News From the Control Tower:

Many of us cannot choose when we retire. Some of us just like to work and others must work for financial reasons. Whether we choose to retire, or the choice is made for us due to layoffs or health issues, there will likely come a time when we must live off our savings. COVID notwithstanding, the United States has experienced an extended period of economic prosperity following the Great Recession of 2008-2009. That prosperity becomes evident when you look at the market value of your retirement savings. For many of us, that retirement savings is predominantly held in a 401(k) and/or traditional IRA. Those are pre-tax savings accounts, meaning all distributions will be taxed at regular income tax rates upon withdrawal.

Over the course of the past year, during the Covid lockdowns and into the re-opening phase, we’ve seen a few key themes play out in the markets. One theme is what we refer to as “Shiny Objects.” Some of the shiny objects that siphoned a lot of funds and attention this past year were cryptocurrencies, meme stocks, NFTs (non-fungible tokens) and SPACs (Special Purpose Acquisition Company). Here I’ll focus on the bigger ones – crypto and meme stocks. First, I’ll cover some background to provide some context into how we think about these shiny objects.

As financial advisors we spend a lot of time talking about retirement planning, but we can also help you navigate a college savings plan that’s best for your family’s situation. Those who make a plan save, on average, twice as much as those who don’t. First, I want to stress that your priority should always be your own retirement savings. There are no loans available for retirement like there are for college. Being a financial burden on your future children is not a legacy you want to leave.

Since the Covid lockdowns have ended, unemployment has remained stubbornly high. Multiple factors affect employment, and getting people back to work is likely not as simple as eliminating the federal unemployment subsidy. Our current labor market may have long-term impacts on our national economy. We last published a blog article about the U.S. Labor Market in late 2019: The November 2019 Jobs Report – Can We Trust It? — Propel Financial Advisors. At that time, the Bureau of Labor Statistics had just released its November 2019 jobs numbers reporting a 50-year low in unemployment at 3.5%. Also, at that time, food service was one of the largest growing areas of employment. What a difference a pandemic makes!

Recently, Christine Benz of Morningstar interviewed Ed Slott about recent legal changes that impact retirement and tax planning. Ed Slott (self-proclaimed retirement expert) discusses the impact of the SECURE Act and promotes his latest book on retirement. Propel Advisor Danielle Woods covered the impact of the SECURE Act in a recent blog post "Traditional Retirement Savings: Why Tax-Deferred Accounts like 401(k)s May Be the Wrong Choice for Some Taxpayers" and our Jan. 27, 2021 Webinar, "New Year, New Strategies: Rethinking Your Savings Plan".

Did you know that the concept of saving for retirement has only been around for two generations? In 1940, the average life expectancy for men was 60.8 years. Women fared a bit better with an average life expectancy of 65.8. Historically, people typically worked until they died or physically couldn’t work any longer. In 1935, when the Social Security Act was signed into law, citizens had to be 65 years old to receive Social Security, which meant a small percentage of people ever received payment. Today, the average life expectancy for men and women is over 78 years, and non-disabled citizens can receive Social Security payments as early as age 62. On top of that, the desire to retire “early” is growing like wildfire. When considering the length of our lives and the cost of living compared with 1940, it’s no wonder we are having trouble keeping up with our retirement needs.

News from the Control Tower: Our weekly curated list of news stories affecting you and your finances. This week's reads include: (1) Low interest rates leave savers with few good options, (2) Ant Challenged Beijing and Prospered. Now It Toes the Line., (3) The Idea That Raising Wages Destroys Value Is A Fallacy, (4) Is it time to forget what you learned about investing in bonds? (5) IRS Announces 2021 Retirement Plan Contribution Limits For 401(k)s And More, and Bonus article - Ghost Stories of Tripadvisor is a dreadful directory of hotel hauntings

News from the Control Tower: Our weekly curated list of news stories affecting you and your finances. This week's reads include: (1) America Has Lost Its Taste for Iceberg Lettuce, (2) The Best Pastries Are Now Being Sold Via Instagram, (3) Mainstreaming MMT, (4) Florida Sees Signals of a Climate-Driven Housing Crisis, (5) The Short Tenure and Abrupt Ouster of Banking’s Sole Black C.E.O., and Bonus article - The American Latino Experience: 20 Essential Films Since 2000

News from the Control Tower: Our weekly curated list of news stories affecting you and your finances. This week's reads include: (1) Sizing Up the Rural-Urban Travel Divide: Who’s Up and Who’s Down, (2) The anti-Spotify: How online music company Bandcamp became the toast of the COVID age, (3) Are markets in a bubble because traders live in one?, (4) Biden’s Tax Plan Would Spur Economic Growth, (5) Small investors have pushed big companies toward social change. A new SEC rule will limit their influence, (6) I Had Lost All Hope’: Clorox Wipes Are Still the Hard-to-Find Pandemic Item, and Bonus article - HEARTBREAKER - To women in search of love, Shaun Rootenberg seemed like a catch. What they didn’t know: he’d spent decades stealing from just about anyone who crossed his path.

Did you know that writing your concerns down often helps to reduce the stress of worrying about them? Many of our clients worry about the future, but do not know how to get those worries on paper in a meaningful way. We strongly encourage clients to consider working with us to create a written FINANCIAL PLAN.