Women Feel Less Prepared For Retirement

Building your wealth and saving for retirement is such a prudent part of your life and career. Many individuals often times overlook the importance of starting early and learning ways to maximize their savings. While both men and women show a lack of financial literacy as it relates to their finances,  we saw some research from the TIAA Institute that found that “women have 30% less retirement savings than men”, as well as research from AARP that found “that a quarter of women nearing retirement age don’t feel confident they’ll have enough money to support themselves”. We find this statistic shocking and a wake up call for employers and individuals to help spread and teach financial literacy to their employees. In fact, further research from the TIAA Institute Personal Finance Index found that “women have lower rates of financial literacy than men, which makes them more ‘financially fragile’. Individuals who are financially illiterate have great trouble making sound financial decisions that ultimately may lead to them derailing their financial plan and harming their financial future.

So, now that we know financial literacy is lacking in many women across the globe, what are some retirement tips and facts they should know? Well first and foremost, for those who may not know, a 401(K) is a retirement vehicle often available within your workplace that allows you to save a portion of your paycheck towards your retirement savings. It is a great way to set aside money each month and build your wealth. Starting early and often is something that we always share with prospects and clients, as time in the market is more beneficial than trying to time the market, as you can take advantage of letting your money compound for the long haul. Next, it’s important to analyze your risk tolerance. Given the extreme market volatility we’ve seen since the beginning of the year, we’ve noticed that many individuals are actually inaccurately allocated in their investments, which can cause anxiety for folks. If you are interested in learning what your risk tolerance is, email us at info@shermanwealth.com to take our customized risk tolerance questionnaire. 

Some more about workplace 401(k)s, many companies offer a company match up to a certain percentage, which is essentially free money to take advantage of from your employer. Check out our blog for more information on why company matches are so crucial to take advantage of. Another great tip when it comes to your 401(K) and retirement savings is setting up automatic contributions. This way you are able to set aside the same amount of money per month, having it become automatic and consistent in nature. In conclusion, educating yourself on your workplace benefits, becoming financially literate about financial topics, and starting early on your retirement savings are all great ways to advance your financial future. If you have questions about your workplace benefits or how to maximize your retirement savings, email us at info@shermanwealth.com and we are happy to help. 

 

Do You Know What Interest Rates You Are Paying On Your Credit Cards?

As inflation continues to rise and be top of mind for the average household, we want to continue discussing how it is affecting our daily life and how to navigate this adjustment. Prices of nearly everything have been skyrocketing over the last few months, and a recent CPI report announced a 8.5% year over year increase in March. This is the highest inflation levels have been in four decades, so it’s certainly making an impact on the wallets of individuals. In fact, according to Moody’s Analytics analysis, inflation is costing the average American household an additional $327 per month. 

So, as Americans face new and higher costs that impact their monthly and yearly budget, it is likely many will begin to cut back on their typical spending habits. The following tweet from Liz Ann Sonders shows that ~84% of Americans are expecting to slash their spending to account for inflation. How will you be adjusting your budget this spring and what strategies are you going to impose on your current spending habits to adjust to the higher cost of living? Maybe you’ll curb some travel and dine out less? Or, maybe you’ll cut back on “extras” that you might typically enjoy? If you are already changing some aspects of your spending, you are certainly not alone.

While we are discussing the strains inflation is inflicting on the households of many, we want to touch on another interesting tweet we saw  – this one about credit card rates. Do you know what the current rates are on your credit cards and lines of credit? So many individuals are carrying credit card debt and do not make it their number one priority to pay it down. As you can see in the tweet below, the average credit card rate rose to a 2-year high of 16.43%, and is only going to rise more as the Fed plans to continually hike rates in order to combat inflation.

If you are carrying credit card debt, make sure you are aware of the interest rates each of these debts incur. You should be attempting to pay your debt with the highest interest rates down first so that you aren’t continuing to pay an excess amount in interest each month.

With rates only continuing to rise, you should start thinking more about the interest rates you are currently tied to and your finances as a whole. If you happen to carry a balance or want to protect against future rate increases if you have an unforeseen big purchase, take advantage of those 0% interest rate credit cards offers if you can. However, only spend what you can afford within your budget. Setting up a plan to pay off your debts in a timely manner will be extremely advantageous to you and your finances in the long run. If you would like to discuss budgeting strategies or have questions about your interest rates, email us at info@shermanwealth.com or schedule a complimentary intro call here. 

Preparing For Your Student Loan Re-Payments To Resume

If you have been taking advantage of the COVID-19 Emergency Relief and federal student loan forbearance program the last two years, you should know that the student loan forbearance is scheduled to stop at the end of this month, on August 31, 2022. This payment pause included a suspension of loan payments, a 0% interest rate, and a stopped collection on defaulted loans since the COVID-19 pandemic.

While it is still unclear whether the Biden Administration will extend this student loan forbearance program, it is a good time to start preparing to make payments again next month. So, you may be asking yourself, “How do I prepare for repayment to resume?” Well, first and foremost, login to your profile on your loan servicer’s website to ensure all your information, including email, phone number, and address is up to date, since you may have not taken a look at it in a year or two. Next, for those of you wondering what your new payment will look like, it’s a good idea to reach out to your loan servicer to get an estimation. 

