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It might sound a little crazy but there are many benefits to working even though you no longer need the money for your living or retirement needs.
These “retirement workers” have discovered that part-time jobs or volunteer positions allow them to keep a nice pace in life and find a balance among using their talents, enjoying recreation, traveling, and spending time with family. Some of our most ambitious clients even start brand new companies in retirement.
Here are three important benefits of working in retirement that might persuade you to clock back in a couple days every week.
Working is good for you.
Retiring early is a very popular goal right now. But while it makes sense to want to enjoy your assets when you’re younger, a recent study links retirement with decreased mental and physical activity and higher instances of illness.
Working keeps your mind and body active. It makes you engage in problem solving and creative thinking. It keeps you mindful about your health and appearance so that you make a good impression on colleagues and customers. It challenges you to keep achieving and rewards you when you do.
And, if nothing else, it keeps you from vegging out on the couch all day and driving your spouse crazy!
Work can give you a sense of purpose.
Many retirees struggle with the transition to retirement because their sense of purpose and identity is so tied to their work. Without that familiar job and its schedule and responsibilities, some retirees struggle to find a reason to get out of bed in the morning. A part-time job can restore some of that sense of structure and drive.
In fact, you might find that working in retirement gives you an even greater sense of purpose than your former career did. You might have worked a job you didn’t 100% love in order to support your family. Now that you no longer need to worry about that, you can take that community college teaching position. You can work a couple days every week at that non-profit that’s making a difference in your community. You can set up regular volunteer hours at a charitable organization that’s close to your heart. You can feel like you’re making a contribution to society without worrying about the size of your paycheck.
Work can improve your connections to other people.
Early retirement can be a period of isolation for some folks. Your friends and family might still be busy working and raising children. The familiar social interactions you enjoyed at work are gone. You and your spouse probably share some common interests, but you can’t spend every single second together.
It’s important for retirees to be open to making new personal connections in retirement. A new workplace is a great place to start that process. You’ll meet new people from different walks of life. You’ll work with and help people who can benefit from your personal wisdom and your professional skill set. You might meet other retired seniors who, like you, are trying to stay active and put their talents to good use. And the more involved you are in your community, the more curious and adventurous you’re going to be about trying new restaurants, shopping in new stores, and interacting with more people.
Of course, working in retirement can affect other aspects of your financial planning even if you don’t need the money, such as taxes, withdrawal rates, and your relationship with your spouse. If you’re considering a new part-time job, let’s schedule a conversation to discuss any adjustments we should be thinking about so that you get the best life possible with the extra bit of money you’ll soon have.
Longevity can be both a gift, and a curse. This generation of retirees is going to live longer than any in history. Today’s seniors are healthier, more active, and receiving better preventative care. And on top of that, a growing group of scientists is trying to harness technology and modern medicine to slow down the aging process.
Experts call the cumulative effect of these changes to life expectancy “the longevity effect.” They project that extending our years of healthy living can have tremendous benefits both to individuals and to society as a whole.
Let’s look at some of the cutting-edge advances in slowing biological aging, as well as what experts recommend folks can do right now to stay more than just young at heart.
You’ve probably seen products like AncestryDNA that can give you a robust genealogical profile from your saliva. Scientists are continuing to progress on more sophisticated versions of this technology that will be able to use your genes to test for serious diseases. There’s even hope of being able to test for genes that are associated with longevity, and others that could eventually shorten your lifespan.
We all know that the best medicine is preventative. But if scientists can perfect this “road map” for life expectancy, the implications for your financial planning could be enormous. An accurate longevity expectancy could make it much easier to plan ahead for significant medical expenses that might not be covered by Medicare. And if you had a better idea of when you were likely to start “slowing down” later in your retirement, you might enjoy your early retirement years more and worry less about running out of money.
Fighting “Zombie Cells”
The cells in our bodies are constantly dividing. After a certain number of divisions, cells usually die. Those that don’t – so-called “zombie cells” – can build up in our bodies over time and interfere with how our healthy cells operate.
Scientists are looking for ways to clear out zombie cells via “interventions” such as pills. Clear out the zombies, and you’re eliminating cellular environments ripe for things like cancer, cardiovascular disease, Alzheimer’s, and osteoporosis. The more resistant we are to these kinds of diseases, the greater our longevity will be. And the longer you live without having to cope with a debilitating disease, the longer you’ll be able to work part-time, volunteer, play your favorite sports, and vacation with your favorite people.
