Tag Archives: economy

Retirement: How Long, How Much?

We often highlight the impacts of longevity on retirement. This week we look at Retirement: How Long, How Much? What are the practical implications of a longer life? What is a safe withdrawal rate? Save as much as you can when working, that is the first step. Knowing how much you can take and how long you need to take it is vital.

Retirement: How Long, How Much?
So, just how long will you live in retirement? No one knows for certain, but it is wise to know the odds and the outside shot.  Retirement Planning for a 115-Year Life Expectancy
Once you have a sense for how long you will be in retirement you can start on how much you need in retirement.  Use the FI Formula to Find Out How Much You Need to Be Financially Independent
That FI Formula still leaves the open question about the 4% rule. Just how much is a safe withdrawal rate? Look at the actual study to fill in some of the gaps in that story. Safe withdrawal rates
Not surprisingly Vanguard has an opinion on withdrawal rates. It makes sense, but is it right for you? Vanguard’s New Model for Retirement Spending in Low-Yield Market

Retirement: How Long, How Much? – Perhaps there are other ways to think about it.
Some of you may be thinking about running away from the US after November 8. We have covered the topic before, but here are some reminders on what to consider. How to Manage Your Finances When You Retire Overseas
If you don’t want to bite the bullet and move overseas, this option still gets you offshore? 6 Reasons a Cruise Ship is the Best Retirement Option
Keeping with the overseas perspective, are we doing everything right here? Australia and New Zealand certainly are better positioned and here’s why. Our legislators should take note. What U.S. Retirees Can Learn from New Zealand and Australia
Regardless your view of longevity and even safe withdrawal rate, generate as much income as you can. Dividends are one approach worth considering. There are always new options to consider. This Dividend ETF Does Your Investing For You
Is dividend investing right for you or as part of your investment strategy? This article might help you consider just that. Why do Some People Like Dividends So Much?

Retirement: How Long, How Much? – What comes after November 8.
So, will there be an implication on the economy? Here’s an interesting viewpoint. Could Hillary Clinton be the Next Herbert Hoover?
Maybe it will happen, maybe it is already priced in already. Is there a smart answer to hedge your bets? How to Hedge the S&P 500 with a Minimum Return of 7%
Maybe you are better off reading a book. Top 10 Books that Will Change Your Life in 2016

Retirement Planning

Retirement planning is vital to achieving a happy, sustainable lifestyle after work. The earlier you begin planning … and executing your plan … the more likely you will achieve your goals. It never hurts to validate your planning and to be aware of the environment. Those two things are our focus this week.

Retirement Planning – never stop validating your plan.
It never hurts to get tips, especially if they are from “experts.” You know I like #7 and #10 on the list. Financial Experts Reveal Retirement Planning Secrets
This article hits a few of our common themes like healthcare costs and longevity. It also touches on some details you do not want to miss. It takes a lot of work to be ready to retire. Don’t forget these things.
It is always good to consider the pitfalls in planning. Hopefully this will help you avoid these common traps. 25 Hidden Obstacles That Keep You From Retiring Comfortably
This is a little bit in the weeds, but an interesting comparison. How should you manage your money as you save for retirement? Betterment vs. Vanguard: Which Should Retirement Investors Choose
If you are still young, and I hope you are, these tips will help, too. How much a 20-something needs to save every month to retire with $5 million

Retirement Planning – understand the environment.
Plenty of doomsayers out there these days, after a long, bull run on Wall Street. Still, this seems to be a pretty well reasoned view, and it warrants consideration. Recession in 2017 for Clinton, Trump or Johnson
In the same vein, albeit focused on Wall Street, this article makes some good points. Most notably, it highlights the cheap money fuel for the Wall Street run. Markets Could Be in for a Long Correction
That fundamental weakness highlighted above positions the market for this issue. As ‘smart money’ pressures the weakest stocks down. Short-selling could sweep stock market if inflation pushes up borrowing costs
This is not just a US or US/EU problem. Chinese banks might need as much as $1.7 trillion in capital

Retirement Planning – maintain a normal, non retirement planning, life, too.
Everyone likes to save money. This is an easy one with Amazon. Hot! Amazon $60 Total Credits Towards Tablets, Cameras & More Prime Members
Inasmuch as we are trying to save money, doing so on airfare is particularly satisfying. How to Find Airline Mistake Fares (Get Ridiculously Cheap Flights)
Since you are flying somewhere cheap, might as well have a goal. The Best Airplane Bars: Yes, There are Mixologists in the Sky
If you are an iPhone user, become a better iPhone user. iPhone memory full? How to free memory on your iPhone. The 25 best hidden features and tricks in your iPhone’s latest update

Secure Retirement

The election continues to provide plenty of action, strange, but action, but you still need a secure retirement. The best way to get a secure retirement is by maintaining focus on the important things: saving enough, achieving the lowest possible cost, leveraging tax incentives, and building a reliable income stream in retirement.

