that this could potentially get straightened out. We'll see
what comes into play. But before that, I want to
I want to take you down a path here before
the end of the show, which I think is very important.
Setera Investment Man Management just wrapped up their twenty twenty
five second quarter outlook as titled Steering through Uncertainty, So
(46:07):
it's a fitting phrase for the current state of affairs
and what they started talking about was corrections and contrasts
and says in March. In March, we saw the S
and P five hundred enter correction territory dropping over ten
percent from its previous peak for the first time since
(46:27):
October of last year. So that kind of volatility, while
it's unsettling, it's a normal part of investing, as we've
been talking about. But what's interesting here is in this
report is how the rest of the world is faring
by comparison. So international markets, especially developed ones like those
(46:48):
in Europe and Asia, have significantly outperformed US markets in
twenty twenty five so far. So the EFA index is
up over twelve percent while the SMP is down more
than three percent year to date as of mid March.
Also catching attention is the rebound of value stocks over
(47:10):
growth stocks. So if you look at the Russell one
thousand value index, it's up nearly two percent while its
growth counterpart is down over eight percent. We've also seen
that bonds have started to step back into the spotlight,
with yields rising early this year then dipping as uncertainty
(47:30):
kind of spread. So balanced portfolios which include a good
health mix of bonds and international equities are currently outperforming
the SMP five hundred alone. Now, we haven't seen that
in a while. So it's an old friend that has
not been in town for quite a while. But here
(47:50):
he comes, and he's steady like he used to be. Now,
the three dominant forces that are creating some turb mulence
that we're seeing right now is AI spending, the potential tariffs,
and government spending cuts. Now, in January, American tech firms
(48:10):
pledged up to five hundred billion dollars for AI infrastructure.
Now that's an ambitious push that fed investor you know,
really the investors were just kind of feeling the optimism there,
but the excitement was really kind of quickly tempered by
(48:33):
news of the Chinese AI company. And you'll remember this
just a couple months back, that this company, Deep Seek
comes on the scene and they start spouting off saying
how they're only paying fractionally what we are paying for
AI and that they're making this an open source as well.
(48:53):
And that raised some really tough questions about the long
term profitability of the AI race in the United States,
and it really created headwinds for companies like chip makers
that benefit from the AI spending now the media has
shifted to potential trade tariffs, which with you know, much
(49:16):
of this conversation is really kind of happening. It's happening
out in the open between other countries here, and businesses
are kind of stuck in this holding pattern because they're
waiting to make major decisions about not only just hiring
and production but capital spending, and they want to wait
(49:36):
until there's a little bit more clarity. So the delays
are already showing up in some forward looking economic indicators
and then we have Doge. So love it or hate it,
it's getting the headlines, that's for sure. And that's the
Department of Government Efficiency. Now, if you haven't gone on
(49:57):
their website, I would encourage you too. And they put
the line items in which where they find that there's
some fraud and abuse and areas that they can cut,
and that is right out there in the open. So
don't take the news's word for it. Just go right
there and you'll see it. So the Trump error initiatives
(50:19):
are really aiming to slash federal spending in addition to
reducing payroll. So while that may help the deficit, it
could also mean a rise in unemployment in addition to
slower government backed economic activities, so that too is leading
into I should say, feeding into the uncertainty. So with
(50:43):
all of this being felt in consumer confidence and in
employment data, the reports out there Won't specifically from the
University of Michigan and the Conference Board are showing that
confidence is starting to decline, so the ISM manufacturing surveys,
a drop in new orders, and job cut announcements are
(51:03):
rising now with the largest spikes since July of twenty twenty.
Still there is a silver lining. Labor market data shows
that jobs are opening and they remain above pre pandemic levels.
The FED appears to be poised to cut rates if
the economy weakens, and inflation, while it's still elevated, it
(51:28):
has cooled from earlier highs. So importantly, many of the
concerns about AI competition and tariffs may prove to just
be temporary and overblown. And there are still some lingering
questions out there about how efficient deep seek really is.
(51:48):
Now there was a study out there. I was trying
to find it getting close to the end of the show,
so I don't want to waste too much time Himen
and Haunt in the microphone here, but I believe it
was that deep seek showing that it's what do I
want to say? It was at an eighty five percent No, yeah,
(52:11):
it showed that eighty five percent of the time it
was not accurate, So an eighty five percent failure rate,
if you would. So that's scary, all right, because a
lot of companies depend upon AI and if you're getting
information that is not accurate, well that's not a good thing,
especially when you're making decisions off of this information. Also,
(52:33):
let us not forget, you know, we still have some
countries that are stepping up with their stimulus efforts. We've
got Germany is planning a historic fiscal spending package, and
China's rolling out programs to boost consumption, including wage hikes
and child's subsidies, which, as I've said before in the past,
(52:57):
Russia and China they are so weak they don't have
enough children. Now they're trying to buy children after for
years trying for families not to have them. And meanwhile,
we've got the US is benefiting from energy independence, unlike
Europe and China. We could see relief if a ceasefire
(53:20):
is reached in this Russia Ukraine conflict. So we do
have a horse in the race on that, and there's
plenty of noise. The US economy still holds some important
advantages here and diversification, especially international, is starting to pay off.
So hang in there. There's a lot going on and
(53:47):
depending upon how you see things, and I think a
majority of people are concerned. That's okay. That's not a
sign of weakness to be concerned, And it doesn't mean
that you're right. It doesn't mean that you're wrong. I
always tell people the best financial decision sometimes is the
(54:11):
one that gives you the greatest amount of peace. Now,
it may not make sense on a spreadsheet, and that's okay,
But if it gives you peace and it gives you health,
then that may be the right thing for you. Okay.
