What your employer isn't doing to plan for Your Retirement

Creating your own Personal Pension
can provide you dependable, growing income.

Are you as prepared as you think?

According to your parents and grandparents, things were always better “back in my day.” While this might not be the case in every scenario, if they're talking about retirement, chances are they're right.

There has been an undeniable shift in the way companies handle their contributions to employee retirement. It's not just the farewell dinner and the gold watch we don't get anymore, although that tradition has certainly fallen out of common practice. The differences between the retirements of yesteryear and those of today are more serious—and unfortunately, often detrimental to the retiree.

The cultural effects of career-hopping

For several generations, the status quo for the typical American career path remained unchanged. People, for the most part, got a job either in the family profession or upon graduating college (or high school, if they weren't able to attend or afford college). Once they had a good job, they’d stay until retirement—often putting in 30 years or more at the same company.

However, as businesses became more competitive, there were shifts on both the employer and employee sides. Employers began to focus more on recruiting top talent, while employees started valuing higher personal satisfaction over longevity. Switching jobs in search of greener pastures has become commonplace.

During this shift, the traditional pension plan has suffered and in some cases been completely abolished.

The new face of pension plans

When lifetime of loyalty was the standard, employers offered attractive pension plans as part of a benefit package to attract and retain strong employees. For the most part, these plans were simple: Once you'd worked for the company a certain number of years, you'd continue regularly receiving a percentage of your salary when you retired. The longer you worked for the company, the greater the percentage.

These plans required little or no investment on the part of the employee. Because the brunt of the financial responsibility for a traditional pension plan falls on the employer, this option was far less attractive for businesses when short-term employment became the norm. 

Enter the 401(k). 

Introduced in the early 1980s, this alternative to pension plans was billed as having the potential to yield greater returns than a set pension while affording the employee the benefit of taking their account with them when they found a better job. The 401(k) retirement plan allows employees to contribute as much or as little to their retirement fund as they desire, and the account earns interest over time through an investment of the employee's choosing.

The first and most obvious drawback to this is the part about employee contributions. While pension plans were actually invested and paid out by the employer, 401(k)s are simply money that you've already earned, which is set aside for retirement. These plans, known as Defined-Contribution or Defined-Comp, have put the burdon of investment choice not on a professional Advisor, but on the client. What used to be the job of a department of professionals becomes your responsibility, saving the company money all along the way. 

From the corporate family to every person for themselves

In today's job industry, traditional pension plans are virtually nonexistent and when they are found they are woefully underfunded. Companies offer 401(k)s, IRAs, TSAs, and other income-dependent, interest-bearing retirement savings plans to offset the higher turnover rate—and to increase overall business profits, since these types of retirement “plans” are now what employees expect.

In any case, once you've retired, you're no longer the company's concern—you'll have to sink or swim on your own. It's important to understand the retirement investment options that are available to you in this more independent model, and make sure you're prepared to handle the burden of retirement through a plan that guarantees income throughout your golden years.

You can probably plan on buying your own gold watch, too.

To get more information on how Monolith Financial Group can help you plan for your Personal Pension give us a call (916) 367-6430

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Market Week: April 30, 2012

The Markets

Solid corporate earnings from some key tech and consumer companies encouraged investors to ignore dicey economic reports and push the S&P 500 back above 1,400. Despite a late-week downgrade to Spanish sovereign debt and a less-than-encouraging U.S. gross domestic product report, even the Global Dow was in positive territory, while a stand-pat stance by the Fed allowed bonds to remain relatively stable.

