Permanent Value

Week in Review – 10/24/2016

Bruce Doole
October 24th, 2016

Divorce Is Destroying Retirement

Even as divorce rates for younger Americans have fallen, failed marriages among people over 50 doubled from 1990 to 2010, according to Bowling Green State University’s National Center for Family & Marriage Research. As a result, the overall risk for getting divorced in the U.S. has remained constant: About half of all marriages will collapse.

It turns out that this may be part of the reason why about one in five Americans over 65 is working — twice as many in the early 1980s and the most since the creation of Medicare. Unlike divorces earlier in life, later breakups have a huge impact on individual finances, often forcing people to delay retirement.

New research suggests this increased monetary stress also plays an outsize role in pushing older women back into the workforce.

According to a study by economists Claudia Olivetti of Boston College and Dana Rotz of Mathematica Policy Research, the later a woman divorces, the more likely she is to be working full time late in life. Using survey data on almost 56,000 women, they found that — compared with women who divorced before age 30 — women who divorced in their 50s were about 10 percentage points more likely to be working full time from ages 50 to 74.

Women born in the early 1950s are 19 percentage points more likely to be working full time over age 50 compared with women born in the 1920s, controlling for such factors as race and education.

Olivetti and Rotz calculate that 11% of this difference is explained by changes in marital status.

The financial price of divorce is bigger than legal fees and court costs. It also means splitting your assets in two while many costs suddenly double: two homes to maintain, two rents, two electricity bills, and so forth. When women with children divorce, they often trade away retirement assets to hold onto the family home. This can be a big mistake. Even if they’re able to afford the costs of maintaining the home, these women can end up way behind on their retirement savings.

As a result of this dynamic, divorced people are much more likely to be poor in their 60s, 70s and beyond. Previous research from the National Center for Family & Marriage Research shows the poverty rate is very low for married Americans over age 62 who never divorced. Just 3.4% of this group are poor. Meanwhile, 16% of single people divorced before age 50 are poor, and 19% of single people divorced after 50 are poor.

Source: Ben Steverman


  • U.S. Industrial Production for September rose only 0.1 percent overall. August figures were also revised down a tenth of a percent, to -0.5 percent.
  • The U.S. Consumer Price Index rose 0.3 percent in September, in line with expectations. Energy led the charge for the month, with a 2.9 percent increase.
  • Canada Manufacturing Sales were significantly higher than expected in August, reporting a 0.9 percent increase for the month. Overall, sales were up in 15 of 21 industries.

Source: Ivy Weekly

Week in Review – 10/17/2016

Bruce Doole
October 17th, 2016

Pension Spending Shows Big Impact on Economy: NIRS Report

Housing, healthcare, food services and retail industries enjoy big employment benefits from retiree spending

Defined benefit pensions make a big contribution to the U.S. economy, the National Institute on Retirement Security reported Wednesday.

In 2014, retiree spending of pension benefits generated $1.2 trillion in total economic output, supporting 7.1 million jobs across the U.S.

American retirees paid $190 billion in federal, state and local taxes on their pension benefits and spending in 2014.

The report showed pension spending supports the economy and jobs where retirees reside and spend their benefits.

Take housing—In 2014, housing spending by retired workers with pensions supported some 383,000 real estate industry jobs nationwide.

Healthcare, food services and retail industries also experience big employment benefits from retiree spending.

“Household spending drives the U.S. economy, accounting for more than two-thirds of U.S. economic output,” NIRS Executive Director Diane Oakley said in a statement. “In fact, American retirees’ pension spending supported one-tenth of such economic output nationwide.

“So it’s clear that the growing number of retired Americans must have adequate income for consumer spending that continues to drive our economy.”

The report includes an interactive map showing the economic effects of state and local plans on a state-by-state basis.

The NIRS report noted economists are predicting a dramatic slowdown in economic growth in coming decades. Citing a recent McKinsey Global Institute study, it said such factors as an aging workforce and drops in population growth could reduce economic growth in the U.S. by one-third, and 40% globally.

