Stock Market Commentary
For the week of July 7, 2008
With the markets closed Friday in observance of Independence Day, Wall Street ended the shortened week with mixed economic indicators. The Labor Department reported unemployment rates unchanged for May at 5.5 percent, and the loss of 62,000 jobs in June was in line with analysts’ forecasts. The Institute for Supply Management reported a drop in service sector activity for May. Oil and the credit crisis continue to hold the markets’ attention. The Dow dropped 1.41 percent to finish the week at 11,288.54. The S&P fell 1.55 percent to end the week at 1,262.90, and the NASDAQ lost 3.27 percent to close the week at 2,245.38.
Better Mileage – In response to high gas prices, the IRS has increased the optional standard mileage rates for the second half of 2008. Taxpayers may use the optional standard rates to calculate deductible costs of using an automobile for business, charitable, medical or moving purposes. The business-use rate for the first half of 2008 is 50.5 cents per mile. The rate from July 1, 2008, to Dec. 31, 2008, is 58.5 cents. The new mileage rate for medical and moving purposes is 27 cents per mile for the second half of the year, an increase from 19 cents for the first half. The charitable use rate remains 14 cents for the entire year.
More Millions – The ranks of the world’s millionaires passed 10 million for the first time last year. A study by Merrill Lynch and Capgemini Group found the world’s millionaires had a combined wealth of nearly $41 trillion in 2007, up 9 percent from the year prior. That averages to $4 million per person, a record. About 25 percent of millionaires live in the U.S., but India, China and Brazil have the fastest growing millionaire ranks. The 10 million millionaires represent less than one-fifth of 1 percent of the 6.7 billion people on the planet.
Mostly Big Ups – The S&P 500 has experienced a total return gain or loss of at least 20 percent in 32 of the past 75 calendar years (i.e., over the period 1933-2007). Twenty-nine of the 32 calendar years that experienced a 20 percent movement in a single year were gains, and only three years suffered through 20 percent or greater losses. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market (Source: BTN Research).
Just Being Careful – Fifty-seven percent of American retirees are living on their defined benefit pension distributions and their monthly social security benefit checks and are not currently spending any income that is generated from their pre-tax retirement assets, e.g., income produced from assets in an IRA (Source: Nationwide Retirement Income Confidence Survey).
WEEKLY FOCUS – Lessons from Bill Gates’ Retirement – Part 2
Last week we looked at Bill Gates’ retirement from Microsoft on June 27 and its lesson on the importance of clear succession planning for business owners or leaders. This week, we look at the psychological impact of leaving behind a career that possibly defined you more than other aspects of your life.
According to psychologist Dr. Ginger Blume, “Many preretirement workers are not actively preparing for the emotional upheaval that can be associated with a shift to retirement. Studies have shown that only about 20 percent of employees realistically address the fact that their work life is nearing an end.”
Many retirees underestimate the degree to which they attach their sense of identity to their career. “If I’m no longer a doctor (lawyer, accountant, business owner, school teacher) – what am I? Who am I?” Unlike Gates, who will remain involved in Microsoft as a shareholder and non-executive chairman, many retirees do not have the opportunity to remain involved in the business that so defined them. And, as Microsoft co-founder Paul Allen said upon Gates’ retirement, “You don’t always realize how dramatic that transition is going to be when people aren’t depending on your decisions day by day.”
Retirement may also mean leaving behind the social network and support system that the workplace can provide. We often do not realize how much we rely upon the camaraderie of our coworkers until it is no longer part of our daily lives. And attempts to maintain those relationships can become awkward and fade over time.
Today’s retirement means more than a sizable nest egg and the absence of deadlines. Mental and emotional preparation can mean a smoother transition to retirement and more enjoyment of your retirement years. We have helped many of our clients with a holistic retirement approach that considers more than finances. Call our office for assistance in starting or continuing your preparations for a happy retirement.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S.stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. WMCSAI# 282339