Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday October 30 the S&P 500 closed @ 1183, and that was...
  
   +7.5% ABOVE its 12-Month moving average which stood @ 1101.
   +5.6% ABOVE its 40-Week moving average which stood @ 1121.
   +3.7% ABOVE its 10-Week moving average which stood @ 1141.


Therefore, the INTERMEDIATE-Term trend IS MODERATELY BULLISH and the LONG-Term trend is BULLISH.

Chart of the Day - Stock Market To Enter Strongest 6-Month Period

Chart & Commentary Courtesy of Chart of the Day

The stock market is now entering what has historically been the strongest 6 months of the year.

 Today's chart illustrates that investing in the S&P 500 from the last trading day in October (therefore referred to as the Halloween indicator) through the end of April accounted for the vast majority of S&P 500 gains since 1950.

While there are some noteworthy periods during which the Halloween indicator didn't produce (e.g. during the oil embargo of 1973-74, the dot-com bust of 2000-01, and the financial meltdown of 2007-09), the overall out performance is compelling.

Grandparents - By The Numbers...

Sources:
Wall Street Journal & www.Grandparents.com

More Americans "UnRetiring"...

UnRetirement is defined as working at least 20 hours per week after the age when one is eligible for Social Security benefits.

The October Sun Life UnRetirement Index found more Americans are continuing to work past the traditional retirement age, less are financially confident and many will show their discontent by voting out incumbent seats.

Sun Life created the Index to learn more about the reasons why Americans are choosing to “UnRetire.” Key findings were:

80% of working Americans think it will take them at least 3 years to rebuild their retirement savings as a result of the economic crisis, up from 64% a year ago.

52% of workers think they’ll need to continue working for at least 3 years longer than planned.

20% of American workers think they’ll never recover their losses from the crisis.

“70 is the new 65”: The same amount of people think they’ll retire at 70, instead of the traditional age of 65.

42% are confident they will now be able to take care of basic living expenses in retirement.

Only 25% have strong confidence they will be able to take care of their medical expenses.

More than 50% say they plan to vote against an incumbent in mid-term elections, regardless of party, because of their financial insecurity.

The Index also shows Americans are reducing spending from cancelling vacations to delaying medical procedures:

77% are cutting back on holiday shopping.

72% are putting off a large purchase, such as a car or home improvement.

57% are canceling travel or vacation plans.

29% delayed a routine or elective medical procedure.


Source: Sun Life Financial
www.unretirementindex.com

Banks vs. Insurance Companies - Become Your Own Banker and Bank On Yourself!

What It Takes to Rank in the Top 5% of Wage Earners...

The Top 1%

Based upon 2008 tax data, it took an adjusted gross income of $380,000 to rank in the top 1% of U.S. taxpayers, a group that paid 38% of all federal income tax for the year.

In 1980, the top 1% of taxpayers paid 19% of all federal income tax. 

The Top 5%

Based upon 2008 tax data, it took an adjusted gross income of $160,000 to rank in the top 5% of U.S. taxpayers, a group that paid 59% of all federal income tax for the year.

In 1980, the top 5% of taxpayers paid 37% of all federal income tax.

(source: Internal Revenue Service)

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday October 22 the S&P 500 closed @ 1183, and that was...
  
   +7.5% ABOVE its 12-Month moving average which stood @ 1101.
   +5.7% ABOVE its 40-Week moving average which stood @ 1119.
   +4.7% ABOVE its 10-Week moving average which stood @ 1130.


Therefore, the INTERMEDIATE-Term trend IS MODERATELY BULLISH and the LONG-Term trend is BULLISH.

Majority of Women Unsure of How They Will Pay for Long-Term Care...

Studies show women use more long-term care services than men, yet a new AARP survey revealed many women are NOT financially prepared for future health care needs. 

According to the survey of women ages 45 to 64:

59% haven’t determined how they’ll pay for long-term care needs.

40% don’t know long-term care costs more than nursing home care.

Only 23% know they’ll likely have to pay for future care needs with personal savings because Medicaid and Medicare DO NOT cover long-term care.

Source: AARP 

Why It Doesn't Feel Like a Recovery - An Interactive Slideshow...

An exceptional interactive graphic/slideshow of the economy's output gap....

