In December, the US stock market dipped BELOW a rather important trading floor in equity valuations, as well as seeing the possibility of an INVERTED bond curve (short term bonds yielding more than long-term bonds).  This has already reversed and is why bonds and equity prices are down at the same time.

And even more recently the stock market is responding to slowing manufacturing, shut down and trade talks.  Then the market moves higher on the Federal Reserve statements of possibly less interest rate moves higher next year.  Wage growth is up, highest in 10 years and job numbers are up. Most of this is short term noise.  Some of the bright spots are increasing incomes and higher retail sales.

U.S. Markets:  U.S. stocks recorded their fourth consecutive week of positive returns, continuing to build on their very strong start to 2019.  The gains pulled most of the large-cap benchmarks out of correction territory, back to within 10% of their recent highs.  However, the NASDAQ Composite and the smaller-cap benchmarks remained below that threshold.  The Dow Jones Industrial Average surged 710 points, or 3.0%, last week closing at 24,706.  The technology-heavy NASDAQ Composite rallied 2.7% ending the week at 7,157.  By market cap, the large cap S&P 500 rose 2.9%, while the mid cap S&P 400 added 3.0% and the small cap Russell 2000 gained 2.4%.

International Markets:  Like the U.S., major international markets were also in the green across the board.  Canada’s TSX Composite rose 2.4% while the UK’s FTSE managed a 0.7% gain despite Prime Minister Theresa May’s Brexit deal failing to gain approval.  On Europe’s mainland, France’s CAC 40 rose 2.0%, Germany’s DAX added 2.9%, and Italy’s Milan FTSE gained 2.2%.  In Asia, China’s Shanghai Composite rose 1.7%, while Japan’s Nikkei gained 1.5%.  As grouped by Morgan Stanley Capital International, emerging markets rose 2.0% last week and developed markets gained 1.7%.

Commodities:  Given that precious metals are traditionally a “safe-haven” in times of market weakness, it comes as no surprise that they finished down for the week in which equities were strong.  Gold retreated 0.5%, closing at $1282.60 an ounce, while Silver fell -1.6% to $15.40 an ounce.  Oil continued its sharp rebound, rising 4.8% to $54.04 per barrel of West Texas Intermediate crude—its third consecutive weekly gain.  Copper, viewed by some analysts as a gauge of world economic health due to its variety of industrial uses, finished the week up 2.1%.

U.S. Economic News:  The number of Americans applying for first-time unemployment benefits fell slightly last week to a five-week low, though more federal workers sought financial assistance due to the government shutdown.  The Labor Department reported initial jobless claims declined by 3,000 to 213,000, lower than the consensus forecast of a 220,000 reading.  New claims fell to their lowest level since early December and are nearing the 50-year low of 202,000 reached last September.  The less-volatile monthly moving average of new claims declined by 1,000 to 220,750.  Continuing claims, which counts the number of people already receiving unemployment benefits, rose by 18,000 to 1.74 million.  That number is reported with a one-week delay.

There are plenty of things to be optimistic about, however, as you approach the “retirement red zone” (5 years preceding your retirement through 5 years after your retirement).  Now is a time you may want to be more cautious with your life savings, especially if you are planning on beginning withdrawals soon.  Most of you have diversified portfolios with us and we’ve already adjusted.  However, if you have assets that are not managed by us, make sure you let us know.

We suggest you take a close look at your personal situation and let us know if anything has changed.  Our philosophy here is to make sure you aren’t as exposed to the stock market if you are taking withdrawals.

For those of you with a plan, this is what we built it for.  More than likely our suggestion would be to do nothing.  For those of you that are not sure please call or email us if you would like to discuss this or schedule an in-person visit if you wish to meet here at our office.

Keep in mind that every single person’s individual situation is unique and there are multiple things to consider including timeline, income needs, personal goals and objectives.

Now is the time for anyone on Medicare to consider whether changes need to be made in their coverage. The annual Open Enrollment period ends Dec. 7th, 2018. You may have seen commercials advertising how easy it is to change your plan. But wait, is it necessary? Have you moved? Has your health changed? Have your prescriptions changed? Has you financial situation changed? Have you run into problems with finding providers?

If you answered “yes” to any of the above questions you should probably investigate whether a change makes sense for 2019.
If you are eligible for Medicare and did not enroll in Medicare B or Part D, there may be penalties. You have 3 months before and 3 months after the month you turn 65 to enroll. After that you accrue penalties that will be with you for your lifetime on Medicare. If you’re in this boat, do not delay!

