Retirement Realities

Expectations vs. Reality

Predicting exactly what your retirement will be like is about as possible as a meteorologist predicting the weather correctly every single time. In fact, few retirees find their financial futures playing out precisely as they assumed. But, understanding some of the more common assumptions about retirement may help you get closer to your goal than most.

Do Retirees Actually “Outlive” Their Money?

Generations ago, as people retired, many did live in dire straits, sometimes “down to their last dime,” which lead to the creation of Social Security. Today, Social Security is still around and a common supplement to one’s retirement strategy. True, health crises can sometimes impoverish retirees, but working with a financial professional may even help you prepare for this hard-to-anticipate cost.

Retiring on 70-80% of Your End Salary May Not Be Feasible

A quick internet search reveals all sorts of sources instructing new retirees should strive to retire on 70-80% of their end salary, but it can be a tough one to achieve.

Most new retirees often want to travel, explore new pursuits, learn some hobbies, and finally get around to those things they had put off when they were too busy with work. So, in the first few years, some may spend roughly as much as they did before retirement.

For many retirees, median household spending increases on the way to a retirement transition. But, with a smart financial strategy, the annual median household spending in retirement tends to decline gradually after age 60 and begins to plateau when people reach their early eighties.1

Practice Makes Perfect, Even in Retirement

On average, households headed by those older than 65 spend 25% less annually than younger households (a difference of more than $15,000). While health care spending increases in retirement, other household costs decline, particularly transportation and housing expenses.2

Retirement May Arrive Earlier Than Expected

Most people retire closer to age 60 than age 70. Believe it or not, the average retirement age in this country is 61. That means you could find yourself claiming Social Security earlier than you planned, if only to avert drawing down your retirement savings too quickly.3

Living the Life You Want

In general, American retirees seem to have it pretty good. A recent survey found that 47% of American retirees feel that the time they put in before retirement allowed them to enjoy the same standard of living they had while working.4

Remain Flexible in Retirement

Your retirement may differ slightly or even greatly from the retirement you have imagined. Fortunately, it may be possible to create a flexible retirement strategy with the help of a financial professional. It’s never too late to start!



1. JP Morgan, 2019

2.Yahoo Finance, 2018

3. Gallup, 2018

4. Forbes, 2019

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

What Will Your Mortgage Look Like in Retirement?

Anyone who has gone through the process of mapping out their retirement knows there can be a lot to keep in mind. Saving, investing, anticipating medical costs, and making sure you have enough tucked away for years to come is just the start. One question many people overlook is: “Should I pay off my mortgage before I retire?” The answer is more complicated than you may think.

Maintaining a Mortgage in Retirement

Imagine you have $300,000 set aside to pay off your mortgage. But rather than using those funds to pay off your mortgage, you instead invest that money. Sure it’s tempting to stop making a monthly payment, but what if that $300,000 earned a hypothetical 6% for the next five years. You would have a little more than $400,000. Yes, your house may appreciate in value over the same period of time, but you should consider all your choices for that lump-sum of money.

Eradicate (Other) Debt

Before you pay down your mortgage, any extra cash might be better suited to paying off other kinds of debt that carry higher interest rates, especially non-deductible debt, such as credit card balances.

Make Your Mortgage Work

Many homeowners benefit from a mortgage interest deduction on their taxes. Here’s how it works: the amount you pay in mortgage interest is deducted from your gross income, which reduces your federal income tax burden. But remember, the further along you are toward paying off your mortgage, the less interest you’re paying. If you’re unsure if you’ll be able to take advantage of this mortgage benefit, it’s best to consult your financial professional.

Retire Your Mortgage

Your monthly mortgage payment may be a large part of your available capital, especially in retirement. Eliminating unnecessary subsidies can significantly reduce the amount of cash you need to meet monthly expenses.

Uninteresting Interest

Depending on the length of your mortgage term and the size of your debt, you may be paying a substantial amount in interest. Paying off your mortgage early can free up money for other uses. True, you may lose the mortgage interest tax deduction, but remember as you get closer to paying off your loan: more of each monthly payment goes to principal and less to interest. In other words, the amount you can deduct from taxes decreases.

Home Is Where the Heart Is

There’s a value to your home beyond money. It’s where you raised your children, made fond memories, and you may want it to remain in the family. Paying off the mortgage may help make your home part of your legacy. After all, some things you just can’t put a price on.



The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

Money Management 101 for Single Parents Going it Alone

1. Determine What You Owe

As the head of the household, it’s up to you to make sure that your entire family’s needs are being met. In order to do that, you need to be extremely diligent when it comes to money management basics. This is not something that will happen by accident. Instead, you must plan for it and work toward it.

The first step is to set up your “office.” Gather all of your bills, a calculator, a pencil, and your checkbook.

I would also recommend that you grab an old binder that you can use to keep track of your financial data and a shoebox for storing paid bills.

Now you’re ready to begin:

  • Go through all of your bills, and pay anything that is due within the next week.
  • If you have bills coming due that you cannot pay, notify the company and ask them to set up a payment plan with you.
  • Print a copy of the chart “Paying Down My Debts” or make your own.
  • On the chart, list all of your debts, including any car loans, student loans, and credit card debt.
  • In addition, list the total balance left to be paid on all of these debts, and the percentage rate you are paying.
  • For now, leave the fourth column of the chart blank, and store it in your “Financial Data” binder.


