THE WEEK ON WALL STREET
Stocks fell for the second consecutive week as a round of fresh economic data stoked inflationary fears among investors. The S&P 500 Index declined 1.94 percent, while the Nasdaq Composite Index dropped 2.34 percent. The Dow Jones Industrial Average lost 1.86 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 0.49 percent.
FACT OF THE WEEK
On January 13, 1999, the National Basketball Association (NBA) superstar Michael Jordan of the Chicago Bulls announces his retirement from professional basketball, for the second time, in front of a crowd at Chicago’s United Center.
Jordan had an outstanding college career, but left the University of North Carolina after his junior year when he was selected by the Chicago Bulls as the third-overall pick in the first round of the 1984 NBA draft. Jordan helped the Bulls make the playoffs in each of his first six seasons on the team. In 1991, he got to his first NBA finals, where he led his team to the first of three consecutive championships.
MARKET MINUTE
Inflation Stymies Markets
Stocks rallied broadly to start the week, but two economic reports on Tuesday—job openings and the prices-paid index among service companies—raised fresh inflation concerns. Higher Treasury yields also put pressure on stocks. Stocks flattened out on Wednesday. Investors reacted to news that most Federal Open Market Committee members agreed inflation risks had increased, per minutes from the Fed’s December meeting. U.S. stock markets were closed Thursday in observance of President Jimmy Carter’s funeral. On Friday, a warmer-than-expected December jobs report caused investors to question whether the Fed will adjust rates in 2025. News that consumer sentiment ticked down also pushed stocks lower.
When Good Becomes Bad News
The economy added 256,000 jobs in December—100,000 more than economists expected. That’s the second-highest monthly job gain for 2024. Unemployment ticked down to 4.1 percent, which was also better than anticipated. Job growth and lower unemployment signals good news for the economy but bad news for the markets. A stronger jobs market puts less pressure on the Fed to adjust rates, especially with inflation top-of-mind among investors.
FINANCIAL STRATEGY OF THE WEEK
Retiring Earlier Than Expected? What To Know
Many Americans, through circumstances beyond their control, find themselves needing to retire earlier than anticipated. Whatever the circumstances, it’s difficult not to feel wrongfooted and hurried by the situation. However, it’s important to get yourself back on track as soon as possible. Here are some things to consider as you make the transition:
Don't Make Fast Decisions
When dealing with a sudden transition like this, it can be tempting to make some sort of hasty decision. But reacting too quickly might hinder your ability to reorient yourself. Unless something is truly urgent, it’s often best to give yourself some space to think about your new life and carefully consider all your available choices. Take the time to organize your thoughts and to put your important documents in order. At the end of that period, you can look at things in a cool, calm way.
Work, if Possible
The American Association of Retired Persons (AARP) states that 56 percent of workers aged 50 and over have faced some sort of unplanned departure from work for various reasons, ranging from health issues or caring for an infirm relative to redundancy. Finding yourself out of work in your 60s can be discouraging, but it’s also true that age is not the barrier it once was. In fact, it’s not unusual for companies to seek an experienced hand to be a consultant or to train the next generation working in a particular field. While it may be part-time or even temporary, if you are able to work, you may find great satisfaction in that opportunity, not to mention additional income.
What to Consider with Tax-Deferred Accounts
Your retirement strategy likely includes some form of tax-deferred account. If so, making withdrawals is one choice to consider. For example, if you are not working, you may be in a lower tax bracket than before. But keep in mind that penalties might apply, depending on your age.
Is Social Security a Factor?
The longer you delay taking your Social Security payments, the greater they will be. While Americans have an opportunity to start taking payments as early as age 62, the payments will not reflect the amount you could be getting at full retirement age. Starting at 62 may be a consideration for those who need the income or have some other urgent need, such as being in poor health.
Making an unexpected change can bring changes to your overall retirement strategy. However, it’s important to remember that it's likely your financial professional has worked with other people in similar circumstances. This might be one of those times when it’s good to have someone who can help provide some guidance.