Another morning of economic data points brought further proof
consumers are scraping the bottom of the barrel to keep spending
away what little they have. The latest numbers show that disposable
income continues to decline. Meanwhile, consumer savings rates are
barely over 3% these days. Some may point to Hurricane Sandy's
effect as the basis for the latest data, but that excuse is already
the trend has not been favorable nonetheless.
Yum Brands (
) was one of the biggest movers on today's tape. The stock plunged
10% lower after the company, citing a slowdown in China's economic
slashed its outlook
. Fast food chains are certainly not immune to spending slowdowns
regardless of price. McDonald's (
), which has struggled this year, is considering adding more items
to its dollar menu in an effort to boost sales. Elsewhere, shares
of Tiffany & Co. (
) and Stanley Black & Decker (
) were down following cautious Wall Street analyst commentary.
The Retirement End Game
Most retirement worries center around a few key issues.
Near-retirees fear whether their employers will be able to meet
pension obligations. Another common fear is whether Social Security
benefits will eventually run out, as concerns mount around the
potential insolvency of the system. Finally, most retirees worry
they are behind in their retirement savings objectives, wondering
if they can really afford to call it a career (not to mention what
happens if they are let go from their existing position).
Delaying Social Security payments is one of my first thoughts as
to how someone can get the most of the system. Keep in mind that
taking benefits at age 62 locks in payments that are only 75
percent of what they would be at the retirement age of 66. Delaying
benefits at age 66 will raise them by 8 percent a year until age
70, after which benefits do not increase with age. This strategy,
along with staying in the workforce as long as possible, could help
maximize your income.
If you are already retired, you need to use a smart strategy
regarding the money you withdraw from your accounts to cover
everyday living expenses. Many financial advisors tend to use a 4%
annual withdrawal rate when discussing retirement savings
withdrawals. With this approach, investors withdraw 4% of their
retirement balance in the first year of retirement, or let's say
$20,000 from a $500K portfolio. The dollar amount of the withdrawal
could be adjusted each year to keep up with inflation. So whether
you are deriving income from dividend-paying stocks, bonds, bank
CDs, or other sources, you can at least have a starting point (4%
withdrawal rate) to factor from.
Doing the bare minimum (for example, saving a set amount each
month to invest, but never pushing harder to raise the amount you
invest over time) will likely leave many short of an enjoyable
period later in life. Some may think that their current financial
obligations will eventually wind down, and then they'll really
begin to stockpile away money for their golden years. Unfortunately
that is almost never the case. Too many unforeseen events can
happen (divorce, a family death, getting laid off, etc.), and you
can't afford to lollygag when you could be doing more - all the
while still enjoying life's finer moments as well.
Building wealth requires you to aside funds and invest them in
income-producing assets (dividend-paying stocks is our immediate
focus, but it can be investing into growing your business even
more, or buying a property that can be cash-flow positive). If you
are already retired, it may mean coming back in the work force
part-time to ease the amount of money you are withdrawing from your
savings (if you are unable to work because of a disability, there
can be work you do from home possibly) or not being gun-shy when it
comes to staying active as an investor. Regardless, taking charge
of your financial profile is paramount to getting the most out of
your later years.
2013 Dividend Stock Guide Coming Next Week!
We just wanted to let everyone know that we are working hard on
a new 2013 Dividend Stock Guide, loaded with our thoughts on what
to expect in the coming year for dividend stocks. Again, this is
only available to Dividend.com Premium members for download, so be
sure you are signed up to receive the guide once it's released!
Last year's Beat the Market with Dividend Stocks eBook was a smash
success, and this year's version will be even better. We anticipate
releasing the new guide sometime next week.
Looking Toward Next Week
Looking ahead to the next week for stocks, we will see earnings
results from the likes of Toronto-Dominion Bank (
), Bank of Montreal (
), and Men's Wearhouse (
), just to name a few. Throw in the latest economic data and fiscal
cliff updates, and investors will have plenty of news to absorb as
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
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