2. Eliminate Joint Debt

Before we create a plan for paying down your debt, it’s important to consider some special circumstances that may apply to you as a single parent. I asked LaToya Irby, Credit/Debt Management Expert, to share her expertise on handling joint debt:

Wolf: Let’s say a single mom still shares a credit card with her ex. What should she do?

Irby: Ideally, she would want her ex to transfer his portion of any joint balances onto his own credit card. That way, everyone is paying for their own debt.

Wolf: What about leaving both names on the account, and agreeing to pay part of the amount due? Is that ever advisable?

Irby: No. If you’ve made an agreement with your ex to split the debt payments on accounts that include your name, and your ex-misses a payment, it’s going to hurt your credit. If the ex-fails to pay altogether, the creditors and collectors will come after you. Not even a divorce decree can change the terms of a joint credit card agreement. In the credit card issuer’s eyes, you’re just as much responsible for post-divorce accounts as before.

Wolf: What about situations when a couple’s divorce decree mandates that one individual must pay off the joint credit card debt, but that person fails to do it?

Irby: You can always file contempt of court papers against him/her, but in the meantime, your credit score suffers. So I suggest paying off the debt to save your credit. If you can’t afford to pay the debt, at least make minimum payments to keep a positive payment history on your credit report.

Wolf: What about other accounts, such as utilities and cell phones?

Irby: The safest thing to do, if you have a service in your ex’s name, is to turn off the account and reestablish service in your name.



3. Find Money to Pay Down Debt

Another thing we have to do before creating a plan to pay down your existing debt is to find money in your budget each month. To assist in this step, I contacted Erin Huffstetler, Frugal Living Expert.

Wolf: How much money do you think the average person can uncover just by being more intentional about spending and budgeting?

Huffstetler: The average person could easily uncover an extra $250 a month—and probably much more.

Wolf: What are the top 5 areas that you think people should look to first when they’re trying to cut their expenses?


  • Food spending (both groceries and eating out)
  • TV-related expenses (cable/satellite services, certainly; but also movie subscriptions and rentals)
  • Phone services (particularly extras like call waiting, caller id, long distance, and cell phones)
  • Insurance premiums
  • Miscellaneous spending (all those small amounts spent on coffee, vending machine snacks, and other indulgences)

Wolf: How can single parents, specifically, stretch their child support dollars and reduce child-related expenses?

Huffstetler: For single parents looking to stretch their child support dollars, creativity is the key. Look to children’s consignment shops and thrift stores to buy your kids’ clothes instead of department stores; sign them up for Parks and Rec-run activities instead of privately-run activities (which will always cost more); and don’t feel like you have to make up for being a single parent by buying them extra things—it’s you they need, not stuff.



4. Pay Off Your Debt

The next step is creating a schedule for paying down your debt:

  1. Pay off the debts that charge you the highest interest first.Bob Hammond, author of Life Without Debt, recommends that you pay off the debts that are charging you the highest interest first since borrowing from those creditors is costing you the most money. “Concentrate on paying off the high-cost debts as soon as possible,” Hammond advises. LaToya Irby, Credit/Debt Management Expert, agrees. “Highest interest rate debts cost the most money, especially when those debts have high balances. So you’ll save money on interest charges when you pay off those high-interest rate debts first.”However, there are exceptions to this general rule. Irby notes, “If you’re likely to get discouraged because it’s taking a long time to pay off that high-interest rate debt, you can start with the lowest balance debt. Getting some small debts paid off will motivate you to keep going.”
  2. Pay more than the minimum payment. Aim for paying more than the suggested minimum payment, in order to pay off your debts as quickly as possible.Miriam Caldwell, Money in Your 20’s Expert, shares this advice:
    • Choose one debt to focus on.
    • Increase your payment on that debt by as much as you can.
    • Once you have paid off that debt, move all that you are paying on it to the next debt you want to pay off.
    • You’ll be surprised at how quickly you can get out of debt with this plan!
  3. Meanwhile, continue to pay the minimum balance due on all of your other debts.Record what you intend to pay toward each debt on the debt chart you made in Step 1.



5. Budget Your Monthly Expenses

Now that you know where you stand financially, and you’ve created a plan for paying down your debts, it’s time to make sure that you’re making any other necessary adjustments so that you can keep up with your plan. And this means creating a budget.

I know this can be intimidating, but I’m going to make a suggestion for you: Sign up for It’s a free financial software program available on the Internet, and it will basically do your budgeting for you. It will create a visual pie chart showing how much you’re spending each month on housing, gas, food, entertainment, and more. This way, if it turns out that you’re spending a lot more on food than you really should, you can begin to make the necessary adjustments to get your spending under control.

If you would prefer to create your budget the traditional way, allotting a certain amount of money to each spending category, I’ve created an online budget calculator you can use, which includes categories for child support and other details specific to your life as a single parent.

Finally, in taking a look at where your money really goes each month, it’s important to know approximately how much money you “should” be spending in each category. Generally speaking, your net spendable income (after taxes) should be allocated as follows*:

  • Housing: 30%
  • Food: 12%
  • Auto: 14%
  • Insurance: 5%
  • Debt: 5%
  • Entertainment: 7%
  • Clothing: 6%
  • Savings: 5%
  • Medical/Dental: 4%
  • Miscellaneous: 7%
  • Child Care: 5%
  • Investments: 5%



6. Set Financial Goals

Now that you’ve worked out a plan to pay down your debt, and you’ve created a budget, it’s time to determine your needs moving forward.

