By Rick Schwerd

The end of the year is always a good time to take stock of your investments and look ahead. Last year at this time, it was easy to be bullish on the stock market. Vaccine distribution was just starting, the country was continuing to reopen and unprecedented stimulus was being injected into the economy.

As we head into 2022, there is still a lot to be positive about, such as robust company earnings and a very healthy consumer base. However, concerns about the Omicron variant, global supply chain issues, labor shortages and inflation are tempering enthusiasm.  

Stock markets had another good year. The Standard and Poor’s (S&P) 500, an index of 500 of the largest companies in the U.S., is up approximately 20 percent year-to-date, as of early December. Small-cap stocks, mid-cap stocks and most international markets have also shown strong gains this year. As expected, short-term interest rates have remained near zero as the Federal Reserve continues its accommodative fiscal policy. Intermediate and long-term rates have risen as the economy has improved, but in a measured way.

As we look forward, there is plenty to be positive about. The U.S. consumer is doing very well, which is vital since consumer spending accounts for nearly 70 percent of our Gross Domestic Product (GDP). The unemployment rate has fallen from 6.7 percent at the start of the year to 4.2 percent in November. Wages and salaries are up approximately 10 percent year-over-year. U.S. consumers have accumulated more than $2 trillion in excess savings and consumer net worth has surged about 30 percent since the start of the pandemic. These factors provide confidence that strong retail sales of goods and services will continue into 2022.  

By Christine Graf

According to the Federal Reserve, only 36 percent of Americans are adequately saving for retirement.  The National Institute on Retirement Security estimates that almost 40 million U.S. households have no retirement savings.

Certified Financial Planner Mark Wells, co-founder of Three Buckets Wealth Management, recommends that everyone have three to five months of living expenses in their savings accounts. A private wealth advisory practice of Ameriprise Financial Services, Three Buckets has offices in Glens Falls, Latham, and Tucson, Arizona.

“If you don’t have disability insurance through your employer, it should be closer to six months of living expenses,” said Wells.

He recommends making maximum contributions to employer matched 401K programs in order to take advantage of “free money.” He also recommends Roth IRA’s to many of his clients including recent college graduates who are in lower tax brackets than they will be later in their careers.

“What we have been doing with a lot of our clients is a Roth conversion which is essentially realizing the tax or converting pre-tax assets like a 401K or IRA to a Roth IRA so that you realize the tax in that year. But that amount going forward is tax free, and the earnings are also tax free. It’s tax free to the owner of the account but also tax free to the beneficiary when they receive it down the road. In your early years when income is lower than it will be in the future, making a Roth contribution is a wise idea.”