Daily Gains Letter

Social Security

Underlying Economic Indicators Dim, but Gold ETFs Retain Their Shine

By for Daily Gains Letter | Mar 28, 2013

Gold egg in the gold nest, isolated on whiteAmericans save for retirement by building wealth through a number of different ways. In addition to personal savings accounts, we build wealth through home equity, pension plans, retirement accounts, and Social Security.

Unfortunately, since 2008, the underlying values of our tried and true wealth management techniques have come under attack. Housing prices are still down 41.0% from their peak in 2007. In fact, 10.5 million homes in the U.S. are in negative equity territory, meaning 21.5% of all residential homes in the U.S. are worth less than their mortgages. (Source: Panchuk, K.A., “CoreLogic: 10.4 million mortgages still in negative equity,” Housing Wire, March 19, 2013.)

At roughly 52.4%, Nevada has the highest percentage of properties with mortgages in negative equity; Florida follows with 40.2% in negative equity, and the housing rebound–rich state of Arizona comes in third, with 34.9% of all properties underwater.

Social Security amounts to $1,237 a month, less than $15,000 a year; that’s not a lot to rely on. And there’s really nowhere to park your extra cash, either. Bank interest rates are a measly 0.5%, bonds are near 3.1%, and jumbo five-year certificates of deposit (CDs) only return around 1.5%.

The downturns in home values, interest rates, and retirement accounts have significantly reduced the amount of wealth available to finance retirement for the average American.

Yes, the Dow Jones is in record-high territory, but the underlying economics can’t support the gains for much longer. Eventually, Wall Street has to reflect Main Street, and right now, it isn’t. Unemployment is hovering near eight percent, as is household debt. Gross domestic product (GDP) is flat. And the economic … Read More

Too Much Time and Not Enough Money: Wealth Management for Your Later Retirement Years

By for Daily Gains Letter | Mar 27, 2013

270313_DL_whitefootThe recipe for a comfortable retirement is all about budgeting and making the numbers add up. Living below your means and setting aside money for the future isn’t an easy task. Nor is it particularly fun to postpone doing something in the here and now for a retirement that will last for an undetermined amount of time.

That disconnect can be found around the world. A recent survey, based on over 15,000 consumers in 15 global markets, found that over half of non-retirees (56%) say they are not adequately preparing for a comfortable retirement. That number maxes out at 72% in Egypt, 71% in Taiwan, and 66% in the U.K. (Source: “Retirement,” HSBC web site, last accessed March 26, 2013.)

Here in America, we can expect to spend about 21 years in retirement, but we will burn through our savings in just 14 years. This means that most Americans have not, and are not, financially prepared for the last 33% of their retirement. This isn’t exactly a surprise when you consider that 36% of Americans say they are not preparing adequately and a staggering 20% say they are not preparing at all.

In spite of inadequate retirement savings and a bleak long-term outlook, the short term has greater appeal; 43% of respondents are more likely to save for a trip than retirement.

This poses major questions about how people will fund not only their “active” retirement years, but how they will also cope with the financial burden of possible long-term care costs associated with aging in their later retirement years.

Right now, those nearing retirement (55–64 years old) say the … Read More