Specifically, as a single parent, you need to ask yourself some questions, such as:

  • Do you need to file for child support?
  • Do you need to get a higher-paying job?
  • Is it time to think about going back to school?
  • Do you need to consider moving into a home/rental that would reduce your overall monthly payments?
  • Are there alternatives, such as taking on another job or splitting expenses with another single parent family, that you need to consider at this point?

One of the things that I want you to know is that the ball is in your court. You determine where this goes from here on out. But unfortunately, you can’t do that if you’re ignoring your financial health, right?

So the fact that you’ve come this far in the process of getting a handle on your finances tells me that you’re determined to make the changes you need to make in order to provide for your family’s future.

So go ahead and ask yourself these questions. So much of single parenting is learning to roll with the punches and be creative in the face of adversity. If, indeed, you need to make some pretty major changes, now is the time to do it. Don’t incur any more debt where you are. Be resourceful, follow through, and do what you need to do to turn your financial situation around.


7. Increase Your Net Worth

The next step is to determine your net worth and begin adding to it.

Determine Your Net Worth:

Your net worth is what you own minus what you owe. Programs such as, Quicken, and Microsoft Money will calculate your net worth for you, automatically.

You can also determine your net worth simply by adding up all that you own, including all of your investments, the equity you may have paid into your home, the value of your car, and any other assets you possess; and subtracting what you owe in remaining debts.

Set Up a Savings Account:

Once you know where you stand, you’ll be ready to set up a savings account. You can do this through your regular bank, or begin investing in a mutual fund that pays interest.

Even if you can only afford to set aside $25 or $50 per month, it will begin to add up.

Before you know it, you’ll have an emergency savings plan in place, to protect you in the event that your car breaks down, or your home needs a major repair.

In addition, this regular savings will help you increase your net worth over time.


8. Become Even More Frugal

Unfortunately, all of the work you’ve already done in steps 1-7 will have little lasting value if you don’t change your attitude toward money. Now is the time to become even more frugal and learn to live within your means.

Practice Discipline:

Stop imagining that more money is going to pour in tomorrow—through finally collecting on unpaid child support, winning the lottery, or getting a promotion. If those things happen, great! You’ll be even better off. But living as if they’re going to happen is causing you to spend money you don’t have.

Instead, force yourself to make purchases with cash only. Do not continue to pay outrageous interest payments toward credit cards for purchases you don’t absolutely need. You can get by without that new furniture, right? What else could you skip, in the interest of spending only what you have right now in the bank?

Try These Ideas:

  • Check Freecycle before you make another major purchase. Someone else may be giving away the very thing you’d like to buy!
  • When you’re getting ready to buy something specific, look for it on eBay first. I buy a lot of my clothes, new-with-tags, through online auctions!
  • Forget trying to keep up with “The Jones’s.” You already know your value; don’t get caught up trying to “prove” your worth to others by having “just the right” house, car, or appearance.
  • Do not use shopping, ever, to appease your emotions.
  • Finally, when you do go to make a big purchase, step back and give yourself a few days–or even a week–to think about it. There’s no reason to suffer through buyer’s remorse and try to justify to yourself purchases that you really can’t afford. Think it over carefully and make those purchases, when necessary, with cash.


9. Schedule Your Own Weekly Financial Check-In

Grab your calendar and schedule a weekly financial update meeting with yourself. This is an extremely important step in managing your personal finances, and it’s one that you need to continue each and every week. During your “meeting” time:

  • Pay any bills that are due.
  • If your bank statement has arrived, take the time to balance your checkbook.
  • Check the balances of your checking and savings accounts.
  • Update your debt list to incorporate any recent payments.
  • This is also a good time to write out your grocery shopping list and check what’s on sale at your local grocery store this week (either using the store’s Web site or the sales circular that comes in the newspaper).
  • Finally, also make note of any upcoming expenses you need to anticipate and plan for.

An attitude of gratitude and finances.



Irby, LaToya. Email interview. 24 Oct. 2008, 
Huffstetler, Erin. Email interview. 24 Oct. 2008. 
Caldwell, Miriam. Email interview. 27 Oct. 2008, Hammond, Bob. “Debt Free Key: 10 Steps for Coping With Credit Problems.” Life Without Debt. Franklin Lakes, NJ: Career Press, 1995. 31-32, Irby, LaToya. Email interview. 24 Oct. 2008. 
“Spending Plan Online Calculator.” Crown Financial Ministries. 11 Oct. 2008.

Written By: Jennifer Wolf

Source: thebalance




Are You Really Ready to Sell Your Home?

Listing just to see what happens may seem like a good idea, but putting a home on the market too soon can backfire in a big way.

Selling a home does not happen overnight. Typical sellers reach out to a real estate agent or start researching their home’s value online many months — sometimes even years — before they are ready to put the “For Sale” sign in their yard.

Often, a home sale is the result of some life event: a marriage, divorce, death in the family, retirement or another child. It’s typically hard to “time” these events; therefore, it’s not easy to time a real estate transaction. Here are some points a potential home seller should consider before deciding to list their home.

