The Fagan Financial Report

September 24th, 2023

Episode Transcript

(00:00):
Good morning, and welcome to theCapitol District's Money and Investment Program. You're
listening to the Fagan Financial Report onDennis Fagan. Aaron is off, So
please feel free to give me acall at one eight hundred to w g
Y one eight hundred eight two fivefive nine four nine if you'd like to,
you know, discuss what's going onwith your portfolio, and is if
you look at the market, youknow, over the past several months,

(00:21):
you know, and even even overthe past you know, a couple of
years, not a heck of alot, as interest rates have moved up
precipitously, uh, and that's kindof stalled out the stock market a little
bit. Since the end of June. The S and P five hundred is
up. Let's see here, Idon't even know if it's up. Just
a minute nine six thirty trying toget that up before of the SMP five

(00:47):
hundred it's down two point nine threepercent, and they has that down four
point one eight percent. So youkind of have a choppy market and and
it wasn't to be expected all eyes. Really this week we're on the Fed
and we'll talk a little about that. But I think you got to say
that the choppiness in the market,you know, given the rebound off of
the October twelfth low, given thefact that you know, the the fit

(01:11):
has been raising interest rates you know, ten or eleven times over the past
year to settle right now at fiveand a quarter percent. This past week
they held firm on injust rates,you know. Suffice it to say that
the markets, you know, comeaways and now it's digesting it. And
I don't think you don't want amarket, believe it or not. You
know, you don't want a marketthat goes straight up because that with that

(01:33):
comes froth in the market. Historically, the old saying is climbs a wall
of worry, and we got tobuild that back up brick by brick.
You know, if you look atthe S and P five hundred right now,
we're sitting about ten percent from therecord high nine twenty nine, three
percent from the record high sent backin January of twenty and twenty two,

(01:53):
so or eighteen months, twenty months, nineteen twenty months away from that record
high forty seven ninety six. Rightnow, the S Andp's one hundreds of
forty three twenty so again nine pointnine three percent away from its all time
NAZAC down seventeen point seven two percent. But I think we all kind of
know this. I think we allkind of realized the market's jobby, the

(02:14):
questions, and and also you know, the market is are these are times
to really try your patients. Ithink that's that's the real key to getting
through this market is to be patients, think of other things to do,
and recognize that this comes with theterritory zooming in this week, though,
I think the first couple of dayswe're kind of, hey, let's let's

(02:36):
wait and see what the Fed does. The Dow up six six points on
Monday, down one hundred points onTuesday, down seventy six on Wednesday.
At two o'clock on Wednesday, theFed announced that they were keeping interest rates
unchanged. At two o'clock on Wednesday, the Dow Jones Industrial average, though
it was at thirty four thousand andsix seventy three. So despite the fact
that it was down seventy seven points, only seventy seven points with which is

(03:00):
about you know, maybe you know, a little less than a quarter percent,
down seventy seven points. On Wednesday, it was down two hundred and
thirty three points after the Fed announcedthat they were keeping rates the same.
So and then on Thursday closed downthree seven. On Friday down another one

(03:21):
oh six. Now, why wouldthe market go down to that extent if
the Fed held on interest rates.It was their tone from the policy statement
from chair pals pre post conference addressor four page notes that he had written

(03:49):
prior to the press conference, tothe comments during the press conference, it
was all pretty hawkish, all prettyhey, you know's let's keep in keep
our two percent goal of inflation inmind in the markets, you know,
as as they always should have,continue to take it seriously. I think
in the backdrop to that is alsothe debt, you know, the discussion

(04:13):
over the debt and then raising thedebt limit, and that comes up at
the end of at the end ofthis week, towards the end of this
week, if not at the endof this week, at the end of
September. Now, say you've gotthose kind of things, Wait, seasonality.
If you look at seasonality the marketshistorically week in September. You know,
according to Bespoke, publishes a newsletterevery week over the past one hundred

(04:38):
years, the worst month for themarket is September. Down an average of
one point two one percent. Thisis for the Dow Jones Industrial average.
Uh that there's only two months wherethe market has fallen on the average over
the past one hundred years. That'sSeptember down one point two one percent,
in May barely down, down zeropoint zero one percent. The rest of

(05:00):
the months it's been up. Infact, the strongest month for the market
is December, excuse me, Julyand then December, and we are entering
a seasonally good period after after weget through this next week. Over the
last fifty years, also only twomonths have been down on average. September
is the worst, down point ninetwo percent, August down point two percent.