In the Meantime
There’s no guarantee that these specific medicines and technologies will be ready for the general public during your retirement. But it is safe to assume that advances both gradual and rapid will continue to improve the quality of your health care.
The most important thing you can do to keep aging in check during retirement is to take advantage of the services Medicare provides right now. That starts with your free “Welcome to Medicare” visit, which will help you and your doctors get a baseline reading of your health upon retirement. Medicare also covers many vaccinations, a wide variety of preventative screenings and tests, an annual wellness checkup, and a depression screening if you’re struggling with the emotional transition into retirement.
These services might not sound as exciting as fighting zombie cells, but they’re the most effective ways to detect significant health problems while it’s still early enough to do something about them.
So while we’re all waiting for the next big medical breakthroughs, old fashioned common sense will go a long way towards a long and healthy retirement. Go to the doctor. Eat well. Exercise. Wear sunscreen. Pursue your passions with a vigor that will keep your body and mind energized.
And any time you want to review how your financial plan will take care of you at every phase of your retirement, don’t hesitate to call us up.
How are you going to get the best, most fulfilling life possible with the money you have once you retire? Generosity is key, but it can be costly.
Study after study has shown that retirees who spend their time and money on experiences are much happier than those who just buy stuff. Charitable giving can be a particularly meaningful way to keep yourself active and put your assets to good use. Too much generosity can be costly, so it’s important you follow these steps.
Just as long as you don’t overdo it.
If you’re feeling an increased desire to give back now that you’ve retired, here are some tips on balancing your good intentions with what’s best for you and your family.
1. Do your homework.
Recently, there have been high-profile cases of fraud and misappropriated funds at some very famous charitable organizations. But even if you’re giving to a charity that is run well, you should understand where your money is really going. If you’re happy with your dollars helping a larger organization to pay its bills and employees, great. If you want your money to have a more immediate impact on those in need, consider giving to smaller organizations in your community.
Do some googling and check online watchdog databases to make sure your favored charity is on the up-and-up. And unless you know the organizers personally, avoid online crowd-funding campaigns that aren’t legally accountable for how they use donations.
2. Consider a volunteer position.
Your favorite non-profit or charitable organizations need money. But they also need manpower.
If you’re thinking about working part time in retirement and a paycheck isn’t really important to you, schedule regular volunteer hours instead. You’ll get all the same benefits of having a job: structure, responsibility, camaraderie. Plus, seniors who volunteer report lower levels of stress, an increased sense of purpose, and better physical and emotional health.
3. Teach, tutor, or consult.
When looking for a charitable outlet, don’t overlook the professional skills that you honed over your career.
You might not have the qualifications to teach at a school or university, but you could talk to your local community center about holding a seminar that could benefit your neighborhood. You might be done balancing your company’s books, but there are high school kids who could benefit from your mastery of math. Open your door to local small business owners or recent college graduates who need an entrepreneurial mentor.
4. Make a plan.
It’s a scientific fact that giving makes us feel good. But some seniors may get too caught up in their generosity. They forget that gifts and donations are coming from that same pool of assets that are supposed to keep them safe and secure for the rest of their lives. They may have trouble setting limits and saying no.
There is indeed such a thing as too much giving. You might not think much about writing an extra check or two early in retirement. But seniors have to maintain a long-term perspective on their nest eggs. This generation of retirees is going to live longer, more active lives than any in history. You need to make sure that helping someone today isn’t going to make it harder to cover your health care and cost of living needs tomorrow.
So, if you and your spouse want to make regular charitable donations, it’s important that you come in and talk to us. We can incorporate giving into your monthly budget and retirement income plan. If you want to make your generosity more permanent, we can also help you establish a charitable trust and add sustained giving to your estate plan.
We’re always happy when our clients want to help others. But it’s our responsibility to make sure your financial plan covers your best interests first. Let’s work together on a plan that will make your retirement secure and the world around you a little brighter.
Ever wonder how you can improve your relationship with money? Many people have a complicated relationship with money. Hang-ups carried over from childhood experiences get mixed together with positive and negative experiences from adulthood. Few people ever take the time to reflect on what money really means to them and how they can “get right” with money to make smarter decisions.
Take time to answer these 5 questions and you’ll do a better job of living your best life possible with the money you have.