If you’re not certain, you’re not ready

If you don’t have a new home to move into or a plan once you sell your home, it’s not a good time to list your home for sale. Sellers without a real and concrete plan are not serious sellers, but only opportunistic.

A seller without a plan will likely be “testing” the market, and that translates into overpricing the home. If the seller overprices the home, it’s not going to do her any good. The market is smart, and rarely will a knowledgeable and active buyer overpay for a home.

Ask yourself, “If I get an offer and sign a contract for a 45-day close, do I know what I will do?” If the answer is no, you should simply not list, or you will do yourself more harm than good in the long run.

Once you list, the clock starts ticking

Today, with access to so much information online, buyers will know the good, bad and ugly when it comes to listing history and data.

If you list your home at too high a price or in poor condition, you risk sitting on the market, without offers and likely without any showings or potential buyers.

That lack of interest will follow you. Once you’re ready to sell your home at the right price or in the right condition, every buyer will know your history. They’ll see the series of price reductions, the old photos, or the previous listing when you were not ready to sell.

All of the old listing activity sends a message to buyers that there is something wrong with the home or with you. Buyers will hold back on such a stigmatized home, and instead focus on a newer listing that is priced right and shows well.

You can plan for the market, not time the market

If you know that your third child is on the way, or that your new job is too far from your current home, you’ll have the luxury of not being under the gun. This allows you to take advantage of market conditions, as opposed to timing the market.

Knowing that you will list the home in the spring or the fall or in February will enable a smart seller to prep the home, make the necessary improvements and get the property market-ready.

Working with a good local real estate agent, you should watch the inventory come and go, see the competition and get the word out at the right time. If a comparable home gets three offers in less than a week, then you know two other buyers are out there. Being ready to go, you can then capitalize on the market conditions.

Real estate transactions happen all year long

Some of the most successful sales happen in the dead of winter when inventory is low, but buyers are still out. Have a sales plan months in advance. Never list your home before you (or the home) are ready.

Many homeowners are emotionally attached to their homes, but listing it at a high price or not making the necessary improvements sabotages their ability to sell it. If you find yourself struggling with the process, don’t list your home yet. Take a step back and wait. The right time will come, and waiting will ensure that you get the most from your investment.



Written By: Brendon DeSimone
Source: Zillow

Monthly Market Insights | January 2017

U.S. Markets

The post-election rally in the stock market gathered fresh momentum in December, but lost steam following a Fed rate hike and the onset of holiday trading.

For December, the Dow Jones Industrial Average jumped 3.3 percent, the Standard & Poor’s 500 Index gained 1.8 percent and the NASDAQ Composite rose 1.1 percent.1


After slipping in the first days of the new month, stocks renewed their climb higher, setting new records on major indices. The market maintained its optimistic view of the anticipated economic direction that a Trump presidency may take, focusing on the potential positive impact expected tax cuts, infrastructure spending and deregulation might have on economic growth and corporate profits.

Fed’s Influence

The climb in stock prices stalled in advance of the Fed decision to raise the federal funds rate by a quarter-percentage point. The Fed also suggested that it might increase rates further in 2017 by three-quarters of a percentage point. This took some of the wind out the equity market’s sails and led to a higher U.S. dollar and tumbling bond prices. (Bond prices move inversely to yields, so as yields rise, bond prices decline.)

Amid thin holiday trading the market moved lower, shaving off some of its December gains.

For the Year

For 2016, the Dow Jones Industrial Average gained 13.4 percent and the Standard & Poor’s 500 Index rose 9.5 percent. The NASDAQ Composite picked up 7.5 percent.2

Sector Performance

Most industry sectors ended higher in December, led by Energy (+6.65 percent) and Financials (+4.46 percent). Other sectors posting gains included Consumer Staples (+1.11 percent), Industrials (+0.18 percent), Materials (+1.25 percent), Real Estate (+0.26 percent), Technology (+1.39 percent) and Utilities (+1.18 percent). Consumer Discretionary (-0.55 percent) and Health Care (-0.32 percent) sustained minor losses.3


World Markets

Global markets ended the year on an encouraging note, with the MSCI-EAFE Index rising 2.8 percent for the month.4

European stocks staged a broad rally to end 2016. Major markets posted strong gains, including Germany, France and the U.K.5

Pacific Rim markets were mixed, as Australia benefited from higher commodity prices, Hong Kong fell on a weaker Yuan and capital outflows from China and Japan settled higher.6



Gross Domestic Product: An earlier estimate of third quarter GNP growth was revised higher to 3.5 percent, up from 3.2 percent. While the increase represented an exceptional growth rate for the economy, the overall economic growth rate through September 2016 remained consistent with the tepid growth that has marked this long economic expansion.7

Employment: The unemployment rate declined to its lowest level in nine years, dropping to 4.6 percent from 4.9 percent a month earlier. Workers’ wages also gained, rising 2.5 percent over November 2015, as employers competed for workers in a tightening labor pool.8

Retail Sales: Sales at retailers ticked 0.1 percent higher in November, a disappointing slowdown that some attributed to uncertainty about the U.S. election. Nevertheless, retail sales were higher over the same month last year by 3.8 percent, suggesting a better start to the holiday shopping season.9