Last Week's Headlines

• U.S. economic growth slowed in the first quarter. The Commerce Department's initial estimate of gross domestic product was 2.2%, substantially lower than the previous quarter's 3%. Consumer spending picked up 2.9%, higher than the 2.1% of Q4 2011, but business spending was off. Another indicator of a slowing economy was durable goods orders, which plummeted 4.2% in March.
• Standard & Poor's downgraded Spanish sovereign debt by two notches to BBB+; the rating downgrade could increase the country's already steep borrowing costs in the future. S&P cited a lack of progress in reducing the country's budget deficit and the likelihood that financial assistance will be needed at some point. It also imposed a negative outlook, meaning further downgrades are likely. New unemployment statistics delivered a second blow by putting the country's unemployment rate at more than 24%.
• Another one bites the dust: Holland's prime minister and cabinet resigned after the coalition government failed to achieve budget cuts needed to reduce the country's deficit and comply with eurozone debt guidelines. Holland has supported the German-led campaign for tougher fiscal responsibility measures and financial assistance.
• Though it saw some hints of softening in the U.S. economy, the Federal Reserve's Open Market Committee essentially stayed the course, giving little indication of any potential post-QE2 actions and leaving interest rates intact.
• New home sales fell 7.1% in March, according to the Commerce Department. However, unseasonably warm weather may have accelerated some sales that would otherwise have occurred in the spring, since an earlier increase in February sales was revised upward.
• U.S. home prices hit their lowest level in almost a decade in February. The S&P/Case-Shiller index was down 0.8% for the month and 3.5% year over year, with Atlanta's 17.3% decline over the past 12 months leading the way. Seventeen of the index's 20 cities reported lower prices. However, Phoenix saw a 3.3% annual gain and its fifth consecutive monthly increase.

Eye on the Week Ahead

Unemployment data on Friday will be closely watched, especially in the wake of recent softer economic data. Additional earnings reports will vie for attention with consumer spending data and the Institute for Supply Management's manufacturing and services reports. Finally, Thursday will bring an announcement from the European Central Bank's meeting.

Key dates and data releases: personal income/spending (4/30); construction spending, U.S. manufacturing, auto sales (5/1); factory orders (5/2); business productivity/costs, U.S. services sector (5/3); unemployment/payrolls (5/4).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Market Week: April 23, 2012

The Markets The Dow managed to top 13,000 once again, but the Nasdaq suffered from a hit to Apple's stock price. Less-than-disastrous Spanish debt auctions helped the Global Dow gain a bit.

Last Week's Headlines

• Manufacturers in the New York area reported substantial weakening this month. Though any number above zero is considered positive, the Federal Reserve's Empire State survey fell to 6.56 compared to 20.21 in March, hurt by disappointing numbers for shipments and unfilled orders. The Philadelphia Fed manufacturing survey also declined for the first time in five months, to 8.5 from 12.5 in March.
• March retail sales were up 0.8%, according to the Commerce Department. That put them 6.5% higher than the previous March. Building and garden equipment and supplies were up more than 14%, while nonstore sales rose more than 9% during the month.
• Housing starts slid 5.8% in March but were 10.3% higher than a year ago, according to the Commerce Department. However, building permits, an indicator of future activity, rose 4.5% during the month and were 30% higher than last year, though March single-family permits were down 3.5%.
• The Federal Reserve said industrial production remained flat for a second month in March, but was up 5.4% during the first quarter. And though manufacturing output declined 0.2% in March, it was up 10.4% for the quarter, driven in part by an almost 40% increase in cars and car parts. The percentage of the nation's manufacturing capacity utilized slipped slightly to 78.6% in March, 2.1% higher than last March but still below its long-term average.
• Demand at auctions of both short-term and 10-year Spanish debt could have been worse; the 10-year yield fell slightly to 5.74%. Meanwhile, the International Monetary Fund said it has received pledges of $430 billion in additional financial support for its loan fund to combat the European debt crisis. However, in the first round of French elections, President Nicolas Sarkozy, a key player in the eurozone's debt crisis battle plan, came in a close second to Socialist Party candidate Francois Hollande, whose support for the strategy is less certain. The two men face a runoff May 6.
• Buffetted all week: Legendary Berkshire Hathaway CEO Warren Buffett was not only diagnosed with prostate cancer, but legislation based on the so-called "Buffett Rule" failed to receive the necessary 60 votes for further consideration in the U.S. Senate. The legislation, which would have established a minimum 30% federal income tax rate for individuals earning at least $1 million annually, and its rejection will provide both parties with plenty of ammunition for the upcoming electoral shooting match.

Eye on the Week Ahead

Global investors will assess the French election's potential implications for the financial markets, and several U.S. tech and consumer bellwether companies will report earnings. The Federal Open Market Committee's Wednesday announcement is its next to last before Operation Twist is scheduled to expire. The first report on Q1 economic growth will suggest how well the first-quarter equities rally reflects the economy as a whole.