1. What’s your first money memory?
Your earliest experiences with money probably happened in your home. You saw how your parents earned and managed their money. You probably compared the quality of your family home and vehicles to what you saw at friends’ and neighbors’ houses. An unexpected job loss or illness might have led to some very lean holidays or a skipped vacation. Or, if you grew up in an affluent household, you might have taken money for granted in a way you no longer do now that you’re the one earning it.
Identifying some of these early memories is critical to reassessing your relationship with money. Are you following positive examples towards decisions that are going to improve your life? Or, without even realizing it, are you repeating poor money habits that are going to hurt you in the long run?
2. Do you feel like money is your servant or your master?
Sometimes money makes us feel like we’re a hamster on a wheel, running as fast as we can without ever really getting anywhere. But if you never stop chasing after that next dollar, when it comes time to retire, all you’re going to have is money, and a whole lot of empty days on your calendar.
People who get the most out of their money recognize that it’s a tool they can use to skillfully navigate to where they want to be in life. So, instead of working too long and hard for more money, think about how to put the money you have to work for you.
3. What would you do if you had more money?
You’ve probably read about studies that show lottery winners don’t end up any happier than they were before their windfalls. This is a dramatic example proving some pretty conventional wisdom: money doesn’t buy happiness. That’s especially true if you’re stuck on your wheel for 40 hours every week just chasing more and more money.
If the idea of having more money gets you thinking about all the things you’d buy, it’s important to remember how quickly even the fanciest new car smell will fade.
If you would immediately quit your job if you had enough money to support your family and live comfortably, then maybe you need to think about a more fulfilling career.
Having more money might not “solve” some issues you’re currently experiencing, but asking what would you do if you had more money might lead you to new decisions that improve your current life satisfaction.
4. What would you do if you had more time?
Imagine you don’t have to work. You can spend every single day doing exactly what you want. What does your ideal week look like? What things are you doing? What hobbies are you perfecting? Where are you travelling? With whom are you spending your time?
These things often get pushed to the side when we’re busy working. But if your money isn’t providing you with opportunities to spend time doing what you love with the people you love, then your work-life balance might need an adjustment.
5. What would your life look like to you if it turned out “well”?
Hopefully by now you’re starting to think about how your relationship to money could be keeping you from getting the most out of your money.
The successful retirees that we work with don’t look back fondly on the amount of money they made or how much stuff they were able to buy. They tell us their lives turned out well because they used money to make progress towards major life goals. They say their money provided them the freedom to pursue their passions. And their sense of well-being increased as they committed time and resources to health, spirituality, and continual self-improvement.
When you reach retirement age, we want you to look back happily on a life well-lived. Come in and talk to us about how our interactive tools and Life-Centered Planning process can improve your relationship to your money.
There’s also some really great resources you can find at www.investopedia.com to help you improve your relationship with money.
“How am I doing?”-Every Investor…..ever
Ever wonder how your retirement savings stack up against other people your age? That’s a big question that most people have when it comes to their money. One way we tend to look for answers is by comparing what we have to what our neighbors, friends, and family, have. Even though we know deep down that “the grass is always greener on the other side,” it can be hard to look away when our phones, computers, and TVs are practically forcing us to make these comparisons.
We understand the worry that you might not be keeping pace with your peers. But if you’re wondering about where your retirement savings “should be,” it’s important that you look at these numbers with the proper context.
According to Nerdwallet, here’s how average retirement savings break down by age:
Average household retirement savings: $32,500
Median household retirement savings: $12,300
Ages 35 to 44
Average household retirement savings: $100,100
Median household retirement savings: $37,000
Ages 45 to 54
Average household retirement savings: $215,800
Median household retirement savings: $82,600
Ages 55 to 64
Average household retirement savings: $374,000
Median household retirement savings: $120,000
Ages 65 to 74
Average household retirement savings: $358,400
Median household retirement savings: $126,000
As you might have guessed, retirement savings tend to ramp up as we age. In part, this is because the older we get, the more real retirement becomes, and more prepared we want to be.
But as fiscally responsible people age, their debt level tends to drop as well. No more kids to support. No more student loan payments. Vehicles and houses get paid off. Credit cards get used less (unless you’re focused on accumulating points) and paid down. There’s only so much you can keep in a low-interest savings account before you want to put more of your money to work.
The numbers behind the numbers
If these figures seem a bit low to you, you’re not wrong. Most financial experts believe that, generally, Americans are not saving nearly enough for retirement.
