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An Often-Overlooked Retirement Risk

The Markets

Happy birthday!

The bull market in stocks charged past its two-year birthday on October 12. “This unique bull market is still young relative to history and, for now, supported by relatively healthy breadth and broadening participation,” wrote Liz Ann Sonders and Kevin Gordon of Schwab.

One factor in the U.S. stock market’s rise has been the American economy’s surprising strength as it recovers from a surge in inflation. Our economy is “the envy of the world” and “has left other rich countries in the dust,” reported Simon Rabinovitch and Henry Curr of The Economist. “Expect that to continue,” they wrote. 

The strength of the U.S. economy was reflected in the release of robust economic data and solid company earnings reports last week. Here’s what happened:

  • U.S. retail sales grew faster-than-expected in September. Retail sales data show how much Americans spent at food and retail stores. The information is considered to be a leading economic indicator, which means that it provides some insight into what may be ahead for the stock market. Will Kenton of Investopedia explained:

“Retail sales is an important indicator that signals either the contraction or expansion of an economy. An increase in retail sales signals a healthy economy that is expanding while a decrease in retail sales signals the opposite. An increase in retail sales usually moves stocks upward and is good for shareholders.”

  • Third quarter earnings season was off to a good start. At the end of each quarter, publicly traded companies report on sales and profits for the previous quarter. Earnings season has a direct effect on share prices and stock market performance. “…if most companies, particularly the established market leaders, report increasing sales and earnings, traders tend to feel more confident about the market’s prospects. When earnings are trending below expectations, it can be a warning sign of potential trouble ahead,” explained Schwab. 

At the end of last week, 14 percent of the companies in the Standard & Poor’s 500 Index had reported third-quarter performance. Seventy-nine percent had beaten analysts’ earnings (profit) expectations, and 64 percent had beaten revenue (income) expectations, according to John Butters of FactSet. 

Major U.S. stock indexes moved higher for the sixth consecutive week, and U.S. Treasury yields finished last week in roughly the same place they ended the week before.


S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. 

Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.


An Often-Overlooked Retirement Risk

When planning for retirement, there is a risk that is sometimes overlooked—the possibility of cognitive decline. It’s not fun to think about, but a significant number of older Americans experience difficulty with memory, problem-solving, concentration and other important mental tasks. Fortunately, there are some strategies that can help protect you and your loved ones.

As people age, they may not be as sharp as they once were. After 65, learning new information can take longer. Retirees, occasionally, struggle to find the right word or misplace their glasses and keys. This is normal aging that “doesn’t affect recognition, intelligence or long-term memory,” according to the Cleveland Clinic.

In some cases, though, a person experiences a more significant decline in brain function. It may be caused by a health issue, such as a stroke, or a disorder, like Alzheimer’s. About 55 million Americans live with Alzheimer’s disease or another type of dementia.

The National Institute on Aging suggests that getting enough sleep, eating healthy meals, being physically active, managing any health conditions, connecting with family and friends, and keeping your brain engaged by learning new things can help keep your brain healthy.

No matter how conscientious you are, it’s also important to organize your finances so they are easy to manage. This often means: 

  • Building a network of family members and professionals who understand your goals and needs. 
  • Streamlining your finances so managing money is easier as you age. Automating bill payment, keeping track of accounts through a centralized system, and other actions can help simplify your financial life.  
  • Putting appropriate planning documents in place, such as a will, a revocable living trust, a power of attorney, and/or a living will that spells out your preferences for medical care.

“Cognitive decline can have devastating consequences for personal finances and sound financial decision-making. The ability to manage finances is one of the first cognitive skills to deteriorate, leaving many people vulnerable to suboptimal financial decision-making and an ever-growing array of pernicious financial scams,” reported Chris Heye in Kiplinger Personal Finance.

If you would like to learn more, please get in touch.


Weekly Inspiration

“Time and memory are true artists; they remold reality nearer to the heart's desire.”

John Dewey, philosopher

Best Regards,
California Retirement Advisors

Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment advisor. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. 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. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.
The information being provided is strictly as a courtesy. When you click on any of the links provided here, you are leaving this website and viewing information provided by a third party. We make no representation as to the completeness or accuracy of information provided by any third-party website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to, or your use of third-party technologies, websites, information and programs made available through this website. By accessing these calculators, you assume total responsibility and risk for your use of the third-party website.
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
https://www.schwab.com/learn/story/is-two-year-old-bull-market-2-legit-2-quit 
https://www.economist.com/special-report/2024-10-19 
https://www.census.gov/retail/sales.html 
https://www.reuters.com/markets/us/us-retail-sales-increase-solidly-september-2024-10-17/ 
https://www.investopedia.com/terms/r/retail-sales.asp 
https://www.schwab.com/learn/story/earnings-season-what-to-look#
https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_101824.pdf (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-21-24_Factset_Earnings%20Insight_7.pdf
https://www.barrons.com/articles/stock-market-rise-moreanimal-spirits-e2735b04?refsec=the-trader&mod=topics_the-trader
https://www.barrons.com/market-data 
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202410 
https://my.clevelandclinic.org/health/diseases/17990-mild-cognitive-impairment 
https://www.alz.org/alzheimer_s_dementia
https://www.nia.nih.gov/health/brain-health/cognitive-health-and-older-adults 
https://www.kiplinger.com/retirement/cognitive-decline-how-to-guard-your-finances 
https://www.brainyquote.com/quotes/john_dewey_163896?src=t_memory