Enjoy a secure retirement by ensuring you are saving enough for retirement.
Should you have an IRA? Look at this amazing chart anyway because it gets to the impact of time on your savings. The Most Important IRA Chart You’ll Ever See
If you really want to be diligent in preparing for your retirement, doing some or all of these things will likely pay off in the long run. Is your 401(k) helping or hurting your retirement savings?
As you can see from the comments on this one, it stirred some controversy. Still, it is a valid point and worth your consideration. Estimate Your Retirement Income Needs Based on Your Spending, not Your Income

Maintain a secure retirement by focusing on building an income stream during retirement.
This one helps you fine-tune your Social Security strategy and gives you some savings tips, too: fits in both categories! How the Average Retiree Can Gain $5,000 Per Year in Retirement
One thing is certain in retirement, you want as much control as possible. That especially applies to RMDs. Here are some good ideas for managing them. 6 Tax-Smart Ways to Lower Your RMDs in Retirement
More good, short information on the brave new world of retirement income. Most notably, more commentary on the 4% rule. Navigating the New World of Retirement Income

Be sure of a secure retirement by keeping an eye on the economy, too.
With continuing anemic growth in the US, just how good is the economy? Have we ever recovered from the 2008 downturn, except for financial markets? “Policymakers Have Been Calling a ‘Depression’ a ‘Recovery’ for Nearly a Decade”
Not to overdose on Zero Hedge, as they tend to have a negative bent, but here citing Goldman’s analysis of the markets it may be worth a look. Goldman: The Last Two times P/E Multiples Expanded This Much, The Result Was A Historic Crash
We have touched on this before, but a focused reminder of the very real implications of Washington’s never ending drunken binge: the national debt will mean you must save more for retirement. Doesn’t seem fair, does it? How Government Debt Affects Your Retirement

Heat Wave Respite

It is hot outside, stay in the cool air and take a heat wave respite with some cool reading about the economy and your retirement.

Heat wave Respite: A few quick ideas to improve your retirement.
First a quick checklist for you. I may not agree with all these, nor may you, but it is directionally correct. 51 things not to do if you want to be better off financially
Most of you, like me, are over 50 now. So, suck it up and take this advice. 3 Steps to Building Wealth in Your 50s
It is always a good time to start saving money. Perhaps these tips will work for you. 2 Ridiculously Simple Tax Strategies That Can Each Save You $100,000+ Over Your Lifetime
Here is an interesting mix of two favourites, have an investment strategy you can stick with and consider dividend stocks as a means of building retirement income. A Simple Method for Buying Low and Maintaining Diversification

Heat wave Respite: A quick scan of the global economy
The most fascinating and consequential event on the schedule is the June 23 “Brexit” vote in Britain. It seems too close to call; I simply cannot imagine an exit. We shall see. One thing that seems to be consistent, at least here, is that Brexit is masking a real, looming issue with European banks. Forget Brexit, It’s the Banks Stupid! makes the most interesting point “Whatever the outcome of the Brexit referendum next week, it would appear that nothing can stop a systemic crisis developing in Europe.” Brexit is Getting the Blame
This is a fascinating, negative, and likely first-time event in the US economy. US Negative Interest Rate Bets Surge to Record High
It is always worthwhile putting things into perspective. Here, you can look at the global economy over the past 5,000 years. That is right, 5,000 years (or so they say). How about the lowest interest rates ever? US stocks at 60-year highs vs. Europe? Plenty of other fascinating or scary facts embedded here. Visualizing “the 5,000 Year Long Run” in 18 Stunning Charts

Fiduciary Implications

The initial reaction to the DOL Fiduciary Rule was mixed, now we are beginning to see some Fiduciary Implications. Big players are already making moves to ease compliance, most notably Charles Schwab, and the speed with which this is happening means some benefits may quickly accrue.

