Social Security is one of the foundations of most Americans’ retirement planning. In an annual poll from Gallup, 60% of retirees said Social Security is a major source of income, and another 28% said it played a minor role in their budget. Keeping as much of your Social Security benefits as you can is essential for many households. That means keeping taxes on your Social Security income low.

One of the biggest challenges for seniors collecting Social Security can be balancing different retirement tax strategies with the effect on Social Security taxes. Unfortunately, Social Security tax rules can be very complicated, and keeping Social Security taxes low is often in conflict with other retirement tax strategies.

If you’re not careful, you could end up with a major surprise when your taxes come due.

Before we dive into how to avoid taxes on Social Security, you’ll need a basic understanding of how Social Security benefits get taxed in the first place. The federal government uses a metric called “combined income” to determine how much of your Social Security, if any, is subject to income taxes. Combined income is equal to the sum of half your Social Security benefits, your adjusted gross income, and any non-taxable interest income.

If your combined income exceeds certain thresholds, a portion of your benefits become taxable as detailed in the table below.

Data source: Social Security Administration.

If those thresholds seem extremely low, that’s because they haven’t changed since Congress set them over 30 years ago. There’s no inflation adjustment, so you must keep your combined income as low as possible every year to avoid additional taxes on Social Security. Since the annual COLA keeps increasing benefits, that’s becoming more and more difficult.

Fortunately, many retirees have a lot of control over the rest of their income, which typically comes in the form of retirement account withdrawals and capital gains. But trying to use some standard tax strategies with both of those income sources could lead to more of your Social Security income becoming taxable, offsetting some or all of the benefits.

Long-term capital gains get a preferred tax bracket compared to other sources of income. The taxes on gains on the sale of securities held for longer than one year can be as low as 0%.

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Rewind to about 15 years ago, and China was the holy grail for automakers. Its market was beginning to boom, and foreign automakers paired up with joint ventures to begin selling vehicles in hopes the region would become another profit machine.

In fact, looking at how dire things are today (more on this in a second), it’s hard to believe General Motors (NYSE: GM) sold more vehicles in China than it did the U.S. from 2010 until 2023. But after a nearly decade-long slide in profits and market share, and blossoming domestic brands, China is now a big problem for investors. However, some recent data gave a silver lining.

To make a fairly well-known story short, the Chinese government heavily subsidized the electric vehicle (EV) industry. The strategy worked, and maybe worked too well. Now there’s an entire domestic market of advanced and highly affordable Chinese EVs that have flooded the industry and created a brutal price war.

The price war has clobbered some domestic financials, and it has also clobbered sales for foreign automakers as it has become increasingly difficult to compete against Chinese brands. As of July, new-energy vehicles, which essentially includes full EVs, plug-in hybrids, and hybrids, accounted for more than 50% of China’s automotive market.

If you can’t compete on prices with EVs in China, you’re in a world of hurt. And that doesn’t even account for the stumbling Chinese economy or trade tensions with the U.S. You can see in the graph below how dramatic the decline in China has been for General Motors.

China’s price war is so vicious that some analysts are calling for a Detroit exit. According to Reuters, John Murphy, Bank of America Securities analyst, said, “I think you have to see the [Big Three] exit China as soon as they possibly can.” Murphy made that statement at his annual presentation of Car Wars, a highly publicized industry report.

General Motors has lost money in China each of the past three quarters, and barring a shocker of a fourth quarter, it will lose money for the full year. There is a silver lining in recent sales data, though, and it shows GM’s fortunes might be turning slightly in the region.

The automaker and its joint ventures witnessed a boost in momentum during the fourth quarter, with sales up over 40%, compared to the prior year. That was an improvement from the third quarter, which posted a 14.3% sequential sales gain. It’s evident that things slowly improved during the back half of 2024, although GM still posted a full-year sales decline of 14% in China.

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The significant interest in artificial intelligence (AI) stocks has shined a bright spotlight on Nvidia, the leading AI chip company.

Nvidia has been an incredible stock for investors, but AI stretches far beyond one company. You can be sure there are many winners in a global AI industry that experts believe could swell to more than $826 billion by 2030. And despite the broader market trading within shouting distance of all-time highs and a remarkable run by technology stocks over the past two years, there are still deals out there.

Here are three top AI stocks (not named Nvidia) that investors can buy today. Their respective growth prospects and valuations offer compelling value that should translate to stellar investment returns as AI technology advances.

Many people may not realize how much goes into making AI chips; it goes beyond designers like Nvidia. Lam Research (NASDAQ: LRCX) designs and builds equipment used in chip fabrication (manufacturing). To sum up Lam Research’s value to the chip industry, its equipment helps companies build smaller and more efficient chip designs.

Nvidia’s H100 AI chip has 80 billion transistors. Its successor, built on Blackwell architecture, has 208 billion. Remember, you can hold these chips in your hand. Cutting-edge equipment is needed to make such small circuits.

As AI technology improves and requires smaller and more powerful chips, Lam Research will be among the companies making these advancements possible. The company’s reputation, intellectual property, and long-standing relationships with chip fabricators make its equipment hard to displace.

The stock currently trades at a price-to-earnings ratio of about 24. Meanwhile, analysts estimate the company will grow earnings by an average of 16% annually over the long term. The resulting 1.5 PEG ratio makes Lam Research a smart buy at these prices.

