Generation X Women Face Retirement Shortfall

Generation X Women Face Uphill Retirement Issues.

Women born between 1961 and 1981, give or take a couple years - are coined the Gen-X. So are men. That would make them approximately 37 to 57 years of age today. Single women face the hardest uphill climb to a secure retirement, according to a published article in Barron's Financial Magazine on March 4th.

Among the bullet points addressed ...
Women have:
* Smaller retirement savings balances due to time off for child-rearing.
* A wage disparity vs. men.
* Little or no spousal benefits vs. married couple's resources and pension / social security benefits.

Here is the text of that story following by Reshma Kapadia. I hope you find it helpful.
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For anyone who has ever spent a frustrating few hours clothes shopping knows that one size does not fit all. When it comes to retirement, many women, in particular - need a custom fit.


                                    

For single women, the situation often is even worse. Their retirement savings tend to be lower than their married—and even widowed—peers. While widows can face a sharp decline in income when a spouse dies, they often inherit their partner’s assets and spousal benefits from Social Security—a source of funds unavailable to single women. Plus, single women face unique challenges related to higher costs for retirement living and long-term care.

“I hear from a lot of women who say all the retirement advice is about couples,” says Cindy Hounsell, president of the Washington, D.C.–based nonprofit Women’s Institute for a Secure Retirement. “You really need to look for a different plan if you are single, and nobody else is going to help you, so you need more saved.”

A recent report by the Employee Benefit Research Institute, a nonpartisan think tank, looked at retirement security for Gen Xers—the population cohort born roughly from 1961 to 1981. The study found that only in one group of Gen Xers—single women—were half the people at risk of not having enough money to cover basic retirement expenses. The average expected shortfall also is greater for single women, at $73,000, or twice the estimated average shortfall for single men and more than triple that for widows. The gap persists even in the highest income quartiles, where 13% of single women are at risk of having a shortfall of $100,000 or more. That compares with just 7% of single men and 4% of widows.

Singles' ShortfallGen-X women who are single at 65 face the biggest expected shortfall in coveringbasic retirement expenses.

Americans are staying single longer, and marriage rates are declining, which means that more women could face this scenario in the future. About 57% of millennials (the median age for this generation is now 28.5 years) have never been married, according to a recent survey by the Pew Research Center. When today’s older retirees—the silent generation—were the age of today’s millennials, only 17% had never been married.

             Graph Removed Due to Technical Glitch

While a recent Society of Actuaries report found that fewer singles than couples put a high priority on retirement savings, financial advisors stress the importance of single women starting to think about retirement even earlier than other people. Their focus should be not only on saving more than their married peers, but also thinking differently about insurance, retirement housing, caregiving plans, and estate planning.

Take the accumulation stage. Lacking a partner to fall back on if they get ill or lose their jobs, single women should build a more robust cash reserve for emergencies, and also consider buying disability insurance, at least until they have built enough wealth to draw on in an emergency, says Marguerita Cheng, a financial planner and head of Blue Ocean Global Wealth.

Because the risk of running out of money is greater for single than married women, some advisors favor a more conservative approach to financial planning. They assume lower expected returns on an investment portfolio to account for possible market volatility and higher costs in retirement.

And, while women tend to provide much of the caregiving to others, they often end up without any such help themselves. It’s one reason why the majority of nursing-home residents are women.

Some people can pay out of pocket for long-term care, but many advisors recommend that single women analyze whether buying some level of insurance to help with such aid is warranted.

“What we tend to see is that the first phase of long-term care tends to come from family members. For those who don’t have children or family near, you have to be more careful about costs because the clock on costs starts on day one,” says Laly Kassa, a certified financial planner at Chevy Chase Trust, which oversees $27 billion in assets.

She advises single clients to prepare to spend 70% of what a couple would spend in retirement, not 50%, to account for higher costs.

Another key consideration is the likelihood of companionship in retirement. A 2017 report by the Society of Actuaries, based on surveys of people 85 and over, found about two-thirds living alone, with women more likely to be in that situation than men. One key reason:

Only 15% of the women were still married at 85, versus 55% of men.

Living at home brings many potential challenges, and is one reason advisors recommend that single women consider continuing-care retirement communities earlier than married couples usually do. These offer a spectrum of care from independent living to skilled nursing care, under one roof.

Moving into such facilities earlier usually enables residents, whether single or married, to create a community and safety net while they’re still healthy.

Single women also can look into shared housing options, or buying homes together, to reduce costs and also create a care-giving safety net, says Catherine Collinson, chief executive of the nonprofit Transamerica Center for Retirement Studies.Co-housing communities focused on seniors recently were spotlighted in a National Building Museum exhibit in Washington D.C.

And then there’s the paperwork: Estate planning is important for everyone, but it’s especially crucial for single women to make sure that documents such as a will, a waiver that allows health information to be disclosed to a third party, and powers of attorney are in place. For those who struggle with finding a proxy, financial institutions can be hired to take on the task and act as a co-trustee.

Also important is checking the beneficiaries on accounts. For example, some pensions don’t allow for nonspousal beneficiaries—one reason that single pension holders who want that money to go to a child or someone else might want to roll the pension into an individual retirement account, for which they can name a trust as a beneficiary, Cheng says.

Our 2018 Re-Cap of the Markets

The financial markets to a large extent showed losses across stocks, bonds, and many commodities last year. Looking into the categories a bit more closely, bonds eeked out a small gains of even to 1-2  percent, including interest earned.