So, what have been the fiduciary implications thus far, and what might follow?
The absolute most encouraging fiduciary implications I saw all week was this news about Schwab dropping loaded funds.  Post-DOL fiduciary rule, Schwab dumps load funds as advisors yawn That’s good news because it indicates the market moving to help you with your quest for lower cost investments, and Schwab moving means others will have to follow, despite what they may say.
Inasmuch as the fiduciary implications are technically limited to qualified investments, i.e. your tax favored investments like 401(k) and IRA assets, theoretically only a fraction of your investments are ‘protected’ by the new fiduciary rule. Still, I think once the smart players go to the effort of compliance with the DOL fiduciary rule, they will go ahead and apply it themselves to non-qualified money. Mind you, the SEC is talking about its own fiduciary rule for non-qualified money, and there will be plenty of resistance from the industry. SEC Joins Battle on Broker Bias That Could Remake Industry
Frankly, having a more uniform framework which applies across qualified and non-qualified money will be a better thing, certainly for investors, as the industry will be compelled to comply, limiting the chances of shutting out smaller investors. Keep in mind that the DOL rule makes it relatively easy to choose to walk away from small accounts – whether personal or business – as a rational business decision. Walking away entirely will be an entirely different equation.

Now that we have a glimpse at the fiduciary implications, let’s take a minute on world markets.
First, let’s consider some context for the prior remarks. This is a fascinating article about the future of the asset management industry. I pulled it first for the excellent bubble chart on invested funds. I put it here, though, because it gives you some insight into the industry dynamics. Asset Managers, Prepare to have Your Business Disrupted
You have read here before about the questionable US unemployment data. This article goes one step beyond to show you the US output gap as an alternative means of divining the true state of the economy. I found it fascinating. Why the US Output Gap Means the 10-year is Going Below 1%
I find it hard to internalize the rapid rise of China as an economic power. These few charts give a good primer on where things stand. These 4 maps show how China is dominating global trade
I admit I don’t agree with George Soros much, probably at my own peril. This time, though, he makes a good deal of sense. Soros says China looks ‘eerily’ like the US in the run up to the financial crisis
At the same time, Japan’s woes seem to worsen. In Shocking Finding, the Bank of Japan is Now a Top 10 Holder in 90% of Japanese Stocks

Now, you deserve to lighten up some.
As an adopted Minnesotan, I was surprisingly struck by the sudden loss of Prince. Here is a great link to his entire very last show. Listen to Prince’s Entire Final Concert
I know an inordinate number of people gather around for the Kentucky Derby. This may make it easier for you. The 13 Best Bourbons for Kentucky Derby Season 2016
When you hit the road this Summer, take along the best tools. The Best iPhone Apps for Travelers

Markets & Opportunities

This week we take a quick look at markets & opportunities before turning to more fun things, like travel. With the chaotic and unpredictable election cycle in the US, evolving terror threat globally and continued weakness in the global economy, it seems to make sense to spend some time on Markets & Opportunities. Still, we’re all getting ready for Summer travel, so tips don’t hurt there. Enjoy.
Where are the markets & opportunities now?
Here is a fascinating look at the two sides of the market, business day and off-hours, if you will. The strange thing is, all the gains for the past 11 years have come from off-hours! WTF Chart of the Day: Without “Pajama Traders,” Stocks Have Gone Nowhere in 11 Years
We frequently talk about dividend stocks as a means of delivering retirement income. This article looks at a fascinating way to pick dividend stocks. These 7% Dividend Stocks Sell Way Below Book
No matter what you do, you will ultimately be wrong when investing. That’s okay. How to be Wrong as an Investor
Let’s find some timely tips to improve your Summer travels.
We should start by saving some money. This trick is news to me because, like the author, I figured one-way fares are always more expensive. Cheap Airline Tickets You’re Probably Missing Out On and How to Find Them
Here is another tip I simply did not know. These two are making me feel out of touch! Mobile Passport App Makes US Re-Entry Fast and Easy and It’s FREE!
Admittedly these are not the best ideas ever (like the ones above). Still, there are some pointers worth considering here. Travel Hacks: 8 Ways to Vacation Like a VIP at a Fraction of the Cost
Since you have saved all that money, here are some ways to use it. 4 luxurious train journeys that will make you feel like 19th-century royalty 4 Luxury South African Hotels You’ll Never Want to Leave Behold, the Caribbean’s First Over-the-Water Luxury Suites