(05:21):
All the other months are up.And even over the past twenty years,
only three months have been down onaverage, September being one of them,
down point three seven percent, onlysurpassed really by June down an average
of point five two percent, inJanuary down point six six percent. So
we are getting through this, wereasonably seek week period. We're building the

(05:41):
blocks to this wallowery and we movewe move on, kind of circling back
to the FEDS policy statement. Threethings of note, really, as I
mentioned, chare poles four page elevenparagraph transcript of his opening statement reference their
goal of getting inflation back down toour two percent goal seven times, So

(06:05):
in eleven paragraphs, seven times hementioned the two percent goal of inflation.
I think that unnerved investors and regularlisteners to the show know that, you
know, we talk about the trajecttrajectory or the glide path of the FED
getting inflation down to two percent.You know, in a service economy,
it's going to be difficult given thepercentage that wages comprise of that seventy seventy

(06:32):
five percent of our economy, whichis service services about three quarters of our
GDP, and wages a large componentof that side as compared to manufacturing.
You can see here right now inthe UAW strike against a General Motors Installantis.
They're not striking against Ford right nowbecause the UAW said they're going to

(06:55):
kind of discussions were going pretty well, but they broadened that out to part
suppliers on Friday, to the tothe OEMs, and there is there as
of this as of right now tenfourteen on Sunday morning, they seem,
you know, somewhat far apart.And I think all of a sudden,

(07:15):
you know, since the pandemic,given the fact we have unemployment at three
point six percent, given the factwe have more jobs available than we have
individuals looking for jobs, and thatshould should change in our opinion over the
next six months. You've got you'vegot inflation, and that inflation wage inflation,
that and you've got power really onthe labor side of the equation as

(07:36):
opposed to management, and that that'ssomewhat inflationary. So for for a chair
Powle to really reference getting inflation backdown to our two percent goal seven times
in eleven paragraphs and four pages meanshe's pretty serious. Uh. Also part
of the during the press conference,we want to see convincing evidence that we

(07:59):
have reached the appropriate level, andwe're seeing progress and we welcome that,
but you know, we need tosee more progress before we'll be willing to
reach that conclusion. And that is, you know, the end of interest
rates, a pause, you know, a skip, I would call it,
you know, rather than the end. The other statement really from Pile
that kind of rattled the markets alittle bit during the latter part of the
week. We're prepared to raise ratesfurther if appropriate, and we intend to

(08:22):
whole policy at a restrictive level untilwe are confident that inflation is moving down
sustainably towards our objectives, So higherfor longer as far as interest rates go.
And and we'll see. Now theFed was wrong, dead wrong and
calling inflation transitory, so we'll seeif they're wrong again. Most ani us

(08:43):
suspect the Fed to cut rates duringtwenty twenty four sometimes, so so we'll
see. You know, from ourperspective, the best scenario would be would
be for the Fed to be ableto you know, keep interest rates at
this level for a period of time, rather than hike them further, or
rather than cut rates, because cutcutting rates would assume a slow slowing economic

(09:09):
growth. You know, it mayassume you know, tame inflation, so
that would be a positive. Butif the Fed cuts rates because of slowing
economic growth, there's probably not goodfor the market. So we're hoping for
the Fed being able to negotiate asoftware which is very difficult, but you
know, kind of being able forthe Fed interest rate policy to remain in

(09:30):
here. So it wasn't actually thethe the lack of raising interest rates that
you know, sent the market intoa bit of a tizzy this past week.
It was more the fact that youknow, the hawkish tone from the
Fed as as I'm going through rightnow, but you know, kind of
taking a look at the week toDow down six six hundred and fifty four
points to close down one point ninenine percent, the S and P five

(09:54):
hundred down one hundred and thirty points, down two point nine three percent.
As investors, I think that theFed's going to keep interest rates higher for
longer. It's the longer duration assets, the longer duration equities, the growth
component of the market that that takesit on the chin historically, and that

(10:15):
was that is that was the NAZthat compositive. Is the NAZ that composite
the nastac because the Tech heavy indexdown three point six percent, down four
hundred ninety six points, And infact, according to Torsen Slot who's apolo
is chief Economists, the seven biggeststocks in the S and P five hundred
are up more than fifty percent thustfor this year. That would be Apple,

(10:35):
Microsoft, Amazon, and Video alphabetTeslain, Berkshire. The remaining four
hundred ninety three are basically flat,and that bifurcated market is some some costs
for concern. Generally speaking, youknow, a relatively small number of stocks
lead the market, but this isthis is small by any measure in seven

