For the week of July 6, 2009
The Labor Department’s monthly job report brought the markets lower on Thursday. The U.S. economy
lost 467,000 jobs in June, about 100,000 more than expected, taking the unemployment rate up to 9.5
percent. Markets were closed Friday in observance of Independence Day. The New York Stock
Exchange extended trading hours from 4 p.m. EDT to 4:15 EDT to accommodate orders affected by
connectivity issues on the trading floor earlier in the day. For the week, the Dow fell 1.85 percent to
8.280.74, the S&P dropped 2.42 percent to end the week at 896.42, and the NASDAQ lost 2.27 percent
to close the week at 1,796.52.
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 S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.
Ten Percent Or More – The S&P 500 stock index has produced positive double-digit calendar year
performances on a total return basis 58 percent of the time over the past half-century (i.e., 1959-2008)
but only three of the past nine years (2000-08) have generated total return gains of at least 10 percent
(Source: BTN Research).
Take It Back – If the 10 U.S. banks that received permission from the Treasury Department on June 9 to
repay their TARP funds actually do repay the $68 billion they have received, that would bring the total
amount repaid back to Uncle Sam to $70 billion, representing 35 percent of all TARP funds paid out to
more than 600 banks nationwide (Source: Treasury Department, BTN Research).
Don’t Be Late – The 2000-02 bear market bottomed on Oct. 9, 2002. The S&P 500 gained 101 percent
(not counting the impact of reinvested dividends) over the next five years after that Oct. 9, 2002, low
close. The S&P 500 gained 62 percent over the five years beginning Nov. 9, 2002 (i.e., one month after
the bear market ended). The S&P 500 gained 52 percent over the five years beginning Jan. 9, 2003 (i.e.,
three months after the bear market ended). 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).
Changes On The Horizon – Regulatory oversight changes proposed by President Obama on June 17
may lead to the elimination of the Office of Thrift Supervision (OTS), an agency of the Treasury
Department that was established in 1989 as a result of the nation’s savings and loan crisis. The OTS has
been the primary regulator of federal savings associations, aka thrifts (Source: Office of Thrift
Supervision, BTN Research).
WEEKLY FOCUS – Spending Your Retirement Savings Wisely
After pop icon Michael Jackson’s death on June 25 at
age 50, the Associated Press reported that, despite a
career spanning four decades and more than 61 million
albums sold in the U.S. alone, the singer left the stage
with $400 million in debt. After several years as a
veritable recluse, Jackson was just two weeks away
from the first of 50 concerts at London’s O2 Arena.
By all appearances, Jackson should have been able to
retire years ago and live well off his residuals and
assets, including the copyright to the John Lennon/
Paul McCartney song catalog. Instead, he faced years
of legal proceedings, during which one forensic
accountant testified Jackson spent $20 million to
$30 million per year in excess of what he earned. Last year, he faced foreclosure on his 2,500-acre
Neverland ranch, purchase in 1988 for $14.6 million.
Jackson’s not the only Baby Boomer to resist living within his means. A 2006 survey by financial services
consulting firm McKinsey & Co. found that 40 percent of retirees admitted to underestimating their
retirement expenses. A Wachovia Retirement Survey report from last year found 28 percent of retirees
withdrawing 10 percent or more of their retirement nest egg annually, while just under 40 percent were
withdrawing 5 percent or less. About half said they have a written strategy for withdrawing savings, and
only 28 percent had a written budget for spending those withdrawals.
And unfortunately, many retirees who underestimate expenses and overspend find themselves in
Jackson’s situation – needing to leave retirement and return to work. A 2005 Putnam study found that of
the seven million retirees who returned to work 18 months later, a third were forced to do so out of
Having a plan for how you will withdraw your retirement savings and spend it is just as important, if not
more so, than your plan for accumulating those savings. With today’s life expectancies, your retirement
assets may need to last 20 to 30 years or longer. Call our office for help in creating or updating your plan
for turning retirement savings into your retirement paycheck and budgeting how you spend it.
* 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. Written by Securities America. SAI# 298761
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