 
I cannot resist sharing some interesting tidbits from around the web with you.
The pace of change in thinking on global warming, aka climate change, is quickening. This one is something of a doomsday view. A nightmarish new climate model predicts a gloomy future for cities from Hong Kong to New York
On a strangely related note, Google has some capabilities you may not know about yet. How about producing time-lapse satellite views of areas? Watch the planet morph before your eyes with Google’s mesmerizing time-lapse feature
Lastly, do you think you know what you would see if you could look all the way to the next land mass from the coast? You are probably wrong. 7 surprising maps that prove your view across the ocean isn’t what you think it is

Election Madness

Indeed, about mid-way between the Iowa Caucuses and New Hampshire Primary, we have seen an already raucous and unique primary season turn to true election madness.
The Iowa Caucuses delivered on a host of fronts, from a unique partnership with Microsoft to deliver app based election returns to not adequately staffing certain precincts to ‘coin toss’ decision making and ‘tell Carson supporters that he’s dropping out, so switch to us’ tactics. Democratic debate night: The first one-on-one clash leaves Hillary Clinton stumbling on Wall Street Who won the New Hampshire Democratic debate? The Politico Wrongometer The fury of Ben Carson Iowa governor slams Ted Cruz for ‘unethical and unfair’ tactics Bloomberg could be a ‘serious contender’ in 2016, his pollster says

Not one to let you forget your retirement savings, some timely guidance from around the web.
Our last installment zeroed in on dividend stocks as a strategy, here is some more background for you on the approach. Ponder the Future of Your Dividend Growth Stocks Dividends: A Key Component of Total Return 20 dividend stocks that Wall Street loves the most
I have paraphrased Warren Buffett before on this very quote, but the idea is ‘don’t save what you don’t spend, spend what you don’t save.’ That’s the key in the so called accumulation phase – your earning years, pre-retirement. Then, though, you have to become a spender, and making the transition can be difficult. Turning a Saver Into a Spender in Retirement and Spending and Saving in Retirement

Lest you think I forgot the world economy, it still moves along in pretty much the same way.
China is releasing an important data set tomorrow, about its currency surplus. A Preview of This Weekend’s Event that Could Unleash a “Vicious Bear Market Rally”
How about here, at home, how is the US economy doing? Economy added 151,000 jobs in January That sounds good enough, but it isn’t.

I think it is overdue to have some levity here, so here is some miscellany:
First, with the Super Bowl this weekend, how about a preview of games to come? Microsoft Offers Tantalizing Glimpse of HoloLens-Powered Super Bowl
Even some travel tips for you this week: Lonely Planet Releases Travel Guides to 38 Cities – For Free

Retirement Security

What strategies can you use, beyond patience, to better ensure your retirement security after a brutal January?

One way of thinking we have not covered much here is using dividend paying stocks to generate income and provide retirement security. Retirement Strategy: Hopefully, This Will be Easy Enough for Even a Novice Investor to Understand Scrap the 4% Retirement Rule, Buy Dividend Stocks with a 4% Yield Instead
On that note, here is a long, but useful article about the “4% rule.” It’s a good read if someone is selling you on the concept. Why 4% Could Fail
If you want to step out there on your own (which I don’t advise), this is an interesting template of an idea. Earn 6.7% on cash with a decent chance to buy ExxonMobil under $60
Here is some more clarity on tax and Social Security law changes for 2016, too. Tax Law Changes Affecting Your Clients 2 Social Security changes and their effect on retirement income The impressive income tax benefits of $5M+ lifetime gift exemptions

So, what are the tea leaves saying? Let’s take a quick cruise around the web on that topic.
We have looked at this before, and it has not gotten any better. Baltic Dry Index falls to lowest level in history Thoughts on Maritime Trade and the Global Economy What if the Imploding Baltic Dry Index Really Does Reflect Global Trade After All
Then, of course, there is China. China’s banking crisis looms like Banquo’s ghost in Davos and China PMI Misses Some of the biggest hedge fund names in the world are loading up on bets against China’s currency
South Korea’s economy is sputtering, too. South Korea’s Exports Dropped the Most Since the Global Recession
Still one of our biggest trading partners, Japan, joined the negative interest rate club, too. BOJ Shock to Pressure Central Banks
Now here’s one you probably have not heard in a while, Venezuela. Of course, Venezuela, like many others, is an oil driven economy. This is What the Death of a Nation Looks Like: Venezuela Prepares for 720% Hyperinflation
Then, there’s US. The Chart That Explains Everything

World economic overview

You know that retirement is coming. It isn’t as though it just shows up one day and takes you by surprise, so you need to get ready for it.” Batya Shevich, Warren Buffett: To Be Rich And Successful Is Easy!