When I say that, I'm not telling you to take
your money out of the market. What I'm saying is
(54:33):
that it's okay to back off some of the risk.
You know, you may take a questionnaire and it says
that you're an aggressive investor, but something inside of you
is telling you, I just don't feel comfortable right now.
That's okay. Let's back off the risk a little bit.
Let's get you a new design portfolio that aligns with
(54:56):
how you feel today. Because remember the way that we
are set up as fiduciaries is we are here to
do exactly what is the best thing for you. And
we do not sell your mutual funds and charge you
high commissions on different products so that you can't about
(55:19):
face and go in a different direction. Okay, So if
you're concerned, I would encourage you to reach out five
one eight two zero three one nine eight three. Again
you're listening to your money matters. I'm your host, Drew Prescott,
chartered retirement planning counselor and accredited wealth management advisor at
Prescott Private Wealth, and I thank you so much for
(55:41):
listening today and until we talk again, May God bless
you and God bless your family.
Speaker 1 (55:48):
At Prescott Private Wealth, we understand your financial picture is unique.
Don't get lost in the noise of mixed advice. Visit
us at four or five to one Who's Sixth Street
in Troy, New York, or online at PRESCOTTPW dot com.
Led by Drew Prescott, our team offers comprehensive solutions from
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estate planning. At Prescott were fully licensed to safeguard and
(56:10):
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is secure. Visit Prescott PW dot com today
Welcome to the hidden world of wealth, where secrets of
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(00:22):
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(01:06):
Four five one through sixth Street, Troy, New York one
two one eight zero.
Speaker 2 (01:18):
So when you look at the future obligations of social security,
the actual national debt is like double what people think
it is because of the future obligations. So Basically, people
are living way longer than expected, and there are fewer
(01:40):
babies being born, so you have more people who are
retired and get that live for a long time and
get work retirement payments, so the future obligations. So how
a bad the financial situation is right now for the
federal government, it will be much worse in the future.
Speaker 3 (02:03):
Today yet more examples that the Social Security Administration is
in turmoil because of the cunts that Elon.
Speaker 4 (02:08):
Musk and Doge are making.
Speaker 3 (02:10):
The Washington Post reports the Social Security Administration website crashed
four times in ten days this month.
Speaker 4 (02:20):
Welcome back, everybody, you're listening to your money matters. I'm
your host, Drew Prescott, chartered Retirement Planning counselor, a credited
wealth management advisor and president of Prescott Private Wealth located
in Troy, New York. And if that siren didn't jilt you,
in addition to the news that I've blended in there
(02:41):
for you, listen, if that didn't get to you, I
don't know what's going to get to you this Sunday morning.
So hopefully you were able to get out to church
and that got to you. But nonetheless, these headlines can
be a little bit frightening for some people. And it's
my job to share with you the insights that I
(03:03):
have and to make this all makes sense for you.
And today we're going to be tackling some very big
and explosive topics social security, we're going to cover the
economy in twenty twenty five, and why you should keep
your chin up even when the news feels like it's
countdown to doomsday. So you've seen the headlines the Social
(03:27):
Security Trust Fund might dry you up by two thousand
and thirty five. Tariffs are rattling the markets and the
stock markets doing its best impression of a nervous teenager
before a big test. But here's the real scoop. Okay,
I've been navigating this financial world for over two decades
and I've watched chaos turn into opportunity more times than
(03:52):
I can count. So grab your coffee, grab your tea,
or maybe even need to grab a stiff drink after
those sounds. But let's dive in together because we're talking
about resilience. We're talking about smart strategies and a hefty
dose of common sense to keep your wallet and your
sanity intact. So let's roll now. Picture this it's twenty
(04:16):
twenty five, and the economy is like a roller coaster
with a few loose bolts, thrilling, a little bit terrifying,
and you're just hoping that this thing holds together for
the entire ride. Well, President Trump's back at the helm
and he's flooring it with the tariffs. Twenty five percent
on Mexico and Canada, twenty percent on China. The headlines
(04:40):
are screaming trade wars and price hikes, and yeah, the
stock market's throwing a tantrum. We're seeing it. And as
of March twenty third, the S and P five hundreds
down three point three percent year to date, the Nasdaq's
down about seven point nine and the Dow off about
(05:00):
one point three percent. Sounds kind of grim, doesn't it.
But hold your horses. The markets love a good drama.
They freak out, they take a breather, and then they
climb right back up. I've seen this movie before and
it's always it always has a sequel. So let's break
(05:21):
it down and let's hunt for the silver lining today. Okay,
let's start off with Trump's tariff playbook. Now, these tariffs
are the talk of the town, and for good reason.
The idea, bring jobs back to American soil, juice up manufacturing,
and make the US the big dog on the global
(05:42):
block again. The downside, your shopping cart might feel the pinch,
so think cars, avocado or that shiny new TV that
you've been eye in. Now, it's a gutsy play, and
not everyone's waving pom poms here, But let's rewind the tape.
In two thoy and eighteen, tariff's on steel and aluminum
(06:05):
really kicked up a fuss. Prices jumped, and then what happened, Well,
we got the USMCA, a trade deal that's smoothed things
out short term pain for long term gain. And that's
the gamble, and I'm not betting against it just yet.