Key dates and data releases: new home sales, home prices (4/24); Federal Open Market Committee announcement/forecasts, durable goods orders (4/25); weekly new unemployment claims (4/26); Q1 initial gross domestic product estimate (4/27).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Market Week: April 16, 2012

The Markets Spanish bullfight: Continued concern about surging bond yields in Spain sent equities down both here and abroad. The Dow followed last week's downdraft with three days of triple-digit losses; its fourth straight losing week was a sad distinction shared by the Global Dow. Of the four domestic indices, only the small-cap Russell 2000 escaped having its worst week so far this year, though the S&P 500 and the Nasdaq managed to remain above 1,300 and 3,000 respectively. Despite high gas prices, oil slid closer to $100 a barrel, while the 10-year Treasury yield hovered around 2%.

Last Week's Headlines

• Consumer inflation rose 0.3% in March, according to the Bureau of Labor Statistics. That put the annual inflation rate at 2.7%, slightly lower than the previous month's 2.9%. Meanwhile, a decline in energy costs helped keep wholesale prices relatively static in March despite a 0.2% increase in wholesale food prices. So-called core inflation, which excludes food and energy, was up 0.3% at the wholesale level.
• The pain in Spain: Spanish bond yields continued to rise, hitting 5.93% after the Bank of Spain reported that Spanish banks nearly doubled their borrowing from the European Central Bank last month. The Italian 10-year yield wasn't far behind at 5.52%, raising concerns yet again about the adequacy of European rescue funds.
• The U.S. trade deficit fell 12.4% in February, to $46 billion. Exports were up by $0.2 billion, while an 18% drop in imports from China left imports overall down $6.3 billion.
• China's economy grew at an annual rate of 8.1% during the first quarter; that's substantially lower than the previous quarter's 8.9%. Meanwhile, food prices helped push China's consumer inflation rate up 0.4% to an annual rate of 3.6%--still within the government's 4% target range--while wholesale prices were down 0.3% from a year ago.
• Winning megamillions: Just over a dozen employees of Instagram, creators of a photo-sharing app for mobile devices, will split the $1 billion that Facebook agreed to pay for the two-year-old company.
• The Federal Reserve's "beige book" report said the economy continued to expand at a "modest to moderate" pace, but noted concerns about higher oil prices. Though hiring was said to be steady or slightly up in many districts, employers also reported difficulty in finding qualified, high-skilled workers.

Eye on the Week Ahead

With earnings season under way and several key banks reporting this week, forward guidance about coming quarters could be even more influential than the earnings themselves. Manufacturing, housing, and retail data will suggest the state of the recovery.

Key dates and data releases: retail sales, Empire State manufacturing survey, business inventory levels, international capital flows (4/16); housing starts, industrial production (4/17); weekly new unemployment claims, home resales, Philly Fed manufacturing survey (4/19).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Market Week: April 9, 2012

The Markets Short but hardly sweet: A disappointing bond auction in Spain and lowered expectations for new Federal Reserve easing gave investors a reason to take some equity gains off the table and return to intermediate- and long-term Treasuries during last week's holiday-shortened trading. The Nasdaq's recent string of successes was punctuated by Wednesday's 45-point drop--its worst day this year--though it managed to remain above 3,000. The Dow had 2012's second triple-digit daily loss, while the small-cap Russell 2000 struggled nearly as much as the Global Dow, which was hit by anxiety over the Spanish auction. Commodities, which had benefitted from economic optimism and the Fed's bond-buying, also were hit. Oil dipped to just over $101 a barrel, though it recovered some of those losses by week's end, while gold plummeted 2.4% to end the week down roughly $40 an ounce.