Yes, having a couple hundred thousand in savings and investment accounts may sound like a lot of money. But people are also living longer and more active lives than ever before. That means your retirement assets are going to have to last longer than your parents’ and grandparents’ did.
And as pensions continue to dry up, the responsibility for preparing for retirement has shifted more and more to individuals. That’s going to be a challenge for anyone who’s significantly below these savings levels. And it’s going to be a BIG problem for the 43% of households headed by someone 35-44 who don’t have any retirement savings at all.
Is an “average” retirement good enough?
Let’s say you’re the average 65-year-old with just over $300,000 in the bank. How long is that $300,000 going to last? Is that nest egg going to provide the retirement you’ve been dreaming about and working for most of your life?
There’s no one-size-fits-all answer to those questions. We all have different passions, goals, healthcare needs, and lifestyle expectations. Some retirees might live quite happily at or even a little below the average level.
But what happens if your spouse has an accident and needs to see a specialist? What if your roof needs a major repair? Will an emergency stretch your “average” retirement too thin?
What happens if, five years into a twenty-year retirement, you start to feel bored and restless? What if you decide you need to see more of the world? What if you can’t let go of that passion project you’ve always wanted to develop into your own business? Will your nest egg provide for changes that will make your retirement more fulfilling?
How your money measures up.
Successful retirement planning balances the things that we can anticipate with the things we can’t. That’s why, as we work together, we’ll never hold up a graph comparing where your money is to where your peers are. We’re not interested in outside standards of “measuring up.” We’re interested in how your money measures up to what YOU want out of life, and what you’ll need to stay comfortable on rainy days.
One of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the couple will have to share some very difficult news with friends and family as they separate from one another.
Few of us will have to reveal emotional personal issues to as wide an audience as Jeff and MacKenzie Bezos recently did. The statement that Jeff released on Twitter suggests that he and MacKenzie are trying to make their split as amicable as possible by using three insightful ideas that could help anyone struggling through a divorce.
1. Be open and honest with those closest to you.
“We want to make people aware of a development in our lives. As our family and close friends know, after a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends.”
Couples need privacy as they deal with strains on their marriage. But once a decision is made, clear communication with your family, friends, and each other will be very important. That goes double if any young children are in the picture.
The more open a couple is about what’s happening, the easier it will be for you to find the outside support that will help you through this transition. Good dialogue might also help you and your former spouse to focus on the essential tasks at hand, like dividing your assets and updating your essential estate planning documents.
2. Be grateful.
“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other. If we had known we would separate after 25 years, we would do it all again.”
Shame, embarrassment, and guilt are common feelings associated with divorce. Playing the blame game or trying to “win” the divorce can quickly turn all those amicable best intentions into bitter personal and legal issues.
Instead, the Bezos statement is a reminder that the end of a marriage – especially a long one – doesn’t erase all of the positive things that came before it. If an amicable divorce is possible in your particular situation, then don’t be ashamed or embarrassed. Cherish those precious shared experiences, like the birth of children, happy vacation memories, the difficult times you helped each other through. Embracing these feelings of gratitude will help ease both you and your partner through this process.
3. Focus on the positives ahead.
“We’ve had such a great life together as a married couple, and we also see wonderful futures ahead, as parents, friends, partners and ventures and projects, and as individuals pursuing ventures and adventures.”
When we work through the $Lifeline exercise, we emphasis that important transitions like retirement, children graduating, weddings, and yes, divorces, are ends in one respect, but also new beginnings. They’re the start of new chapters in your life.
That might be difficult to see when the pain of a divorce is still raw. But it’s important to open yourself up to new opportunities when they present themselves. You’re about to start your single life all over again. And yes it’s scary. It may not be what you wanted. And you may be bitter. But over time, you may be able to see what awaits you on the other end. It could be traveling that you’ve longed for. Maybe you’ll relocate, start a new career, begin new hobbies, and meet new people. You might have more financial resources at your disposal to explore solo than you did when you were younger and unmarried. And you might approach these experiences with a more mature and grateful perspective, enjoying every minute just a little bit more fully.
We want to help you through all of life’s major transitions, the positives as well as the challenges. If there’s change on the horizon, make an appointment to come in and review the $Lifeline exercise with us. We can help you plan ahead so that the next chapter of your life is the most fulfilling yet.
How to Make Your Empty Nest Time a Prime Time in Your Life
Time flies when you’re a parent. Just when you’ve wrapped your head around the demands and responsibilities of raising a child, you turn around and your little bundle of joy is ready to head out into the world.
