Hello,

There’s no two ways about it… according to the latest numbers from the Federal Reserve’s Report on the Economic Well-Being of U.S. Households, the number of American parents who report they’re doing “at least okay” financially has taken a double-digit hit over the last two years. 

It's a sharp movement, and for many parents, a movement in the wrong direction. By all appearances, parental financial confidence had been on a steady rise since 2015 (lagging just behind the financial confidence of all other adults) and had seemingly recovered from a one-time pandemic-era hit. That changed in 2022, and, by all appearances, 2023 only accelerated the trend.

What’s Behind the Drop in Financial Confidence?

Today’s parents take parenting seriously! About 87% say they treat the role as “one of the most important” or “the most important” things they do, and the majority (64%) believe they’re doing a very good or even excellent job. That said, most (62%) also report that the job is “somewhat” or “a lot” harder than they’d believed it would be.¹

Costs are likely a big part of that difficulty. The most recent USDA Expenditures on Children by Families annual report (2015) reported the estimated average cost of raising a child from birth to age 17 was $233,610. Assuming these expenses roughly tracked overall inflation (which they may not have, given the big jumps in healthcare, childcare, food, and housing costs in recent years), that expense is now over $300,000. That’s a lot, especially considering that this eye-popping number doesn’t even include the cost of college!^2,3

It’s no wonder that older parents are now helping their adult children more than ever. According to a recent survey by the Pew Research Center, most older parents (59%) report helping their adult children in the past year despite the fact that many of these adult children are now parents themselves.⁴

Possible Relief on the Horizon?

Here’s the good news–financially savvy parents are not out of options! Beyond the financial basics of budgeting, saving, investing, and smart debt management, the SECURE Act 2.0 changed the rules on tax-advantaged 529 educational savings plans. Parents can now use these funds for a big swath of qualified educational expenses, including everything from private kindergarten to college to trade school, dorm rooms, textbooks, technology, and much more. Both parents and grandparents can contribute to 529s.

More good news–parents are not out of options with their 529s if their children decide against higher education. In fact, they can make tax and penalty-free withdrawals into a Roth IRA retirement plan. Just keep in mind that Roth IRA contributions are phased out for taxpayers with adjusted gross incomes (AGIs) above a certain amount.⁵

On the political horizon, there may be another bipartisan opportunity to increase the Child Tax Credit. Details, at the moment, remain unresolved, but most agree that this could be a critical measure to support parental financial confidence.⁶

Final Thoughts

If you’re a parent or grandparent thinking about your finances, give us a call so we can talk about what’s on your mind. Hopefully, the recent hit in parental financial confidence is a blip, and the trajectory returns to an upward swing! In the meantime, extend a little understanding to the parents in your life, or if you’re a parent, know that you’re not alone.

Your Partner,

Your Eagle Wealth Team

IRS Releases 2025 Tax Brackets

The Internal Revenue Service released the updated income tax brackets, standard deduction, and retirement contribution limits for the 2025 tax year. While these changes won’t impact you for some time, it may benefit you to start thinking ahead.

The top rate remains 37% but remember that 2017’s Tax Cuts and Jobs Act expires at the end of 2025. Overall, more than 60 provisions have changed at the federal level. Here are a few of the most critical changes in the federal tax bracket and retirement contribution limit. While the IRS has highlighted its changes, keep an eye out for any changes to individual and business taxes that may be pending in your state.⁷

Tax Bracket Inflation Adjustment
Overall, tax brackets have been adjusted upwards for 2025. This adjustment is based on the Consumer Price Index and primarily accounts for inflation.

Standard Deduction
The standard deduction has increased to $30,000 for married couples filing jointly, up $800 from the previous year. For single filers, this number increased by $400 to $15,000.

Marginal Rates
Marginal tax rate brackets are also increasing.

Gift Tax
The annual gift tax exclusion for 2025 is $19,000, an increase of $1,000 from the previous year.

Estate Tax Credit
Individuals receiving an inheritance in 2025 will be able to exclude $13,990,000 from federal taxation, up from $13,610,000 in the previous year.

All information sourced from IRS.gov. Remember that we provide updates for informational purposes only, so consult with your tax professional before making any changes in anticipation of the new 2025 levels. You can also contact our offices, and we can provide information about the pending changes. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don't levy a state income tax.

The Week on Wall Street

Stocks slid last week as mixed economic data and strong-but-not-spectacular Q3 corporate reports failed to inspire investors.

The Standard & Poor’s 500 Index fell 1.36 percent, while the Nasdaq Composite Index declined 1.50 percent. The Dow Jones Industrial Average edged down 0.15 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 0.96 percent.^8,9

Q3 Reports Uninspired

Stocks rallied early Wednesday after the gross domestic product report showed a strong economy that appeared on the path to a soft landing. However, stocks moved lower throughout the day as investors digested mixed Q3 reports from a few mega-cap tech names.^10,11

Stocks were under more pressure Thursday as disappointing outlooks for some key tech companies pulled the market down. A softer-than-expected jobs report on Friday unsettled investors, but stocks picked up as the day progressed, and attention shifted to how the Fed may interpret the jobs data.¹²

By Friday, the Nasdaq’s eight-week winning streak had ended, and the S&P fell for the second week.

Fed Back in Focus After Jobs Report

At its most recent meetings, the Fed has made it clear that it needed to balance the risks of both inflation and employment.

So Friday's jobs report that showed 12,000 jobs created in October caught some by surprise. Economists expected the Labor Department to report 100,000, down from September’s 223,000 jobs.¹³

Investors parsed the data and determined the strike at a major aircraft manufacturer and two hurricanes caused the jobs report to fall short of estimates. Investors also appeared to believe the jobs report would prompt the Fed to move on rates at its two-day policy meeting, which ends on November 7.

Past performance is not a guarantee of future results. Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance.

^{Source: YCharts.com, November 2, 2024. Weekly performance is measured from Monday, October 28, to Friday, November 1. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.}

<sup>1. Pew Research Center, Parenting in America Today, January 24, 2023
2. USDA Food and Nutrition Service, 2015 Expenditures on Children By Families, January 9, 2017
3. CPI Inflation Calculator, 2024
4. Pew Research Center, Parents, Young Adult Children and the Transition to Adulthood, January 25, 2024
5. Investor.gov, 2024
6. CATO Institute, Both Candidates Support Child Tax Credits, but Their Approaches Differ., October 14, 2024
7. IRS.gov
8. The Wall Street Journal, November 1, 2024
9. Investing.com, November 1, 2024
10. CNBC.com, October 30, 2024
11. The Wall Street Journal, October 30, 2024
12. The Wall Street Journal, November 1, 2024
13. The Wall Street Journal, November 1, 2024

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^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

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