It’s your money. You work hard and I’m not here to tell you how to spend it. But I am here to suggest some small changes that could, over time, increase your savings by tens, even hundreds of thousands of dollars. These are things you may not have thought much about because they seem so minor. Yet they could dramatically improve your ability to fund your kids’ college education, as well as the quality of your lifestyle in retirement. Read more
Posts tagged ‘Executive Insights’
I love everything about the Olympics, in particular what it showcases – sportsmanship, patriotism, and uncompromising dedication.
I can’t help being inspired by the countless examples of focus, endurance and strength. To me, the Olympics stretch the boundaries of what is possible. There is real human emotion, with the margin of victory often measured in hundredths of a second. Many of the athletes prepare for the better part of their lifetime for events that last just minutes, or less. Read more
In the past 40 years, the U.S. economy has seen five different recessions. In most of those recessions, we lost about 2 percent of our workforce (including 2001). It then took about 2-3 years for the subsequent economic growth to regrow those jobs back to the pre-recession level. With the 2001 recession, it actually took about 3.5 years to regrow the jobs. Then, the 2008 economic disaster came along — we lost 8 million jobs (6 percent of the workforce) and we are not yet back to the number of pre-recession jobs (we’re now at 60 months and counting). So, broadly, what we’re seeing is that, when recessions occur, the job losses come more quickly. They are sharper (i.e. we see deeper job cuts), and it takes longer for the U.S. economy to grow enough to get back to pre-recession levels. Read more
$2.4 trillion. That’s what U.S. households spent on credit cards in 2012 – more than 10 times the amount employees contributed to 401(k)s and other private defined contribution retirement (DC) plans. While some of that spend was clearly for necessities, more than 100 million flat screen televisions shipped to the United States between 2010 and 2012. Seems that in the battle to build nest eggs, purchases like big screen TV’s often edge out savings. Read more
On Wednesday, the Federal Reserve recognized the fundamental improvements in the U.S. economy and announced that, in January, it would begin paring back its bond-buying program by US$10 billion per month. This is the “taper” that everyone’s been talking about. The Fed had their first window at tapering back in September, when just the suggestion that tapering was a possibility was enough to send markets shuddering. The Fed’s communication machinery seems to have been more “well-oiled” this time around because both the Dow and the S&P 500 ended Wednesday at record highs. This means that markets are seeing the taper for what it is, a sign that the U.S. economy is on a path of stable growth.
The possible cause of concern is that the market panics if economic data in early 2014 isn’t as rosy as it has been in recent months. With the taper now official, it’s important to understand that tapering isn’t an inevitable one-way street. The Fed has reserved the right to slow, halt, or reverse the taper if economic conditions warrant. Read more
When the sun rises on December 19th, I believe there’s an even chance that the Federal Reserve will have announced that they’ll begin tapering their bond-buying program that began in September 2012. I’d put 50/50 odds on an announcement of tapering their US$85 billion per month program of quantitative easing, and there are several fundamental reasons that back up my beliefs.
The potential federal budget deal that arose late in the day on Tuesday, December 10 between House and Senate negotiators is the most recent, albeit least important, piece of evidence paving the way for a December taper. Read more
“An object at rest or in uniform motion will remain in that state unless an external force acts upon it.”
Newton’s First Law of Motion, 1687, translated from Latin
Isaac Newton was experimenting with inanimate objects when he discovered the laws of motion. But we in the retirement industry know only too well that these laws also apply to human nature. In an age when it is up to employees to take action in order to build retirement security, inertia has been a major impediment.
Fortunately, the leading behavioral economists of our time are showing us how to harness the power of inertia to work for retirement savers instead of against them. Read more