Last week, investors got a welcome break: taxable bonds finally snapped a five-week losing streak while the major U.S. stock indexes moved higher. This week, attention turns to inflation and corporate profits. And with less than three months left in 2026, I also want to share a tax deduction many retirees may not realize is available to them.

Market Overview: Stocks Advance as Bonds Find Some Relief

Most major U.S. stock indexes finished higher last week, with the Dow, S&P 500, and NASDAQ posting gains. Small-cap stocks and international markets weren’t quite as fortunate. Meanwhile, the taxable bond market finally snapped a five-week losing streak. Whether this is the beginning of a sustained recovery remains to be seen; however, bond investors will certainly welcome some good news.

Market Index Performance: Last Week and Year-to-Date

Interest Rates and Bonds: Is Some Stability Returning?

A strong 10-Year Treasury auction and a reasonably well-received 30-Year auction offered temporary encouragement. Buyers have tended to emerge near yields of 5.25% and 5.60%, respectively. Strong demand for newly issued government debt can improve confidence, although inflation and borrowing needs remain important challenges.

For retirees, yields at these levels cut both ways. Higher rates put pressure on existing bond prices and borrowing costs, but they also mean more income may be available on newly purchased bonds, CDs, and money market funds than we have seen in many years.

Consumer Confidence and Geopolitical Uncertainty

Economic reports were relatively light last week; however, the University of Michigan’s consumer sentiment reading fell to a five-month low. Higher energy prices and borrowing costs continue to weigh on households. The stock market and the consumer don’t always share the same optimism!

We also cannot overlook the ongoing U.S.–Iran situation. The rhetoric seems to change almost daily, including speculation about further military action. This uncertainty has influenced oil prices, interest rates, and investor sentiment. For retirees, maintaining a diversified portfolio aligned with income needs remains more important than reacting to each headline.

This Week: Inflation and Corporate Earnings Take Center Stage

These releases will offer important clues about inflation and consumers’ spending power.

Third-quarter corporate earnings are expected to rise approximately 30% from a year earlier, according to FactSet. This week we will hear from major banks including JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, Morgan Stanley, and Bank of America, as well as Johnson & Johnson, UnitedHealth, Charles Schwab, Taiwan Semiconductor, and semiconductor equipment maker ASML.

I typically suggest that two of the most important ingredients for the markets are corporate profits and interest rates. The combination of inflation data and corporate profits should make this an especially interesting week for both stock and bond investors.

Year-End Tax Planning: The Additional Deduction for Retirees 65 and Older

With less than three months remaining in 2026, now is an excellent time to review your federal income tax situation. For Retirement Refined clients, our annual tax projections are designed to identify opportunities before December 31, while also considering lifetime tax consequences.

Here is a reminder of one opportunity some retirees may not realize is available: a temporary additional federal deduction of up to $6,000 per person for taxpayers ages 65 or older (the IRS calls it the “enhanced deduction for seniors”), effective for tax years 2025 through 2028. It is available to eligible taxpayers whether they itemize or claim the standard deduction. Married couples must file a joint return to claim it.

You may have seen this deduction described in the news as “no tax on Social Security.” That shorthand is understandable, but it does not quite describe how the deduction works. It does not remove or reduce the tax on your monthly Social Security check, and depending on your income, up to 85% of your benefits may still be taxable under existing rules. Instead, it is a deduction from your income that you claim when you file your 2026 tax return next year, and it may lower your overall tax bill. It is available to eligible taxpayers age 65 and older whether or not they receive benefits, and it begins to phase out as income rises.

Here is how the deduction and its income limits work, based on modified adjusted gross income (MAGI):

Consider a hypothetical married couple, both age 67, eligible for the full $12,000 deduction. At a 22% marginal federal tax rate, the deduction could reduce their tax bill by approximately $2,640. That is real money potentially staying in their pocket rather than going to Uncle Sam! This is a deduction, not a dollar-for-dollar credit, so actual savings will depend on individual circumstances.

Roth conversions, retirement account withdrawals, capital gains, and charitable giving are among the decisions worth examining before year-end. Keep in mind that several of these can increase your MAGI, which may reduce or even eliminate this deduction and can also affect future Medicare premiums. That is exactly why these decisions should be coordinated rather than made in isolation. Our objective is not simply to lower this year’s taxes, but to help reduce the total taxes you may pay throughout retirement.

If you would like to review your 2026 tax picture before year-end, please reach out to our office at (856) 354-3200 ext. 205.

Coming Next Week: Could You Pay 0% Federal Tax on Capital Gains?

Yes, some retirees may qualify for a 0% federal long-term capital gains tax rate. Next week, we will discuss who may qualify, how it works, and why it deserves attention as part of a thoughtful retirement tax strategy.

Thank you for reading! Please feel free to share the Weekly Retirement Report with family, friends, and colleagues. Until next week, stay invested, stay informed, and enjoy the journey to and during retirement.

Paul Levin, CFP®, ChFC®, RICP®¹, TPCP®
Founder and Principal

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Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All market data sourced from The Wall Street Journal, Oct 9, 2026.

Specific individualized tax advice not provided. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a Registered Investment Advisor.

1. RICP® conferred by The American College. ↩︎