U.S. stocks closed mixed on Friday but improved throughout the session, pushing the Dow Jones to a record close. Amazon shares fell 4.3% after the quarterly earnings report. The major indexes posted a mixed weekly performance, with the S&P ending slightly lower while the Dow was up 1%. For the year, tech has been the best performing sector – up close to 22%.
S&P 500: 2,472 (-.004%)
FTSE All-World ex-US: (+0.4%)
US 10 Year Treasury Yield: 2.29% (+.02%)
Gold: $1,275 (+1.6%)
EUR/USD: $1.17 (+.002%)
- Monday – KKR to buy WebMD in $2.8 billion deal
- Tuesday – McDonald’s posted biggest jump in global sales in 5 years
- Wednesday –Amazon market cap tops half a trillion
- Thursday – Apollo raises $24.6 billion for largest private equity fund ever
- Friday – Starbucks fell 7.5 percent after quarterly report
While we are all trying to enjoy this summer, it’s important to take a step back and think about what little steps you’re taking at your age to better align your long term goals for retirement. In that spirit, here are a few things that you should have set up or in place to address based on your age:
Start contributing to your 401k. The sooner you start contributing to your 401k the more you’ll get to benefit from the power of tax free or deferred compounding. Many companies will have matching and if you are not contributing, you are missing out on free money.
Pay down non-mortgage debt. This is the time to start paying down credit card debt and student loans so you’ll enter your forties with better positioning to start building your nest egg. Make sure you have a sufficient emergency fund balance (usually six months of expenses). Consider insurance if you have started a family as well as setting up wills and estate planning documents.
This is the decade to beef up your savings and really start defining your long-term goals. Balancing retirement, college and personal or family goals. Are you on track to pay for college goals, have you revisit insurance coverage? Are your 401k contributions maxed out?
You are now eligible to make larger contributions towards retirement accounts. Take advantage of the catch up provisions. If you have children, start to set priorities and expectations on how you plan to help them after college and through adulthood. Reassess how close and when you want to retire. Are the wills and estate planning documents up to date?
You should have a better idea of what retirement could look like for you and what it really means for you to be “retired”. Do you want to keep working as long as you can? Would you like to slow down? What are your Social Security benefits and when is the optimal age to start taking them? At 65, make sure you visit and understand Medicare whether you intend to use it or not. Optimize your investment accounts so you are as tax efficient as possible.
Your 70s and beyond:
Grandchildren could be a big part of starting to think about legacy and family planning. Any philanthropic goals or organization that you care about? Required Minimum Distributions (RMDs) will be a factor whether you are still working or not.
Amin Dabit, CFP®
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