All Right, Tariffs are basically taxes on imported goods. They
(06:27):
jack up the price of stuff from overseas, nudging you
to buy American extent. So take cars for instance, tons
of parts roll in from Mexico and Canada, so twenty
five percent tariff could slap an extra couple grand on
that forty eight thousand dollars average new car price from
twenty twenty four, So think about that. Oof, that's things right,
(06:53):
But here's the flip side. If it convinces Ford or
GM to build more fact reason place like Ohio or Tennessee,
then we could see a wave of solid, well paying
jobs come back into our economy. And we'll talk about
Ford in GM here in a little bit. You'd be
(07:14):
completely shocked if you understood what portion of these vehicles
are manufactured and sourced here in the US. So before
we get to that, I want to share something with
you here. The Bureau of Labor Statistics PEG manufacturing at
twelve point nine million jobs in twenty twenty four, and
(07:38):
the question is could we nudge that up to thirteen
and a half million by twenty thirty. So they're saying
it's not a pipe dream, it's a slow burn, but
it's doable. So now let's zoom into your daily life
because we want to talk about Mexico for a second. Okay, Now,
Mexico sends US eighty percent of our avocados. Now, if
(08:00):
you have ever had them over in California, you know
they're they're awfully good. I would say they're just as
good those creamy green gems. They might jump though in
price because of this tariff, So we could see them
go from a dollar fifty currently to two dollars a
(08:20):
piece with a twenty five percent tariff. Now think about electronics.
We've got clothes, toy prices which could creep up across
the board. The consumer Price Index was up about two
point six percent in twenty twenty four, so tack on
tariffs and we might see that at three and a
half percent in twenty and twenty five. Now, companies might
(08:41):
eat some of that cost, but don't bank on it,
because remember, these are not charities. So still I'm not
hitting this panic button. Why because we've weathered bigger storms,
the oil shocks of the seventies, the Great Recession of
two thousand and even this COVID mess that we just
(09:02):
came out of from twenty twenty, and each time we adapted,
we innovated, and we came out even stronger. So let's
dig into some industries here. Let's take technology for a second,
and the tariff on Chinese goods could sting giants like
Apple who assemble iPhones across the Pacific. But here's the kicker.
(09:26):
Apple's already sniffing around India and Vietnam for new manufacturing hubs.
So it's not just about dodging tariffs. It's about spreading
their bet, making their supply chain tougher than a two
dollars steak. And we've got agriculture. That's another angle, right.
(09:47):
We've got farmers who might sweat if Mexico slaps tariffs
on our corn or soybeans in retaliation. But if Americans
start buying more homegrown goods, that could be bounce the scales.
Now it's a messy puzzle, but there's gold in the
cracks if you know where to look. The markets acting,
(10:11):
you know, a little bit crazy right now, we've got
techts taking it on the chin. The Nasdaq's down seven
point nine percent, Tesselas off about twelve percent because of
China's huge market and tariffs could crimp their style. Now
we're seeing apples wobbling to those iPhones. They might cost
more to churn out through this, but peak under the hood,
(10:33):
energy stocks are holding steady. We've got defense giants like
Lockheed Martin who are up about two percent. In utilities
like next Energy I'm sorry, yeah, Next Era Energy are
up about one point five percent. And people still need
lights on and planes in the sky. Tariffs are not well.
(10:53):
The S and P five hundred might be down three
point three percent, the Dow off by one point three percent,
but it's a hiccup, it's not a heart attack. So
flash back to twenty twenty COVID and when everything tanked,
and then we hit all time highs in twenty and
twenty one. So this dip that we're in now, it's
(11:16):
really a clearance rack because savvy investors buy when the
shelves are stocked cheap. And I'm calling a rebound right now.
So let's put this in perspective with a little history.
The stock market's really a drama queen if you think
about it, but it's got a killer track record. So
since nineteen twenty six, the SMP five hundreds averaged about
(11:41):
ten percent annually, So that's crashes, recessions and all. Now,
the Great depression that took a decade, but we climbed
out of it, the two thousand and eight meltdown. By
twenty and thirteen, we're back in business. And even the
COVID plunge turned into our rocket ride. Now, these tariff
(12:02):
jitters are just another chapter. Now, Remember, volatility is the
price of admission, but the payoff's worth it if you
have the stomach. So let's pivot to Social Security. How
we started off this show. You heard the headlines, you've
heard the chatter, and who remembers the voice that I
(12:24):
played at the beginning of that. Not Elon Musk. I'm
not talking about him. I'm talking about the lady. For
all you locals, how many of you remember it's now
Chris Jansen, but it was Chris Kopistashik And I remember
watching her when I was a kid and just had
a very distinct voice. And good for her for making
(12:45):
it onto the national stage. Now she's at CNBC. So
let's pivot to Social Security, as I said, and social
Security is the heavyweight champ of this episode. Okay, it's
tied to the economy like peanut butter to jelly. It's
a thriving When we have a thriving economy, it means
(13:09):
that more workers are paying in keeping this whole machine purring.
What's the big scare right now? The big scare is
the trust fund slated to run dry by two thousand
and thirty five, leaving benefits at eighty three percent of
what's promised. That's your heart earned cash on the line.
(13:32):
But here's why I'm not sweating it. First of all,
if you've been paying attention and you don't have your
head in the sand, you've been looking at your statements anyways,
And it has said this for quite a while now.
Politicians love to play kick the can down the road,
right because nobody wants the egg on their face of
(13:53):
being the big bad wolf that makes some type of
a tweak to social security, because we've seen how this
is played out in the past, and it's political suicide.