“A stable and secure pension benefit that won’t run out enables retirees to pay for their basic needs like housing, food, medicine and clothing,” Oakley said. “It’s good for the economy when retirees are self-sufficient and regularly spend their pension income.”

In contrast, retirees with inadequate 401(k) savings and those fearful of running out of savings tend to hold back on spending, stunting economic growth, she said. The NIRS study was conducted using the most current data available from the U.S. Census Bureau and IMPLAN, input-output modeling software widely used by industry and governments analysts.

Source: Michael Fischer


  • The China Merchandise Trade Balance for September fell to $42 billion, down $10 billion from August and significantly lower than the expected forecast of $50.3 billion.
  • U.S. FOMC Minutes from September’s meeting show that three members voted for a rate hike at that time, but were ultimately out-voted.
  • U.S. Jobless Claims for the week of October 8 dropped to 246,000, down about 10,000 from this time a month ago.

Source: Ivy Weekly


Week in Review 10/10/16

Bruce Doole
October 10th, 2016


The following will highlight the potential impact of the 2016 election, based on the policies presented by Democratic nominee Hillary Clinton and Republican nominee Donald Trump.

Hillary Clinton – Taxes
Will implement a 4% surcharge tax on income over $5 million, plus the Buffett Rule, ensures that individuals who earn more than $1 million annually pay a minimum effective tax rate of 30%. She will cap the value of itemized deductions at 28% for folks in higher brackets. This would impact some currently tax-deductible items, such as 401(k) plans, tax exempt interest, and the value of employer-provided medical insurance. It would increase estate taxes, and place higher taxes on large corporations.

Donald Trump – Taxes
Cut taxes across the board; from the lowest-income earners to the top 1%. For all businesses, he proposes a 15% tax rate and favors full expensing for new asset purchases such as buildings and equipment. He wants to do away with the estate and gift tax with a max tax rate of 33%. He advocates allowing families to deduct child-care spending from their income taxes. He’s stated, “Reducing taxes will cause new companies and new jobs to come roaring back into our country.”

Hillary Clinton – Social Security & Medicare
Expand Social Security benefits for women who are widows and caregivers, and let individuals over age 55 buy into Medicare. She will expand coverage to people who leave the workforce to care for children or sick family members. Also she would, increase benefits for widows who face benefit cuts when their spouses die. The Medicare proposal is a new program called “Medicare for More.” It could cover an additional 13 million Americans, including seven million uninsured individuals.

Donald Trump – Social Security & Medicare
Has pledged to preserve Social Security and Medicare throughout his campaign. His plan to fund benefits is to create new jobs that generate more payroll taxes. His position contrasts with that of many Republicans, who hope to decrease payouts over time by raising the retirement age or calculating lower cost-of-living adjustments.

Hillary Clinton – Health Care
Will “defend” and “build” on Obama’s Affordable Care Act. Calls for providing a $5,000 tax credit per family to “offset a portion of excessive out-of-pocket and premium costs” above 5 percent of their income. Wants all states to expand Medicaid health care coverage for low-income Americans, saying she would continue the Obama administration’s policy of providing states 100% matching federal funding for the first three years they expand the program.

Donald Trump – Health Care
Will repeal the Affordable Care Act signed into law by Obama and “replace it with something terrific, for far less money for the country and for the people.” He proposes providing tax exemptions to consumers who buy individual health care plans and supports giving health insurance companies the capability of competing across state lines. U.S. patients would also have the capability to purchase pharmaceutical drugs from overseas “to bring more options to consumers.”

Your wallet, job, healthcare and retirement will be significantly impacted after this election. It is very important to make an informed and wise voting decision. We hope this table helps sort out the issues being discussed. Feel free to call or email us at any time to review how the election may impact your financial situation.

Source: Kiplinger-Meilan Solly, Douglas Harbrecht and Newsday- Laura Figueroa



  • U.S. ISM Manufacturing Index bounced two points higher to a better-than-expected 51.5.
  • Japan PMI Composite fell from 49.8 in August to 48.9 in September.
  • U.S. international trade deficit widened by $1.2 billion in August to $40.7 billion.

Source: Ivy Weekly