December Monthly Insights - AI risks, Life Expectancy and Tax Corner
Market check-in: AI and Risk
Recent data still looks supportive for investors. Corporate earnings have been strong, the Fed is sounding more friendly, and inflation is slowly cooling.
At our Smart Investing Dinner Seminar in November, we talked about:
Market outlook
Asset allocation
Risk management
Tax planning Strategies
One big topic was AI.
We don’t believe today’s AI boom is the same kind of bubble as the internet in 2000. Back then, many companies had big promises but very little profit.
Today, many AI leaders are:
Already highly profitable
Generating strong cash flows
Investing heavily to meet real demand for computing power
That said, some of these companies now trade at high valuations, so we should expectmore ups and downs in the stock market. Because of this, we still believe a diversified portfolio matters a lot, including:
U.S. stocks
International and emerging markets (which capture more of the semiconductor supply chain in places like Taiwan and South Korea)
Bonds
Gold
Alternatives
Feel free to email me if you would like to discuss your investment portfolio.
Life expectancy vs. Health life expectancy
A few key numbers from recent data[1]:
In 2023, U.S. life expectancy at birth was 78.4 years
In 2000, it was 76.7, so overall life expectancy has not moved that much.
For men, life expectancy in 2023 was 75.8 while for women, it was 81.1.
But there is another idea: Health life expectancy — the years we spend in relatively good health. According to the World Health Organization, the average health life expectancy in the U.S. fell from 65.3 years in 2000 to 63.9 years in 2021. That means many people are living longer, but not always living healthier in those extra years.
A few gentle reminders:
Living longer doesn’t always mean living healthier.
Being healthy today doesn’t guarantee we’ll be healthy 10–20 years from now.
This is why I encourage clients to:
Start with life goals, not just numbers.
Let money serve your life, not the other way around.
If you’d like a warm, safe place to talk about your goals, fears, and hopes—financial or personal—just reply to this email. We can explore what truly matters to you and then design your money around that.
Tax corner: new senior deduction and SALT planning
Because of the new One Big Beautiful Bill Act (OBBBA), starting in 2025, there are a few important tax changes to keep in mind, especially for retirees and near-retirees.
New deduction for seniors (age 65+)
For 2025, there is a new deduction for seniors:
$6,000 per taxpayer age 65+
$12,000 for a couple filing jointly if both are 65+
You do not have to itemize deductions to use this. However, it phases out as income rises:
For single filers, it starts to go down when modified AGI is above $75,000.
For joint filers, it starts to go down above $150,000.
It disappears completely after income is $100,000 above those levels.
SALT deduction
You may be able to deduct up to $40,000 of state and local taxes (SALT).
But the higher limit starts to phase out when income is above $500,000.
This is especially important for high-income earners in states like MD, CA, NY, NJ, and VA.
Why this matters for Roth conversions and withdrawals
When you think about:
Roth conversions
IRA withdrawals
Realizing capital gains
…it becomes very important to manage your income level in each year.
For example:
If you skip a Roth conversion this year, you might keep more SALT deductions and pay less tax this year.
But later, you might face larger required minimum distributions (RMDs), higher tax brackets, and possibly higher Medicare premiums.
There is usually a trade-off between:
Saving taxes now, and
Reducing taxes and healthcare costs later.
This is exactly the type of planning we help clients with. We map out future cash flow, expected RMDs, and tax brackets over time so you can see the full picture.
If you’re thinking about Roth conversions, IRA withdrawals, or realizing gains, it’s a great idea to talk before year-end so we can review your options together.
