Retirement Newsletter

MONTHLY NEWS AND INFORMATION FOR CURRENT AND FUTURE RETIREES HOW LONG WILL YOUR MONEY LAST? Assume you will live to be 90. It could happen: the Social Security Administration thinks that about 25% of today’s 65-year-olds will live to age 90 or longer. Will your savings be able to last that long? (1) As T. Rowe Price’s retirement calculator indicates, if you retire at 65 with $500,000 in retirement savings split between equities and bonds, there is about an 80% chance that your savings will last until age 95 if you draw them down by $20,000 (or its inflation-adjusted equivalent)

GOOD NEWS ABOUT CONSUMER SPENDING, Q4 GDP Personal spending and personal wages both increased 0.5% in January, according to the Bureau of Economic Analysis. The BEA also revised Q4 growth up to 1.0% from its initial estimate of 0.7%. As a footnote to all this, capital goods orders jumped 4.9% in January. (1) CONSUMER CONFIDENCE WANES The Conference Board’s much-watched monthly index tumbled 5.6 points in February to a 7-month low of 92.2. Rather than a significant monthly fall, the University of Michigan’s consumer sentiment index took only a small one: it declined 0.3 points from its final January mark


The Markets It wasn’t as entertaining as the Fantastic Four, The Magnificent Seven, or Ocean’s 11 but, last week, we had an opportunity to watch the Group of 20 (G20). The G20 stars finance ministers and central bankers from 19 countries and the European Union as well as representatives from the International Monetary Fund (IMF) and World Bank. The group meets periodically to discuss the global economy. At their most recent meeting, the G20 made a commitment to continue to pursue global growth through monetary policy. They also emphasized governments around the world need to do more. The IMF’s report

February 22, 2016 WALL STREET HAS ITS BEST WEEK OF 2016 Across four trading days, the S&P 500 rose 2.84% and the Dow Jones Industrial Average, 2.62%; the Nasdaq Composite beat them both with a 3.85% gain. The Friday settlements: Dow Jones, 16,391.99; Nasdaq, 4,504.43; S&P, 1,917.78. WTI crude settled at $29.64 on the NYMEX Friday and gold at $1,230.80 on the COMEX. (1) WHOLESALE PRICES OUTPACE CONSUMER PRICES Core producer prices rose o.4% in January according to the Bureau of Labor Statistics, with the headline Producer Price Index up 0.1%. The Consumer Price Index was flat in January, with

Weekly Market Commentary

The Markets And the economic data says… The United States economy is doing pretty well. So well that a March rate hike by the Federal Reserve is not entirely out of the question. Barron’s described the situation like this: “Squawking pessimism can’t drown out what is a very respectable start to 2016. Economic data so far this year, apart from predictions of deflation and negative interest rates, could justify what was scheduled to be, but what soon seemed impossible, a rate hike at the March FOMC. Yes, global factors are a risk and are hurting the factory sector but service

The Markets Are markets suffering from excessive worry? Last week, markets headed south because investors were concerned about the possibility of negative interest rates in the United States – even though the U.S. Federal Reserve has been tightening monetary policy (i.e., they’ve been raising interest rates). The worries appear to have taken root after the House Financial Services Committee asked Fed Chair Janet Yellen whether the Federal Reserve was opposed to reducing its target rate below zero should economic conditions warrant it (e.g., if the U.S. economy deteriorated in a significant way). Barron’s reported on the confab between the House

OIL JUMPS 12%, BUT STOCKS RETREAT FOR THE WEEK On Friday, WTI crude closed at a NYMEX price of $29.44 after a 12.32% surge. However, it fell 4.69% on the week, and major U.S. stock benchmarks fell as well. Across five days, the Dow Jones Industrial Average declined 1.43% to 15,973.84; the Nasdaq Composite, 0.58% to 4,337.51; and the S&P 500, 1.95% to 1,864.78. Gold closed Friday at $1,239.00 on the COMEX, capping its best week since 2008 and its first four-week win streak since last April. (1,2) BETTER NEWS ABOUT RETAIL SALES Commerce Department data showed retail purchases increasing

Weekly Market Commentary 2-8-2016

February 8 2016 The Markets There was bad news and good news in last Friday’s unemployment report. In the negative column, fewer jobs were created in the United States than economists had predicted, and January’s jobs gains were not as strong as December’s had been. In addition, the December jobs increase was revised downward from 292,000 to 252,000, according to Barron’s. On the positive side of the ledger, more than 150,000 new jobs were added in January. The unemployment rate fell below 5 percent for the first time since February of 2008 and earnings increased. In total, average hourly earnings

Economic Update

February 8 2016 UNEMPLOYMENT NOW BELOW 5% Although the economy added just 151,000 jobs in January, the Labor Department’s latest employment report also showed a reduction in the headline jobless rate to 4.9%. The broader U-6 measure of underemployment remained at 9.9%. Monthly payroll gains have averaged 231,000 since November; in fact, the 3-month, 6-month, and 12-month job creation averages are now all above 200,000. (1) CONSUMER SPENDING FLATTENED IN DECEMBER Personal incomes rose 0.3% in the final month of 2015, but the Commerce Department recorded no corresponding personal spending advance. The good news? The personal savings rate reached 5.5%,

Monthly Economic Update February 2016

February 2016 THE MONTH IN BRIEF The opening month of 2016 definitely tested the patience of stock and commodity investors. The Dow Jones Industrial Average fell, losing 5.50% on the month. Overseas stock benchmarks also recorded big losses. Key indicators showed our manufacturing sector contracting again; our service sector remained in better shape, and that could also be said for consumer confidence and household incomes. The Bank of Japan made an interest rate decision that raised eyebrows worldwide; OPEC made no mention of trying to reduce the global oil glut. Wall Street hung on and hoped for a calmer market

Weekly Market Commentary 2/1/2016

The Markets How low can you go? The Bank of Japan (BOJ) dove into the negative interest rate rabbit hole last week when it dropped its benchmark interest rate to minus 0.1 percent. If you’ve been following Japan’s story, then you know the country has been struggling with deflation for almost two decades. The BOJ’s goal is to push inflation up to 2 percent. MarketWatch explained the idea behind negative interest rates: “Central banks use their deposit to influence how banks handle their reserves. In the case of negative rates, central banks want to dissuade lenders from parking cash with

Economic Update

February 1, 2016 ONE CONFIDENCE POLL RISES, ANOTHER FALLS The Conference Board’s consumer confidence index rose in January to 98.1, beating the forecast of 96.3. The University of Michigan’s consumer sentiment index lost 0.6 points on the month, ending January at 92.0. (1,2) NEW HOME SALES LEAP 10.8% Census Bureau data showed new home buying at its hottest pace in 10 months in December – a seasonally adjusted annual rate of 544,000 sales. New home sales were up 14.5% for 2015. In other housing news, the National Association of Realtors said pending home sales rose 0.1% in December after