Economic Updates & Financial Articles

Economic Updates & Financial Articles

Economic Updates:

Retirement in Sight Newsletter:

Financial Articles:

 


Weekly Economic Update for 8/8/2022

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THE WEEK ON WALL STREET

Stocks turned in a mixed performance last week as investors struggled with headlines suggesting that the Fed was unlikely to soon ease up on its current monetary tightening policy.

The Dow Jones Industrial Average slipped 0.13%, while the Standard & Poor’s 500 rose 0.36%. The Nasdaq Composite index picked up 2.15% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.23%.1,2,3

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Monthly Economic Update for August, 2022

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U.S. Markets

Stocks posted big numbers in July, erasing some of their first-half losses. Investor sentiment was lifted by receding inflation and recession worries and a better-than-expected start to the second quarter earnings season.

The Dow Jones Industrial Average gained 6.73 percent, while the Standard & Poor’s 500 Index rose 9.11 percent. The Nasdaq Composite led, picking up 12.35 percent.1

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Weekly Economic Update for 8/1/2022

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THE WEEK ON WALL STREET

Undaunted by another Fed rate hike and news of a contracting economy, the stock market rallied last week on better-than-expected corporate earnings.

The Dow Jones Industrial Average increased 2.97%, while the Standard & Poor’s 500 picked up 4.26%. The Nasdaq Composite index gained 4.70% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.95%.1,2,3

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Weekly Economic Update for 7/25/2022

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THE WEEK ON WALL STREET

Stocks rallied last week as investor spirits lifted thanks to a better-than-expected start to the second-quarter earnings season.

The Dow Jones Industrial Average gained 1.95%, while the Standard & Poor’s 500 added 2.55%. The Nasdaq Composite index jumped 3.33% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 3.54%.1,2,3

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Required Minimum Distributions 101

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If you are approaching your seventies, get ready for required minimum distributions. You may soon have to take RMDs, as they are called, from one or more of your retirement accounts.

You can now take some RMDs a bit later in life, which is good. Recent rule changes give your invested savings a little more time to potentially grow in your retirement savings vehicles before that first required drawdown.

What account types require RMDs? Any retirement plan sponsored by an employer, plus traditional Individual Retirement Arrangements (IRAs) and IRA-based retirement plans, such as SIMPLE IRAs and Simplified Employee Pension plans (SEPs). Original owners of Roth IRAs do not have to take RMDs.1

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What Happens When There Are No Beneficiaries

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Some accounts have no designated beneficiary. Rarely, the same thing occurs with insurance policies. This is usually an oversight. In exceptional circumstances, it is a choice. What happens to these accounts and policies when the original owner dies?

The investment or insurance firm gets the first chance to determine what happens. On many retirement plans, for example, a spouse is often the default beneficiary, even if not named on a beneficiary form. If the deceased has no spouse, then the plan assets may just become part of that person’s estate. Brokerage accounts without any designated beneficiaries are also poised to become part of the estate of the decedent. The next stop for these assets could be probate.1

The state may end up deciding where the assets go when beneficiary forms are blank. If the deceased failed to name account or policy beneficiaries but had a valid will or other valid estate documents, this will influence the path from here – but it may not exempt the assets from probate court.

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Weekly Economic Update for 7/18/2022

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THE WEEK ON WALL STREET

A record-high inflation report, the prospects of a more aggressive Fed, and growing recession fears sent stocks lower– though a Friday rally pared losses.

The Dow Jones Industrial Average slipped 0.16%, while the Standard & Poor’s 500 lost 0.93%. The Nasdaq Composite index dropped 1.57% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 3.49%.1,2,3

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Weekly Economic Update for 7/11/2022

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THE WEEK ON WALL STREET

In a holiday-shortened trading week, stocks rallied despite mixed economic data and vacillating energy prices and bond yields.

