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Weekly Economic Update

MidAmerica Financial Resources Presents:

 

WEEKLY ECONOMIC UPDATE

 

 

 

WEEKLYQUOTE

“Look at all the sentences which seem true and question them.”

- David Reisman

 

 

WEEKLYTIP

Own a business? Negotiating with vendors may help you save a few hundred dollars in monthly operating costs. It doesn’t hurt to try it; any vendor would prefer a satisfied customer over a search for a new one.

 

 

WEEKLYRIDDLE

A man bet his neighbor that his dog could jump higher than his neighbor’s hedge. The neighbor accepted the bet and lost. Why?

 

Lastweek’sriddle:

Its body of stone shields a fiery heart. Under sufficient pressure, its head will depart. What is it?

 

Lastweek’sanswer:

A volcano.

 

 

 

 

March 30, 2015

HOME SALES PICK UP

Existing home sales accelerated 1.2% to an annual pace of 4.88 million in February, the National Association of Realtors announced. Sales had slowed markedly in January. February also brought a big jump in new home buying – a 7.8% increase according to the Census Bureau, taking the year-over-year gain to 24.8%.1,2

FEBRUARY BRINGS AN ADVANCE IN THE CPI

The 0.2% gain represented the first monthly rise in consumer prices since October; a 2.4% increase in gasoline prices made a demonstrable difference. Even so, this left the headline CPI flat year-over-year. The core CPI rose 0.2% in February, taking its annualized gain to 1.7%.3

UMICH INDEX STAGES MARCH RETREAT

At a mark of 93.0, March’s final University of Michigan consumer sentiment index declined 2.4 points from its final February reading. It has still improved vastly in the past year – last March, it was at 80.0.4

FINAL Q4 GDP: 2.2%

The third estimate of fourth-quarter growth by the Bureau of Economic Analysis was unchanged from the second; economists polled by Briefing.com expected an upward revision to 2.4%. Last week also brought news of a 1.4% slip in hard goods orders; even minus transportation orders, durables still declined 0.4%.2

WALL STREET WORRIES ABOUT A STRONG DOLLAR

Pessimism about the oncoming earnings season contributed to market choppiness and weekly losses for the big three. Across March 23-27, the Dow fell 2.29%, the Nasdaq 2.69% and the S&P 500 2.23%. Friday, the Dow settled at 17,712.66, the Nasdaq at 4,891.22 and the S&P at 2,061.02.5

THIS WEEK: Monday, the Commerce Department releases February personal spending numbers and the NAR issues February pending home sales data. The January S&P/Case-Shiller home price index and the Conference Board’s March consumer confidence survey arrive Tuesday. On Wednesday, ISM’s March factory PMI and ADP’s March employment report appear and Monsanto announces earnings. Thursday brings the March Challenger job-cut report, new initial claims totals, February factory orders data and earnings from CarMax and Perry Ellis. On Friday, the Labor Department presents its March jobs report and Federal Reserve chair Janet Yellen speaks briefly at a Fed research conference.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

-0.62

+8.91

+12.65

+6.89

NASDAQ

+3.28

+17.83

+20.84

+14.55

S&P 500

+0.10

+11.46

+15.33

+7.55

REAL YIELD

3/27 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.19%

0.56%

1.62%

1.94%


Sources: online.wsj.com, bigcharts.com, treasury.gov - 3/27/155,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

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Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to NPC.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.

1 - housingwire.com/articles/33325-new-home-sales-rebound-25-in-february [3/24/15]

2 - briefing.com/investor/calendars/economic/2015/03/23-27 [3/27/15]

3- nytimes.com/2015/03/25/business/rising-gas-costs-help-lift-us-consumer-prices.html [3/25/15]

4 - tinyurl.com/o9am74a [3/27/15]

5 - tinyurl.com/onrf6g7 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F27%2F14&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F27%2F14&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F27%2F14&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F26%2F10&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F26%2F10&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F26%2F10&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F28%2F05&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F28%2F05&x=0&y=0 [3/27/15]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F28%2F05&x=0&y=0 [3/27/15]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/27/15]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/27/15]

 

 


Will Baby Boomers Ever Truly Retire?

 

Many may keep working out of interest rather than need.

 

Provided by MidAmerica Financial Resources

 

Baby boomers realize that their retirements may not unfold like those of their parents. New survey data from The Pew Charitable Trusts highlights how perceptions of retirement have changed for this generation. A majority of boomers expect to work in their sixties and seventies, and that expectation may reflect their desire for engagement rather than any economic desperation.

