Perhaps it should come as no surprise that U.S. stocks managed to post modest gains in a week when the Federal Reserve Board announced an immediate increase in short-term interest rates with a promise of more hikes to come later this year. The expected reaction in the face of higher interest rates is to sell stocks and buy bonds. True, investors added to their bond holdings last week, but also showed strong interest in dividend-paying stocks, particularly utilities and real estate. Wall Street observers thought the reason for this conundrum was relief that the Fed suggested that the move toward higher interest rates will be accomplished very gradually, thus averting a stampede out of stocks. Foreign stocks enjoyed a very strong week, advancing over 2%.
This will be a relatively quiet week for economic data, but fireworks may be set off in the nation’s capital with congressional hearings on Supreme Court nominee Gorsuch and on alleged Russian tampering with the U.S. election, not to mention the ongoing rumblings over proposed health care changes.
Whether you’re 24 or 64, here are four matters to keep in mind as you plan for retirement, or for that matter, if you’re already retired.
1st – make sure your investments are well-diversified so that you can earn attractive lifelong returns despite the occasional bumps in the road.
2nd – make the most of your home. Paying off the mortgage by the time you retire can be enormously beneficial to your retirement prospects. Also, consider the possibility of eventually downsizing your domicile to free up money for retirement purposes.
3rd – prepare an estimate of your retirement budget. You may be able to retire on a lot less money than you have been led to believe. But don’t forget to include the inevitable “budget busters” in your budget, like car replacement, home maintenance, and the dreaded major dental bills.
4th - decide where and when you want to retire. Retiring to a less expensive locale can work wonders on your budget. Delaying retirement can have a very positive impact on your retirement lifestyle as well. For example, delaying retirement by just three years can increase your lifetime retirement income by 25%.
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