With the U.S. stock market recovering from its late unpleasantness and the U.S. midterm elections and Mueller investigation outcome looming on the horizon, we focus on some other topics, some of which have enormous implications. We hope that you find these notes informative, interesting and worth a few minutes of your time.
- U.S. Deficit Surges: The U.S. budget deficit increased $778 billion during fiscal year 2018, which ended on September 30, 2018. It was the largest annual deficit increase since fiscal year 2012, when the economy was still recovering from the financial crisis. See this NYT article for detail and context. Any suggestion that a growing economy will fix the deficit is a fairy tale.
- McConnell Puts Social Security and Medicare in the Cross Hairs: Senate Majority Leader Mitch McConnell has targeted Social Security, Medicare and Medicaid as the deficit culprits. Expecting retirees and the poor to bear the brunt of solving this massive national issue is blatantly unfair. Nevertheless, the ugly math will dictate that so-called entitlements will have to be part of the discussion-as will tax rates and non-entitlement spending. We welcome an open national debate on how to solve a problem, given that the ultimate solution will have to transcend partisan politics.
- Major Climate Warning: The recent U.N. climate change report is alarming. Regardless of the cause or causes of climate change, facing our global future clearly is becoming increasingly urgent. The initial Trump administration response to the report was not encouraging. Political and policy disagreement is a reality, but if I could magically de-politicize two policy problems, the U.S. deficit and global climate change would surely top my wish list.
- The Good News of Higher Interest Rates: Higher interest rates appeared to spook the stock market last week, but it is much too simplistic to assume that interest rates going up is necessarily bad. Are interest rates rising for positive reasons?
- Stocks for the Long Run: Maintaining perspective on stock market ups and downs is one of the biggest challenges for investors. Human nature being what it is, we all want good stock market returns but without the risk of corrections and volatility. Legendary finance Professor Jeremy Siegel continues to make the case for stocks for the long run.
- Social Security & Medicare: Recipients of social security benefits received some good news with the announcement of a 2.8% cost of living adjustment for 2019. In addition, here are three tips for evaluating Medicare options during this open enrollment period.
- Mortgages and Retirement: We frequently advise clients on whether to prepay or accelerate the payoff of a mortgage as they head into retirement. Here’s a good article making the case for being debt free in retirement. You must analyze this issue on an individual basis, but we are in general agreement with the article.
- Working to Ward Off Alzheimer’s? Many jobs promote mental engagement and may even play a role in staving off Alzheimer’s. At least one brain scientist believes this to be the case for her. Retirement can be mentally enriching too but may necessitate some conscious lifestyle design to preserve the same level of pre-retirement mental sharpness.
- Aging and Contentment: What role does contentment play in how happily we age? Read this thoughtful article making the case for it being the secret to aging well.
- Book Recommendation: Atomic Habits is a just released book about understanding habits by James Clear, one of my favorite bloggers. Quoting Aristotle, ”We are what we repeatedly do. Excellence is not an act, but a habit.” Atomic Habits will be a best seller and the go-to reference for understanding and modifying habits.
Thank you to our readers. Please forward these notes to anyone you believe may benefit or find them interesting and help us spread the word!