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Finance

June 25, 2022

67-Year-Old Shares the Biggest Retirement Hurdle That ‘No One Talks About’

67-year-old George Jerjian recently penned a piece for CNBC where he shared the biggest challenge in retirement “that no one talks about.”

“The biggest retirement challenge that no one talks about, in my experience, is finding purpose,” Jerjian wrote.

Jerjian, who decided to “un-retire” after 10 years, came to his conclusion after asking more than 15,000 retirees age 60 and up, “What is your single biggest challenge in retirement?”

“In the same survey, I asked how people thought they might solve their challenges. A full 35% believed that the answer is in finding purpose in life through a new skill or interest,” he said.

The Emmy-award-winning producer cited a 2021 study that found a link between a strong life purpose with healthier lifestyle behaviors and slower progression rates of chronic illnesses.

“Finding purpose can also help retirees find new side hustle opportunities that bring in income, helping to ease financial concerns,” Jerjian said.

June 24, 2022

4 Major Flaws with Biden’s Gas Tax Plan

On Wednesday, President Joe Biden called on Congress to pass legislation that would temporarily halt the federal tax on gas and diesel fuel for three months.

Greg Valliere, a chief strategist at AGF Investments, listed four problems with Biden’s proposed plan, saying it’s “a bad idea.”

1. Puny savings. 

Right now, the federal gas tax is 18.4 cents per gallon. Under a gas tax holiday, consumers would save $2.76 filling up a 15-gallon tank.

2. Potential to increase gas demand. 

Even if the puny gas tax holiday savings were to entice consumers, then they might load up on gas, increasing demand and driving up prices.

3. Less money for the federal highway fund. 

Revenue from the federal gas tax goes to finance the construction, maintenance, and repair of highways and other types of infrastructure. For each month a gas tax holiday is in effect, the infrastructure fund would lose more than $2 billion.

4. It probably won’t pass the Senate. 

House Speaker Nancy Pelosi (D-CA) has previously said she is not in favor of a gas tax holiday. Neither is Sen. Joe Manchin (D-VA). Even Sen. Tom Carper (D-DE), a close ally of Biden’s, said a gas tax holiday is “shortsighted and inefficient.”

June 24, 2022

Retirement Accounts See $3.4T Loss

Americans’ 401(k) and IRA accounts have lost a combined total of about $3.4 trillion since January, according to a new report.

The S&P 500 is down about 20% since the beginning of 2022, and Marketwatch says it impacts retirement savings.

Marketwatch estimates that IRA accounts have lost $2 trillion, while 401(k) accounts have lost $1.4 trillion since the beginning of the year.

The outlet also noted that some Americans hold other equities besides retirement accounts.

“In 2021, these holdings amounted to $32.2 trillion. Applying the 20% decline means that people have lost an additional $6.4 trillion in direct holdings,” Marketwatch reported.

“These individuals, however, are much less likely to be forced to sell and can wait out the decline to recoup their losses.”

June 23, 2022

Federal Reserve Says Recession is a “Possibility”

Federal Reserve chair Jerome Powell says it’s “certainly a possibility” that the central bank’s interest rate hikes to battle inflation could lead to a recession in the U.S.

“It is not our intended outcome at all,” Powell told lawmakers Wednesday as a two-day congressional hearing began.

“It’s certainly a possibility,” Powell said. “We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential.”

The Fed faced bipartisan skepticism that its policies could mitigate consumer price inflation.

“Though I’m pleased you have begun taking drastic action necessary to right the U.S. economy, these actions are long overdue, and monetary policy remains too loose,” Sen. Thom Tillis (R-N.C.) said.

“Inflation is like an illness, and medicine needs to be tailored to the specific problem. Otherwise, you could make things a lot worse. Right now, the Fed has no control over the main drivers of rising prices,” Sen. Elizabeth Warren (D-MA) said.

June 22, 2022

White House Considering Gas Tax Holiday

President Joe Biden told reporters he is seriously considering a federal gas tax holiday ahead of the July 4 weekend.

On Monday, Biden said he could make a decision on whether to temporarily halt the federal gas tax by the end of the week.

“I hope I have a decision based on data,” Biden said.

However, Energy Secretary Jennifer Granholm told CNN on Sunday that if Biden implements a federal gas tax holiday, it could prevent some federal funds from going to roadway projects — as directed by the infrastructure legislation Biden signed last year.

“If we remove the gas tax, that takes away the funding that was just passed by Congress to be able to do that,” Granholm said.

“So you know, that’s one of the challenges, but I’m not saying that that’s off the table.”

June 20, 2022

Baby Formula Production Stops Again

Abbott announced that it had to stop baby formula production less than two weeks after it had resumed at its plant in Sturgis, Michigan.