The Dow Jones Industrial Average increased 0.77%, while the Standard & Poor’s 500 rose 1.94%. The Nasdaq Composite index picked up 4.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.46% higher.1,2,3

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Getting Disability Income

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If you cannot work due to a disability, you might be eligible for Social Security Disability Income (SSDI). These federal government payments could offer you a degree of financial relief.1

Most SSDI recipients get paid between $700-1,400 per month. This year, the average monthly SSDI benefit for an individual is $1,358. Your monthly benefit could range from $100 to $3,345 based primarily on your earnings history. Roughly speaking, the greater your average annual earnings (in terms of taxable income), the greater your SSDI benefit.1,2 

Suppose you have previously spent some time out of the workforce, had jobs in which you did not pay Social Security taxes, or lived in a household receiving other government benefits. In that case, this can also affect SSDI payment amounts.1,2

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Monthly Economic Update for July, 2022

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U.S. Markets

Stock prices were lower in June as recession talk prompted investors to manage risk in their portfolios.

The Dow Jones Industrial Average lost 6.71 percent, while the Standard & Poor’s 500 Index fell 8.39 percent. The tech-heavy Nasdaq Composite dropped 8.71 percent.1

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Quarterly Economic Update for 2Q-2022

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THE QUARTER IN BRIEF

Stocks dropped in the second quarter, with the pressure beginning in April, as the Standard & Poor’s 500 index (-8.8%) and the NASDAQ Composite (-13.3%) experienced monthly losses to start the quarter.1

Investors were unnerved by comments from Fed officials about the pace and magnitude of potential rate hikes and by inflation, which showed little sign of abating. For instance, March’s Consumer Price Index rose 8.5%--the fastest pace since December 1981, while the Producer Price Index–an indicator of potential future costs–climbed 11.2% year-over-year, a new all-time high.2

Tightening monetary policy and rising inflation sent bond yields sharply higher, with the 10-year Treasury Note yield rallying from 2.32% at March-end to 2.89% by the end of April.3

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Weekly Economic Update for 7/4/2022

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THE WEEK ON WALL STREET

Stocks turned lower as a quiet news week offered investors little fresh visibility into the market overhangs of economic slowdown and inflation.

The Dow Jones Industrial Average dipped 1.28%, while the Standard & Poor’s 500 fell 2.21%. The Nasdaq Composite index dropped 4.13%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.49%.1,2,3

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Weekly Economic Update for 6/27/2022

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THE WEEK ON WALL STREET

Prospects of cooling inflation powered a rally in stock prices last week despite growing recession concerns.

The Dow Jones Industrial Average gained 5.39%, while the Standard & Poor’s 500 climbed 6.45%. The Nasdaq Composite index rose 7.49% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.78% higher.1,2,3

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Weekly Economic Update for 6/20/2022

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THE WEEK ON WALL STREET

Stocks moved lower last week as recession fears deepened following a Fed hike in interest rates and weak economic data.

The Dow Jones Industrial Average fell 4.79%, while the Standard & Poor’s 500 dropped 5.79%. The Nasdaq Composite index slid 4.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 4.51%.1,2,3

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Retirement In Sight for June, 2022

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HEALTH SAVINGS ACCOUNTS FOR RETIREMENT

If you have the chance to open a Health Savings Account (HSA), you might want to take a look. An HSA is a tax-advantaged account that you can use to pay for qualified medical expenses.

Many people retire before age 65, the age of Medicare eligibility. If you retire before age 65 and have funded an HSA, you can utilize your HSA balance to help pay for any out-of-pocket medical and hospital costs. While you can't contribute to an HSA after becoming a Medicare beneficiary, you can use your HSA assets to reimburse yourself for Medicare premiums. You can also draw on your HSA to help pay other senior healthcare costs: at-home health care, nursing home care, and even eldercare insurance premiums. 

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Weekly Economic Update for 6/13/2022

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THE WEEK ON WALL STREET

A higher-than-expected inflation report triggered a sell-off on Friday, leaving stocks in the red for the week.

The Dow Jones Industrial Average lost 4.58%, while the Standard & Poor’s 500 dropped 5.05%. The Nasdaq Composite index slid 5.60% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 1.81%.1,2,3

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Monthly Economic Update for June, 2022

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U.S. Markets

Stocks were mixed in May as a powerful rally in the final week of trading helped recoup losses from earlier in the month.

