In today’s podcast, I want to take a few minutes to look back on 2025…and then use what we learned to prepare for 2026.

Because reflection is one of the best exercises we can do before we begin the work of designing the year ahead.

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Articles, Links & Resources:

…Big Draw Downs often lead to strong year end gains.
Bureau of Labor Statistics – Inflation 
Inflation Since 1872 
https://www.minneapolisfed.org/ Inflation from 1913-
BLS – The Employment Situation.
Goldman forecasts double digit growth
Analyst revamps S&P 500 target through 2026
Do Downturns Lead to Down Years?

Transcript:

465 The Year in Review — and Preparing for the Year Ahead

Announcer: Welcome back America to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. And now here is your host, Jason Parker,

Jason Parker: America. Welcome back to another round of Sound Retirement Radio.

You’re listening to episode number 465. The year in review and preparing for the year ahead. In today’s podcast, I wanna take a few minutes to look back on 2025 and then use what we learned to prepare for 2026. Reflection is one of the best exercises we can do before we begin the work of designing the year ahead.

But before we get into this show, let’s start out by renewing our mind. This verse comes to us from First Thessalonians chapter five verse 18. Give thanks in all circumstances for this is God’s will for you in Christ Jesus. And then of course, something fun for the grandkids. What do snowman eat for breakfast?

Frosty flakes. What do you get when you cross a snowman with a dog? Frostbite. Why was the snowman looking through a box of carrots? He was picking his nose.

Remember, articles, links, resources, and the transcription of today’s show can be found@soundretirementplanning.com. Just click on episode number 465. So let me ask you a question. How would you describe the stock market this past year? Was it good? Bad or ugly. Historically, on average, the s and p 500 has returned about 10% per year over a long period of time, so that’s the yardstick we’ll use to judge whether it was a good year, a bad year, or ugly.

Before we talk about what actually happened in 2025, let’s talk about predictions for what was expected to happen. Every December, the headlines show up with banks, analysts, and research firms all predicting where the s and p 500 will land in the coming year. So it’s worth remembering what the experts told us to expect.

In December of 2024, there was a report recently put out by Avantis, and they reviewed the forecast from 20 analysts at the end of 2024, the most optimistic projection that they had for the s and p 500 was up roughly 21%. While the most pessimistic forecast called for a decline of negative 24%, that’s an incredibly wide range, and it reminds me that even with the enormous resources, artificial intelligence, brilliant people, sophisticated models, forecasting markets is still incredibly difficult.

When predictions range from negative 24% to positive 21%, that’s barely a prediction at all. Frankly, the weatherman is more accurate and you’d probably do just as well. Throwing darts at a list of numbers, it really makes you stop and think, how can so many smart people with access to incredible technology look at the same data and arrive at such wildly different conclusions?

And maybe that’s why Warren Buffet once said, we have long felt that the only value of stock forecasters is to make fortune tellers look good. And if you wanna have a little fun, write down where you think the market will be by the end of 2026. Put it on your calendar for January of 2027 and then see just how accurate your forecast turns out to be with December.

Upon us, we’re starting to see predictions for 2026. One headline I saw forecast an 18% gain by the end of 2026. Another bank estimated just a 3.8% increase. And then of course, I saw a YouTube headline that read a once in a Lifetime crash is coming worse than 2008. And of course, this is from some guy that’s pumping crypto and gold.

So at the end of today’s podcast, I’ll throw my hat into the arena and make my prediction for 2026. But before I do, let’s look at what actually happened in 2025. As I’m recording this on December 10th, the year isn’t quite over, but here’s how things stand as I record this. The s and p 500 is up about 16% year to date.

If you stayed invested throughout the year in a diversified portfolio, you’re probably feeling pretty good right now. But don’t forget what it felt like earlier in the year. From February till April 8th, the s and p 500 fell about 19%. Headlines were loud, people were nervous. Doubt was everywhere. The headlines were all about the impact of the tariffs.

And yet the market still delivered strong returns based on the calendar year. And it’s a good reminder that you can have big intrayear declines and still finish with solid returns. In fact, I’ll share an article in the show notes, um, that shows that from 2003 through 2022. There was not a year that did not have an intrayear decline.

There were even years like 2009 that had a 27% intrayear decline only to end the year positive with a 28% return. Or in 2020. You remember when COVID hit, there was a 35% intra year decline. Only to see the market end that year, positive 21% for the year as we enter 2026, here’s something to tell yourself now before the volatility returns.

At some point in 2026, there’s a very high probability that the market will be down at some point in the coming year. Not because of my insight, but because it happens almost every year. It’s normal. If there was no volatility, there would be no expectation for higher returns. The risk we accept is the price we pay for the higher expected returns, and the goal is to decide ahead of time that you’re not gonna panic when the volatility hits.

In fact, if you have the ability to invest more when the markets are down, that’s often when long-term investors are rewarded, and if you’re already fully invested in a properly diversified portfolio. Which I think is a good idea. One practical way to buy low is through rebalancing. Often when stocks fall, bonds hold up better.

Rebalancing means selling what held up and buying what fell. It’s the opposite of what your gut will tell you to do. Your gut will tell you to sell, move to cash, get safe. But discipline is what separates long-term investors from long-term warriors. Global markets were also really strong. In 2025, the German DAX was up 20%.

Euro stock 50 was up 16%. The AK 2 25 and Japan was up 28% and the Hong sang was up 30%. It’s been a strong year for global investors, but not everyone participated because some people think it sounds smart by always talking about how bad things are. They’re committed to a specific narrative that they keep telling themselves, or they bought into some doom and gloom reporting from the negative news outlets or some crazy YouTuber convinced them that the end is near.