That was the rare bright spot, folks. Looking at stocks, 8 of the 10 S&P sectors ended in the red: Utility stocks and Health Care ended positive for the year. Commodities were mixed to down. Oil prices fell 25% last year, which was good for consumers, but bad for profits in the Energy sector.

Through nine months, the stock market looked impeccable; another year of double- digit growth looked very achievable. Then the road got rough – fast. As October unfolded, interest rates started to rise, and housing and mortgage growth slowed. China trade skirmishes didn’t help matters. Earnings growth was perceived as slowing, although very robust nearing its 10th year of an economic recovery (the longest in Post WWII times).

At the end of the day, more sellers were interested in moving money out of stocks, rather than make new commitments to buy. Suddenly, there were more reasons to be scared of stocks, and less reasons for confidence. And sentiment – what investors think and feel – are most important. You can rationalize all day, but the markets often act irrational in behavior.

The Dow Jones Industrials and Standard & Poor’s 500 Indices fell 3.5% and 4.5% respectively for 2018 including dividends, while the Nasdaq Composite lost -3.9%. Many stock fell much more, the smaller the company, the more chance of larger losses last year.

One final positive push was in store, as The Santa Claus rally surfaced, starting on Christmas eve, as the stock market (Dow) rallied a BIG 7% during the next 4 sessions to close out the old year, 2018. It’s an understatement that volatility increased dramatically in the fourth quarter.

Our favored commodity to own, Gold – fared well comparatively, as it moved just 1% lower; that’s $12 an ounce decline, to $1,279 on the year.

Where do we go from here?

First, we recommend to keep lots of cash on hand until conditions and the charts tell us it’s safer to invest and an uptrend is developing. You may miss some gains off the bottom bounce - that's starting to develop now as favorable news is reported and interest rates are backing down a bit. As the stock indexes move higher, confidence will come back, and it'll be a safer entry point.

Next, we watch the pot and don’t leave it unattended. BUY and HOLD is not in our vocabulary.
Thaks for reading and Happy New Year !

When To SELL; Technical Analysis for All

Investors: Is Your Selling Strategy in Order

Getting your selling strategy in order and formalized is probably one the facets of investing that you have the most control over. If handled properly, it will protect your money from big losses, instill confidence in yourself, and avoid much financial stress and anxiety.

Having an exit strategy is most appropriate now that the stock market is in a precarious place, having recently falling into correction territory with plus 10% losses in the popular averages.

With Thursday’s action behind us, the major equity (stock) market indices are down close to 20% from their late summer highs. That’s right on the cusp of a defined Bear Market! Note that bonds have come alive here and Gold is rising also.

Thus far in the fourth quarter, here’s the tally:

Stocks (Dow and S&P 500)  down 13% and down 15%
Bonds,  intermediate / long:  up 3.3% and up 4.5%
Gold, bullion price:  Up $72 / ounce, or up 6.1%
Cash and short term money market funds are paying 1.5% to 2% annually, so they were ahead a tad over the 3 months.

Technical Analysis - Think About the Math

Investors do not know with certainty how their stocks will perform. There are  just too many variables affecting the buy and sell decisions of millions of investors. Political, economic, company specific announcements, interest rates, etc. are all outside of our control mostly when assessing risks. These factors all swim around in a large punch bowl – we never know which sip will be the bad one for us.

BUT, what you can control to a large extent is your behavior with your investments on when to SELL. What does that look like? There’s one strategy that’ll work for us all. Perhaps your financial advisor or planner did not explain to you: STOP LOSS.

In its simple explanation, you would sell your stock when it fell a certain percent from your cost price – or the most recent HIGH price. That will lock in the gain or loss for you. Let’s look at Apple stock, a darling of Wall Street for years now, until the recent 30%+ decline. Apple stock reached $232.66 in early October (green rectangle on the chart). That’s factual and known then and now.

It does not matter what you paid for Apple stock – that is past news. You can only SELL it for what others will pay you today! So, the term STOP LOSS can either lock in a GAIN for you – if you paid less – or limit a LOSS for you – if you paid more.

I use a 7% to 8% stop price because that has shown to be a wide enough measure to weed out the short term blips of price action. So, your sale would be at near $215 using 7% or 8%. The blue line is another indicator (moving average) that I use as a confirmation signal to sell, beyond the discussion today).

See the green circle where the price was very erratic? If you were busy and could not sell, you should have SOLD in the $200-205 range as a final trigger pull. A $200 sale would be a 14% loss, which is still manageable and acceptable in fast moving conditions. 

 

You NEVER want to be in a position to give up a 30% or 40% decline in a stock you own, and could have mitigated that decline greatly!

Apple’s down $75 a share or 33% from its high; that means it needs a 49% gain to get back to $232! Likely soon?  A 15% loss needs just a 18% gain to get back to even-steven.

Caveat: Not every stock you own will show the same pattern or clarity that Apple has shown us. But in the end analysis, TECHNICAL ANALYSIS and STOP LOSS selling can provide you with a better batting average with your portfolio of stocks.

Browse on over to a popular financial site like: FINANCE.YAHOO.com, or your brokerages site and plug in the ticker symbol and view your chart to go through this exercise with your stock holdings.
 

E-mail or call with any questions, and have a Merry Christmas and safe Holiday ahead.

I’ll recap 2018 in my next post in January.

🎄🎄🎄
 

Sure enough, we’ve enjoyed a nice robust rally for close to 10 years now, and if you have been fortunate to own assets like stocks or mutual funds, you are no doubt happy campers.