Last month there was no interest rate hike by the Federal Open Market Committee, which caught many by surprise, then redemption for the fed came in the form a weaker employment numbers. It will likely be 1st quarter of next year before we see an interest rate hike, because the Fed never wants to be the Grinch who stole Christmas. If the Economy doesn’t improve much in the next few months the fed could get dragged into the Political scene by raising rates in the heat of the presidential campaigns and possibly November elections. These are political situations they prefer to avoid.
The US Government sold more Treasury bills at -0- percent interest rates again, and that is not a good sign. Low interest rates affect savers, retirees, future retirees, and eventually push people into risker investing then might normally be called for to achieve a decent return.
The flood of stock buybacks initiated by various companies is generally a sign they don’t have the confidence to make an investment in their respective business lines. Not good when these “Board” types become traders or market timers. We always prefer they return cash to investors through dividends; either increasing the current dividend or paying a special annual distribution.
Walmart is the latest victim of market volatility, down 10 % in a day, due to lowered earnings expectation relative to increasing the minimum wage for their workers to 10.00 hour and devoting capital to expanding their on-line capabilities and revamping stores. All noble and perhaps welcome pursuits but for quick tempered shareholders It’s all about what have you done for me lately.
Pay Attention to This!
This is why you really must pay attention, even if you are in your late 50’s, to what’s happening in the world of Social Security. You may have sensed it’s not just signing up one day and heading off to the beach the next. There are incredibly important and complex strategies to consider here, which could mean tens possibly hundreds of thousands of dollars in life time income. A potential difference of a worried versus “no worries” retirement. Like many things in life, the “right” stuff just doesn’t happen because we want it to, it takes some thought and effort. Knowing what PIA, FRA, File and Suspend is important, but the most important thing is consider your future income streams if you live to 95 or even 100 years old. When computing the “present Value” it is often a very large number, often more than anyone’s savings. Consider a lottery prize that is advertised as multiple millions, but then the winner elects to take it in equal annual payments, this Is the same theory, only in reverse.
The US Government just sold 10 Billion one year “Bill’s”, which pay an equivalent interest rate of LESS Than ¼ of 1.0 pct. This is the current market rate demanded by the world largest, savviest, and smartest investors. If you can plan ahead and position yourself to delay receiving Social Security benefits at your normal retirement age, the same US Government will increase your benefits by 8 pct a year. That’s over 30 times the current market rate! It can’t be done by everyone, but you will not know if its appropriate for you until dig deeper. This is definitely a “wager” Mr. Pascal would love.
If you would like to learn more, please Join OCM at a dinner on December 1st at the Molly Pitcher Inn when we feature Kurt Czarnowski, a former New England Regional director of the Social Security Administration who will be discussing maximizing your benefits. Just contact our office for details.