Industrial Production: Industrial output by factories, mines and utilities fell 0.4 percent as a consequence of unseasonably warm weather in November. Capacity utilization also slipped 0.4 percent to 75 percent.10

Housing: Housing starts fell 18.7 percent from a robust result in October. However, over the last three months, housing starts have been at their highest level since the end of 2007.11

Sales of existing homes rose 0.7 percent, the third consecutive month of higher sales. Thirty-two percent of November sales were from first-time buyers, while over 20 percent of sales were all-cash transactions.12

New home purchases climbed 5.2 percent, the largest one-month gain since July. Through November, sales are 12.7 percent higher over the same period last year.13

CPI: For the fourth straight month, consumer prices moved higher, rising 0.2 percent in November. Prices were also higher when compared to November of last year, up by 1.7 percent—the biggest increase since October 2014.14

Durable Goods Orders: Orders for civilian aircraft dropped sharply in November, leading to a 4.6 percent decline in durable goods orders. Excluding transportation orders, orders for long-lasting goods increased 0.5 percent.15

The Fed

The Federal Reserve announced on December 14 that it would hike the federal funds rate by a quarter of a percentage point, with Fed officials signaling their expectation to raise rates by another 0.75 percent in 2017, which may come in three separate quarter-point moves. The decision to hike rates at a faster pace than previously anticipated reflected the Fed’s escalating conviction in the economy’s strength and stability.16

What Investors May Be Talking About

Markets are expected to watch carefully to see what President Trump attempts to accomplish in the early days of his presidency with a Republican Congress. Many of the initiatives that have been discussed by the President-elect have the potential to further impact stock valuations. Among them are:

  • The rollback of environmental, energy and climate policies enacted by the Obama Administration.
  • Corporate income tax reform to reduce taxes, eliminate deductions and repatriate overseas profits with a one-time reduced tax assessment.
  • The withdrawal from trade agreement talks (Trans Pacific Partnership) or the renegotiation or withdrawal from existing trade agreements (NAFTA) may benefit some companies, but could harm others with substantial exports or overseas manufacturing.
  • The reduction of corporate regulations may influence profits. For example, revamping Dodd-Frank Wall Street Reform and Consumer Protection Act may prove beneficial to financial companies’ profits.
  • The Affordable Care Act may be up for a significant rewrite or even repeal, though without knowing what replaces it, it is difficult to estimate the impact any health care law changes may have in the market.

Of course, disappointment in achieving some of the anticipated changes that have driven markets higher since the election may be cause for a broad price retreat.

In any event, experience teaches investors that overreacting to current events can be counterproductive to long-term investment strategies, but ignoring them entirely runs its own set of risks.






  1. The Wall Street Journal, December 31, 2016
  2. The Wall Street Journal, December 31, 2016
  3. Interactive Data Managed Solutions, December 31, 2016
  4., December 31, 2016
  5., December 31, 2016
  6., December 31, 2016
  7. The Wall Street Journal, December 22, 2016
  8. The Wall Street Journal, December 2, 2016
  9. The Wall Street Journal, December 14, 2016
  10. The Wall Street Journal, December 14, 2016
  11. The Wall Street Journal, December 16, 2016
  12. The Wall Street Journal, December 21, 2016
  13. The Wall Street Journal, December 23, 2016
  14. The Wall Street Journal, December 15, 2016
  15. The Wall Street Journal, December 22, 2016
  16. The Wall Street Journal, December 15, 2016


Source: Lake Avenue Financial

Monthly Market Insights | December 2016

U.S. Markets

A surprise election outcome ignited an unexpected rally that pushed stocks into record territory, as investors anticipated faster economic growth, lower corporate taxes and increased infrastructure spending under the newly elected president.

For the month, the Dow Jones Industrial Average jumped 5.4 percent, the Standard & Poor’s 500 Index gained 3.4 percent, and the NASDAQ Composite rose 2.6 percent.1

Head Fake

The wave of investor selling overseas in response to the U.S. election results threatened to extend to domestic stocks, with U.S. stock futures down sharply prior to the first day of post-election trading. However, instead of dropping, stock prices jumped as investors appeared to focus more on the potential positives of a Trump presidency than its uncertainties.


Along with the rally in prices came a weakening in the strong correlations among industry sectors that have existed for some time now. For example, since the election, the correlation between financial stocks and the S&P 500 Index fell to 0.59, down from 0.89 on November 7.2 (A correlation of 1.0 indicates the two are moving in perfect harmony.)

Correlation Watch

When examined more broadly, a benchmark measuring the anticipated average correlation among stocks dipped to its lowest level since 2008.3  Whether lower correlations become a more permanent feature of the markets remains a question mark.

Long-Term Trend?

Should the larger dispersion of returns among industry sectors persist, the ability of investors to separate leaders from laggards may be met with greater reward than it has been met with in the recent past. In short, a weakening in correlations potentially could mean more opportunities for active managers to outperform popular indexes.3

After posting gains for three straight weeks in November, market momentum stalled in the closing days of trading, despite news that OPEC nations reached an agreement to cut oil production.