Click here:
Why It Doesn't Feel Like a Recovery 

Bottom Line: 

It will take average annual economic growth of +3% per year until 2020 for unemployment rate to fall to 5% of the labor force, from roughly 9.5% at present. 

But if the economy rises only +2% per year, the unemployment rate will increase to 11.9% in 2020.

The Truth About Interest Rates - Become Your Own Banker and Bank On Yourself!

Baby Boomers To Work Longer, Retire Later Than Previous Generations

Baby Boomers born between years 1946 and 1965, or “Early Boomers” are changing the American concept of retirement by continuing to work out of financial necessity, and putting off the start of a leisure-filled life.

75% of men and women in the past would have been retired between ages 60-65.

Less than 50% of early boomers will be retired by ages 65-69.

Expect a 50% rise in the number of people ages 65-74 years old in the next 10 years, a growth rate for that age group not seen in 50 years.

37% of boomer men are college graduates, more than any age group of men, which means they are more likely to still work after age 65.

25% of early boomer families had one or more of their children living with them, and most of those children were adults, according to the U.S. Census Bureau.

67% of early boomers are grandparents, and the Census Bureau reports a rising number are responsible for their grandchildren.

There is a 65.2% labor force participation rate of early boomer men and women, a 15-year high.

75% of early boomer women and 60% of early boomer men had higher-paying and less physically demanding jobs, which makes it likely more of them will continue working over the next decade.


Source: Metlife Mature Market

AARP Survey Results: More Despondent Respondents

A recent AARP survey regarding the financial effects of social and economic changes on Americans age 45 and over revealed:

• 28% of respondents reported having to stop contributing to retirement savings.
  
  
• 20% reported cutting work hours or taking a pay cut.
  
  
• 20% said they had problems paying for essential items, such as food and utilities.
  
  
• 20% reported having difficulties with health care-related expenses, with 33% of African American respondents reporting difficulties, compared to 29% of Hispanic respondents and 17% of white respondents.
  
  
• 33% said they put off or postponed getting needed health care or dental care treatments.
  
  
• 24% reported losing a substantial amount of equity in their home’s value that they will need for retirement.
  
  
• 17% of those aged 45-64 reported having trouble paying their mortgage or rent.
  
  

Source: AARP

Two Primary Reasons Why Growth Is Required In Your Retirement Plan...

1. Loss of Purchasing Power.

 
An individual living on a fixed income over the 20 years from the end of 1989 to the end of 2009 would have suffered a -40% loss of purchasing power over the 2 decades using the CPI as a gauge of his/her inflation (source: Department of Labor).
    

2. Life Expectancy. 

A husband and wife both aged 62 have a 47% chance of at least 1 of them living to age 90 or older (source: Government Accountability Office).

Long-Term Care Costs Rising At Twice the Rate of Inflation to $247 Per Day...

Long-Term Care (LTC) costs grew at a compound annual growth rate average of +6% between 2004 and 2010, while the consumer price index rose at a rate of +2.5% per year.

Between 2008 and 2010, the cost of daily care in a nursing home with a private room rose +14% to an average daily rate of $247.

Costs for a semiprivate room in a nursing home jumped +11% to an average of $215 a day.

And home health care expenses increased +13% to $190 a day, according to a report by Prudential Financial.

50-Year Record Low In Life Insurance Ownership Prevails...

The Trends in Life Insurance Ownership study, conducted every six years by LIMRA, found that:

Only 44% of U.S. households have individual life insurance.

35 million households have no life insurance coverage, up +8% from 2004.

11 million households with children under age 18 have no coverage.

More than 40% of Americans say a major reason they have not bought more life insurance is because they have other financial priorities right now, such as paying off debt or saving for retirement.

4 in 10 households with children under 18 say they would have immediate trouble meeting everyday living expenses if the primary breadwinner died today.

24% of households with children under 18 want to speak with a financial professional about their life insurance needs.

25% of all households plan to buy life insurance in the next year.

1 in 4 middle-market households admit they don’t know how to obtain or reach their financial goals, including buying life insurance.

Almost 8 in 10 U.S. households currently do not have a personal life insurance agent or broker to turn to and most of them say they never did.   

According to the study, life insurance beat out all other sources of financial assets or income that Americans expect to use to help pay bills and to maintain their lifestyle in the event of the primary wage-earner’s death.  

