Mid-May Update

Unemployment At 50 Year Low:  Economy

The labor market is as strong as it’s been in 50 years. The US economy added 263,000 jobs in April which marked the 103rd straight month of gains. Unemployment fell to 3.6%. The last time unemployment was that low, 350,000 rock and roll fans were attending a festival called Woodstock. Unemployment has also fallen for those who have historically struggled, including those with lower levels of education.

But a question remains: can enough workers be drawn into the market to sustain the current 10 years expansion? At some point it will contract, only to be followed by another expansion.

Source: The Wall Street Journal


Rates Remain Stable:  Fixed Income Update

Rates stabilized in April as the Fed consoled markets with a hold-and-wait stance as it announced no change in short-term rates.

The rate for a conforming 30-year mortgage fell to 4.14% in April, down from 4.55% in April of 2018, which may bode well for the housing market heading into the summer selling season. The difference in rates from a year ago is equal to a mortgage payment reduction of roughly $75 per month on a $307,700 30-year mortgage, which is the average sales price for a home nationwide as of this past month.

Sources: U.S. Treasury, Federal Reserve, Bloomberg

Mid-May Update

Social Security Falls Short On Projections:  Retirement Planning

The establishment of Social Security occurred on August 14, 1935, when President Roosevelt signed the Social Security Act into law. Since then, Social Security has provided millions of Americans with benefit payments. In 1940, the life expectancy of a 65-year old was 14 years, today it’s about 20 years. By 2036 there will be almost twice as many older Americans eligible for benefits as today, from 41.9 million to 78.1 million.

Social Security costs will exceed its income in 2020 for the first time since 1982, forcing the program to dip into its trust fund, which is currently just under $3 trillion. Social Security is funded by two trust funds, one for retiree benefits and another for disability benefits. Disability applications have actually been declining since 2010, with a decreasing number of workers receiving disability benefits since 2014.

The latest annual report issued by the trustees of Social Security and Medicare revealed that by 2034, the program’s trust fund will be depleted. Depletion means that Social Security recipients will no longer be receiving full scheduled benefits. Recipients would receive about three-quarters of their scheduled benefits after 2034. Congress can eventually act to fortify the program’s finances, but it may be years before it actually takes effect and funds.

Incorporating these pending reductions in Government benefits into your retirement income projection – will offer you a more realistic picture of where you stand.

Source: https://www.ssa.gov/oact/TR/2019/index.html