Once you receive some clarity on what your new payment will look like, you may want to revisit your budget to see how this additional payment will fit in. Make sure you are projecting your budget for the rest of the year and beyond to include this payment whether there is another extension or not. We will continue to monitor updates on the forbearance and how you should be preparing for the re-payments to resume. 

As we’ve been discussing, we are over halfway through the year which marks a great time to check-in and adjust your financial plan in general. Call or reach out to your student loan servicer with more particular questions as you look into your situation. Additionally, if you have further questions on your student loans and how to adjust your budget, please email us at info@shermanwealth.com or schedule a complimentary call here as we are here and happy to help you talk and work through it.

The Month Of July In The Markets

Happy August everybody-crazy summer is almost over! As we head into the last month of summer, we want to take a moment to review what a month July was in the markets. As you can see in the chart below, we had a good start after July 4th, then came down and rocketed higher. On the week of July 15, after we had the CPI inflation data announced hotter than expected at 9.1%, the markets fell for two days following that news, but since then we’re pretty much up in a straight line from there with the NASDAQ leading the way at 11.35% to mark its best month in two years. We also saw the S&P500 hitting almost 8% and the Dow at 5.6%.

A lot of folks, of course, are calling this a bear market rally or some type of relief rally. Even with July’s strong numbers we are still down significantly year to date marking the worst first six months of the year since the 1970s. 


So will we see the rally continue into August? Or is this just a bear market rally? We will find out soon. A lot of what we found has been tied to interest rates. We see from this chart, mortgage rates completely rolling down to 5.3% as of last week, and the chart as high as 5.8%. Housing is obviously a huge part of the US economy, so many folks are worried about how this will impact their housing agendas, but we will continue to track it for you. 

Additionally, we saw Treasury yields slip and as you can see from here, the yield curve is inverted. Remember that means that short term rates are higher than long term rates. So you see the 10-Year Treasury rate down to 2.6% fallen from a high of 3.5% in the middle of June when the market was really at its lows, so a real massive rally in both bond price and market price with almost a 100 basis point drop there from 3.5% to 2.6%. 

So if you are in the market for a home, talk with your lender, see if you can get a lower rate. Of course, we’re also seeing people still in 0% interest rates on their FDIC insured savings at money center bank still earning zero, while we’re seeing high yield savings in the mid-1% range. And if you want to tie up the money for a bit longer, CDs are in the 2% to 3% range.

 

Next we want to talk about what we discussed in June, consumer sentiment, which is still close to all time lows, even though we saw a very, very slight uptick in the last reading. However, we want to hear from you- What are you feeling about the talks of a recession and such high inflation?  We’ve heard that the Federal Reserve will be hiking rates once again in their next meeting in September and probably in October. What are you doing differently in this type of environment? Where did your consumer sentiment fall in July? Let us know at info@shermanwealth.com. 

Financial Tips As Recession Talks Loom

It’s certainly been quite a year, with the stock market having its worst first half of the year since 1970. As we’ve been weathering this extreme market volatility and watching the Federal Reserve hike interest rates to combat hot inflation, many believe a recession is near if not already here in some sense. With talks of a recession being thrown around, many are worried about what that might look like for them and ways that they can prepare. So, let’s take a look at some ways you can prepare and stay on top of your finances in the case of a recession. 

First and foremost, recession or not, establishing a financial plan should be your priority. Despite what the future holds, all the economic change in the fast few months should be an indicator of the importance of a financial roadmap and financial organization. If you already have a financial plan, now is a great time to revisit it to ensure your plan is equipped to weather not only the good times, but the bad as well. 

Next, think about adjusting your budget. We’ve been talking about this a lot, but with record-high inflation numbers and the Federal Reserve rising rates, many individuals are feeling the impacts of rising prices in their day to day. If you are feeling it too, you might want to think about cutting out old unused subscriptions or just accounting for inflation within your budget to ensure your cash flows align. 

Another tip when anticipating a recession is funding your emergency bucket. Your emergency fund is a crucial safety net to have, especially during uncertain and unprecedented times. Make sure you are comfortable with the value within your emergency fund in case you need to utilize those funds. Today, jobless claims hit its highest level since January coupled with surging layoffs, so update your resume and always protect yourself in the event of layoffs. 

In this rising-interest rate environment, we want to touch on variable interest rate debt and paying off your loans. If you are in the position to, think about paying off your debt, especially ones with variable interest rates, that could continue to increase with the Federal Reserve rate hikes. 

Most importantly, remember the importance of sticking to your long-term plan and try not to get too spooked by the markets. We know market volatility can be stressful, but it’s prudent not to derail years of your time in the market. Re-visit your asset allocation and ensure you are properly invested in the market. If you are having trouble sleeping at night because of your portfolio, you may be allocated incorrectly in correlation to your risk tolerance, so think about reassessing that as well. While these are only a few points to think about, if you have any questions about your personal financial situation or would like to establish a financial plan, we are here to help. Email us at info@shermanwealth.com or schedule a complimentary intro call here.