This empty nest transition can be very emotional. And in some cases, like children who stay on your health insurance until age 25, the break isn’t as clean as it used to be. But this change should also be exciting! Here are some tips on how you and your spouse can stay positive and make the most out of all your new free time, all that new space, and hopefully, all that extra money.
First off, some major congratulations are in order. Raising children is as rewarding as it is challenging. In order to get where you and your spouse are today, you had to make so many sacrifices, juggle work and family schedules, and carefully manage your finances.
An empty nest fills some parents with sadness and loneliness. But you should focus on the positive. Your kids are ready to be adults. Be proud of them, and of you and your spouse. Pop a good bottle of wine you’ve been saving or treat yourselves to a night out. You deserve it. An exciting new part of your life is about to begin.
2. Readjust your budget.
Children are wonderful. They’re also really expensive! No more sports fees. No more restocking the fridge every other day. Depending on their ages and how much you’re helping with their transition into adulthood, no more school tuition or piggybacking on insurance and phone plans.
Even the smallest of these expenses adds up quickly month after month. Now that they’re in the past, it’s time to make a new budget. You might find ways to ramp up your savings and contributions to your retirement accounts. You also might be able to afford a few more creature comforts or an extra trip or two.
3. Reclaim your space.
If your house suddenly feels a little emptier, well … it is. Too empty? If you and your spouse now have more room than you really need, it might be time to consider downsizing and economizing. Any new homes or neighborhoods in your community that look appealing? Have you considered moving out of state to start a new adventure?
If you’re happy where you are, take back those vacant rooms. Refurnish with a more grown-up touch to create a guest room for visiting friends and family. Give your hobbies and passions their own space by making a crafting room or a library.
Added bonus: if your kids have any trouble “adulting,” they’ll be more motivated to figure things out for themselves if there’s an easel or writing desk where their beds used to be.
4. Reconnect with your spouse.
You and your spouse are going to have more one-on-one time now than you’ve had since you were newlyweds, especially if you’re both getting ready to retire. What things did you used to do together before all those soccer practices and ballet recitals started dominating your schedules? What dream vacations for two have you been putting off? Have your golf or tennis swings gotten a little rusty over the years? Do you have time to cook meals together now?
Another activity that might bring you and your spouse closer is regular visits to your adult children and any grandchildren you might have. Seeing your kids on their own, flourishing at college or raising their own kids, will only deepen the sense of pride you should feel for a job well done.
5. Talk it out.
Major life transitions are often more challenging than we’re prepared to admit. More room, more free time, and more cash in hand are all positive. But the feeling that a large part of your life is over might be hard to shake.
Your blank calendar and lack of routine can be intimidating. Empty bedrooms can feel lonely. And while empty nest blues are often associated with the mother, many fathers suffer in silence. Make sure that you and your spouse are open and honest with each other about what you’re both feeling and get help if necessary.
On the flipside, you might feel overwhelmed in a good way – thrilled by all the options available to you, excited to start something new, but unsure of where to begin.
Again, step one is clear communication with your spouse. Make sure that you are on the same page about what you both want from this new stage of your life. Plan activities that you can do together. But also make space in your new routine for each of you to explore, learn, and grow individually.
Step two: come in and talk to us. We can help you sort through the financial implications of your empty nest and make sure you have the resources to live your best possible life with the money you have.
3 Ways to Know When You Are Ready to Retire
There’s a pretty good chance that your parents and grandparents retired just because they turned 65. Today’s retirement is a bit more complicated than that. While age is still an important factor, your ability to connect your financial resources to your lifestyle goals is what will truly determine if you’re ready to retire.
Here are three important markers to cross before you crack open your nest egg:
You’re financially ready.
The most common question we field from our clients is, “How much do I need to retire?” While there’s no magic number to hit, a few key checkpoints are:
- You have a budget. Many clients who are preparing to retire tell us they’ve never kept a budget before. Time to start! If you have any big plans for early in your retirement, like remodeling your home or a dream vacation, let us know so we can discuss front-loading your annual withdrawal rate.
- Your debts are paid. No, you don’t necessarily need to pay off a fixed-rate mortgage before you retire. But try to reduce or eliminate credit card balances and any other loans that are charging you interest.
- Your age, retirement accounts, and Social Security plan are all in-sync. If you’re planning on retiring early, be sure that your retirement accounts won’t charge you any early withdrawal penalties for which you’re not prepared. Also keep in mind that the earlier you take Social Security the smaller your payments will be. Can you afford to live without Social Security until age 70 to maximize your benefits?
