After breaking records earlier in the week, stocks dropped Friday and posted weekly losses. Contributing factors included growing tension in the Middle East, mixed corporate earnings reports, unsettled trade talks between China and the U.S. and concern over the Federal Reserve’s next move. For the week, the Dow fell 0.61 percent to close at 27,154.20. The S&P lost 1.21 percent to finish at 2,976.61, and the NASDAQ dropped 1.18 percent to end the week at 8,146.49.
Returns Through 7/19/19
Dow Jones Industrials (TR)
NASDAQ Composite (PR)
S&P 500 (TR)
Barclays US Agg Bond (TR)
MSCI EAFE (TR)
Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.
The Very Richest — The top 1 percent of wage earners in the U.S. reported at least $480,804 of pretax income in 2016 and owned an estimated 29 percent of the total wealth in the country (source: Survey of Consumer Finances, BTN Research).
Going, Going, Gone — 7,037 American retail stores have closed YTD through June 30, 2019, already exceeding the 5,864 closures that occurred during all of calendar year 2018. This year’s store closures are on pace to exceed the all-time record of 8,139 from 2017 (source: Coresight Research, BTN Research).
From Lowest to Now — The yield on the 10-year Treasury note closed at 1.36 percent on July 8, 2016, its lowest closing yield ever. 10-year notes have been traded in the U.S. since 1790. The yield on the 10-year note closed Friday, July 5, 2019, at 2.04 percent (source: Treasury Department, BTN Research).
WEEKLY FOCUS – The Importance of a Good Withdrawal Plan
So, you’ve developed a financial plan for your future. You know how you’re going to accumulate the savings and investments needed to provide a comfortable retirement. But do you have a plan for withdrawing savings during retirement? If you don’t create a well-thought out plan for accessing funds from your accounts, you could lose savings to taxes or even run out of money.
Here are some things to keep in mind when developing your budget and withdrawal plan.
Budget for your future lifestyle. Your budget is a good place to begin in determining your monthly retirement withdrawals. Will you continue your current financial lifestyle? Adopt a more conservative approach? Or do you have goals that will require a higher budget? In addition to living expenses, include travel, entertainment and the possibility of life-changing events like marriage or health issues.
Know how taxes will affect your assets. Having assets in accounts that vary in terms of their tax treatment could be wise. Your assets likely fall into tax-deferred, taxable or tax-free categories. Knowing how your savings will be taxed is important when developing your withdrawal plan. For example, depending upon your circumstances and goals, it might be best to use the profits from taxable investment accounts first and later look to your tax-deferred accounts, such as a traditional IRA or 401(k). Most experts agree Roth IRAs should be the last account to tap, giving them as much time as possible to grow tax-free.
Know your required minimum distributions (RMDs). When you reach 70½, certain types of accounts require you begin withdrawing savings. If you don’t, the tax penalty could be as high as 50 percent of the required distribution. The rules for RMDs can be confusing. Your financial professional can help you understand them and avoid fees.
Just as it’s never too early to start saving for retirement, it’s never too soon to think about how you’ll withdraw from those savings in retirement. There are many approaches to withdrawal plans, but the best plan is based on your future goals and the kind of investment accounts you have. Call our office today. We can help you create a well-thought out withdrawal plan designed to provide peace of mind, protect your retirement assets and reduce your tax burden. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.