So even if even if you're someone that is the
furthest right and you're completely anti government and you're someone
(14:17):
on the far left right, believe it or not, social
security is one of those things that I believe. It's
about seventy seven percent of US taxpayers say they do
not want to lose social Security, all right, So that's
overwhelmingly the majority of this country. The last time that
(14:41):
this came up, when there was privatization talk about social security,
that didn't end well, all right. As a matter of fact,
if you do a little survey, you'll see that all
the people that were behind that their political careers came
to a screeching halt. So I want to dive in
today and share with you why I don't want you
(15:04):
hit in that panic button, okay, because here's what you
have to remember that, according to the Social Security statement,
the fund is slated to run dry by twenty thirty five,
leaving benefits at eighty three percent of what's promised. Again,
that's your hard earned money on the line. But again
(15:26):
I want you to tell you I'm not sweating it.
Social Security is a fighter, and I'm going to take
you through the history of that because it has not
really should have been knocked down at least, if not
knocked out, several times, but it has dodged some significant
punches going back to nineteen seventy seven, nineteen eighty three
(15:49):
and even beyond. So the doomsday crowds loud, we're hearing it, right,
but history has a louder megaphone. So let's unpack that
for you. Social Security is most people's financial lifeboat. And
you and your boss each toss six point two percent
(16:11):
of your paycheck into this up to a gross income
of one hundred and sixty eight thousand, six hundred dollars,
and this goes into the trust fund. Now it gets
parked in government bonds and it earns a little interest,
and it flows out to sixty five million folks, retirees,
(16:32):
disabled workers, and survivors. And right now it's sitting on
a cool two point eight trillion. But here's the hitch.
Baby boomers are retiring faster than gen Z can clock in.
So by two thousand and thirty five, payroll taxes might
(16:53):
only cover eighty three percent of the benefits. Not great,
but it's not armageddon either, So break it down. Let's
get started with a little story.
Speaker 5 (17:08):
Everybody sit down, listen carefully, everybody sit down, Sit down,
please sit Story time, Story time.
Speaker 4 (17:24):
So here we have it. It is nineteen sixty five
workers propped up every retiree. Today it's three, and that
number is shrinking. Plus we're living longer, more years of payouts.
So say you're pulling two thousand dollars a month now,
(17:49):
so that's twenty four thousand dollars a year. A seventeen
percent cut in two thousand and thirty five drops you
to sixteen hundred and six sixty dollars monthly or nineteen
nine hundred and twenty dollars a year. So that's a
haircut of four thousand and eighty dollars per year. So
(18:11):
for a couple, that's banking forty thousand dollars from Social
Security annually. That's sixty eight hundred dollars that's gone, and
that's real, duh, no doubt about it. But even at
eighty three percent, it's a godsend. Before social Security, half
(18:31):
of the seniors were really kind of scraping by and
they didn't have this Social Security benefit. So now poverty
is under ten percent for that crowd, and we're not
tossing that lifeline overboard, I can assure you of that.
So let's start to take a little bit more of
(18:53):
a stroll down history here. We've got Social Security kicked
off back in nineteen thirty five courtesy of Franklin D.
Roosevelt smack in the middle of the Great Depression, and
it was a lifeline for these seniors who had lost everything.
(19:13):
They had no four oh one K, they had no iras,
just grit and prayers. And over the decades it's grown,
adding disability benefits, survivor payouts, you name it. It's grown
quite a bit. And it's funded by those payroll taxes
with the trust fund as a rainy day stash. But
(19:36):
that stash is starting to shrink, and we've got to
figure out how to keep the boat afloat. So here's
the sunny side of things. We've pulled Social Security out
of the fire before. Let's go back to nineteen seventy seven.
It was flat broke. Congress had hike taxes and boom
(19:57):
crisis averted. Then in nineteen eighty three, benefits we're teetering.
Reagan and Tip O'Neil teamed up. They bump the retirement age,
taxed some benefits and save the day. So you see,
we've got options right now. So we can lift that
one hundred and sixty eight six hundred tax cap so
(20:20):
that big earners chip in more, nudge the twelve point
four percent tax rate, which is the employee and the
employer port should combined. We can move that to thirteen
or fourteen percent, or slide the retirement age from sixty
seven to sixty eight. Now, they're all tough pills, but
(20:42):
we've swallowed worse. So I want to chew on these,
on these fixes here for a second. Okay, Now there
are plenty more. There are a ton of different ways
that we can attack this. Now I'm sharing this with
you because if you're at home and uh, you know,
(21:02):
maybe you feel like you need a little peptobysmo from
everything that you're hearing, and you don't know how to
make sense out of this. I'm going to help you.
So again, let's think about these things that I just
shared with you. Okay, So raising the tax cap means
folks that are making over one hundred and sixty eight
six hundred dollars pay Social Security tax on every dollar,
(21:24):
not just the first chunk. So it's a cash infusion.
But high earners might grumble about that. So upping the
payroll tax, say to thirteen percent, means a thinner paycheck
for everybody, but it keeps the system humming and the
retirement age well. Back in nineteen thirty five, life expectancy
(21:46):
was sixty one and the retirement age at that time
was sixty five. So now we're living to seventy nine
on average and pushing it to sixty eight or seventy.
It makes sense on paper, but try telling that to
a construction worker with aching knees. And it's a debate
(22:10):
that's worth having because here's the ace up our sleeve.
A booming economy, more jobs, fatter paychecks, bigger tax haul
and these tariffs might sting. But if they ignite manufacturing,
that's more workers feeding the trust fund. That's more innovation,
(22:34):
and that's a game changer too. So AI for example,
even green energy new industries could really swell the workforce.