With the Federal Open Market Committee raising the Federal Funds Rate for the first time in nearly a decade, it seems like a good time to take a clear headed economic overview.
Now, the Fed move is largely predicated on a robust employment market and related risk of inflationary pressure. Put that in the context of oil & gas and commodities falling through the floor, and you tend to think like Canada. So, what are equity markets telling us? Here are two opposing views: Why Stocks Need to be a Big Part of Your Portfolio in 2016 tells a tale of a failing bond market and focus on consistent dividend paying stocks, but then “Coppock Guide” Signals a Bear Market is at Hand tells a fascinatingly wonkish look at market tops over a very long time. Both articles are worth your time.
This came in advance of the rate hike, but the read is still worthwhile, bottom line: even a small rate hike, if Japan’s experience is any guide, will be difficult to hold. The Simple Explanation Why There is No Such Thing as a “Dovish Rate Hike”
This rate hike occurs in the face of a largely negative rate environment in the EU, and our friends to the North looking in that direction as well. That, I suppose, would presage good investment news for the US economy, but it does feel odd as the high rate outlier. The Next Domino: Canada and The Bank of Canada just said the 3 most controversial words in central banking: ‘negative interest rates’
I would be remiss if I did not tee up the downside potential, and this is a decent list of hot spots around the globe. A Pessimist’s Guide to 2016: When Everything That Can Go Wrong, Does Go Wrong

No matter what happens to global markets, you still want to retire, right?:
Knowing plenty of people who fall prey to the morning coffee routine, or picking up a quick lunch, I thought this was a great read. Cutting Back on Lunch and Coffee Could Save You $700,000 In other words, that Starbucks Grande is costing you a lot of retirement flexibility.
In the same vein, nine more ways you can save more. I’ll paraphrase here a Warren Buffett quote, don’t save what you don’t spend, spend what you don’t save. 9 Ways to Stop Wasting Money Now
Since I’m on a roll here, let’s not forget the impact fees have on your retirement accounts. This is a great story about how Vanguard single handedly is changing the landscape. The Company That’s a Bigger Threat to Wall Street than Occupy
While this does not play directly into your retirement, knowing this may have some meaningful implications for how you think about investing and it is a fascinating component of any global economic overview. These 2 charts basically tell the entire global demographic story
A friendly reminder about healthcare cost in retirement, it really is a big issue, and you really do have to be prepared for it. Health Care in Retirement Will Cost How Much?

Miscellany to lighten your mental load:
Everyone with an iPhone will like this trick. Make Your iPhone Faster With This One Simple Trick
Here is the convergence of two recurring topics here: travel and saving money. The 11 most underrated ski resorts in America
This is a little heavier, sorry, but it is really interesting, too. History in the remaking

Retirement thanksgiving

Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.” – Jonathan Clements

Since we are giving thanks, let’s have a retirement thanksgiving:
It is always interesting to see what the so-called experts are doing, and I find the trends here most insightful: construction/heavy industrials and retail. Goldman: Hedge funds are betting billions that these 19 stocks are going down
It is always good to stay on top of the changing legal landscape, don’t make a costly mistake. How Retirement Benefits Will Change in 2016
It is also good to know your options, the HSA has been a hidden gem since inception. Learn more here. HSAs Can Be Like DC Plans for Retirement Health Costs
One gentle reminder about fees, this time from a different angle, the impact of a fee focused company, Vanguard, on the industry. The Vanguard Effect

A weekly look at global markets:
In the continuing trend of global economic sluggishness/slowdown, I give you the world commodities markets in a single graph. Collapse of Commodities in One Simple Chart
In the same vein, and another continuing theme, a further dismal report on the Chinese economy. Everyone on Wall Street is talking about this dark new China report

Travel, because it is that time of year:
Talk about making holiday travel bearable, here’s the ticket. The 10 Best First Class Airline Cabins for Holiday Travel
Since you probably won’t be in one of those cabins, I give you this diversion for your travels. 6 Craft Beer Stores Hiding in Airports
Crowd funding unleashes some great ideas, cutting out the middlemen. Jurni is a great travel idea, worth keeping your eye on now. This May Be The Best Carry-On Suitcase Idea We’ve EVER Seen
This one is for your consideration. Indeed, everyone should have a personal favorite museum. Just so happens I agree with this article. How about you? Is This the Greatest National Museum in the World?