“These torrential storms produced significant rainfall in a short period of time, overwhelming the city’s stormwater system in Sturgis, Michigan, and resulting in flooding in parts of the city, including areas of our plant,” an Abbott spokesperson told ABC News.

“As a result, Abbott has stopped production of its EleCare specialty formula that was underway to assess damage caused by the storm and clean and re-sanitize the plant.”

The spokesperson confirmed that the company had informed the Food and Drug Administration “and will conduct comprehensive testing in conjunction with the independent third party to ensure the plant is safe to resume production.”

June 18, 2022

Here’s What the Fed’s Rate Hike Means For You

The Federal Reserve raised interest rates by a staggering 0.75% this week — the largest increase since 1994.

Here are 5 ways the rate hike will affect Americans, according to The Hill:

#1 Monthly car, mortgage, and credit card payments will increase
The Hill noted that the Fed’s rate hike “translates down to higher rates in credit markets, mortgage markets and any industry that relies on financing plans to make payments.”

#2 Volatile stock markets
Since the Fed started hiking its interest rates in March, the Dow fell 12 percent, the S&P fell 16 percent, and the Nasdaq dropped 20 percent.

#3 It’ll be harder to find a job
“Price increases that shrink demand also have the effect of forcing companies to cut costs, and one of the first places they look to do that is in the labor force,” the outlet reported.

#4 A recession is becoming more likely
“I’m not as worried about a return to the inflation levels of the 1970s as I am about a deep recession that is going to bring inflation way down soon,” said Desmond Lachman, an economist at the American Enterprise Institute (AEI).

#5 The national deficit will be a bigger drag on taxpayers
“The government is going to have to pay out more in interest payments,” Lachman said. “On top of that, what’s going to happen in the progress that we’ve been making in reducing the deficit is also going to go, because as the economy tanks and goes into recession, it means the government’s going to collect fewer taxes.”  

“The wrong thing for the Fed to do was — especially after the Biden package of $1.9 trillion, 8 percent of GDP, the kind of fiscal stimulus that we’ve never had before during peacetime — the Fed just sat with interest rates at zero and then kept convincing itself that inflation was transitory and had nothing to do with the fact that the money supply had increased by 40 percent over two years. That was insane.”  

June 15, 2022

Recession Fears Trigger Layoffs

Cryptocurrency exchange Coinbase Global announced that it was laying off approximately 1,100 full-time jobs — about 18% of its workforce.

Coinbase CEO and co-founder Brian Armstrong said managing costs would be critical with the possibility of recession leading to a crypto winter.

Coinbase isn’t the only crypto company to implement layoffs amid fears of a recession this month.

On Monday, crypto lender BlockFi said it was reducing its headcount by roughly 20% after being “impacted by the dramatic shift in macroeconomic conditions worldwide.”

The Winklevoss twins’ Gemini Trust Co. announced it was laying off 10% of its staff.

Crypto.com also said it was downsizing. Last year, the crypto exchange reportedly spent $700 million to have Staples Center in Los Angeles renamed Crypto.com Arena for the next 20 years.

Conversely, Binance CEO and co-founder Changpeng Zhao says that now is a great time for hiring and acquisitions.

June 12, 2022

Finally: Great News for Retirees

Retirees could see a big boost in their Social Security benefits next year.

This year, Social Security recipients saw the highest cost of living adjustment in 40 years — 5.9%, or $93. Some experts believe there will be an even bigger adjustment in 2023.

“Looking at the CPI-W [Consumer Price Index for Urban Wage Earners and Clerical Workers] trends that we’re seeing so far this year, it is likely we’re going to have a COLA [cost-of-living adjustment] closer to 8% than 3.8%,” said Stephen Goss, chief actuary at the Social Security Administration, during a recent briefing.

“That is actually good news for the beneficiaries who are currently eligible for benefits in this year,” Goss added. “They will get a relatively high increase to their benefit.”

Of course, the COLA for 2023 could change before it is formally announced later this year. According to CNBC, 2023’s adjustment will depend on inflation in July, August, and September.

June 11, 2022

Inflation Hits New 40-Year High — Again

Inflation continued to rise last month, setting a new 40-year high as Americans endure skyrocketing prices.

The Labor Department said consumer prices rose 8.6% from 12 months earlier last month — faster than April’s staggering 8.3% year-over-year increase.

The new inflation data shows the biggest yearly increase since December 1981.

Prices increased by 1% from April to May, with food, energy, rent, airline tickets, and vehicles contributing to the uptick.

The Associated Press reported that the Labor Department’s new report “underscored the worry that inflation is broadening well beyond the spike in energy prices stemming from clogged supply chains and Russia’s invasion of Ukraine.”

Ethan Harris, Bank of America’s head of global economic research, said: “Virtually every sector has higher-than-normal inflation.”

“It’s made its way into every nook and cranny of the economy. That’s the thing that makes it concerning, because it means it’s likely to persist.”

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