And the economy grew by two and a half percent
in twenty twenty four. So crank it up to three
percent or three and a half percent, and social securities
got some new breathing room. Okay. Plus, remember what I
(22:59):
said a moment ago. Politicians know that social security is untouchable.
So call it the third rail of politics, if you would,
because if you mess with it, your toast. And I'd
wager that we'll see it fixed by two thousand and
(23:19):
thirty five, will probably be between some tax tweaks, some
benefit trims, whatever it takes. We've danced this dance before
and we're going to do it again. So what I
want to let's transition into something here. Okay, I was
gonna do I was gonna do a little show today,
by the way, talking about some covered calls, strategies, some
(23:42):
naked puts, maybe some limit order stuff like that. But
then I thought, eh, that's not where you are right now,
That's not where the American mind is. So let's let's
go to where you're concerned. And I'm hoping that I'm
meeting you right there. I think that i am. But
here's what I want to share with you about these tariffs.
(24:04):
All right, So you know, we all have real life stories,
we all have our own thoughts, and sometimes sometimes people talk,
and when they talk, sometimes they actually show how little
knowledge they have about a topic that they run around
(24:24):
talking about all the time. And I want to share
one with you. So let's talk about tariffs. You know,
if you're paying attention, everybody has their take on it.
Everybody has something to say about it. And what I
found is that a lot of people are wrong. So
I'm here to straighten out. So let me give you
a Let me give you a little story about what
(24:45):
happened the other day. So I'm over, I'm over having
a drink with some friends over at the nineteenth Hole,
and there's a fella that's sitting in the corner, not
associating with anybody. And as we're having some drinks, one
(25:05):
of the fellows gets a glass of wine and then
out of the shadows in the corner there this voice
chimes in and says, you know that's going to cost
more on April, and I said, what's that and he
says the wine. So I turned to Ernie the bartender.
(25:27):
I said, Ernie, where's that from? And he says California.
So I spinned back to the guy and I said, well, Frankly,
you're wrong because from California, not France or Germany, so
tariffs don't touch it. So he kind of slinked off,
and you know, I savored my little sip. And that's
(25:48):
the type of noise that we're hearing out there. People
are freaking out. They're completely misinformed, all because the media
loves a good scare. Remember, bad news sells. All right,
take your time and educate yourself. Don't just go with
you know what somebody said at lunch hour, or the
(26:10):
loudest voice in your family, because you know they they
don't like anybody to challenge them. Do your own homework
before you lose your cool, all right. I just had
a meeting with a client the other morning, and he
is getting completely attacked on these tariffs he has He
(26:36):
doesn't right, he doesn't have a great understanding of them himself.
But he's got a family member that's very boisterous and opinionated,
and so he said, man, you know, can you share
some stuff with me about these tariffs? So what I
did was and I'll share the same thing with you. Okay. Uh,
(26:59):
you know you gotta do. You gotta do your own research,
all right. If you're listening to just CNN, C n AN,
C n b C, Foxnews, Bloomberg, whatever, you know, you're
missing out, h take take your time, do your own research.
I'm gonna pull this up here. I'm kind of buying
(27:20):
myself a little time because I'm trying to get into
the source that I want to share with you here. Okay,
So here's here. It is right here. So I want
to share some numbers with you. Maybe you're aware of them,
maybe you're not. And if you don't believe that that
these are real numbers, that's okay. I'll tell you where
you can go to look them up. Go to Canada
(27:41):
dot c A, go to the White House dot gov.
You can go to ah nbcnews dot com, WITS, dot
World Bank, dot org, PM, dot g C, dot c A. Yeah,
I've BBC dot com. This is all coming from the
these different sources, all right. So again, I don't mean
(28:04):
to to continue to beat a dead horse here. But
things are not as doom and gloom on these tariffs
as others are trying to make them out to be.
Here's why. So let's just look at this for a second.
Did you know that Canada has historically imposed high tariffs
on dairy imports from the US to protect its domestic industry.
(28:26):
Because these include tariffs that are approximately two hundred and
seventy percent on milk, two hundred and forty five percent
on cheese, and two hundred and ninety eight percent on butter.
Now let's go step further. How about poultry and eggs. Well,
(28:48):
the tariffs on chicken can reach up to two hundred
and thirty eight percent, while eggs face a tariff of
around one hundred and sixty three percent usage on the
other hand, yeah, not so bad, seventy percent. What about cars?
Canada imposes a tariff of around twenty five percent on
(29:09):
US made vehicles. What about steel and aluminum, Well, Canada
has applied a retaliatory tariff of twenty five percent on
steel and up to forty five percent, oh pardon me
on aluminum from the US. Now, what about general consumer
(29:34):
goods like TVs and HVAC equipment. Well, it's been cited
that they have tariffs up to forty five percent, and
it goes on and on barley, barley seed fifty seven percent,
wheat ninety four percent, bovine and meat products twenty six
and a half percent. All of those faced tariffs and
(29:55):
when you average it out, it's about a six point
one percent and tariff on US imports. So is it
really bad that we're trying to institute tariffs? I don't
think so. I think that it's a good plan. Again,
(30:19):
they're retaliatory. So if all of a sudden, Canada decides, hey,
you know something, you know, maybe we're being a little
bit ridiculous. Maybe two hundred and seventy percent tariff on
milk is a little bit crazy. Maybe we're going to
be complete gentlemen and go to two hundred percent. Okay, Well,
(30:41):
then we go to two hundred percent on that item. Right,
if they want to go to zero, guess what we do.