Older Couples Less Likely To Work Together In Money Matters

Younger couples are more likely to make financial decisions as a team than older couples, according to a survey by TD AMERITRADE.

One reason may be due to more women active in the workforce in the 1970s and 1980s, resulting in their having more of a role in their families' financial matters.

Results also suggest the idea of just one family member being responsible for taking care of the finances has changed. Another finding is younger generations have recognized the need to be more collaborative regarding financial matters in a recession. 

26% of couples ages 65 and older report the breadwinner alone makes decisions about paying bills, compared to 17% of couples ages 18-34 who reported the same.
 
28% of couples ages 65 and older report the breadwinner alone is responsible for making decisions about how to manage debt, compared to 13% of couples ages 35-44.

94% of those ages 55-64 who are single report making decisions about managing debt alone, compared to 76% of those ages 35-44 who are single.

97% of those ages 65 and older who are single report making decisions about paying bills alone, compared to 76% of those ages 18-34 who are single.

20% of those ages 35-44 who are single report making decisions about paying bills with someone else, compared to 3% of those ages 65 and older who are single.

Source: TD AMERITRADE

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday October 8th the S&P 500 closed @ 1165, and that was...
  
   +6.1% ABOVE its 12-Month moving average which stood @ 1098.
   +4.3% BELOW its 40-Week moving average which stood @ 1117.
   +4.6% ABOVE its 10-Week moving average which stood @ 1114.


Therefore, the INTERMEDIATE-Term trend IS MODERATELY BULLISH and the LONG-Term trend is MODERATELY BULLISH.

The Average Equity Fund Investor Trails the Market By A Wide Margin...

"A study by research firm Dalbar Inc. reveals that for the 20 years ending December 31, 2009, annualized returns for the S&P 500 index were +8.2%, but returns for the average stock (equity fund) investor were only +3.2%."

U.S. News & World Report, October 2010 Issue

A +8.2% per year average return means that a $100,000 investment in the S&P 500 grew to $483,666 over 20 years. 

But the average equity fund investor only earned +3.2% per year. Under that scenario, $100,000 grows to only $187,756 in 20 years.

But wait. Are we done yet?

What about inflation?

We have to account for the fact that inflation averaged +2.8% during the past 20 years. That means that $100,000 has to grow to $173,015 over 20 years just maintain its purchasing power!

What about taxes?

Because investors were buying high and selling low, they incurred tax liabilities that would reduce their inflation-adjusted and tax-adjusted returns below the rate of inflation.

That means the average investor's purchasing power after taxes,  inflation and a +3.2% annual return has not increased, rather it has steadily eroded.

Another "average investor" study by TrimTabs Investment Research shows that the stock market ended the past decade pretty much at break even, but average investors lost roughly -$39 billion, or roughly -20% over the past 10 years.

"It cost them about -20% to buy high and sell low," says TrimTabs' Vincent Deluard.


BOTTOM LINE: 

1. Sadly, over the past 2 decades, investors haven't built any real wealth during neither the past 10 years nor the past 20 years. Taxes, inflation, fear, greed, the business cycle, financial crises and market meltdowns all conspired to, not grow, and not even maintain, but shrivel the purchasing power of the average investor.


2. The vast majority of passive investors simply don't have and never will have the psychological discipline to keep the faith during bear markets meltdowns of -30%, -40% or -50% that decimate their retirement nest eggs. 


And who can blame them?

Thankfully, there is a better way.

Why The Long-Term Care Conversation is Essential...

Have you and your spouse or partner talked about what you’ll do if you ever need help getting in and out of bed, taking a bath and getting dressed, preparing and eating your meals, or other ordinary activities of daily living (ADLs)?

What options would you prefer for your care? (For example, having your spouse or a care professional assist you at home, or moving to an assisted-living facility?) What role will your family members play, and what will their responsibilities be in managing your care? And how will you pay for it if necessary?

If you haven’t had this conversation, you’re not alone. Only 8% of Americans have talked about all these issues with a spouse or partner, and just 5% have done it with their adult children.

“The fact is, families don’t discuss these issues,” said Ken Dychtwald, founding president and CEO of Age Wave, a San Francisco-based firm that specializes in issues about aging. "Because of fear of upsetting family members, the topic of long-term care is rarely discussed, and families don’t plan, only to get “broken apart” when the need for care arises," Dytchwald said.

