How Your Savings Will React in The 2019 Market Environment

If you’re a retiree and depend on your savings to get your through your retirement years or if you have a 401K and are preparing for your upcoming retirement, you may be interested in what several financial advisors have to say about our current year in the stock market.

Many advisors are predicting that 2019 will be the year of the next recession. How do they know this? In past years, when the unemployment rate equaled the rate of inflation, a recession was imminent. Right now, according to Jeff Kleintop from Charles Schwab, the unemployment rate and inflation rate are only 1% apart. That’s not good!

jeff

Whether you are invested in the stock market or not, how the Dow Jones gyrates still affects you. Right now, Kleintop states Wall Street is headed towards a bear market. He’s not optimistic at all.

OK, so what if Kleintop is accurate? What’s a retiree currently living on savings or a nearly retiree to do?

1. Start trimming volatile holdings out of your portfolio.

2. Trim your stock holdings and switch into more bonds, such as treasuries.

3. Trim emerging markets out of all your holdings.

For more insight and information on this topic, here’s the interview with Jeff Kleintop along with his advice:

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15 comments

  1. When was this Fox interview? The market is having it’s best January in 30 years! There are so many mixed predictions and different strategies being pushed right now. I will elaborate more my strategy after I finish getting more prepared for Storm Harper that’s suppose to arrive around six here. Lara

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    • It was right before January 2019. Just watch the unemployment numbers and the rate of inflation. If and when the two are equal, the end result will be a recession. Easy enough.

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  2. I think if “you” are a sit and wait person, the market is not for “you”. The only time we lost big was in the dot com- mostly because we could not get our money out fast enough because of their rules. We liquidated mutual funds and never looked back. Over all I agree that most people should be very trim in the market right now.

    We have “played” the market for thirty years. It is one of our six legs of retirement-no debt, pensions, SS, bonds, savings and market. I am a long haul on some strong American companies. They do business in the midwest and are strong on US interests. Yup, I invest in the US. We take profits off the table and plow back in. Last year we made about 15% on our stocks- coming up with our present (pulled back) position in November. We are both hawks- listening to all of the reports, even the tone of voice of the CEO/CFO. We have become ultra cautious, not because we fear recession, but because we saw what computers can do in the last three months!

    My prediction is that the federal government will either take over the market or tighten the controls in two to five years. If they don’t it will collapse under the machines. We who are clear of debt and have a good cash savings will fare OK.It will be much more then a recession though…..when it happens. Yup, doom and gloom for sure. The 10% that we lose in the market will be the easy part.

    In the meantime, I am packing for traveling this year. Trump keeps the world pretty settled. I figure it is our last year to move around easily before the election cycle begins and people become even more crazy!

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    • Hi Janette. You have some very clear and good advice here. You’re right about one more year of calm before the next election. Enjoy and travel well. Thanks for sharing.

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  3. Hello again, I have a few more things besides all the ones Janette mentioned that I count as legs in my financial stool REITs and my home since neither of my children will move back to where I live now. But Probably the two biggest reason I have been successful in retirement is I have always lived below my means so thus have been a lifetime saver and secondly I am now content with my life and willing to look at everyday as a possibility to seek new opportunities to add positively to my life. 2018 had a lot of expensive repairs and tornado da age but I just took care of these problems and moved on, Financially we have some great opportunities to increase our passive income from the paltry interest rates conservative savers have had for over ten years and with the new tax brackets pay less of it to the government. I am still designing a better financial plan to take advantage of Roth conversions for the next five years to lower my RMDs and overall total taxation on my tax deferred money. As a widow My suggestion to those married do it when you have the higher income limits for the different tax brackets and start the tax free passive income stream of a Roth sooner rather then waiting to 70 1/2.. In the two years of The new tax structure I did both Roth Conversions when the markets were down January 2, 2019 the 2019 one and chose the highest yielding dividend stocks and REITs to now have all my future taxes covered including property tax with the dividends and distribution. So the next four years of Roth conversions will create income for other items on my bucket list. The beauty of the plan is investing in dividend stocks that pay higher then my personal inflation rate so I will be ahead of the increase of my cost of living. Sincerely, Lara

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    • Lara, I don’t know what living below ones means, means anymore! If I don’t buy or do anything that I can’t afford, I think I am living AT my means and within my needs? I certainly am not going without anything. I just buy and do what I can afford. So, whatever that is, that’s what I’m doing.
      I only got ROTH IRA’s throughout the years. I never went for the traditional. And YES!!!! with the new interest levels and lower tax rates, I’m finally feeling good about my investment choices. Boy, oh boy does that feel good! And perfect timing IMHO. They are certainly coming in handy now.
      I always made savings a part of my expense lines. In fact, saving was #1. I have always had either some money stashed away for a rainy day or something at least to sell for some quick cash.

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  4. The Roth IRA was created by the TaxRelief Act in 1997 and the 401k and traditional IRA was establish with ERISA in 1974 the year I got married. We contributed to our first IRA in 1978 having prioritize saving a down payment for a house and 100% funding and finishing our college degrees first. My DH company offered the 401k in 1981 and we switch into this because of the company match. They continue through his career to improve that match and so it made no sense in 1997 to lose 100% company stock match on 6% of his salary to use the Roth instead. We already had been contributing since 1971 to a contributory pension too. I retired in Jan 1998 at age 45 to help my aging parents 500 miles away. This continued till 2008.
    The math in 1998 showed for us tax deferred plans were the better choice.
    I had A light bulb moment when I realized collecting my widow pension at age 60 I could pay the taxes due on the Roth IRA Conversions And eventually the RMDs by just returning government money back from this and keeping the contributions and 48 years of growth. Roth conversions now allow a define tax payment out of my Social Security portion and 100% of the money converted-gets to grow tax free from the first day of the conversions.
    Timing the conversions when the markets are low adds more possibilities of capital growth in the tax free Roth along with high dividends also tax free. I take the tax payment from the government payments so far but adding in two years of larger Roth conversions with the lower tax brackets The dividends in The Roth now are equilvalent to my total taxes if I need to withdraw it.
    I remember you said You had to cash out Nick’s 401k funds in another comment response. It would have been nice for you to have that income stream now. Lara

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    • Yeah, we needed that 401k money when the company he was working for went under. At that time nick remained unemployed for 2.5 years. Ugh.
      Good news is nick gets a pension from his years at Disney with survivor benefits for me. So it all worked out. That money pays 6 bills per month!!
      I know we can’t go backward but I wish I was as smart then as I am now. Oh well. Live and learn.
      Thanks so much for all your comments. I appreciate them so much!!

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  5. I Personally in retirement define means as All your money sources for the year that you have including pension, social security, garage sales, hobby income, rewards, passive income. Earned, investment, interest, rents, side hustles.
    Then subtract all spending that was done-necessities and discretionary, rewards used, outstanding credit or loan balances that were created in the year, taxes owed.
    If the total is positive you are living below your means if it’s zero at your means, and negative above your means. Lara

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    • Thanks Lara for that explanation. Then we are living just slightly below our means. I always have something left over. I don’t spend every single penny. Thank goodness!!

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