Market Commentary 1/30/12
For the Week of Jan. 30, 2012
The Markets
Stocks ended last week mixed, with the Dow seeing its first weekly decline of the year. Still,U.S.stocks are on track to end the first month of 2012 up, with the Dow currently holding its biggest monthly point gain in history, according to The Wall Street Journal. The Dow is also looking at its fourth-straight monthly gain and biggest monthly rise since October. For the week, the Dow fell 0.47 percent to close at 12,660.46. The S&P gained 0.09 percent to finish at 1,316.33 and the NASDAQ rose 1.07 percent to end the week at 2,816.55.
| Returns Through 01/27/12 | 1 Week | YTD | 1 Year | 3 Year | 5 Year |
|---|---|---|---|---|---|
| Dow Jones Industrials (TR) | -0.47 | 3.78 | 8.46 | 19.03 | 3.07 |
| NASDAQ Composite (PR) | 1.07 | 8.11 | 2.22 | 23.24 | 2.95 |
| S&P 500 (TR) | 0.09 | 4.79 | 3.45 | 18.42 | 0.62 |
| BarCap US Agg Bond (TR) | 0.61 | 0.51 | 8.29 | 6.96 | 6.68 |
| MSCI EAFE (TR) | 1.63 | 5.96 | -10.07 | 13.09 | -3.63 |
Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, BarCap US Agg Bond and S&P, excluding "1 Week" returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.
Where The Jobs Are – Of the top seven occupations expected to create the greatest number of new jobs through the year 2018, none require a four-year college degree. The top two jobs on the list are registered nurses and home health aides (source: Department of Labor, BTN Research).
Later – More than one in three American workers (36 percent) believe that they will retire after age 65. Only one in nine Americans (11 percent) believed they would work past age 65 when the same question was asked in 1996 (source: EBRI, BTN Research).
On The To-Do List – Sixty-five percent of American adults have not written a will (source: Lawyers.com, BTN Research).
WEEKLY FOCUS – Delay Receiving Social Security to Increase Benefits
Many Americans think of retirement as something that automatically happens when they reach 65. However, some may be able to afford to retire sooner, while others may want work longer to save more. Regardless of when you want to retire, you should delay receiving Social Security benefits until 70 if you can.
"One of the best ways to ease into retirement is to live within your means and not rely on income from Social Security until age 70," according to Aaron Crowe from Bankrate.com.
Most baby boomers will be eligible for full Social Security benefits at age 66, but retirees can begin claiming reduced Social Security benefits at age 62. People who claim their benefits before reaching full retirement age (this age varies depending on your birth year), and subsequently have to return to the work force, will have their benefits reduced by an additional $1 for every $2 more than $14,640 earned in a year. By postponing applying for Social Security benefits until age 70, retirees could receive up to 8 percent more per year and almost double their monthly benefit income.
To know if you can afford to retire and wait until 70 to receive increased benefits, you should practice living on a retirement budget that excludes Social Security benefits for at least six months. This will help you determine if receiving Social Security will be required to cover daily necessities or will be additional income to fund weekend dinners out or yearly vacations.
Instead of deciding to retire because of arbitrarily set ages for claiming Social Security, take the time to practice and examine your budget options to make sure you will be making the most of your benefits. Our office will work with you to examine all of your savings and benefit options to help you enter retirement at the time that works best with your budget. If you are wondering about the best time to take your retirement benefits, call our office today for a review of your portfolio. We can help you build and practice living on a budget to help you confidently transition from the work force into retirement.