Sector Performance

The majority of industry sectors posted strong gains, led by Financials (+12.34 percent) and Industrials (+9.16 percent). Also advancing were Consumer Discretionary (+5.77 percent), Energy (+2.10 percent), Health Care (+2.40 percent), Materials (+5.74 percent) and Technology (+1.33 percent). Meanwhile, Consumer Staples (-2.41 percent), Real Estate (-0.49 percent) and Utilities (-0.39 percent) ended lower.4


World Markets

World markets did not participate in the stock market rally experienced in the U.S., with the MSCI-EAFE Index sliding 2.05 percent for the month.5

Some European markets struggled in November, weighed down by persistent economic weakness and growing concerns about spreading populism in the wake of Brexit and the election of Donald Trump. U.K. and Germany closed lower while France posted a slight gain.6

Markets in the Pacific Rim grappled with their own challenges, while Australia managed a slight gain on stronger commodity prices.7

World Markets 11-2016.png


Gross Domestic Product: The economy expanded at a rate of 3.2 percent in the third quarter, up from the initial estimate of 2.9 percent. This represents the strongest growth in two years.8

Employment: The unemployment rate dipped to 4.9 percent as employers added 161,000 new nonfarm jobs, while the prior two months saw upward revisions from original estimates. Average hourly earnings for private-sector workers jumped 2.8 percent, year-over-year, the largest such increase since June 2009.9

Retail Sales: On the eve of holiday shopping season, retail sales jumped 0.8 percent, while September sales were revised upward to 1.0 percent, from the originally reported 0.6 percent increase. These back-to-back increases represent the best two months in at least two years.10

Industrial Production: Industrial output was unchanged in October as unseasonably warm weather kept home and office heating demands low.11

Housing: Housing starts increased 25.5 percent, the fastest pace since August 2007. Through October-end, starts were higher by 5.9 percent.12

Sales of existing homes increased 2.0 percent, touching a sales level not seen since February 2007.13

New home sales, however, declined 1.9 percent in October, though they are 12.7 percent higher year-to-date over the same 10-month period last year.14

CPI: Consumer prices jumped 0.4 percent from a month earlier. When compared to a year earlier, the increase represents the fastest rate in two years, signaling firming inflationary pressures.15

Durable Goods Orders: Posting the biggest increase in a year, orders of durable goods jumped 4.8 percent in October, propelled by a nearly 100 percent increase in civilian aircraft orders. September’s durable goods orders were revised higher, from an initial decline to a 0.4 percent gain.16

The Fed

In testimony to Congress, Janet Yellen on November 17 reiterated her belief that the U.S. economy is stable enough to absorb an interest rate hike, telling lawmakers that such an increase might come “relatively soon.” Her comments confirmed market expectations of a Fed hike in the federal funds rate at its next meeting on December 13-14.17

What Investors May Be Talking About

December is one of the best performing months on an historical basis. Since 1926, it has experienced the highest number of positive monthly returns of any month, the fewest number of negative returns, the least performance volatility and the second highest average return.18

Since past performance is not indicative of future results, this December’s market performance may turn on how investors respond to the wealth of news that unfolds over the course of the month.

Secrets of the Temple

Perhaps the most critical news might be what the Fed does about the federal funds rate. The Fed has signaled that a hike may be likely in December, though they may reconsider taking action in light of the unexpected election result.

If they move ahead with a rate hike, how the markets will respond may depend on whether this anticipated action has been fully priced in the markets. In the alternative scenario where the Fed delays a rate hike, the market’s response may be even greater, though no one can be sure in which direction such a development would drive stock prices.

Cabinet Positions

There is a Washington D.C adage, “personnel is policy.” This may never be truer when it comes to the incoming Trump presidency. Markets may be watching very closely any news about potential Cabinet appointments as a sign of the policy direction that the new administration may be taking once it assumes office in January.

Markets also are expected to keep an eye on consumer spending, which accounts for more than two-thirds of GDP.19 No month is more critical than December for retail sales.

Retail Spending

For some retailers, the holiday season can represent as much as 30 percent of annual sales, with jewelry stores reporting the highest percentage (27.4 percent) during the 2015 holiday season. Overall, last year’s holiday sales represented nearly 20 percent of total retail industry sales.20

As December marks the close of 2016 and represents the gateway to a new year, the uncertainty that reigns over the economic and foreign policies that will be pursued by President-elect Trump may lead to bouts of market skittishness in the weeks and months ahead.

By the Numbers

Beginnings and Endings

Year the first “greenbacks” were issued in the U.S.: 186121
Birth of the mail-order catalog: 174422

The first self-made multimillionaire in America: John Jacob Astor (1763-1848)23Famous hotel co-founded by Astor’s grandson and namesake: The Waldorf-Astoria24
How Astor’s grandson died in 1912: Aboard the Titanic24

First year Social Security taxes were collected: 193725
Size of the first lump-sum Social Security check: 17 cents25

Approximate number of kindergarteners in the U.S.: 3.7 million26
Approximate number of students who graduate from high school each year: 3.5 million26
Percent of graduating seniors who enroll in college the following fall: 68.4%26

Approximate number of new businesses started in the U.S. last year: 680,00027
Share of new businesses that survive 20 years or more: About 1 in 527

Success rate of businesses whose founder has previously started a successful business: 30%28
Success rate for businesses whose founder has previously failed with a start-up: 20%28
Success rate for first-time entrepreneurs: 18%28

Average retirement age: 6329
Share of Americans who plan to “keep working as long as possible:” 27%30