- You and your spouse have a health care plan. Medicare insures individuals, not families. If only the retiree is 65, the younger spouse will need to buy health care elsewhere.
You’re emotionally ready.
We spend so much of our lives working that our jobs become a large part of our identities. Rediscovering who we are once we stop working can be a major retirement challenge. To prepare for this emotional transition:
- Talk to your spouse ahead of time. Don’t wait until your last day of work to discuss how both of you feel about retirement. What do each of you imagine life will be like? What are the things you’re excited to do? What are you afraid of? What can each of you do to make this new phase of life as fulfilling as possible?
- Make a list. What are the things you’re passionate about? Something you’ve always wished you knew more about? A skill you’d like to develop? A cause that’s important to you? An ambitious business idea that was too ambitious for your former employer?
- Check that your estate plan is in order. It’s understandable that many people avoid this part of their retirement planning. But putting together a legacy that could impact your family and community for generations can have tremendous emotional benefits. The peace of mind that comes from knowing the people you care about are taken care of can empower you to worry a little less and enjoy your retirement more.
You’re ready to do new things.
Ideally, the financial piece of this conversation should make you feel free enough to create a new retirement schedule based on the emotional piece. Plan your days around the people and passions that get you out of bed in the morning. Some ideas:
- Work at something you love. Take a part-time job at a company that interests you. Turn that crazy idea you couldn’t sell to your old boss into your own business. Consult. Teach. Volunteer.
- Keep learning. Brush up your high school French by enrolling in an online course. Learn some basic web design so you can showcase your photography portfolio or create an online store for your crafts. Sign up for cooking classes and get some new meals in your weekly rotation.
- Get better at having fun. What’s the best way to lower your handicap or perfect your backhand? Take lessons from a pro. The second best? Organize weekly games with friends and family.
- Travel. Planning out a big vacation can be a fun project for couples to do to together. And while you’re looking forward to that dream trip, take a few weekend jaunts out of town. Stay at the new bed and breakfast you keep hearing about. Visit your grandkids. Go on the road with a favorite sports team and enjoy the local flavor in a different city.
If you’re nearing retirement and struggling with these issues, working through the Return on Life tools with us might provide some clarity. Let’s discuss how we can help get you ready for the best retirement possible with the money you have.
For more retirement resources visit the AARP website.
Let’s Talk Turkey!
So, how did Turkey, a country that represents just about 1.4 percent of the world’s economy spark a global selloff?
Turkey was once a rising star. The country’s Prime Minister Recep Tayyip Erdogan took office in 2003 and his “conservative, pro-business policies helped pull the country back from an economic crisis,” reported Financial Times.
As Turkey’s economy strengthened, investors saw opportunity. Investments from outside the country averaged about $13 billion a year, according to World Bank figures cited by Financial Times, although investment slowed after terror attacks in 2015.
Bloomberg reported Prime Minister Erdogan has become more authoritarian since being re-elected in 2018, giving himself power to name the head of Turkey’s central bank. Financial Times reported the Prime Minister’s “…unorthodox views on interest rates…has proved disruptive for monetary policy, leaving…Turkey’s central bank, struggling to contain inflation that is running at close to 16 percent.”
Lack of central bank autonomy concerned investors. The Turkish lira began to weaken against the U.S. dollar, making it costly for businesses to repay dollar-denominated debt.
Politics have factored into the situation, as well. During 2018, negotiations were underway to secure the release of an American pastor who was arrested on “farcical terrorism charges,” reported The Economist. However, talks collapsed early in August. Asset freezes and sanctions followed, along with promises of additional tariffs on Turkish goods imported by the United States.
The subsequent steep drop in the value of Turkish lira sparked concerns that rippled through global markets. Financial Times reported:
“Turkey’s deepening crisis punished emerging market currencies and sparked a global pullback from riskier assets on Friday…The S&P 500 fell 0.7 percent in New York on Friday. Treasury yields also moved lower, with the 10-year dipping below 2.9 percent for the first time this month, as investors sought safe assets…Investors’ shift from risky assets knocked equities across Europe, with Germany’s Dax, France’s CAC 40 and Spain’s Ibex all about 2 percent weaker.”
