By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: edleonedds@gmail.com 303-478-6793
The new administration in Washington has many challenges regarding the health of the US economy. According to Richard Young, a long time investor, writer and researcher, the Trump administration and the US Congress have inherited some very troubling issues:
Cheap debt has created an addiction to borrowing to advance economic growth. Public debt, corporate debt and private debt have grown dramatically in recent years. Low interest rates have hurt savers and those retired who depend on fixed income assets for spending income.
Unemployment reports are misleading. The labor force participation rate is at 63% as compared to 67% in 1999.
Median household income is currently at $56,500. It was at $58,000 in 2000. These are real income numbers adjusted for inflation.
Many corporate entities are using cheap debt to increase earnings reported by the repurchase of existing stock shares to increase the reported P/E ratio.
It will likely take an extended period of time along with significant cooperation among government officials, corporate leaders and our citizens to turn this trend around. Do we have the will? Economic reports are becoming more positive. Will this trend be sustainable?
Another issue which many of use who are in retirement or getting close to retirement fail to address is an estate plan. Please consider the following under the guidance of a trained professional:
Create a will or trust instead of having state law dictate the distribution of your assets.
Keep adequate records of assets and family information. Retirement savings should engage a long-term consistent plan for investing.
Make and confirm beneficiary designations.
Name appropriate fiduciaries such as executors and trustees.
Correctly title assets.
Consider directives in the event of incapacity and health issues.
Periodically review and up date the plan.
Regarding economic saving and planing think about the following:
Save from early in life and save often. Shelter retirement investments from taxes when possible.
Have cash available for emergencies.
Take maximum advantage of employer incentives.
Maintain a good credit rating status.
Set economic goals.
Cultivate your career path to move ahead in you area of interest and expertise.
Engage risk management through insurance vehicles and legal awareness of risk issues.
Maintain a stellar personal reputation.
A very interesting study performed at Notre Dame University focused on how married couples spent money in retirement. It was noted that those couples with separate financial accounts had a tendency to engage in some frivolous spending while those who had a joint financial account of which they were both engaged in management, had more moderate spending habits. This could be a valuable strategy for many people both in retirement and during the planing years as a matter of disciplining life style expenses.
It is my sincerest hope that some of the above information will be of benefit to the readers.
For The Record:
DJIA 20,914.62
S&P 500 2,378.25
NASDAQ 5,901
Suggested Reading: “The Little Book of Comon Sense Investing” By John Bogle
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