Number of AirBnB users over age 60: 1 million31
Percent of AirBnB hosts over age 60: 10%31

Percentage of retirees who say going on an RV trip is very appealing: 24%31
Most popular bucket list item, according to See the Northern Lights32








  1. The Wall Street Journal, November 30, 2016
  2. The Wall Street Journal, November 23, 2016
  3. The Wall Street Journal, November 23, 2016
  4. Interactive Data Managed Solutions, November 30, 2016
  5., November 30, 2016
  6., November 30, 2016
  7., November 30, 2016
  8. The Wall Street Journal, November 29, 2016
  9. The Wall Street Journal, November 4, 2016
  10. The Wall Street Journal, November 15, 2016
  11. The Wall Street Journal, November 16, 2016
  12. The Wall Street Journal, November 17, 2016
  13. The Wall Street Journal, November 22, 2016
  14. The Wall Street Journal, November 23 18, 2016
  15. The Wall Street Journal, November 17, 2016
  16. The Wall Street Journal, November 23, 2016
  17. The Wall Street Journal, November 17, 2016
  18. Yardeni Research, “Stock Market Indicators: Historical Monthly and Annual Returns,” Yardeni Research,” October 2, 2016
  19. The Wall Street Journal, October 14, 2016
  20. National Retail Federation, 2016
  21., 2016
  22. Wikipedia, October 20, 2016
  23., 2016
  24., 2016
  25. Social Security Administration, 2016
  26., 2016
  27. Bureau of Labor Statistics, April 28, 2016
  28., October 21, 2015
  29., October 28, 2016
  30. Bloomberg, May 13, 2016
  31. Forbes, June 3, 2016
  32., 2016

Source: Lake Avenue Financial

Here’s a Part of the Housing Market That’s Really Booming

Mike Blake/Reuters

The turmoil in the stock market hasn’t hurt homeowners’ plans to spend on their properties this year, according to a new Angie’s List survey.

The survey found that among homeowners who’ve already set their spending budgets for 2016, nearly 79 percent plan to spend as much or more on home improvement projects compared to last year.

That’s good news for service providers, who are also optimistic about 2016. More than 90 percent of them said they expect homeowners to spend as much or more on projects as they did last year.

The survey found that millennials plan to spend as much as or more than older homeowners on home improvements.

The Angie’s List findings confirms a report issued by the Joint Center for Housing Studies at Harvard University last month, which projected that home remodeling would pick up this summer. The Leading Indicator of Remodeling Activities projected that annual spending on home improvement projects in 2016 could surpass its 2006 peak, on nominal terms.

The report shows expected home improvement spending of $148 billion in the second quarter of this year, followed by $155 billion in the third quarter.

Home-improvement projects are making more sense as an investment than they have in recent years. While most renovations don’t pay off dollar-for-dollar when you sell a home, the return on investment for remodeling projects in 2015 increased to 64.4 percent in 2016, up from 62 percent in 2015 and the second-highest return in the past eight years, according to Remodeling magazine. 

Written by Beth Braverman of Fiscal Times

(Source: Fiscal Times)


To Downsize or Not to Downsize: The Retiree’s Question

© Zillow
© Zillow

Many boomers may decide to downsize their large multi-level houses in retirement, while others may hang onto their homes for family gatherings and passing on to children. What’s the right move for you?

You might want to stay in your home if …

You have a strong emotional attachment to it.

A lot of times the decision isn’t as much financial as much as it is emotional, says Craig Brimhall, vice president of wealth strategies at Ameriprise Financial.

“People envision their grandkids in the spare bedroom, and that’s a very emotional thing. Sure, it makes sense to save money on a home when you can, but if family ties override that, then you may find yourself doing just the opposite of what you said you’d always do,” he says.

Leaving a home will always be somewhat bittersweet assuming you have positive memories of years gone by, Brimhall explains.

“Many people have a tough time parting with the family home. If you aren’t really fired up about moving into a condo, and financially you aren’t being forced to leave, then it’s OK to stay put.”

You want to leave your home and property to your children.

“If you don’t want to let go, your kids probably don’t want to let go,” Brimhall says. “Even if you’re ready to sell, you may find your kids say, ‘Don’t do it! I want the home!'”

Kids sometimes have surprising opinions about what parents should do in retirement, says Judith Chipps, senior vice president of wealth management at Merrill Lynch.

“If there is a good family situation there, talk to your kids. If you have strong family ties in an area and your kids will be involved with you, then there may not be a need for you to downsize. If your children want you to be involved with their children and they all live nearby, that would be a very strong input into the decision-making,” Chipps says.

You don’t want to move or don’t want a major change.

If the thought of moving and meeting with a real estate agent fills you with terror, you may not need to make a change.

“Psychologically, if this is going to send you into a tailspin and you aren’t going to be happy, then is it worth it? Probably not,” Brimhall says.

If you’re doing the math and you find you’re going to save only a few thousand dollars every year and will be less satisfied, that amount just isn’t worth it.

“If you think about it but you feel like, ‘All my memories are here and I just can’t go through with a big move,’ then I think that’s a sign you shouldn’t uproot yourself,” he says.

With that said, the move itself is a short-term inconvenience, and retirees have to look at the big picture.

“Moving is admittedly a really bad weekend, but then it’s over,” Chipps cautions. “The hassle of moving should not drive the downsizing question.”