For quite some time, investors have appeared immune to geopolitical risks. Perhaps that is beginning to change.
|Data as of 8/10/18||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||-0.3%||6.0%||16.2%||10.4%||10.9%||8.1%|
|Dow Jones Global ex-U.S.||-1.5||-5.5||1.7||2.9||2.6||1.1|
|10-year Treasury Note (Yield Only)||2.9||NA||2.2||2.2||2.6||4.0|
|Gold (per ounce)||-0.2||-6.3||-5.5||3.5||-2.0||3.6|
|Bloomberg Commodity Index||-0.8||-4.5||0.8||-3.1||-7.9||-7.7|
|DJ Equity All REIT Total Return Index||-1.5||1.7||5.8||7.7||9.2||7.3|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
3 things to consider Before claiming social security benefits: timing, spousal benefits, and work status.
Most Americans understand they can choose when to begin receiving Social Security benefits. The choices are fairly straightforward:
- Early (age 62 to full retirement age). People who decide to collect benefits early typically receive a smaller monthly benefit than they would if they waited until full retirement age. The reduction in monthly income may be as large as 30 percent. However, they receive benefits for a longer period of time.
- Normal (full retirement age). An American’s full retirement age is determined by his or her date of birth. For someone born in 1960 or later, full retirement age is 67 years. The amount of income a person receives at normal retirement age is determined by the amount earned during his or her working years.
- Delayed (after full retirement age to age 70). By delaying the start of Social Security benefits, a person can increase his or her monthly benefit by accruing delayed retirement credits. For Americans born in 1943 and after, credit accrues at a rate of 8 percent each year.
While it’s important to understand timing options for Social Security benefits, choosing when to take benefits may not be the most important decision you make, especially if you’re married.
There are several different claiming strategies that may help married couples optimize their benefits and the benefits available for children who are minors or have special needs. These options should be carefully considered before filing for benefits.
Your filing decision may also be affected by your work status and income. If you file early while still working, and your earnings exceed established limits, then a portion of your benefit may be withheld. In addition, your income will help determine whether your Social Security benefit is taxable.
Weekly Focus – Think About It
“Take time for all things: great haste makes great waste.”
–Benjamin Franklin, Founding Father
Debt: What’s Your Story and How Do You Feel About It?
In a recent study, half of Americans said their debt and expenses is equal to or greater than their income. 1 Revolving credit, particularly credit cards, is an increasingly significant part of the equation. According to the Federal Reserve Bank of New York’s Household Debt and Credit report data, Americans’ total credit card debt hit $905 billion in 2017 – an increase of 8% from the previous year. 2
The phrase “credit card debt” usually triggers red flags when we’re talking about long-term financial planning. And in fact, the average US household now carries $15,654 on their cards, and pays $904 annually in interest. 2 But debt, in and of itself, isn’t good or bad. Instead of making a value judgement about how you use debt, when working with clients we like to understand:
- What is your debt story?
- What are your attitudes about debt?
- Why do you feel the way you do?
- How are your debt levels affecting the Return on Life your money provides?
Having a deeper understanding of the above helps us do a better job positioning your money to work more effectively for you.
What’s the big picture?
Our current high debt levels reflect a previous generation of low interest rates, an active housing market, a robust credit market, and relative peace and prosperity. This meant more consumers with more plastic and more loans. Again, debt is not bad in and of itself, especially in a healthy economy. But from 2007-2009, many highly-leveraged people and companies were vulnerable to foreclosure and bankruptcy during the Great Recession.
People who were born between the Great Depression and World War II grew up in the daily realities of war and lean markets. Unsurprisingly, this group tends to avoid using credit cards when they can. Instead, they rely on the cash in their hands and the checkbooks they balance with pen and paper.
That credit-aversion seems to have skipped the Boomer generation, who, generally speaking, happily used credit cards and home-equity loans.
The current generation of young workers—Millennials—seem to be warier about carrying debt than their parents were.
Young people are entering the workforce at a time when household income is struggling to keep pace with the cost of living. They believe taking on debt would only widen that gap. In particular, the costs of medical care, housing, and food continue to grow faster than income. 2
Many underemployed Millennials are living at home into their late-20s, so they aren’t using credit cards to finance luxury items or buy first homes. Even for millennials who do find good jobs after college, many start their adult lives in the red because of student loans. As of September 2017, the average US household had $46,597 in student loan debt. 2
Millennials are less enthusiastic about investing in the markets. Growing up during the Great Recession shook their faith in the economy. Growing up in the shadow of 9/11 and terrorism, they’ve only known a world unsettled by global unrest.