The Dow Jones Industrial Average picked up 0.04 percent, while the Standard & Poor’s 500 Index added 0.01 percent. The Nasdaq Composite fell 2.05 percent.1

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Weekly Economic Update for 6/6/2022

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THE WEEK ON WALL STREET

In a holiday-shortened week of volatile trading, stocks surrendered some of the previous week’s strong gains.

The Dow Jones Industrial Average fell 0.94%, while the Standard & Poor’s 500 declined 1.20%. The Nasdaq Composite index lost 0.98% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.17%.1,2,3

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The Behavior Gap and Your Financial Health

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“It turns out my job was not to find great investments but to help create great investors,” writes Carl Richards, author of “The Behavior Gap.” From increasing our budget mindfulness to taking a steadier approach to investing, Richards has drawn attention to how our unexamined behaviors and emotions can be to our detriment when it comes to living a happy and financially sound life. In many cases, we make poor financial decisions when experiencing panic or anxiety due to personal or widespread events.1

The Behavior Gap Explained. Coined by Richards, “the behavior gap” refers to the difference between a wise financial decision versus what we decide to do. Many people miss out on higher returns because of emotionally driven decisions, creating a behavior gap between their lower returns and what they could have earned.

Excitement When Stocks Are High. Whether in a bull market or witnessing the hype from a product release, many investors may feel tempted to increase their risks or attempt to gain from emerging investments when stocks are high. This can lead to investors constantly readjusting their portfolios as the market experiences upswings.

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Rehearsing for Retirement

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Imagine if you could preview your retirement in advance. In a sense, you can. Financially and mentally, you can “rehearse” for the third act of your life, while still enjoying the second.

Pretend you are retired for a month or two. Take two steps to act out your rehearsal – one having to do with your budget, the other with your expectations.

Draw up a retirement budget & live on it for one, two, or three months. Make a list of essential expenses (groceries, gas, utilities, mortgage, medicines), and then a list of discretionary expenses (such as movie tickets, dinners out, spa treatments). This may reveal that you can live handily on less than what you currently spend each month.

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Weekly Economic Update for 5/30/2022

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THE WEEK ON WALL STREET

Stocks posted solid gains for the week, buoyed by the release of Fed meeting minutes and upbeat earnings from mid-size and discount retailers.

The Dow Jones Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%. The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.09%.1,2,3

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Creating a Retirement Strategy

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Across the country, people are saving for that “someday” called retirement. Someday, their careers will end. Someday, they may live off their savings or investments, plus Social Security.  They know this, but many of them do not know when, or how, it will happen. What is missing is a strategy – and a good strategy might make a great difference.

A retirement strategy directly addresses the “when, why, and how” of retiring. It can even address the “where.” It breaks the whole process of getting ready for retirement into actionable steps.

This is so important. Too many people retire with doubts, unsure if they have enough retirement money and uncertain of what their tomorrows will look like. Year after year, many workers also retire earlier than they had expected, and according to a 2022 study by the Employee Benefit Research Institute, about 47% do. In contrast, you can save, invest, and act on your vision of retirement now to chart a path toward your goals and the future you want to create for yourself.1

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Weekly Economic Update for 5/23/2022

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THE WEEK ON WALL STREET

Recession fears grew last week following weak earnings reports from major retailers, sending stocks lower.

The Dow Jones Industrial Average fell 2.90%, while the Standard & Poor’s 500 lost 3.05%. The Nasdaq Composite index dropped 3.82% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.84%.1,2,3

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Weekly Economic Update for 5/16/2022

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THE WEEK ON WALL STREET

In a volatile trading week, stocks extended their losses as economic growth and inflation concerns soured investor sentiment.

The Dow Jones Industrial Average dropped 2.14%, while the Standard & Poor’s 500 lost 2.41%. The Nasdaq Composite index fell 2.80% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 3.21%.1,2,3

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Couples Retiring on the Same Page

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What does a good retirement look like to you? Does it resemble the retirement that your spouse or partner has in mind? It is at least roughly similar?