What is Medicare?
Medicare can seem like an alphabet soup: Parts A and B comprise “traditional” Medicare coverage. Part A is for in-patient care and Part B covers out-patient services. Part D is for prescription drugs. These building blocks of Medicare, however, have deductibles and do not provide 100% coverage. Most people opt to supplement traditional Medicare with a MediGap (Supplement) plan and a Part D prescription plan or choose a Medicare Advantage plan that packages all their Medicare benefits and includes prescription coverage. In all cases, the Part B premium ($135.50 in 2019) must be paid.
Medicare Advantage programs are available through private health insurance companies with networks of local providers; monthly premiums can range from $0 to $200. Then you “pay-as-you-go” – a copay or percentage coinsurance each time you access a medical service. Advantage plans cover everything that Medicare covers and additionally can offer extra benefits – limited dental, vision, hearing and even gym memberships. And drug coverage is included with the plan.

With Medigap (Supplement) plans you can choose different levels of coverage but, once you pay the monthly premium (in the $150-$200 range for 65 year olds and likely to increase with age), there are no copays or deductibles for any medically necessary services that traditional Medicare covers. It’s a “pre-paid” plan and the cost for your health care is known and predictable. Since it doesn’t include Rx coverage, most people choose to add a Part D plan. Usually there are no extra benefits such as those offered by Advantage plans. And, while Advantage plans have to accept any applicant; Medigap plans can – after a person’s first six months on Medicare – deny coverage for health reasons to new applicants. While any year you could switch from a MediGap to an Advantage plan, you might not be able to go the opposite direction.

Traveling?
Advantage plans have contracted networks of local providers. HMO plans limit coverage to their local network; PPO plans allow you to go outside the network for somewhat higher copays. MediGap (Supplement) plans are national rather than local and will cover any provider who accepts Medicare and may be a better choice for snowbirds or others who expect to spend time out of the area. All plans, however, will provide emergency coverage, often world-wide, but may require you to return to your local network providers to receive follow-up care. Usually separate travel insurance is recommended for international travel.

Need Help?
Lots to think about but it can make a big difference in your costs and health over the long run. Need help sorting out your options? SHIBA volunteers are trained to help. Call 541-812-0849 to schedule an appointment; there are some times still available next Monday, December 2.

Have you heard that higher income doesn’t necessarily mean increased happiness?   Studies show that on average people earning more than $75,000 (in 2010) don’t report increasing happiness with increasing income levels. The main explanation for this phenomenon is that once our basic needs are met, we aren’t very good at spending our money in ways that make us much happier.  Psychologists have taken an interest in this topic and lucky for us, their research gives us insights on how we can spend our discretionary income in ways that are more likely to increase our happiness.  Dr. Elizabeth Dunn shared some of these insights with us at the 2018 XYPN Live Conference.  Here are her top 5:

1)  Buy experiences. People report more intense feelings of happiness after purchasing an experience than after purchasing material items.  In fact, the memory of how great an experience was increases over time.  This effect contrasts with what we see with the purchase of material items, which bring smaller, more frequent jolts of happiness that tend to decrease over time.  Connecting with others to create unique and memorable experiences is one of the keys to happiness.

2)  Make it a treat. Novelty brings happiness, so you might want to reconsider purchases that used to be a treat but are now bought out of habit. Like eating out.

3)  Buy time. Are you aware of your U-index?  It measures the proportion of your day that you spend doing dreaded tasks.  Essentially, the higher your U-index, the lower your happiness.  So, outsource those dreaded tasks and see your happiness soar.  Use the extra time to connect with the people you love. If you’ve been looking for a good reason to hire a housekeeper –here it is!

4)  Pay now, consume later. This goes against everything credit card companies would have you believe, but research shows that we enjoy things more if we consume them after we experience the pain of paying for them.  Another benefit of this tactic is the added happiness that the anticipation of enjoying that item or experience will bring.  Get ready for a blog post on how budgeting can make you happier!

5)  Invest in others. One of the fundamental aspects of being human is that it brings us joy to help others.  Giving to others feeds into this part of the human experience and is one of the best ways you can spend your money in a way that will bring you happiness.  Choose beneficiaries that you connect with, and that you feel you can have an impact on.  Another perk of giving to others?  It’s good for your heart!  Lab experiments revealed that being charitable had the same effect on blood pressure as exercise!

This body of research demonstrates that maximizing your money is not what’s important.  Your spending decisions and attitudes towards money have a much more powerful impact on your well-being.  That’s what holistic financial planning is all about!