By Edward Leone Jr. CFP RFC DMD MBA
Contact Information: edleonedds@gmail.com 303-478-6793
The decline in the price of petroleum products appears to be a very complex international and global geopolitical and market driven phenomenon. Both domestically and internationally, the cost of production and transportation of many products will be reduced. Those countries in which cost of production of petroleum products is higher than market levels at this time will lose market share. Is this political and for how long will it sustain? The market demand for petroleum products is high in Europe, China, Latin America, Mexico and other areas in Asia. Is this representative of a demand problem or supply restrictions for what ever reason? What do you think?
Another area of interest as it regards a major industry has to do with pharmaceuticals. There is a growing trend to reduce consumption of antibiotics in farm animals which are a part of the food supply. The theory is that this will reduce the incidence of antibiotic resistant bacteria which is becoming a big problem. Will this trend create problems with the quality and safety of meat products which we consume? How will this trend affect the cost of medicines to humans since at this time, 80% of antibiotics produced are distributed to farm animals?
If you are not engaged in aggressive use of digital technology, you may be missing exposure to the up coming Y Generation. 90% of these folks use the internet. 75% are engaged in social networking. 85% own a smart phone and 85% keep cell phones near by both day and night.
Other bits of information which may help you gage your status relating to habits regarding retirement savings are as follows:
The average 401k contribution in 2014 was $9,603.
Average 401k balances for the most immediate history are $77,300 for 2012, $89,000 for 2013 and $91,000 for 2014.
The average employee savings rate for retirement was 8.1% for 2014.
How do you stack up and is this pattern enough to satisfy future retirement need?
If your goal is a $1 million balance in your 401k upon retirement, at a 4% withdrawal rate adjusted for year to year inflation factors, you will have $40,000 of purchasing power, but don’t forget to add in your Social Security benefit which averages $27,000 per/ year for a middle class couple. Is this enough to support your life style in retirement? See a financial planner to plot and appropriate strategy for retirement savings! Watch out for the variety of designations used by investment advisors. Use http://www.finra.org to judge who is mandated to function and advise in your best interest and with fiduciary obligations.
Another issue of great concern to families preparing financially for future retirement events and students graduation from college is student loan debt. The average for an undergraduate in 2012 was $25,900 according to the National Center for Education Statistics. Student loan debt rose from $241 million in 2003 to $1.08 trillion in 2013. In 2012, the average for graduate students was $46,620 and $102,460 for doctors and lawyers. Income based repayment loan programs have been available since 2009. Have your students and other family member look into these options to handle these debt obligations for Federal Student Loans. Public Service Loan Forgiveness programs are also available. Check with the U S Department of Education. Good luck!!
For The Record:
DJIA 17,826.30
NASDAQ 4,931.81
S&P 500 2,081.18
Suggested Reading: “Contemporary Financial Management” by Moyer, Mc Guigan and Ketlow
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