You might want to consider downsizing and relocating if …

You want to be closer to grandchildren.

Proximity to grandkids and family is a big consideration for many retirees, Brimhall says.

“I see it a lot of people moving cross country or around the world to be closer to grandkids. It’s a hot button issue, and many people are willing to make the move, regardless of cost.”

Because most retirees don’t have the financial means to keep both their family home and buy something closer to the grandkids, downsizing or selling your current home is the most common solution.

You’re on a fixed income and the cost/upkeep may be too much for you.

When living on a fixed income you may find it difficult to keep up with the expenses that go along with a larger home, not to mention that its maintenance may become more difficult as you get older, says Leslie Tayne, author of Life & Debt and founder of Tayne Law Group.

“Downsizing to a more affordable home or condo is usually a better option,” Tayne says. “Making a decision to downsize can be very difficult because it is often very emotional; however, although your home is filled with memories and sentiment, it may be more practical to downsize so you are able to live within your means during retirement.”

You want to travel frequently

If you envision a retirement in which you can shut the door behind you and not have to worry about leaky water heaters and roofs, downsizing to a smaller apartment or condo may be the best decision, Chipps says.

“A smaller place with very little upkeep makes sense for people who want to be more mobile,” she says.

You may need a single-level home for medical concerns

If your larger family home would need to be completely retrofit in the event of an injury or needing a wheelchair, a smaller one-level home may make the most sense, Brimhall says.

“It’s not pleasant to think about, but will your house be suitable for you when you are no longer ambulatory? People are living longer and you have to think about the reality of becoming immobile,” he says.

In addition to needing a home equipped for medical care, many retirees may also want to consider the need for a home that is closer to medical facilities, good doctors and hospitals.

Written by Kathryn Tuggle of TheStreet

(Source: TheStreet)

How Healthy is Your City’s Housing Market?

Provided by USA Today
Provided by USA Today

Boston has happy home buyers, while Las Vegas lacks reliable residents, according to a new study.

WalletHub, a consumer finance website, looked at how the housing recovery affected consumers across the country. Having the right type of financing could set home buyers up for success — and the risky kind could set families up for failure down the road, said WalletHub spokeswoman Jill Gonzalez.

So WalletHub ranked 25 metropolitan areas on homeowners’ “financial freedom,” using data from the Census Bureau’s American Housing Survey. Researchers looked for signs of a healthy housing recovery: places with high home equity, a short amount time left on mortgages, and where a buyer with an average credit score could get an affordable interest rate and down payment of less than 20%.

The researchers also doled out black marks against cities with potentially risky borrowing, like “easy” mortgages. If a high percentage of buyers were using government assistance,  had a home equity line of credit or a lump-sum home equity loan, or owed more than their house was worth, the city moved down the list.

The complete rankings (by metro area):

1. Boston

2. Oklahoma City

3. San Antonio

4. Northern New Jersey, NJ

5. Hartford, Conn.

6. Austin

7. New York City

8. Rochester, N.Y.

9. Philadelphia, PA-NJ not sure why NJ is in there, but Philly is a stand-alone city

10. Houston

11. Louisville

12. Nashville

Tie #13 Baltimore

Tie #13 Washington, D.C.

Tie #13 Chicago

16. Detroit

17. Miami-Hialeah

18. Richmond-Petersburg, Va.

19. Seattle

20. Jacksonville

21. Minneapolis-Saint Paul

22. Tucson

23. Orlando

24. Tampa-Saint Petersburg-Clearwater

25. Las Vegas

Metro areas with high equity values, low interest rates and strict lending practices show promise for a stable housing market recovery, Gonzalez said, while cities near the bottom still face challenges.

Consider the percentage of “underwater” mortgages: where the consumer owes more on the home than the home’s value. Nationally, about 15% of mortgages fall in to this category, WalletHub said. Fewer than 7% of mortgages in Boston would be considered “underwater,” while in Las Vegas, that figure is close to 40%.

Similarly, fewer than 10% of mortgages in Boston were obtained with no proof of income, assets or debt. In Tampa, that number is close to 24%, well above the national average of 17%.

“Each city has its own obstacles to overcome,” said Gonzalez. “A place that is bringing in more young people, like Boston and New York, that’s going to be setting more people up to be buying than somewhere like Las Vegas.”

Jeff Taylor is a managing partner at Digital Risk, an analytics company for mortgage lenders. He said there are a variety of regional trends that can affect a local housing markets, from first-time buyers looking to save money on rent, to foreign, all-cash purchases of pied-a-terres. 

“Nationally we have absolutely stabilized, but we still have two dynamics going on,” Taylor said. “There are areas that will see price increases that’s based on high demand, like Miami and San Francisco. In Orlando or the Midwest, prices are growing more slowly as inventory has not made its way through the foreclosure process.”

The study is not the first to show the housing market mounting an uneven recovery. While cities such as Denver and San Francisco are seeing home values skyrocket, others are seeing steady, but tapering, growth, according to the S&P/Case-Shiller Home Price Index, a measure of housing prices in 20 major American cities that was released Tuesday.

“We have outliers, like Orlando,” Taylor said. “But as a country, we are heading in the right direction.”

Written by Anita Balakrishnan of USA Today

(Source: USA Today)