Now that President Obama has signed the budget deal passed by Congress last week, it is time to take a look at how retirees have fared under the new provisions. For the most part, the changes were positive for elderly Americans.

In last week's column, I warned that the demise of File and Suspend and Restricted Application, which are Social Security claiming strategies, was all but certain. The final legislation confirmed that, but fortunately the new rules do not take effect immediately, as many had feared.

Those who are already receiving benefits from these strategies will be grandfathered in, meaning their benefits will not be affected at all. In addition, those who will reach retirement age within the next six months (or who are already retired), will still be able to take advantage of these strategies, at least until April 30 of next year. Anyone born after 1953 (or before) can still do a Restricted Application for spousal benefits, even if the filing won't occur until years from now.

For those who fail to fall within the above age guidelines, these claiming strategies are now off the table for you.

There is, however, some good news for seniors. Social Security disability insurance, which has been in a financial crisis, has been rescued, at least for now. There are 11 million Americans receiving disability benefits. These beneficiaries were facing a 20 percent cut in their benefits by 2016, but now that has been put off for three years. Lawmakers found a stop gap solution. Congress is increasing the percentage share of Social Security taxes (from 1.8 percent to 2.37 percent) that are earmarked for disability, thereby averting a shortfall.

At the same time, retirees were bracing themselves for a substantial hike in Medicare Part B premiums. These hikes could have amounted to as much as 52 percent for some beneficiaries. The budget deal averts that by allowing the U.S. Treasury to lend $7.5 billion to the Medicare program.

Premiums will still rise, by about 15 percent, which is still a sharp hike, but better than the worst-case scenario. In two years, Medicare beneficiaries will have to start repaying that loan by paying roughly $3 per beneficiary, per month.

In the future, we can expect more changes like this to occur as legislatures grapple with the runaway costs of the U.S. entitlement programs. I am not a believer in the death of Social Security, as so many predict. Instead, retirees will continue to see compromises, adjustments and the grandfathering of existing beneficiaries of our entitlement programs as lawmakers come up with solutions.

Political analysts were surprised by the common sense approach to these latest Social Security and Medicare negotiations. Now that Paul Ryan has taken the reigns as House Speaker, expect to see the same kind of approach in resolving entitlements, as well as tax reform. I don't expect any "grand bargain" on either issue. Readers may recall that both the president, as well as former House Speaker John Boehner, had repeatedly (and unsuccessfully) attempted to achieve such all-encompassing deals.  

Instead, expect moderate changes, pragmatic bargaining and incremental fixes to these programs. That's what I call progress.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The markets have two months to recoup their losses and deliver positive returns to investors. With this year's correction behind us, the question to ask is will the markets deliver positive returns for 2015 and, if so, what will they be?

As October comes to an end, historically the month of November is positive for the stock market. December and the traditional Christmas rally it typically generates combine to make these two months the best period for positive returns all year. Chances are high that this year the stock market will perform according to this behavior pattern.

I say that because so far in 2015, if you had followed the historical behavior of the markets: "sell in May," "expect at least 2-3 or more pullbacks per year," and the warnings that "the first half of October is usually volatile," you would not have been steered wrong.

As we trade today, the S&P 500 Index is slightly positive (1.5 percent) for the year. The Dow Jones Industrials is essentially flat, while the NASDAQ has done better, up 7.4 percent for 2015. I am expecting that all three averages will gain from here through the end of the year. The NASDAQ will most likely outperform the other two averages, but not by a wide margin.

As I have said all year, I expect a single digit return from the S&P 500 Index, but will that mean 1 percent or 9 percent? That's quite a range and the outcome could have a significant impact on your returns for the year. The low end of my range would see the S&P to hit 2,150. That is only another 2.3 percent gain from here. In total, that would generate a 2015 return of 3.8 percent for this benchmark index. On the other hand, if over the next two months the bulls get to see all their wishes come true then we could achieve as much as 2,250 on the S&P 500 Index. That would generate roughly an 9 percent return. What would need to happen in order for that wish list to come true?

One item on that list has already come true. The political issues that were bugging the markets are now off the table — debt ceiling, budget debate, a new speaker — thanks to this week's compromise in Washington.  

Bulls are also betting that the economy will continue to muddle through, neither too warm nor too cold, so the Fed won't take any action on interest rates in December. Energy prices will remain at this level, providing lower costs for both the consumer and corporations.