We go to zero. That's retaliatory. Okay. Now, it doesn't
take a lot to use common sense. So I would
encourage you to stay in that vein keep everything at
a common sense level. Now, don't worry about the wine
(31:05):
and things like that. Now, anybody that's a wine lover
knows that California has some of the best wine in
the country, coming from Napa Valley and Sonoma. It really
turns out some class reds and whites. And have you
ever heard let me ask you this, have you ever
heard of the Judgment of Paris in nineteen seventy six.
(31:29):
That's when California wines went toe to toe with French
heavyweights and a blind taste test, and California walked away
the winners. So if tariffs bump up the price of
a Bordeaux, just grab a Napa Valley vintage instead, and
you're gonna save cash and put the American growers back
in a position of strength. So you know that that's
(31:54):
enough on wine. I'm bored. Let's move on to something else,
all right, all right, so let's you know what here,
let's let's do this. Let's talk about ways to dodge
the tariff bullet. So let's say you want to go
American and you're in the clear, right Ford or GM
(32:14):
built in Detroit, not shipped from overseas. Correct, well, not
so much. You're gonna be paid. That's gonna have an
embedded cost inside of there. Now, seventy eight percent of
the vehicles and parts are manufactured here in the United States.
(32:36):
For Ford, GM, on the other hand, shockingly just barely
squeaks into that American column in my opinion, because they're
fifty two percent. Okay, so I would say just barely
in the majority. Now, who are the ones that, if
you buy, you won't get hit with tariffs? Ready, drum
(32:59):
roll please, it's going to be Tesla and Rivion Now
think about that. Hold on a second, hold on, hold on,
that's interesting. Why is that interesting? Well, because where is
all the hatred going right now? And another reason because
(33:27):
the electric cars are to be championed. Correct. Isn't this
a wonderful way to drive sales towards electric vehicles. You
don't have to worry about embedded tariff taxes. That's a
good thing. Now, what about groceries? You know, I'm kind
(33:50):
of I'm reaching here, I'm reaching Okay, So we'll go
with some California avocados instead of Mexico Florida oranges, Texas beef.
No terrifikes there, clothes? How about flip the tag made
in America, skip the text ooze NAPA and Sonoma rat
(34:11):
wines here and they outshine plenty of European bottles, and
Kentucky Bourbon is a heavyweight champ. So it's not just
while it's smart, it's really a flex for the homeland. Now,
what about tech. Yeah, there's a lot of gadgets out
there that definitely come from China, but there is hope.
(34:32):
Now we've got Texas Instruments who pumps out semiconductor statewide,
and Apple's flirting with US production, so tariffs might nudge
that along at a quicker pace, which would be a
beautiful thing. And we've got pricier imports could mean that
homegrown innovation could be a new wave. And you can't
(34:56):
ditch imports entirely, right, But stocks, you know, they'll what
I want to say. I don't want to say that.
That's not what I want to say. Here's what I'd
like to say. If you stock up before the price
tags climb, or you hunt for US swaps like Wisconsin
(35:19):
cheddar that holds its own against European cheese and Vermont
leather goods give Italy a run for its money. So
here's a pro tip for you. Skip the wine if
you're really pinching pennies and your wallet and your liver
are going to give you a high five. And that's
just some common sense coming from your friend Drew. And
(35:41):
don't tell me, don't say I never gave you anything.
Gave you some good advice on this financially and health wise.
Now it isn't just about dodging costs, okay, It's really
about spotting the upside. And tariffs could light a fire
under US companies. So after the nineteen seventies oil crisis,
(36:05):
we got fuel efficient cars. Now tariffs on Chinese tech
might spark a five G or a chip boom here
short term squeeze, but a long term jackpot. So what
is the bottom line? Keep the faith because optimism wins
(36:26):
and social security has got some bumps ahead, but it
is definitely not circling the drain. The economies looks a
little bit wobbly, but it's a launch pad for growth.
Tariffs are pain, but you can outmaneuver them. And America's
been through the grinder with depression, wars, crashes, and what
(36:52):
have we always done? We're resilient people, were resilient nation.
We always dust ourselves off and we keep moving ahead.
And your grandparents they didn't throw in the towel, and
neither should you. And let me just get personal for
one second. Okay, back in, Let's say, you know, two
(37:16):
thousand and six I was I was a green horn
in financial services, and we had some student loans, you know,
that were right up to our eyeballs. And the market
was at two thousand and eight, the market was in
a free fall, and the world was just kind of
looking like it was toast. But I dug in, I
(37:40):
kept learning, and I wrote it out, and by two
thy and thirteen things were humming again. And that taught
me something. Tough times are temporary, but tough people stick around.
And if you're jittery about twenty twenty five, I want
you to lean on that resilience because it's baked into
(38:02):
who we are. If you've got social security worries and
you're working, bulke up your four to one K, kick
off an IRA, snag some dividends stocks, build your own
safety net markets, dipping suite stocks are on sale, tariffs
are bugging, you buy local, boost American workers. It's not
(38:27):
just about hanging on, it's about coming out ahead. And
here is a quick playbook for you. If you're saving,
challenge yourself to save more, because one thing that we
know is that with social security, it has seen its challenges,
(38:53):
it will continue to see its challenges. And if you
want to take this to an extra stream level, adopt
the mindset that this will be a pay as you
go system and that social Security will be for those
(39:14):
This is a worst case scenario. I'm saying a worst
case scenario that if you really want to adopt this mindset,
then you need to do two things. Consider it going.
