As we head into the third month of the year and what seems like the third year of this year’s presidential election, I hope you are well and that you are weathering the choppy economic environment as well as all of life’s other challenges.
LAST WEEK’S MARKETS:
The markets advanced for the first four days of the week, but gave it all back on Friday. The Dow [-0.93%; -7.53%], the S & P 500 [-1.66%; -9.38%], and the NASDAQ Composite [-1.38%; -14.36%] all declined for the week. Many investors getting out of stocks moved to the quality of U. S. Treasury securities, driving their prices up and yields down. T-bills dropped well below two percent, meaning lower returns ahead for money-market funds and other short-term investments. If the Fed lowers rates again in March, rates on T-bills, CDs, and money-market funds could slip to near one percent. Once again investors will have to move further out on the yield curve or take on greater risk, to maintain higher levels of income and return. The average taxable money market fund in the USA was yielding +3.05% last week, down from +4.75% just a year earlier (source: iMoneyNet).
“RETIREMENT”:
I have been doing a lot of my extracurricular reading lately on the subject of retirement. It is fascinating how this concept has evolved over the past century and a half, and it is also fascinating to see how it seems to be changing again now. In 1880, 78% of men in the U.S. age 65 and older were gainfully employed. That was the peak. It has decreased steadily every decade since, and as of 2000, the figure was 17.5%. I would not be at all surprised to see this percentage begin to rise again at the next census in 2010. I believe it is not only that more people may need to work, but I see more who will want to work, in some capacity, after age 65.
RISING COSTS:
We generally use a fixed 4% inflation rate in our retirement projections. Inflation has gone up +115% over the last 25 years (1983-2007) or +3.1% per year.
NATIONAL HEALTH CARE IS ALREADY HERE, KIND OF:
45% of all health care expenditures are paid today by government entities (e.g., Medicare or Medicaid) as opposed to payments made by private health insurance companies or out-of-pocket payments made by individuals. Federal expenditures for Medicare are projected to be $477 billion in the calendar year 2008, more than double the $222 billion spent for Medicare in 2000. Projections for future Medicare costs anticipate an additional +55% increase in the size of the program (to $741 billion) in just another 6 years (source: Medicare Trustees Annual Report, http://www.ssa.gov/OACT/TR/TR07/index.html).
ALMOST A TRILLION: The nation’s credit card debt increased about +7.8% during 2007 to a record $943.5 billion.
Have a great week!
Doug MacGray
Douglas R. MacGray, J.D, C.F.P.®, C.E.A.®
Senior Vice President, Financial Planning
EGE Advisors, Ltd.
If you would like to schedule a time to speak with Doug, please feel free to call me at 302-368-7132 Ext.12 and I will get you in touch with Doug.
If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713
