Every quarter we sit down with Tom Siomades for a conversation about the big picture, the stuff that gets lost when you’re watching the market tick by tick. Tom put it well this time. “When you’re close to the markets every day,” he said, “you end up reading every blade of grass, and every so often you have to stand up and take in the whole field.” 

We spoke with Tom shortly after the Federal Reserve raised interest rates by a quarter of a percentage point. Oil has been elevated for about seven months because of the conflict with Iran, gas is running around $4 a gallon and diesel around $6, and at the time of our conversation, the stock market was up double digits for the year and within a few percentage points of its all-time high. That mix confuses a lot of people, and it makes this a good quarter to step back. 

What follows is what Tom told us, labeled as his view, and then our thoughts for you to consider about each piece if you’re retired or getting close. Tom’s opinions are his own. Mine are about planning, and none of this is a prediction to trade on.

A small Federal Reserve rate hike with a big message 

You weren’t alone if you went into this year expecting the Fed to cut rates. Instead, we got an increase. Tom’s read is that 25 basis points won’t do much to energy-driven inflation. When gas is at $4 and diesel is at $6, a quarter point doesn’t change what it costs to fill a truck. What changes is the tone. The hike tells you the Fed thinks higher inflation may stick around longer than anyone hoped. 

Tom mentioned that some forecasts call for as much as another full point of hikes by June. He doesn’t think the Fed needs to go that far, because if the conflict ended and energy prices started falling, a lot of the pressure would ease on its own. He also described the bind the Fed is in. A couple of percentage points in hikes could break inflation, and it could also push a slow-growing economy into recession, and nobody wants that outcome. 

For retirees, Fed decisions show up in three places. Cash, CDs, and new bonds pay more when rates rise, which helps. Borrowing gets more expensive, which matters if you’re weighing a mortgage on a second home or a bridge loan during a move. And existing bonds lose some market value when rates go up, which is why the bond side of your statement can look soft in a quarter like this one. None of those calls for a dramatic move. All three belong in your income plan. 

Why oil prices keep inflation sticky 

Tom used a relatable example. Gas stations raise prices seemingly by the minute and then take weeks to lower them. He thinks the broader economy works the same way. After seven months of expensive fuel, those costs are built into the price of almost everything that gets shipped, grown, or delivered, and even if the conflict were resolved tomorrow, he expects those embedded costs to come out slowly. 

He also explained why official reports of oil moving through the Strait of Hormuz haven’t calmed markets. The risk sits with the companies that insure and ship the oil. As long as an attack on a tanker is possible anywhere along that coast, those companies stay cautious, and prices stay high. 

Tom added one more pressure point, the roughly $40 trillion in federal debt. Investors are less willing to lock up money for 30 years without being paid well for it, and that pushes longer-term interest rates up alongside the Fed. 

Building income assumptions around costs that come down slowly can help you plan through retirement. Retirees tend to spend more in the categories fuel touches most, like travel and groceries, so your personal inflation rate can run ahead of the headline number. The Social Security Administration typically announces next year’s cost-of-living adjustment in October, which makes this month a good time to compare what your benefit will do against what your spending is doing. 

The economy looks stronger than it feels 

We asked Tom to set rates and the conflict aside and describe everything else. His answer was that the economy is in pretty good shape. People are still spending, still traveling, and still going out to dinner, and he isn’t seeing widespread layoffs. The latest round of corporate earnings was strong. GDP growth is running around 1.5%, and Tom thinks it could reach 2.5% to 3% if oil comes down and the conflict ends. 

He made a point. People complain about prices constantly, and bad news sells, and yet Tom noted we just had the busiest travel season we’ve seen. Travel is discretionary. People who feel like they’re lacking funds don’t book flights. In Tom’s words, people will tell you how they feel, and their feelings aren’t always an accurate read of what’s happening around them. 

That gap between mood and data is where retirees can make costly decisions. Selling out of stocks because the gas pump makes you angry is a decision driven by a feeling, and your plan should be built to run on your numbers. 