Let’s explore the AI chip space a bit longer. Taiwan Semiconductor Manufacturing (NYSE: TSM) is the leading chip fabricator. As you might guess, this makes the company a pillar of the AI industry, as chips are the building blocks on which AI models train and operate.

Just how dominant is Taiwan Semiconductor? In the third quarter 2024, the company manufactured approximately 64% of the world’s chips. That includes Nvidia’s AI chips, which Taiwan Semiconductor builds with a custom manufacturing process. The company could have years of rampant growth ahead as Nvidia and other companies design increasingly complex chips and seek Taiwan Semiconductor’s expertise and capacity to build them.

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Retail is emerging from its inflation slump, and most of the country’s large retailers demonstrated important progress last year. Amazon (NASDAQ: AMZN) and Costco Wholesale (NASDAQ: COST), the two largest U.S. retailers behind first-place Walmart, ended the year with solid growth and healthy stock gains.

Let’s see what each of these companies brings to the investing table and which one is the better buy today.

Amazon is the largest e-commerce retailer in the U.S. It has higher sales than Costco, and it’s still growing faster. It’s also more profitable.

Data source: Amazon and Costco quarterly reports. Amazon metrics are for the 2024 third quarter, and Costco metrics are for the fiscal 2025 first quarter.

Amazon accounts for around 40% of all U.S. e-commerce sales, a breathtaking lead that’s unchallengeable in the near term. It’s taking all kinds of actions to protect its position and become the source of even more of its loyal Prime members’ shopping, like a new distribution network to keep products closer to customers and get them out faster. E-commerce remains Amazon’s core business, and it’s still growing. E-commerce is also increasing as a percentage of retail sales, expected to reach 41% of sales, up from 18% in 2017, according to the Boston Consulting Group.

But there’s something else entirely that makes Amazon stand out right now, and that’s generative artificial intelligence (AI). Really, it starts with Amazon Web Services, (AWS), Amazon’s cloud computing business. AWS is growing faster than e-commerce, and it’s a higher-margin business. In the third quarter, sales increased 19% year over year, accounting for 17% of sales and 62% of operating income.

Many of the most valuable generative AI solutions are available to AWS customers, who can tap into all kinds of data and tools to create or benefit from AI. CEO Andy Jassy keeps saying things like it’s a “once-in-a-lifetime type of opportunity” and that it’s already a billion-dollar run rate business.

There could be many factors to add in Amazon’s favor, but another important one is its growing advertising business, or better framed, its constant innovations that lead to new businesses and sales-generating opportunities.

You might say Costco is the very opposite of Amazon. As much as Amazon jumps from here to there, catching onto the flavor of the week, Costco is steadfast.

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ETF investors poured over $12.5 billion into funds as key stock indexes reached new highs.

U.S. equity ETFs captured over $7.9 billion in inflows Friday, leading all asset classes as investors showed a strong appetite for domestic stock exposure.

The iShares Core S&P 500 ETF (IVV) topped the daily flows list with nearly $2 billion in new assets, followed by the Invesco QQQ Trust Series I (QQQ) with $1.4 billion in inflows.

Fixed income ETFs also saw some robust demand, with U.S. bond fund attracting over $2.9 billion in new money. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) led the fixed income category with $728 million in inflows.

International equity funds added $590 million, while commodities ETFs saw $378 million in outflows.

Total ETF assets under management stood at $10.46 trillion, with the day’s flows representing a 0.12% increase.

Top 10 Creations (All ETFs)

Top 10 Redemptions (All ETFs)

ETF Daily Flows By Asset Class

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State Street Corp.’s SPDR unit, the number three U.S. ETF issuer, pulled in less cash in the fourth quarter of 2024 than in the same period in 2023, as investors cut the amount of money that went into the company’s flagship SPDR S&P 500 ETF Trust (SPY) by more than half.

Boston-based State Street’s ETF unit pulled in $65 billion in Q4 2024, marking a noticeable dip from the $68 billion in the same quarter in 2023, according to the company’s latest earnings report. Still, that total is a 75% jump from Q3 2024, when the SPDR unit pulled in $37 billion.

The first and currently the world’s largest U.S. ETF with $621.4 billion in assets, SPY’s asset growth has slowed as Vanguard’s $603.9 trillion Vanguard S&P 500 ETF (VOO) seizes more market share. The latter fund has become the world’s second-largest, replacing the iShares Core S&P 500 ETF (IVV) in just the past few days, and is widely expected to take over as the world’s largest exchange-traded fund, possibly within a matter of weeks.

SPY’s inflows slumped to $20.8 billion in the fourth quarter from $46.3 billion in 2023’s final period. Meanwhile, VOO’s inflows more than tripled to $45.3 billion in the fourth quarter from $11.9 billion in 2023’s last quarter.

SPY costs three times more to own than VOO, charging an expense ratio of 0.09% compared with VOO’s 0.03%.

VOO’s momentum, at the expense of SPY, is continuing this year, Bloomberg Senior ETF Analyst Eric Balchunas posted on X.

“Somehow $VOO is outdoing itself this year w/ +$13b in 11 days to start 2025,” he wrote. “It’s also 25% of all net flows and a mere $20b away from dethroning $SPY.”

The entire North American ETF industry’s assets surged 61% year over year to $427 billion, State Street noted in its press release.

State Street, which manages $1.29 trillion in 137 ETFs, ranks behind BlackRock Inc. and its iShares unit and Vanguard Group in terms of largest issuers.

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