The Social Security Administration currently projects an average retirement of 18 years for a man and 21 years for a woman (assuming retirement at age 65). So, sharing the same vision of retirement (or at least respecting the difference in each other’s visions) seems crucial to retirement happiness.1

What kind of retirement does your spouse or partner imagine? During years of working, parenting and making ends meet, many couples never really get around to talking about what retirement should look like. If spouses or partners have quite different attitudes about money or dreams that don’t align, that conversation may be deferred for years. Even if they are great communicators, assumptions about what the other wants for the future may prove inaccurate.

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How to Buy I Bonds Direct from the Treasury

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With inflation hovering near 40-year highs, some investors are looking for alternative ways to weather the storm. For many, a Series I Savings Bond is just the ticket. I Bonds give investors a rate of return plus inflation protection and are backed by the U.S. government.

I Bonds are pretty simple to set up. You can go to TreasuryDirect.gov and open a free account to purchase these federally-backed securities directly from the U.S. Treasury.1

Here’s how to get started.

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What is an Annuity?

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Individuals hold about $2.5 trillion in annuity contracts; a tidy sum considering an estimated $12.2 trillion is held in all types of IRAs.1

Annuity contracts are purchased from an insurance company. In exchange, the insurance company makes regular payments to the buyer — either immediately or at some future date. These payments can be made monthly, quarterly, annually, or in a single lump sum. Annuity contract holders can opt to receive payments for the rest of their lives or a set number of years.

The money invested in an annuity grows tax-deferred. The amount contributed to the annuity will not be taxed when the money is withdrawn, but earnings will be taxed as regular income. There is no contribution limit for an annuity.

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Retirement In Sight for May, 2022

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RETHINKING RETIREMENT

Some of the "conventional financial wisdom" circulating about retirement may need a second look because those assumptions may not prove true for everyone. Or, to put it another way, sometimes people think about retirement conveniently rather than realistically. Many people assume they will retire as they choose, purely on their terms. Is that how it usually happens? The Employee Benefit Research Institute’s 2021 Retirement Confidence Survey indicates otherwise. The average retirement age is 62, yet most workers expect to retire at 65. While 59% of workers believe they can ease into retirement via part-time work, just 19% of current retirees have. As for working in retirement, 72% of pre-retirees expect to do so, yet just 30% of retired survey respondents said they earned income from employment or freelancing. You still hear about the "4% rule" for retirement income withdrawals, withdrawing 4% a year off your retirement assets. But one size rarely fits all. One of the most complicated and essential calculations is figuring out how much money you can withdraw from your retirement account.  Finally, you sometimes read articles that tell you to save at least $1 million before you retire. It's important to remember that anything you have saved in your retirement account is better than nothing, but the more you can put away now, the more you may have later on.1

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Weekly Economic Update for 5/9/2022

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THE WEEK ON WALL STREET

With the Fed in focus, the markets experienced wide price swings over the course of last week, as technology companies led the market lower.

The Dow Jones Industrial Average slipped 0.24%, while the Standard & Poor’s 500 declined 0.21%. The Nasdaq Composite index dropped 1.54% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.99%.1,2,3

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Should You Downsize for Retirement?

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You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven’t fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it’s time to downsize.

Lower housing expenses could put more cash in your pocket. If your home isn’t paid off yet, have you considered how much money is going toward the home loan? When you took out your mortgage, your lender likely wanted your monthly payment to amount to no more than 28% of your total gross income, or no more than 36% of your total monthly debt repayments. Those are pretty standard metrics in the mortgage industry.1

What percentage of your gross income are you devoting to your mortgage payments today? Even if your home loan is 15 or 20 years old, you still may be devoting a significant part of your gross income to it. When you move to a smaller home, your mortgage expenses may lessen (or disappear) and your cash flow may greatly increase.

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Monthly Economic Update for May, 2022

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U.S. Markets

April was a challenging month for investors as losses in mega-cap technology companies and high-valuation stocks spilled over to the broader market.