(10:58):
and I think that if you lookat the formats of the Ruffle two thousand,
which is the second third thousand largestAmerican stocks, you have that up
less than one percent. You're theSMP five hundred up twelve fifty two that's
without dividends to the s ANDPF Ibunched probably fourteen percent with dividends. And
you know you have the four hundredand ninety three out of the SMP five
hundred flat. So how can sevenseven stocks control and index? It's because

(11:22):
the SMPF i've hundred. Again,as regular listeners to our show, note,
it's kind of a market that kindof it is a market capitalization weighted
index. So you have this marketthat's that's on the equity side, you
know, kind of behold into theNastack composite, behold into the large cap
tech stocks. FINCI strates stay higherfor longer. That's somewhat of a of

(11:45):
a negative for tech, although historicallyit's a negative. I think this week
was was I guess the drop ofthe NAZ that exacerbated by the the the
tension centering around interest rates. Youknow, once this attention, once interest
rates or the attention gravitates or movestowards something else, namely earnings. In

(12:07):
about two or three weeks, Ithink that will be that will be moving
the market rather than interest rates.But because the FED was meeting, because
of their hawkish tone, uh,the naz that got hit a little bit
more than others. I would think, you know a few more percent,
and then NAZA could probably be youknow, a buying opportunity in NAZAC seventeen
point seven percent away from its alltime high. As I mentioned early the

(12:28):
s and P five hundred and ninepoint nine three percent, so back into
correction territory, that that was onlyabout five percent away from mids all time
high. Dall said, it's alltime NY January fourth to twenty two to
thirty six thousand, eight hundred tothirty four nine sixty three. So it's
although it's only five percent away fromits all time high, it's still you
know, has hasn't said an alltime high since since early the first first

(12:52):
or second trading day of last year. So you have this type of a
market that's that is choppy and probablywill continue to beat choppy, at least
for the near term, although,like I said, you know, we're
building those bricks to climb that wallof worry. We're entering a seasonably good
period. The market has sold offduring the months of August and September as

(13:15):
expected. It's not an actionable item, you know, when you talk about
two or three percents, not actionable, and you're setting yourself up probably for
a good close to the year,if not for the entire fourth quarter,
probably for from mid October on.That's kind of how we'd be looking at
it right now, because earnings willprobably come in at or above expectations.

(13:37):
Corporations seem to be doing a verygood job with it. Some caveats obviously
being the budget negotiations, excuse me, the debt negotiations, and interest rates,
and also you know, Ken,the UAW and the two of the
three big three domestic auto manufacturers,you know, come to a meeting of

(13:58):
the mines. There, interest rate, the interest rate component, you had
movement movement up in interest rates.You had a flattening of the yield curve.
Yield curve basically measures the short termrates versus long term rates. The
two year Treasury note moved up tofive point one percent from five point zero
two percent. The ten year Treasurynote went from four thirty three to four

(14:20):
forty four, So that spread betweenthe ten and the two year narrowed a
little bit to point six six percent. The thirty year went from four forty
two to four fifty three, thetwenty year from four point five nine to
four seventy so so and then sothe shorter end of the curve, shorter
term interest rates went up less thanlonger term interest rates. So if you

(14:41):
if you look at that like agraph, you'll see that, you know,
the yield curve just flattened a littlebit, meaning that you know,
longer term rates went up at aquicker paste than shorter term rates. So
it also provides the opportunity along that, along that which you would call like
the middle of the curve, thebelly of the herve. The US,
the seven year right now at fourpoint five three percent cecific at four point

(15:05):
five three percent non taxable in astate of New York, if you're in
a five percent federal tax bracket,you're adding about another quarter point on to
your return, you know. Butso the CD equivalent return is four seventy
seven, So that's not that's notbad right now. If you're looking at
a four percent distribution right not adjustedfor inflation, that covers your distributions for

(15:28):
for your life. So market centersaround the Fed this week. The market
centers around their attention centered around seasonality, and the market centered around the debt
negotiation negotiations over you know, raisingthe debt limit, and those three things
combine and kind of dealt the market, you know, a little bit of

(15:52):
a setback, and and that's howwe have it one eight w G y
one eight hundred eight two five fivenine four nine. You know, you
look around the world, you're kindof seeing similar concerns as far as interest
rates go. Central banks with theirrhetoric, hawkish rhetoric, but you know,

(16:17):
kind of where our FED is,they're getting to where they want to
be, and you're not going tosee the seventy five bases point increases in
interest rates like we saw in twentytwo three consecutive ones. You're going to
see they're nothing in a quarter andeventually going to you're gonna see nothing and
then maybe some more dubbish rhetoric.Let's go to the phone. So let's
go to build you're wanting to Bill, you'reut in the end, Thanks for