So you better sell everything and buy gold in crypto. Just recently, I, I spoke with somebody who told me that he managed to get out of the market just before the major sell off occurred during the COVID five years ago. The problem, he still isn’t fully invested back in the market and it’s been more than five years.

It’s one thing to know when to get out, but it’s another thing to know when to get back in. And that’s the challenge. Markets never feel safe. They’re volatile by design. They reward risk taking. They move up, they move down, and unfortunately we feel the down days more negatively. And we enjoy the up days, and the discomfort never really goes away.

If you’re a long-term investor with a long-term outlook, you stay invested. You benefit from long-term compounding, which Albert Einstein once called compounding the eighth wonder of the world. But if you sit on the sidelines, you’re compounding the consequences of fear. Sitting on the sidelines of life, worrying about what could happen and missing out on what actually is happening.

It’s okay to be afraid and stay invested. Courage means that you take action in the face of fear, not an absence of fear. Now, if life is about to change due to a big event like retirement, it can certainly make sense to hold a few years of spending in lower risk positions if your plan calls for it.

That’s not acting out of fear. It’s just recognizing that a specific portion of money is needed in the short term. And short term money should not be invested with risk. So we’ve talked about what happened in the market. Let’s also talk about taxes. People love to see their money grow. They don’t live seeing their taxes go up.

And in July of 2025, the one big beautiful bill passed and it lowered taxes for most Americans, especially seniors. So for the next four years, people age 65 and older have access to an enhanced senior deduction, which means many will pay less in taxes than they would have otherwise. And a lot of the negative news predictions like social security being cut or massive tax hikes, it simply didn’t materialize in 2025.

Taxes are always gonna be with us. How they impact you will depend in part on how you plan for them. Inflation is another thing that we need to consider. How did that work out in 2025? It’s always top of mind because rising prices can quietly cancel out gains, but the data showed inflation cooling. The Bureau of Labor Statistics breaks down inflation by different categories.

And I’ll include a link in the show notes, but when you zoom out the BLS reports as of September 30th. Overall inflation is right around 3%, which is pretty close to the historical norms. Inflation has averaged about 2.55% over the last 30 years, and about 3% over the last 100 years. In other words, not great, not terrible, just normal.

The key is that we need to have a plan for inflation. So when you build a retirement spending plan, make sure you’re thinking about how inflation will impact your spending over time. Employment is another gauge for how people are doing. As of September, 2025, unemployment was around 4.4%. Historically, the US has operated between roughly 3.5 to 6% much of the time, so once again, unemployment’s looking pretty normal, and we should also acknowledge what’s been happening with interest rates.

The Federal Reserve recently announced another quarter basis point rate cut, bringing the federal funds rate from 3.5% to 3.75% the lowest level we’ve seen in about three years. Lower rates can ease borrowing costs, support economic activity, relieve pressure for households carry in variable rate debt, and for those looking to refinance their mortgage.

It’s another data point that looks positive for the average household. Let’s recap. 2025. Stock returns over a long period of time have averaged about 10% per year this year, as measured by the s and p 500, they’re up more than 16%, which is above average. Taxes went down for many people, especially seniors.

Inflation was within historical norms of 3%. Unemployment was within historical norms at 4.4%. Interest rates have moved lower and are the lowest that they’ve been in three years. So why do so many people still feel uneasy? Why are so many people sitting on the sidelines? The the answer is because most of us experience the world through our personal lens shaped by emotion, uncertainty, and whatever.

The news and internet and TV and radio is feeding us, even the people we surround ourselves with and the podcast we listen to, can have a powerful influence on how we see things. And then when media coverage is driven by a political narrative, it can further widen the emotional gap between how things feel versus how things actually are.

Think about this for a minute. What if the news station that you tune into is shaping a narrative that nudges you to either invest or to sit on the sidelines? That narrative could literally influence whether you build wealth over time or miss out on it. The news station you choose to listen to has a tremendous impact on how we perceive the world.

It shapes the story we tell ourselves and even our internal dialogue. That’s why I think it’s wise that we be intentional about who we allow to speak into our lives. So as we head into 2026, here’s my forecast, my prediction, I believe that there’s a roughly a 70% chance that the market’s gonna be positive this year, and about a 30% chance that it’s gonna be negative.

Not because I have special insight, but because historically over long stretches. That’s how the markets have behaved, which brings me to a really important matter going forward. Have a plan. Work the plan, update the plan as life changes, and understand what the plan actually says about your future based on what’s really happening and not what you fear might happen.

Choose optimism over pessimism. Set the course, make small course corrections along the way. And if you find yourself making radical changes to the plan, it’s often a sign that something was off from the beginning. And if you’re approaching retirement, one practical step is to keep enough cash set aside to cover the first three to five years of withdrawals so that market downturns don’t force you to sell long-term assets at the wrong time.

Wishing you a very merry Christmas. And a happy New Year.

Announcer: Thank you for tuning in to Sound Retirement Radio. For articles, links, and resources from today’s show, visit sound retirement planning.com. If you enjoy the podcast, share it with a friend and give us a five star review. Ready to kickstart your retirement planning head over to retirement budget calculator.com.

Need assistance with investment management, explore our services@parkerfinancial.net. Information and opinions expressed here are believed to be accurate and complete for general information only and should not be construed as specific tax, legal, or financial advice for any individual and does not constitute a solicitation for any securities or insurance products.

Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company.

Investing involves risk. Jason Parker is the president of Parker Financial LLC, an independent fee-based wealth management firm. Located at 9 2 3 0 Bayshore Drive Northwest Suite 2 0 1, Silverdale, Washington. For additional information, call 3 6 0 3 3 7 2 7 0 1 or visit us online@soundretirementplanning.com.