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Retirement Readiness: A recent study showed that 28% of all U.S. households have an overly rosy view of retirement readiness. They think they are on track to maintain their standard of living in retirement—and this trend is higher for those considered wealthy. Thirty-two percent of high-income households are not worried enough about their retirement risk, a larger share than the low- and middle-income earners.

As you prepare for retirement, invite your advisor into the conversation. What standard of living are you looking to maintain during retirement? Have you built in the possibility of higher healthcare costs?

It’s also important to remember that risk is defined differently depending on your income bracket. Low-income earners at risk may be unable to afford basic living necessities, while an affluent household isn’t typically at risk of falling into poverty.

Many factors have also created pressure on retirement preparedness:

  • Living longer pressures funds to stretch further.
  • Employers have steadily put more responsibility on individuals to save by transitioning away from pensions and towards 401(k)-type plans.
  • Competing financial priorities (e.g. a child’s education costs that continue to increase significantly).
  • The gradual rise in Social Security’s “full retirement age.”

In addition to shoring up your financial plan’s goals to help you live freely, we want to work with you to ensure the plan works in the long-term. Again, reach out to your advisor to revisit your future and financial goals.

One Step Further: Completing your will is another step to take in your financial preparedness. Fifty-five percent of adults don’t have one. It is often avoided because it’s an uncomfortable task that forces you to think through difficult circumstances. Yet that is precisely the reason it is helpful to do it:

  • Without a will, your family and loved ones have no official direction to guide decisions after your death.
  • The lack of direction may poise your family to disagree about your wishes.
  • Your estate will go to probate without legal documentation, and it is divided according to state law.
  • It provides an opportunity for you to communicate your final message and wishes to your loved ones.

Anyone who has handled an estate for a parent, sibling, or friend knows the benefit of a well-organized estate plan. Without one, the pitfalls are numerous. Consider this a goal for your next few months if you don’t already have a completed will. We would be happy to point you in the right direction if you need help.

Business Briefing

  • A Decline in Giving: Charitable giving fell 3.4% in 2022 to $499.3 billion, marking the fourth time the number has declined in four decades, according to a Giving USA report released Tuesday. Adjusting for inflation, the drop was 10.5%. The decline came as nonprofits reported increased demand for services now that pandemic aid has ended and high inflation is taking a toll on families. (The Associated Press)
  • Inflation Fight: Federal Reserve Chair Jerome Powell said in his semiannual economic report to Congress on Wednesday that the central bank would have to increase interest rates to bring down high inflation. The Fed paused its 15-month campaign to raise rates this month but signaled it expected two more hikes this year. (Bloomberg)
  • FedEx Shares Fall: FedEx released a 2024 profit outlook that fell short of expectations due to falling demand for package deliveries, sending its shares falling 3% in pre-market trading on Wednesday. They said Tuesday that its earnings in the next fiscal year would be around $17.50 per share, compared to an average estimate of $18.31 by analysts surveyed. (Bloomberg)

Monday Musings

  • Graduated … Now What? Many 2023 college graduates will be hopping hot off the press and into their new jobs this summer. While they are filled to the brim with book knowledge, some practical “how-to-act-in-an-office” knowledge seems to have been lost in final exams. For this class in particular there are some complicating factors. Many of them were college freshmen in the spring of 2020 when campuses shuttered due to the global pandemic. They spent the rest of their college years in a partially virtual world or hybrid internships. Students didn’t have the same opportunities to learn the soft skills often acquired by osmosis on the job. (Perhaps, too, many soft skills lost their sharpness even among adults already in the workforce.) Companies are addressing deficiencies in everything from elevator chitchat to presentation skills and networking. It’s an interesting leftover ramification from the pandemic. Do you have an area that became less practiced or sharp during the pandemic?
  • Listening: We came across this quote earlier this week and wonder what you think about it—”We don’t talk enough about how looking at our phones while a loved one is telling us a story is a form of rejection.” (Jillian Turecki)

What do you think? Overstated? Right on point? Extend this notion to the workplace or any acquaintance, for that matter. Are we too distracted?