That will translate into more money for the consumer, who will be willing to spend more this holiday season. That should generate additional sales and profits for the retail sector. On the international front, both China and Europe will continue to stimulate their economies and that will support global equity markets.

I do believe that much of the bull's case will come true, although it will require good timing, some luck and cooperation from a number of sources. What can go wrong? The Fed could fool us. The dollar might spike higher. The weather, given El Nino, could turn frigid, fueling higher energy prices. Overseas central bankers and governments may not cooperate or change their minds. I could go on, but you get the point.

Whether the bulls get their way, or we have to settle for something less, my worst case scenario is still fairly positive for the markets. Especially for those of you who thought the world was coming to an end on that Dow 1,000 point down day in August.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

The congressional budget deal that was passed last night will have a dramatic impact on several Social Security strategies. If you have been using, or considering using, the file and suspend clause to increase your Social Security payments, think again.

Back in February of this year, I wrote a column on "How to make the most out of Social Security." I explained that you could improve your total social security benefits, as well as your spouse's, by almost 13 percent by the time you both reach the age of 70. It's called "file and suspend" and occurs when the Social Security claimant files for benefits and then suspends receiving them, while collecting benefits for a spouse.

The ability to file and suspend was granted under the Senior Citizens' Freedom to Work Act of 2000. Although at first the strategy for married couples was an obscure oddity, overtime, especially in the past couple of years, it has become almost main stream with a growing number of financial planners and accountants recommending the strategy to their clients.

The impetus to change these "unintended loopholes" came about in President Obama's budget proposal for fiscal year 2015. The administration argued that these loopholes were simply "aggressive Social Security claiming strategies which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits."

Senate Majority Leader Mitch McConnell, a Republican from Kentucky, said closing the loopholes would result in $168 billion in long-term savings.

It is hard to dispute these allegations, although a study by the Center for Retirement Research at Boston College found that only 46 percent of the benefits flowed to the top 40 percent of wealthy households. A couple aged 66 years old that used the file and suspend strategy would potentially be able to make more than $200,000 combined in extra benefits over their lifetime.

With that kind of return, not only the wealthy but anyone who could was jumping on the bandwagon.

There are other changes as well in the legislation. It appears that anyone who turns 62 next year or later would lose the right to collect just spousal benefits, for example. Another provision of the legislation would place a surcharge on higher-income recipients of Medicare.

What has surprised most professionals about the legislation was the speed in which these provisions will be implemented. Normally, changes such as these would give taxpayers plenty of time to adjust. Many who were already claiming these benefits would expected to be grandfathered and only new claimants would be impacted.

Preliminary indications are that in this case the changes would be enacted immediately and no one will be grandfathered but the situation is still fluid. The House passed the legislation 222-167 and now the bill moves to the Senate. Since Nov. 3 is the deadline on the debt ceiling, (when the government's borrowing authority runs out) this budget must be passed no later than next week.

There is still time for some backroom horse-trading in which retirees would be given more time, say six more months or so, before the changes went into effect. Clearly, if you are using one of these claiming strategies, a call to your financial planner or accountant is in order sometime soon to see what the fall out will be once the budget is passed.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

As of today, the S&P 500 Index is in the plus column for the year. That seemed impossible to most investors just a month ago. And I expect more gains to come over the next two months.

In last week's column, I predicted the worst was over and the price action this week confirms that. This will be the fourth week in a row that U.S. markets have generated positive returns. The engine of growth behind these further gains this week came as no surprise to me.

I have argued repeatedly that the monetary stimulus programs underway by central banks across the globe would keep stock markets climbing. Last week I wrote that "The ECB launched a stimulus program at the beginning of the year. Investors not only expect that to continue, but possibly be increased if economic data warrant it." Evidently, economic data warranted it.

Thursday morning, ECB President Mario Draghi hinted that investors could expect further stimulus in December from the central bank. World markets greeted the news by gaining between 1-3 percent (depending on the country) by the end of the day.

I also mentioned China was another country where "every negative data point will convince investors that the government there will need to stimulate monetary policy further." Their GDP for the year was announced last weekend. It was 6.9 percent, a bit below the government's stated growth target of 7 percent.

Before the U.S. market opened this Friday (and after the close in Asia), China's central bank officials announced another (their sixth) cut in interest rates by one quarter percent. This further fueled gains in both Europe and America. One can only expect that Asian markets will move higher on Sunday night as a result.