Don't plan on it. I don't think you should do that,
(39:34):
but again, if you want to act that way. Secondly,
if you want to take that mindset that social Security
is going to be gone and it's gone forever, and
you do have money, but you already live on that
social Security income, how can you replace that? The only
(39:58):
tool that is availed to do that that will guarantee
that you are paid as long as you are breathing
is an annuity. So if you need to double down
and make sure that you have guaranteed fixed income for
(40:19):
your life, the only way to do that would be
with a form of an annuity. So if that's something
that's of concern to you, give me a call. Let's
put together a financial plan for you. Let's walk through
what it would look like if there were a cut
(40:39):
to Social Security, if there were no Social Security, and
what is your plan of attack for yourself? Okay, because
as you know, nobody owes us anything now, we could
very well have put all that money into this program
for ourselves and not have anything there. Again, like I said,
(41:01):
very unlikely. I was looking at the other day. Let
me see if I can pull this up for you again.
So I'm sorry. I sit here as I'm doing the show.
What I like to do is I've got my notes,
and I like to look things up, and I want
to share with you something here, and I'll try to
talk as I do it at the same time. I've
(41:22):
become a little bit better at that. I used to
not be able to chew them and walk at the
same time, but I'm getting better as.
Speaker 1 (41:26):
I get older.
Speaker 4 (41:27):
All right here it is, This is what I was
looking for. So for those of you who are out
there and you're really concerned that there's going to be
something major that happens with Social Security on an overhaul,
there has been so many situations where the simply the
talk of making an amendment to social Security has been
(41:50):
the downfall to people. That's why they call it the
third rail of American politics is again, touch it and
you're likely going to get electrocuted and die right on
the scene. So one notable example goes back to nineteen
thirty six with Guy Gillette. He was a Democrat US
Senator from Iowa, and he opposed certain aspects of the
(42:12):
social Security system, and his stance, among other disagreements with
Roosevelt's administration contributed really to his defeat in the nineteen
forty four election, and he ended up losing to Republican
Governor Bork Hankenlooper. And similarly, in the nineteen eighty one
Mississippi's fourth Congressional district special election, Republican candidate Lyles Williams
(42:39):
faced Democratic candidate Wayne Dowdy. Now, Dowdy opposed the Reagan's
administration on proposed tax cuts and specifically citing concerns about
cuts to social security and education. And this position of
his really resonated with the voters and it led Dowdy
to a narrow victory a runoff election. And then even
(43:02):
as far as when we go into most recent times,
you know George W. Bush talked about privatizing Social Security,
and they were pushing on this hard, and they were
facing some strong opposition with groups like ARP and others.
And really that kind of led to the Democrats taken
(43:26):
over power again. But then we even see it from
Barack Obama. Now what had happened was he too was
really pushing to make a change to the calculation of
social securities cost of living adjustments and that's known as
the CPI or the chained CPI, I should say, which
(43:49):
would have resulted in smaller annual increases for beneficiaries. So
the proposal faced immediate backlash from members of his own
party in addition to advocacy groups, eventually led to his
withdrawal of the idea. Now, this didn't it wasn't the
demise of him because it was his second term. Had
that had happened in the first term, it may not
(44:13):
have been so good for him. But additionally, let's think
about the Clinton administration. Now, Bill Clinton and the House
Speaker Knuke Gingrish at the time had reportedly reached a
deal about Social Security which include benefit cuts in addition
to some privatization elements. However, so one thing he can
(44:35):
be thankful, well, a couple things he could be thankful
for with Monica Lewinsky, but specifically that because of this
being such a distraction, it actually allowed him to abow
face and not make the reform to Social Security that
(44:57):
he had planned on doing, and if if he had,
I'm quite convinced that that would have been political suicide
for him. So with that being said, remember when this
first started in nineteen thirty five with Social Security, life
(45:20):
expectancy was sixty one. Today it's seventy nine, So we've
tacked on eighteen years thanks to medical advancement and medicine,
medicine and healthcare. So we got to stay sharp, stay hopeful,
and keep tuning in, all right, because you have got
to prepare for yourself. Now I've shared with you different
(45:45):
ways that this could potentially get straightened out. We'll see
what comes into play. But before that, I want to
I want to take you down a path here before
the end of the show, which I think is very important.
Setera Investment Man Management just wrapped up their twenty twenty
five second quarter outlook as titled Steering through Uncertainty, So
(46:07):
it's a fitting phrase for the current state of affairs
and what they started talking about was corrections and contrasts
and says in March. In March, we saw the S
and P five hundred enter correction territory dropping over ten
percent from its previous peak for the first time since
(46:27):
October of last year. So that kind of volatility, while
it's unsettling, it's a normal part of investing, as we've
been talking about. But what's interesting here is in this
report is how the rest of the world is faring
by comparison. So international markets, especially developed ones like those
(46:48):
in Europe and Asia, have significantly outperformed US markets in
twenty twenty five so far. So the EFA index is
up over twelve percent while the SMP is down more
than three percent year to date as of mid March.
Also catching attention is the rebound of value stocks over
(47:10):
growth stocks. So if you look at the Russell one
thousand value index, it's up nearly two percent while its
growth counterpart is down over eight percent. We've also seen
that bonds have started to step back into the spotlight,
with yields rising early this year then dipping as uncertainty
(47:30):
kind of spread. So balanced portfolios which include a good
health mix of bonds and international equities are currently outperforming
the SMP five hundred alone. Now, we haven't seen that
in a while. So it's an old friend that has
not been in town for quite a while. But here
(47:50):
he comes, and he's steady like he used to be. Now,
the three dominant forces that are creating some turb mulence
that we're seeing right now is AI spending, the potential tariffs,
and government spending cuts. Now, in January, American tech firms
(48:10):
pledged up to five hundred billion dollars for AI infrastructure.