Millennials are also a more conscientious consumer group than their parents were. They want to spend their time, and their money, on things that help to make the world a better place. They consider personal fiscal responsibility to be part of a greater good.
What’s your story?
While looking at big picture debt trends is useful for predicting where the economy is headed, your Life-Centered Plan is about you. Now would be a great time to take a minute to consider:
- How do you feel about debt?
- Why do you think that you feel the way you do?
- Are you comfortable with your current level of debt?
- Is your current level of debt causing any problems with one of your loved ones?
- Do you pay off your credit card balances in full every month?
- How do your attitudes about debt align or differ with those of your parents? Why do you think that is?
We encourage you to reach out to us and we can take a closer look at your financial situation and help you get on a more comfortable path. Together, we can create a financial plan that will improve your Return on Life.
- Half of Americans are spending their entire paycheck (or more) http://money.cnn.com/2017/06/27/pf/expenses/index.html
- Nerdwallet’s 2017 American Household Credit Card Debt Study https://www.nerdwallet.com/blog/average-credit-card-debt-household/
5 steps to raise your credit score
If you need to boost your credit score, it won’t happen overnight.
Credit scores take into account years of past behavior you can findon your credit report, and not just your present actions.
But there are some steps you can take now to start on the path to better credit.
1. Watch those credit card balances
One major factor in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.
The optimum: 30 percent or lower.
To boost your score, “pay down your balances, and keep those balances low,” says Pamela Banks, senior policy counsel for Consumers Union.
If you have multiple credit card balances, consolidating them with a personal loan could help your score.
What you might not know: Even if you pay balances in full every month, you still could have a higher utilization ratio than you’d expect. That’s because some issuers use the balance on your statement as the one reported to the bureau. Even if you’re paying balances in full every month, your credit score will still weigh your monthly balances.
One strategy: See if the credit card issuer will accept multiple payments throughout the month.
2. Eliminate credit card balances
“A good way to improve your credit score is to eliminate nuisance balances,” says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.
The reason this strategy can boost your score: One of the items your score considers is just how many of your cards have balances, Ulzheimer says. That’s why charging $50 on one card and $30 on another instead of using the same card (preferably one with a good interest rate) can hurt your credit score.
The solution to improve your credit score is to gather up all those credit cards with small balances and pay them off, Ulzheimer says. Then select one or two go-to cards that you can use for everything.
“That way, you’re not polluting your credit report with a lot of balances,” he says.
3. Leave old debt on your report
Some people erroneously believe that old debt on their credit report is bad.
The minute they get their home or car paid off, they’re on the phone trying to get it removed from their credit report.
Negative items are bad for your credit score, and most of them will disappear from your report after seven years. However, “arguing to get old accounts off your credit report just because they’re paid is a bad idea,” Ulzheimer says.
Good debt — debt that you’ve handled well and paid as agreed — is good for your credit. The longer your history of good debt is, the better it is for your score.
One of the ways to improve your credit score: Leave old debt and good accounts on as long as possible. This is also a good reason not to close old accounts where you’ve had a solid repayment record.
Trying to get rid of old good debt “is like making straight A’s in high school and trying to expunge the record 20 years later,” Ulzheimer says. “You never want that stuff to come off your history.”
4. Pay bills on time
If you’re planning a major purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash.
While you’re juggling bills, you don’t want to start paying bills late. Even if you’re sitting on a pile of savings, a drop in your score could scuttle that dream deal.
One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.
“Credit scores are determined by what’s in your credit report,” says Linda Sherry, director of national priorities for Consumer Action. If you’re bad about paying your bills — or paying them on time — it damages your credit and hurts your credit score, she says.
That can even extend to items that aren’t normally associated with credit reporting, such as library books, she says. That’s because even if the original “creditor,” such as the library, doesn’t report to the bureaus, they may eventually call in a collections agency for an unpaid bill. That agency could very well list the item on your credit report.
5. Don’t hint at risk
Sometimes, one of the best ways to improve your credit score is to not do something that could sink it.
Two of the biggies are missing payments and suddenly paying less (or charging more) than you normally do, says Dave Jones, retired president of the Association of Independent Consumer Credit Counseling Agencies.
Other changes that could scare your card issuer (but not necessarily hurt your credit score): taking cash advances or even using your cards at businesses that could indicate current or future money stress, such as a pawnshop or a divorce attorney, he says.