In the weeks ahead, I would expect the discussion among Fed Heads to intensify as a result of these new monetary initiatives. Right now, the handicappers are giving a low probability to a rate raise in December.  That could change, if the macro-economic data both here and abroad gather strength. The dollar will also be a renewed topic of concern, since a hike in rates here and a decline in interest rates elsewhere will lead to a stronger dollar.

In the meantime, we still have earnings to worry about. Although the majority of companies have "beat" earnings, revenue and guidance tells a different story. Only 40 percent of companies thus far have raised revenue guidance, blaming the strength in the dollar for these disappointing numbers. Of course, there have been exceptions in the middle of these lackluster results. Some of the biggest names in the technology space have done quite well in both the top line (sales) as well as the bottom line (profits). That has heartened investors somewhat.

As for the markets, we have already topped my short-term targets. My next target on the S&P 500 Index is 2,100. Remember that the year's high is only 34 points above that. By now you should also know that nothing goes straight up, so expect some consolidation. We remain on track to see single digit gains from this index by year's end.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Just about everyone is aware of the California water crisis. You may be tempted to simply dismiss this on-going event as a local problem, but it isn't. Our world is running out of water and we are on the brink of a freshwater shortage.

At least that is the conclusion of NASA, in a recent report that argues that even giant lakes are disappearing. The agency believes that sometime within the next 35 years the globe will be facing a long and protracted drought of epic proportions.

You might say, "So what? We have plenty of time to come up with solutions. Besides, the 'authorities' will handle it." A look at what is happening in California might dissuade you of that view. Take the Sierra Nevada snowpack, which supplies much of that state's water needs in places like Los Angeles, San Francisco and the Central Valley farms. The snowpack is at a 500-year low. It won't be rebuilt anytime soon.

California is the nation's largest agricultural producer and exporter. It grows more than a third of all our vegetables and two-thirds of our fruits and nuts. The Central Valley, an area roughly 450 miles long and 60 miles wide, is also the U.S.'s top dairy producing region. Thanks to the drought, the water bill for just one 10-acre farm was $33,000 last year versus $3,200 the year before. Farm losses this year could total $2.8 billion.

But it is not only the economic loss that must be calculated. The damage to wildlife is enormous. At least 18 species of fish, including salmon and trout, face extinction. Five million birds or more migrating along the Pacific Flyway are also at risk of starvation and disease.

You may or may not believe global warming is behind this crisis, but leaving aside this debate, both sides cannot dispute that the overuse of groundwater from aquifers is a leading factor worldwide in the coming crisis. Aquifers are underground layers of rocks, sand and silt that store fresh water. These natural wells can be thousands, if not millions, of years old. We have been pumping water out of these wells for eons. Entire cities have sprung up above these natural wells and that has become a problem.

Some aquifers are shallow enough to be refilled through precipitation over time. Unfortunately, for places like California, where the area is experiencing both record lows in rainfall and snow (in addition to record heat) that process is not occurring. And even if it was, the key word in replenishment is time.  Many cities, states and countries are running out of time. Even worse, many more aquifers are deep underground and once depleted are gone forever.

People in Iran, Brazil, and the United Arab Emirates, to name just a few affected areas, are already suffering from this water shortage. Without water, food becomes scarce, employment disappears and political unrest springs to the forefront. Some argue that the conflicts in Syria are more about the lack of water and all the hardship that it creates than it is about politics or religion. Scientists also point to groundwater contamination by pesticides, fertilizers and even hydraulic fracking as another cause of water shortage globally.

As for the "authorities", although California has known of their water shortage problem for decades, it was only this year that Gov. Jerry Brown implemented the state's first water-use restrictions. Restrictions, by the way, are not solutions. Combating this coming worldwide drought will require money, years of effort, and both radical and innovative responses by everyone.

Many solutions are already available. Solar-powered water purifiers, desalination plants, leak monitors, CO2 cleaners, even technologically innovative shower heads are available. What is lacking is the will to implement these solutions now.

Today's politicians are hoping that this year's El Nino will provide enough rain to break California's drought so that the water shortage problem will go away. This out-of-sight, out-of-mind approach to this impending challenge is about what we can expect from our "authorities."

In the meantime, while we wait for this crisis to develop, why don't you begin by doing your part? Go spend the money to at least buy a new water-efficient shower head. Over the course of the next decade, it could save the world thousands, if not hundreds of thousands, of liters of water every year.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.