Now that's an ambitious push that fed investor you know,
really the investors were just kind of feeling the optimism there,
but the excitement was really kind of quickly tempered by
(48:33):
news of the Chinese AI company. And you'll remember this
just a couple months back, that this company, Deep Seek
comes on the scene and they start spouting off saying
how they're only paying fractionally what we are paying for
AI and that they're making this an open source as well.
(48:53):
And that raised some really tough questions about the long
term profitability of the AI race in the United States,
and it really created headwinds for companies like chip makers
that benefit from the AI spending now the media has
shifted to potential trade tariffs, which with you know, much
(49:16):
of this conversation is really kind of happening. It's happening
out in the open between other countries here, and businesses
are kind of stuck in this holding pattern because they're
waiting to make major decisions about not only just hiring
and production but capital spending, and they want to wait
(49:36):
until there's a little bit more clarity. So the delays
are already showing up in some forward looking economic indicators
and then we have Doge. So love it or hate it,
it's getting the headlines, that's for sure. And that's the
Department of Government Efficiency. Now, if you haven't gone on
(49:57):
their website, I would encourage you too. And they put
the line items in which where they find that there's
some fraud and abuse and areas that they can cut,
and that is right out there in the open. So
don't take the news's word for it. Just go right
there and you'll see it. So the Trump error initiatives
(50:19):
are really aiming to slash federal spending in addition to
reducing payroll. So while that may help the deficit, it
could also mean a rise in unemployment in addition to
slower government backed economic activities, so that too is leading
into I should say, feeding into the uncertainty. So with
(50:43):
all of this being felt in consumer confidence and in
employment data, the reports out there Won't specifically from the
University of Michigan and the Conference Board are showing that
confidence is starting to decline, so the ISM manufacturing surveys,
a drop in new orders, and job cut announcements are
(51:03):
rising now with the largest spikes since July of twenty twenty.
Still there is a silver lining. Labor market data shows
that jobs are opening and they remain above pre pandemic levels.
The FED appears to be poised to cut rates if
the economy weakens, and inflation, while it's still elevated, it
(51:28):
has cooled from earlier highs. So importantly, many of the
concerns about AI competition and tariffs may prove to just
be temporary and overblown. And there are still some lingering
questions out there about how efficient deep seek really is.
(51:48):
Now there was a study out there. I was trying
to find it getting close to the end of the show,
so I don't want to waste too much time Himen
and Haunt in the microphone here, but I believe it
was that deep seek showing that it's what do I
want to say? It was at an eighty five percent No, yeah,
(52:11):
it showed that eighty five percent of the time it
was not accurate, So an eighty five percent failure rate,
if you would. So that's scary, all right, because a
lot of companies depend upon AI and if you're getting
information that is not accurate, well that's not a good thing,
especially when you're making decisions off of this information. Also,
(52:33):
let us not forget, you know, we still have some
countries that are stepping up with their stimulus efforts. We've
got Germany is planning a historic fiscal spending package, and
China's rolling out programs to boost consumption, including wage hikes
and child's subsidies, which, as I've said before in the past,
(52:57):
Russia and China they are so weak they don't have
enough children. Now they're trying to buy children after for
years trying for families not to have them. And meanwhile,
we've got the US is benefiting from energy independence, unlike
Europe and China. We could see relief if a ceasefire
(53:20):
is reached in this Russia Ukraine conflict. So we do
have a horse in the race on that, and there's
plenty of noise. The US economy still holds some important
advantages here and diversification, especially international, is starting to pay off.
So hang in there. There's a lot going on and
(53:47):
depending upon how you see things, and I think a
majority of people are concerned. That's okay. That's not a
sign of weakness to be concerned, And it doesn't mean
that you're right. It doesn't mean that you're wrong. I
always tell people the best financial decision sometimes is the
(54:11):
one that gives you the greatest amount of peace. Now,
it may not make sense on a spreadsheet, and that's okay,
But if it gives you peace and it gives you health,
then that may be the right thing for you. Okay.
When I say that, I'm not telling you to take
your money out of the market. What I'm saying is
(54:33):
that it's okay to back off some of the risk.
You know, you may take a questionnaire and it says
that you're an aggressive investor, but something inside of you
is telling you, I just don't feel comfortable right now.
That's okay. Let's back off the risk a little bit.
Let's get you a new design portfolio that aligns with
(54:56):
how you feel today. Because remember the way that we
are set up as fiduciaries is we are here to
do exactly what is the best thing for you. And
we do not sell your mutual funds and charge you
high commissions on different products so that you can't about
(55:19):
face and go in a different direction. Okay, So if
you're concerned, I would encourage you to reach out five
one eight two zero three one nine eight three. Again
you're listening to your money matters. I'm your host, Drew Prescott,
chartered retirement planning counselor and accredited wealth management advisor at
Prescott Private Wealth, and I thank you so much for
(55:41):
listening today and until we talk again, May God bless
you and God bless your family.
Speaker 1 (55:48):
At Prescott Private Wealth, we understand your financial picture is unique.
Don't get lost in the noise of mixed advice. Visit
us at four or five to one Who's Sixth Street
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