 

Instead of an “endless Saturday,” the future may include some 8-to-5. Pew asked heads of 7,000 U.S. households how they envisioned retirement and also added survey responses from focus groups in Phoenix, Orlando and Boston. Just 26% of respondents felt their retirements would be work-free. A slight majority (53%) told Pew they would probably work in some context in the next act of their lives, possibly at a different type of job; 21% said they had no intention to retire at all.1

 

Working longer may help boomers settle debts. A study published by the Employee Benefit Research Institute in January (Debt of the Elderly and Near Elderly, 1992-2013) shows a 2.0% increase in the percentage of indebted households in the U.S. headed by breadwinners 55 and older from 2010-13 (reaching 65.4% at the end of that period). EBRI says median indebtedness for such households hit $47,900 in 2013 compared to $17,879 in 1992. It notes that larger mortgage balances have been a major factor in this.1

 

Debts aside, some people just like to work. Those presently on the job expect to stay in the workforce longer than their parents did. Additional EBRI data affirms this – last year, 33% of U.S. workers believed that they would leave their careers after age 65. That compares to just 11% in 1991.2

 

How many boomers will manage to work past 65? This is one of the major unknowns in retirement planning today. We are watching a reasonably healthy generation age into seniority, one that can access more knowledge about being healthy than ever before – yet obesity rates have climbed even as advances have been made in treating so many illnesses.

 

Working past 65 probably means easing into part-time work – and not every employer permits such transitions for full-time employees. The federal government now has a training program in which FTEs can make such a transition while training new workers and some larger companies do allow phased retirements, but this is not exactly the norm.3

 

Working less than a 40-hour week may also negatively impact a worker’s retirement account and employer-sponsored health care coverage. EBRI finds that only about a third of small firms let part-time employees stay on their health plans; even fewer than half of large employers (200 or more workers) do. The Transamerica Center for Retirement Studies says part-time workers get to participate in 401(k) plans at only half of the companies that sponsor them.3

  

Boomers who work after 65 have to keep an eye on Medicare and Social Security. They will qualify for Medicare Part A (hospital coverage) at 65, but they should sign up for Part B (doctor visits) within the appropriate enrollment window and either a Part C plan or Medigap coverage plus Medicare Part D.3

 

Believe it or not, company size also influences when Medicare coverage starts for some 65-year-olds. Medicare will become the primary insurance for employees at firms with less than 20 workers when they turn 65, even if that company sponsors a health plan. At firms with 20 or more workers, the workplace health plan takes precedence over Medicare coverage, with 65-year-olds maintaining their eligibility for that employer-sponsored health coverage provided they work sufficient hours. Boomers who work for these larger employers may sign up for Part A and then enroll in Part B and optionally a Part C plan or Part D with Medigap coverage within eight months of retiring – they do not have to wait for the next open enrollment period.3  

 

Prior to age 66, federal retirement benefits may be lessened if retirement income tops certain limits. In 2015, if you are 62-65 and receive Social Security, $1 of your benefits will be withheld for every $2 that you earn above $15,720. If you receive Social Security and turn 66, this year, then $1 of your benefits will be withheld for every $3 that you earn above $41,880.4

 

Social Security income may also be taxed above the program’s “combined income” threshold. (“Combined income” is defined as adjusted gross income + non-taxable interest + 50% of Social Security benefits.) Single filers with combined incomes from $25,000-34,000 may have to pay federal income tax on up to 50% of their Social Security benefits in 2015, and that also applies to joint filers with combined incomes of $32,000-44,000. Single filers with combined incomes above $34,000 and joint filers whose combined incomes top $44,000 may have to pay federal income tax on up to 85% of their Social Security benefits.5

 

Are boomers really the retiring type? Given the amazing accomplishments and vitality of the baby boom generation, a wave of boomers working past 65 seems more like a probability than a possibility. Life is still exciting; there is so much more to be done.     

 

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@natplan.com.

www.mid-america.us

  

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.   

 

Citations.

1 - marketwatch.com/story/only-one-quarter-of-americans-plan-to-retire-2015-02-26 [2/26/15]

2 - usatoday.com/story/money/columnist/brooks/2015/02/17/baby-boomer-retire/23168003/ [2/17/15]

3 - tinyurl.com/qdm5ddq [3/4/15]

4 - forbes.com/sites/janetnovack/2014/10/22/social-security-benefits-rising-1-7-for-2015-top-tax-up-just-1-3/ [10/22/14]

5 - ssa.gov/planners/taxes.htm [3/4/15]





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