Broker Check



Dorion-Gray Capital Management® Weekly Commentary October 31, 2016

| October 31, 2016
Share |


In a volatile session, stocks fell sharply as investors got news the FBI will review more of Hillary Clinton’s emails and weighed how that could affect the presidential election. After the initial reaction, investors appeared to calm down, and the market partially recovered. For the week, the Dow rose 0.09 percent to close at 18,161.19. The S&P fell 0.67 percent to finish at 2,126.41, and the NASDAQ lost 1.28 percent to end the week at 5,190.10.

Just Five Surplus Years –

The budget deficit for the U.S. in fiscal year 2016 (i.e., the 12 months that ended Sept. 30) was $587 billion. The U.S. has run a budget deficit in 51 of the last 56 fiscal years, (i.e., 1961-2016). The only surplus years were 1969, 1998, 1999, 2000 and 2001 (source: Treasury Department, BTN Research).

Defense Dollars –

America’s spending on national defense (stated as a percentage of total government outlays) has fallen from 43.2 percent in fiscal year 1966 to 15.5 percent in fiscal year 2016 (source: Treasury Department, BTN Research).

Estate Taxes -

The federal estate tax exemption is estimated to increase from $5.45 million (per decedent) in 2016 to $5.5 million as of Jan. 1, 2017, i.e., a married couple would be able to shelter $11 million from federal estate and gift taxes. The IRS announcement of the new limit is expected this week (source: BTN Research).

WEEKLY FOCUS - Scary Financial Mistakes

Retirees Make Many of us loved Halloween when we were young. We relished the costumes, sugary treats and good scares from sights and sounds that temporarily startled us. Prolonged scary situations aren’t as pleasant. Consider a few financial mistakes that haunt some retirees throughout their golden years:

Retiring too soon. According to SmartAsset’s analysis of U.S. Census Bureau data, the national average retirement age is 63. Barring known health conditions, those 63-year-olds could live another 30 years. A rule of thumb is retirees need 70 percent of their pre-retirement yearly salary to live comfortably. Multiply that amount times 30. If the math doesn’t add up, it may be best to stay on the job longer.

Drawing Social Security early has its own downsides. An individual whose full retirement age is 66 will only receive 75 percent of their full benefits if they start taking them at 62. If that person has a lower-earning spouse who plans to draw on that account instead of their own, the spouse will only get 35 percent of the higher earner’s check – instead of half if the higher earner waits until full retirement. Conversely, a person who waits until they’re 70 to take benefits will receive an additional 32 percent. That extra monthly income will outweigh delaying benefits if they live to be 80.

Not having a balanced plan. With fewer years to recoup losses, some seniors are tempted to exit the equity market and turn to investments that are more stable but also have low growth potential. As a result, their assets may not keep up with inflation, particularly in the area of health care, and they could outlive their funds. While there are no guarantees in investing, a diversified portfolio including assets that provide predictable income is a rational approach to balance market risk and inflation.

In other cases, retirees and pre-retirees don’t realize a well-conceived strategy is just as important during the distribution phase as it is in the accumulation phase. Such a plan should address the following goals: keeping the retiree from spending too much too soon, maintaining adequate liquid assets for expected and emergency expenses, incorporating growth potential and providing for required minimum distributions in a tax-efficient way.*

We’d like to help you avoid the ghosts of regret and enjoy the sweet treats of financial stability during your retirement. Contact our office and make an appointment to set up or review your retirement plan.

*Securities America and its representatives do not provide tax or legal advice.

The Dorion-Gray Team

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. a Registered Investment Advisory Firm. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. located at 2602 IL Route 176, Crystal Lake, IL 60014. Dorion-Gray and the Securities America companies are separate, unaffiliated entities.

Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.

© 2016. Dorion-Gray Financial Services, Inc.

Share |