Money Monday

MONEY MONDAY 1/7/19

Happy 2019! At Simply Money Advisors, we have our eyes on a few things as we kick-off the new year.

1. The government shutdown. We hope this is short term. The economic affects: a) 800,000 federal employees are out of work and not spending as much in our economy. b) If the shutdown keeps dragging, businesses may start to lose confidence. This could mean pulling back on hiring and in vestment. c) The economy has rebounded after previous shutdowns.

The IRS: It's operating with 1/8th it's normal staff. During this time you still owe taxes, but you won't get a refund. 

2. Trade war with China: What is the exit strategy? We also do not really know what will happen if the US and China cannot reach a deal by the March 2nd deadline. Apple is already feeling the heat.

3. Emerging markets. Chances are, your investment mix has some exposure to countries like Brazil, Russia, India, and China. As interest rates rise, it becomes harder-and-harder for these economies to borrow and grow.

4. Corporate debt. In December, U.S. corporate debt hit 46% of our Gross Domestic Product. That's the highest amount of debt on record.

As interest rates continue to rise many companies will have more trouble paying back bond holders and staying out of "junk status." This doesn't mean they will default, but could mean they spend less money on hiring and investing.

As interest rates continue to rise many companies will have more trouble paying back bond holders and staying out of "junk status." This doesn't mean they will default, but could mean they spend less money on hiring and investing.

5. Across the pond. This might be the year that Britain finally leaves the European Union. This is a problem. If Britain "crashes" out without an agreement to keep trade flowing.

HERE'S THE SIMPLY MONEY POINT

You can expect more market turbulence this year but, in our opinion at Simply Money, nothing is fundamentally broken like in 2008. 

TEASE

Coming up, some of the changes in 2019 that will impact your retirement planning.

Every Sunday, you see the Simply Money column in The Cincinnati Enquirer and online at cincinnati.com

Dennis and Debra from Western Hills: We recently noticed 401(k) contribution limits will increase for 2019. Any other major retirement changes we need to know about?

TEASE

Thinking about retiring early? Coming up, how to make sure you have all yours bases covered.

#3: Retirement

It's not just for the millennials: more Americans want to retire early. Here's the question, is early retirement worth it, or even possible?

Today, Americans want to retire at age 62, on average. 40% of americans want to retire before age 60.

This is an increase from 5 years ago when the average planned retirement age was age 64.

Why are more people planning to retire early? 1) Even though the stock market ended on a down year, we are getting used to the historically long bull market. 2) Retirement savings spiked. The average 401(k) balance of consistant savers was $167,000 in 2016. In 2013, it was $120,000. Today, it's probably more.

Is the optimism misplaced? Only about half of Americans have figured out how much they needed to retire. 1/3 of Americans have developed a plan for retirement savings.

What do hopeful early retirees forget? Medical costs. A couple retiring today needs an average of $280,000 for health care in retirement. This does not include long-term care.

If you are planning on retiring early, what's your lifestyle? Do you never go out to eat? Are you a season ticket holder for shows at the Arnoff?

Many early-retiree planners want to work part time. That's great, but save enough so work is an option and not an obligation.

Check your connections: The social loss of an early retirement puts many back to work.

HERE'S THE SIMPLY MONEY POINT

It's great to plan to retire early, but make sure you are truly prepared to do so.

TEASE TO SHOW

And tonight starting at 6:06 on 55KRC: If you got a late start saving for retirement, get Simply Money’s straight talk advice for how to catch up.