Last Week's Headlines

• U.S. payrolls rose in March at their slowest pace since October. According to the Bureau of Labor Statistics, the 120,000 new jobs reduced the unemployment rate only to 8.2%, though it was the 11th straight month of either stable or falling unemployment. Losses in the retail sector partly offset gains in manufacturing, leisure/hospitality, health care, and business and professional services.
• Minutes of the most recent Federal Reserve Open Market Committee meeting suggested little interest in an additional round of quantitative easing. However, most members felt recent improvements in economic data still weren't strong enough to warrant upgrading the Fed's outlook through late 2014, and some suggested that those improvements could weaken later in the year.
• Growth in the U.S. services sector slowed a bit in March as the Institute for Supply Management's index fell to 56%. (Even so, it was the 27th consecutive month above the 50% mark that is the threshold for expansion.) New orders and production accounted for most of the month's drop.
• U.S. manufacturing expansion accelerated in March. According to the Institute for Supply Management, the nation's purchasing managers reported a 1% increase from the previous month, though the growth of new orders slowed a bit. It was the 32nd straight month of expansion. Meanwhile, the Commerce Department's February figures for factory orders rose 1.3% for the month.
• New construction fell 1.1% in February, although it was still 5.8% higher than a year earlier. According to the Commerce Department, a 1.7% decline in public construction was primarily responsible, though private construction also fell 0.8%. Residential construction remained unchanged.
• Despite Spain's announcement of budget cuts and tax increases designed to cut its budget deficit to 5.3% of GDP from 8.5% last year, disappointing demand for intermediate-term Spanish bonds helped push the yield on the 10-year above 5.5%. Similar bonds yielded less than 5% only a month ago.
• President Obama signed two market-related pieces of legislation. The JOBS (Jumpstart Our Business Startups) Act exempts businesses defined as "emerging growth companies" (less than $1 billion in annual gross revenues) from certain securities regulations in an attempt to make it less costly for them to go public. The act also reduces the amount of auditing and reporting required, and authorizes "crowdfunding" of startups. The STOCK (for Stop Trading On Congressional Knowledge) Act makes it a criminal offense for public officials such as members of Congress, the president, and many federal employees to trade securities based on nonpublic knowledge obtained through their jobs. It also requires that transactions over $1,000 by such individuals be made public online no later than 45 days after a transaction.

Eye on the Week Ahead

Alcoa's announcement Tuesday marks the unofficial kickoff of the Q1 corporate earnings season, and U.S. equities investors will have their first chance to react to Friday's unemployment figures. Inflation numbers also will be of interest, as will China's gross domestic product release. Long-term U.S. Treasury auctions are scheduled, and European markets will reopen Tuesday after their Easter holiday.

Key dates and data releases: Fed "beige book" report, import/export prices (4/11); wholesale inflation, balance of trade, weekly new unemployment claims (4/12); consumer inflation, consumer sentiment (4/13).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Market Week: April 2, 2012

The Markets Domestic equities ended a relatively uneventful week by marking the best first quarter for the S&P 500 since 1998. Despite some downdrafts early in the week, the Dow and the S&P managed to stay above 13,000 and 1,400 respectively, and the Nasdaq continued to lead the pack for the year.

Last Week's Headlines

• Home prices in the 20 cities tracked by the S&P/Case-Shiller index hit their lowest level since 2003 after falling for the fifth month in a row. The 0.8% three-month average decline for November through January means that prices have fallen 3.8% over the last year.
• Orders for durable goods--those intended to last three years or more--saw their fourth increase in the last five months. The Commerce Department said orders were up 2.2% in February, with the single largest increase being the 3.9% growth in the value of transportation equipment. Inventories of durable goods hit their highest level since 1992.
• Final figures for the nation's gross domestic product (GDP) confirmed that the U.S. economy grew at an annual rate of 3% in 2011's final quarter. That was substantially better than Q3's 1.8%. The Bureau of Economic Analysis also said corporate profits rose during the quarter, both pretax (+0.9%) and after-tax (+1.1%), though both increases were less than in the previous quarter.
• Consumer spending was up 0.8% in February, but the increase helped cut the saving rate to 3.7% (the monthly average for the previous year was 4.7%). Higher gas prices accounted for part of the increase, but consumers also spent 0.5% more on other goods and services. Meanwhile, incomes rose only 0.2% for the month.

Eye on the Week Ahead

As a new quarter kicks off, unemployment data will be released Friday, though markets will be closed for the long holiday weekend and won't be able to react until the following week. The Federal Open Market Committee minutes will be watched for the group's thinking about any potential actions after Operation Twist expires. The European Central Bank will review interest rates Thursday, and manufacturing-related data will round out the week.

Key dates and data releases: U.S. manufacturing, construction spending (4/2); Federal Open Market Committee minutes, factory orders, auto sales (4/3); U.S. services sector (4/4); weekly new unemployment claims (4/5); unemployment/payrolls (4/6).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.