The Dow Jones Industrial Average lost 4.91 percent while the Standard & Poor’s 500 Index dropped 8.80 percent. The Nasdaq Composite fell 13.26 percent.1

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Weekly Economic Update for 5/2/2022

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THE WEEK ON WALL STREET

On Friday, a sharp sell-off sent major stock market indices into negative territory for the week, capping a volatile close to April.

The Dow Jones Industrial Average declined 2.47%, while the Standard & Poor’s 500 tumbled 3.27%. The Nasdaq Composite index dropped 3.93% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 3.33%.1,2,3

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Weekly Economic Update for 4/25/2022

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THE WEEK ON WALL STREET

Hawkish comments from Fed Chair Jerome Powell overshadowed many largely positive earnings results, sending stocks lower for the week.

The Dow Jones Industrial Average declined 1.86%, while the Standard & Poor’s 500 dropped 2.75%. The Nasdaq Composite index fell 3.83% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 0.50%.1,2,3

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Weekly Economic Update for 4/18/2022

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THE WEEK ON WALL STREET

Stocks posted losses in a holiday-shortened trading week as the first-quarter earnings season kicked off and investors digested new inflation data. 

The Dow Jones Industrial Average declined 0.78%, while the Standard & Poor’s 500 fell 2.13%. The Nasdaq Composite index dropped 2.63% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.20%.1,2,3

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Retirement In Sight for April, 2022

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A SPRING CLEANING FOR YOUR RETIREMENT STRATEGY

Spring cleaning: you tidy up, organize, and put things in order. You can take a "spring cleaning" approach to your retirement, just as you can with your home or garage. It may be helpful, especially if retirement seems near.

This is a good time for a review of your retirement accounts. As you get older, you may want to accept less risk in those accounts, and specific business, career, or life events might mean considering adjustments to your retirement strategy. Some people have old retirement accounts from previous jobs. There might be benefits to consolidating them: less paperwork when your retirement transition happens and perhaps a more accessible summary or analysis of your financial position. If you get the sense that there is an old retirement account that could "work harder" for you, you may want to examine your choices.1

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Weekly Economic Update for 4/11/2022

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THE WEEK ON WALL STREET

Stock prices fell last week in response to the Fed’s plan to combat inflation, which staked out a more aggressive stance than investors had anticipated. 

The Dow Jones Industrial Average slipped 0.28%, while the Standard & Poor’s 500 fell 1.27%. The Nasdaq Composite index dropped 3.86% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slid 2.05%.1,2,3

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Monthly Economic Update for April, 2022

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U.S. Markets

Greater clarity on monetary policy and improved investor sentiment on the economic outlook propelled stocks to their first monthly gain of the year.

The Standard & Poor’s 500 Index led, gaining 3.58 percent. The Dow Jones Industrial Average added 2.32 percent, and the Nasdaq Composite picked up 3.41 percent.1

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Quarterly Economic Update for 1Q-2022

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THE QUARTER IN BRIEF

Financial markets abhor uncertainty, and Russia's invasion of Ukraine added new uncertainties to a market already wavering from accelerating inflation and the prospect of higher interest rates. After a year of strong economic growth and solid stock market returns, heightened inflation and the unclear pace of monetary policy tightening triggered market volatility right from the start of the new year. The potential of rising interest rates propelled bond yields higher and hurt stock valuations, especially the previously high-flying, high-growth technology names.

Stock market weakness continued into February as investors worried that the Fed's slow response would lead them to address high inflation with more rate hikes than investors initially anticipated. When Fed Chair Jerome Powell announced plans to shrink the Fed's balance sheet, the fears of a more aggressive monetary policy grew.

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Weekly Economic Update for 4/4/2022

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THE WEEK ON WALL STREET

Stocks spent last week digesting the sharp gains of previous weeks as investors assessed a tightening yield curve, the war in Ukraine, and an uncertain outlook for economic growth and inflation. 

The Dow Jones Industrial Average slipped 0.12%, while the Standard & Poor’s 500 was flat (+0.06%). The Nasdaq Composite index led, picking up 0.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.02%.1,2,3

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