After a press conference in which President Trump mentioned scientists were testing the potential of using disinfectants as a coronavirus cure, poison control centers across the country reported a spike in calls. In Maryland alone, the Emergency Management Agency fielded more than 100 calls asking about the president’s suggestion. In less than 24 hours of the briefing, the poison control center in New York City responded to more than 30 cases in which people were exposed to disinfectant as a possible treatment.
Sunday, May 31, 2020
Thursday, May 28, 2020
In past recessions, industries like manufacturing and construction were often the hardest hit. For example, some economists referred to the Great Recession as a “man-cession” because at the outset, more men lost jobs than women. In some households, wives were able to find employment more often than men. The recovery, however, favored men, who regained 5.5 million jobs compared to 3.6 million jobs by women.
Arne L. Kalleberg and Till M. Von Wachter. National Center for Biotechnology Information. April 2017. “The U.S. Labor Market During and After the Great Recession: Continuities and Transformations.” . Accessed April 27, 2020.
Wednesday, May 20, 2020
The research firm Spectrem Group estimated that at the end of 2019 there were 11 million millionaires in the U.S. By the end of the first quarter in 2020, that number had dropped by at least half a million. Clearly, the recent stock market woes have taken a toll on everyone, not just the working class.
As we learned after the last recession, recovery can take a while— it could be years, in fact. For those on the cusp of retirement, this could be a very real obstacle. Should they retire or keep working longer than planned? The latter offers three clear benefits:
- Allow investments time to recover
- Continue contributing money toward a nest egg
- Give Social Security time to build a larger benefit
In the future, could there be problems with that last benefit? Congress has long brushed aside the pending insolvency of Social Security. Now, the pandemic stimulus packages are poised to further contribute to federal budget problems. In fact, if no changes are made to the Social Security system, the program’s income and reserves won’t cover scheduled benefits within just 15 years. It is projected that by 2035, benefit levels will have to be reduced by 20 percent. Given current stock market losses, the uncertainty of employment opportunities following the COVID-19 crisis and the unresolved issues with Social Security, it may be time for individuals to seriously consider making changes to their financial strategies and portfolio allocations.
Sequence-of-returns (SOR) risk is the risk of what can happen if the market performs poorly in the years that correspond closely to your retirement date. Losses could lead you to withdraw more from your portfolio than you planned to cover lifestyle expenses. Ultimately, by taking more money from your principal investment, there’s less capital to earn the money you may need during later stages of retirement. In short, SOR risk could cause you to outlive your retirement savings.
We believe individuals should carefully consider creating a liability-matching portfolio. In other words, you may be able to mitigate SOR risk by adding fixed-income assets and/or an annuity to reliably provide the amount of annual income you’ll need in retirement. In a liability-matching portfolio, your income production after taxes should match your liabilities (expenses).
Retirees should allow for flexibility in their retirement expenditures to accommodate the possibility of poor market returns. However, did you know that some level of income can be insured? With an annuity, the insurance company guarantees to pay a certain level of income regardless of market losses, changes in Social Security benefits, or a global pandemic. A reliable stream of income can help mitigate the risk if one or more of the other sources of retirement income experiences a setback.It’s important to keep in mind that annuities are insurance contracts designed for retirement or other long-term needs. They provide guarantees of principal and credited interest, subject to surrender charges.
As for your current investment portfolio, it’s a bit late for panic selling. Instead, you may want to consider what the U.S. and global economies will look like a year from now, and incorporate investments poised to benefit from lasting paradigm shifts. Some possibilities related to such a shift could include opportunities for working from home, localized and flexible supply-chain alternatives, social and event industry innovations, and a rise in certain demographics—possibly leading to another baby boom. To avoid selling, use retirement accounts to reallocate investments without tax implications and potentially rebalance asset allocations. While staying the course may be an appropriate strategy for long-term investors, be open to new opportunities as they arise.
When managing sequence-of-returns risk, you may also want to consider maintaining a cash component in your portfolio moving forward. Today’s economic environment is a significant reminder of why it’s important to consider transferring assets to more conservative holdings as we edge closer to retirement.
We're here to help! If you have questions or concerns, reach out to us at (734) 769-1719 or email@example.com.
Ben Steverman. Bloomberg. March 26, 2020. “Coronavirus Shock Is Destroying Americans’ Retirement Dreams.” . Accessed April 6, 2020.
Bev Bachel. Jackson National. July 16, 2019. “Order Matters in Retirement.” . Accessed April 6, 2020.
Raymond James. Jan. 31, 2020. “Don’t Let ‘Sequence of Returns’ Risk Ruin Your Plans.” . Accessed April 6, 2020.
Stephen H. Dover. Franklin Templeton. March 18, 2020. “Quick Thoughts: Pessimists may miss the up market – don’t become one.” . Accessed April 6, 2020.
Wednesday, May 13, 2020
A recent survey by the National Endowment for Financial Education found that almost 90% of Americans were feeling anxious about their money situation.
- 39% were worried about job security
- 48% worried about paying bills
- 28% didn’t know if they could pay their utilities
- 41% were worried about not having enough emergency savings
- 23% were worried about having enough saved for retirement
Even before the COVID-19 pandemic, subsequent mass layoffs and other hardships, a U.S. Bureau of Labor Statistics study revealed that 40% of adults did not have enough cash on hand to cover an unexpected $400 expense.
Obviously, a home foreclosure or auto repossession can generate a snowball economic effect on a household, but everything from medical expenses to utility bills to parking tickets can coalesce into a high degree of financial distress, causing mental and physical health problems.
If you find yourself in financial stress during this difficult time, there are a couple of ways we can help. First, we understand what you’re going through, so your problems are very real to us. Second, we have access to a variety of different financial vehicles that may help address your unique issues. Please contact us to learn more.
Even in normal situations, financial stress can take its toll on a marriage. A pair of recent studies suggests that partnerships best able to weather financial distress are those in which spouses make a proactive effort to practice “relationship maintenance behaviors,” such as respecting and showing love and affection for each other.
If you find yourself succumbing to the rigors of financial stress, follow some of the widely touted tips to help — because they work. Better yet, many ways to manage stress are easy and free. For example:
- Get regular exercise, particularly in nature.
- Learn and practice relaxation techniques, such as meditation or yoga.
- Laugh — watch old movies or TV shows that make you laugh out loud.
- Eat healthy, well-balanced meals on a regular basis.
- Learn to manage your time effectively, making time for hobbies, interests and down time.
- Set limits appropriately and say no to things that cause you stress.
- Seek out social support and spend time with people who put you at ease.
We're here to help! If you have questions or concerns, do not hesitate to reach out to us at (734) 769-1719 or firstname.lastname@example.org.
Michelle Fox. CNBC. April 16, 2020. “Coronavirus is causing financial stress for nearly 9 in 10 Americans.” . Accessed April 20, 2020.
Knowledge@Wharton. April 9, 2020. “What Contributes Most to Consumer Financial Distress?” . Accessed April 20, 2020.
University of Arizona. April 21, 2020. “What helps couples weather financial storms.” . Accessed April 20, 2020.