AI stocks, small caps, and the concentration question 

A lot of this year’s gains have come from technology and the companies tied to artificial intelligence. Tom sees the concerns. Some of these companies won’t show a profit for years, they’re borrowing to fund enormous data center buildouts while rates rise, and people inside the industry have raised safety worries of their own. The AI trade sells off, and then buyers pile back in. 

His view is that the largest AI companies are durable and posting good earnings, and that AI will likely stay part of the market’s upward movement over the next three months to a year. He also pointed to something that’s gotten less attention. At the time we spoke to Tom, small-cap stocks were outpacing the S&P 500, a sign that this year’s gains aren’t coming only from a handful of giant names. 

For retirees, the practical question is concentration. If a retiree owns an S&P 500 index fund, a meaningful share of that money sits in the same small group of large technology companies. If a retiree also owns some of those companies directly, or through an old company stock plan, exposure may be higher than you think. Trimming it in a taxable account can create capital gains, so the timing and the tax bill need to be planned together. 

Fixed income pays you again 

This is the part of the conversation to underline for retirees. Tom pointed out that with mortgages around 7%, investors can earn 5% to 6% on fixed income and deal with less of the stock market’s up-and-down. He called it a newer dynamic, and he’s right that for most of the last decade the safer part of a portfolio paid very little. 

At POM we build retirement portfolios in buckets. There’s cash for near-term spending, an income and stability bucket, and a growth bucket invested in the market. When the income bucket pays a real yield, it carries more of the load, and the growth bucket can take its time. 

The tax side is where people leave money behind. Interest from bonds and CDs in a taxable account is taxed as ordinary income, so where you hold those investments matters, and so does the total. Extra interest income raises your modified adjusted gross income, and Medicare uses that figure from two years earlier to decide whether you pay higher premiums through IRMAA. If you’re also doing Roth conversions this year, the interest and the conversion stack on top of each other, and the conversion has to be finished by December 31 to count for 2026. Those numbers need to be modeled together before year-end, while you can still adjust them. 

Tom’s year-end outlook, and how I’d use it 

We end every one of these conversations by pushing Tom for a number, with the understanding that it’s his best guess and nothing more. This time he said he sees more upside than downside through the end of 2026. He started at 3% to 4%, then committed to a 4% to 5% gain by year-end. 

His reasoning had three parts. The midterm elections could produce a split government, which usually means less big legislation out of Washington. He doesn’t see much room for the Iran situation to get worse, and any positive development there would help. And with the market close to record levels, he compared it to a compressed spring with stored energy. 

He was just as clear about the risk. We’re going on four straight years of double-digit returns, and historically the market is up about three out of every four years. A down year comes eventually, and a rough October is always possible. 

We enjoy hearing Tom’s perspective, and we’d never want your retirement to depend on it. The bucket approach exists so a bad year in stocks doesn’t force you to sell anything, because your next few years of spending already sit somewhere safer. 

A short checklist before December 31 

• Check what your cash is earning. If your near-term spending money sits in an account paying close to nothing, you could be giving up income that’s available right now. 

• Add up your concentration. Count your exposure to the largest technology companies across index funds, individual stocks, and any old company plans. 

• Model your 2026 income before year-end. Interest, capital gains, and Roth conversions all add up, and together they affect your tax bracket and your future Medicare premiums. 

• Finish planned Roth conversions by December 31 if they’re part of this year’s strategy. 

• Review your Medicare coverage during open enrollment, October 15 through December 7. 

If you’d like our team to run your numbers against what’s happening this quarter, including the tax side and the Medicare side, reach out through the Contact Us page at pomwealth.net. We’ll sit down with you (and your spouse, if you’re married) and look at where you stand.  

This material is for informational and educational purposes only and is not intended as investment, legal, or tax advice. Tom Siomades is an independent third-party guest speaker and is not affiliated with POM Investment Strategies, LLC dba Peace of Mind Wealth Management (POM), a registered investment advisor. The views expressed are those of the speaker and do not necessarily reflect the views of POM. References to any investment products, securities, or strategies are for discussion purposes only and do not constitute a recommendation or endorsement. All investments involve risk, including possible loss of principal. Consult your financial professional regarding your individual situation.