Age Wave and Harris Interactive, with funding from Genworth Financial companies, surveyed a nationally representative sample of 2,939 Americans 18 to 90 years old. Among key results:

• Uninsured medical expenses and fear of outliving their money are the biggest financial worries Americans face in retirement.

• The top long-term care anxiety Americans have is being a burden on their families.

• The overwhelming majority have not discussed long-term care with their families.

• Few financial professionals discuss long-term care with their clients.

• Confusion, aside from cost, is the biggest barrier to buying long-term care insurance.

“To not have to be a burden on my family is the most important reason for planning,” Dychtwald said. “Without long-term care insurance or some other way to provide for it, “the burden of care falls on the family.”

Providing such care can bring families closer together but can also cause emotional and financial strain on the caregiver, who may have to cut back on working hours or give up his or her job.

This report is not a commercial for long-term care insurance. There are several ways to plan and provide for long-term care, including self-funding through savings and/or moving to a continuing-care or an assisted-living facility.

But it is a reminder that long-term care is often a neglected if not entirely forgotten subject in retirement planning. Contrary to what many people believe, long-term care, except for minor exceptions, is not covered by Medicare.

And though only 37% of Americans believe they’ll ever need care, about 67% of those over 65 actually do, even if it’s not for long.

“I don’t believe long-term care is the most important topic in retirement planning,” said Dychtwald, a nationally known gerontologist who has followed aging issues since 1974, and recently turned 60. “But it is an essential part of the discussion.”

Case Study: Struggling Families Risk Living Without Life Insurance...

Sunday, September 26, 2010
By Tim Grant, Pittsburgh Post-Gazette

Pam Panchak/Pittsburgh Post-Gazette

Emily O'Donnell, a sophomore at the University of Pittsburgh, had to postpone her plans for college after her father died of cancer. She says that life insurance would have eased the burden on her family.

When her father died three years ago from cancer, Emily O'Donnell had to postpone her plans for college because she no longer could afford to go. She and her three siblings were hit hard by her father's death, and the ramifications affect them all to this day.

"If my father had held a life insurance policy, it would have certainly eased the burden on my family," said Ms. O'Donnell, a 24-year-old sophomore studying film and communications at the University of Pittsburgh.

"My siblings and I continue to struggle with money every day, each of us supporting ourselves and each other as much as possible," she said, adding that she works two jobs and relies on student loans to pay college expenses.

Life insurance would not only have helped her, her two sisters and brother get a head start in life, but also it would have gone a long way in helping to pay for their father's hospital bills and his funeral expenses.

"To this day, we still cannot afford even to have his name engraved on his headstone," Ms. O'Donnell said...

"Life insurance isn't for those who die. It's for those who live," said Jack Dewald, chairman of the nonprofit Life and Health Insurance Foundation for Education. "You'll never meet with a widow who complains that their spouse had too much life insurance."


Read more: Struggling Families Risk Living Without Life Insurance

Why The Path To Financial Peace of Mind is Paved with Insurance...

Retirement on Hold: American Workers $6 Trillion Short...

A new study obtained by CNBC says Americans are $6.6 trillion short of what they need to retire. 

The $6.6 trillion figure is based on projections of retirement and income for American workers ages 32-64. The study's authors say they arrived at the amount using conservative assumptions, including a +3% rate of return on assets and no further cuts in pension coverage or increases in the Social Security retirement age.

"Using other assumptions, it could be much higher," said Maria Freese, Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare. For example, the study notes, if the rate of return matches the return on U.S. Treasury Inflation-Protected Securities (TIPS), currently +1.87%, the deficit balloons to $7.9 trillion. 

Retirement on Hold: American Workers $6 Trillion Short

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday October 1st the S&P 500 closed @ 1146, and that was...
  
   +4.7% ABOVE its 12-Month moving average which stood @ 1095.
   +2.8% ABOVE its 40-Week moving average which stood @ 1115.
   +3.5% ABOVE its 10-Week moving average which stood @ 1107.


Therefore, the INTERMEDIATE-Term trend IS MODERATELY BULLISH and the LONG-Term trend is NEUTRAL.