(16:38):
calling. How can I help you? Oh? Yeah, I know you're
talking about domestic stuff, but alsothere's a lot of other factors that maybe
you can add how they might affectthe markets. Sure, you know,
OPEC has decided they're going to raiseoil prices. They're not gonna they're gonna
limit production, which will essentially raiseoil prices. China has got a banking

(17:00):
crisis on its end, which howwill that spin off to other countries and
to the United States? And whatabout the strikes? All these seem to
be other factors beyond just the interestrates that server affecting the markets. Yeah,
definitely touched on the UAW earlier thisyear, earlier this week, earlier
today. Excuse me, And youknow the problem you have a show too,

(17:21):
Bill, is that, you know, with the China thing. You
know, I don't want to talkabout the same thing over and over again,
so I try to talk about somestuff that happened this week. But
but you're and we have talked aboutChina a little bit, We've talked about
OPEC. But I agree with youone hundred percent. China's property financial issues
and property issues are affecting our market. I think our movement away from them

(17:42):
as the primary supplier to our manufacturersis affecting inflation at home OPAC. You
know, our draw down of thestrategic petroleum Reserve by President Biden over the
past year and a half to keepprices in check due to Russia's invaded invasion
of Ukraine, I think was nota really smart move, but that that

(18:03):
has to be replenished at a timewhen you know, Saudi Arabia's part of
the bricks movement away from really relianceon Western money and the IMF in international
Monetary fund. So all these things, yeah, I agree. And then
you had interest rates over five percenton the shorter end of treasuries and well
over four from ten years you know, the whole the whole yield curve.

(18:26):
So yeah, those are all thingsthat I think are kind of influencing investors
right now. I don't know ifyou're a professional investor, a retail investor,
but what are your what are yoursentiments right now really towards not the
stock market, but what type whatwould you what's your main concern with the
market is it the interest rate thatthat provides an alternative to stocks, is

(18:47):
it is it some of those otherissues you brought up, or is it
just the combination of all of theabove. Well, I had an irrational
banking background before I retired. Sothe international climate a lot, and and
I see a lot of cross currentsand oil tightening up probably means that you

(19:08):
know, it's going to slow theeconomy down. UAW wants a lot of
pay increases, not to say thatsome aren't justified, but that could hurt
our industry domestically, so agreed.H And then you've got the mortgage markets
which are closing down, the realestate prices, and then I'm afraid of
the longer term. Are you knowthe prospect of war because this thing in

(19:33):
Armenia orgo Tarbash could expand because Russiawants to take over Armenia. You've got
the potential contagion if the Chinese bankingsystem collapses. So those those are the
things are the black swans that Iwonder about. Yeah, all good points.
And as you know, being inthe financial business or this side,
there's always going to be those issuesthat are affecting them, that are affecting

(19:57):
you. Know, sentiment and andinfecting affecting the economy and its spiritual investors
are looking They're looking at more thanjust more than just interest rates. They
are taking a look at those things. Oh, definitely, definitely, and
so are we. So are wejust you know, we have we have
half an hour or so we tryto address some of the things that are

(20:18):
top of mind and top of reallyyou know, affecting the market. Literally
done at ten A. And that'swhat I thought about words interest rate,
but point well taken and and definitelyissues that are going to affect the market.
Though, thank you for your call. Thanks were going, yeah,
and and they brings up some goodpoints, you know, and I'm like

(20:40):
what I'm saying saying earlier that youknow, he had this time slot and
it's like, okay, what whatwhat you know the second half of the
week. What affected that? Itwas the FED. But when you talk
about some of these other issues,and there's always going to be issues that
are you know, that are goingto impact the direction of the market.
And that is why the old sayingis the market climbs a wall of where

(21:03):
That's also why, though we've beensaying for quite some time that you know,
after the run up out of October, and it's time for a breather,
you know. But but on theother hand, you look at our
economy, and our economy is prettystrong right now. You have interest rates
excuse me, you have unemployment verylow. You have you know, you
have housing prices high. Now thatis a double edged sword. Interest rates

(21:26):
are high. Affordability is very verylow now relative to historical numbers and also
relative to over the past years,interest rates have moved from three to well
over seven percent on the thirty yeara mortgage. But ye have low employment,
you have a stronger, relatively strongconsumer. You have consumer sentiments still

(21:51):
in decent shapes they have. Youhave some good things going on for the
market, but you also have onthe other side of that ledger, so
to speak, you've got some realissues and and and Bill is right,
you have you do have a RussianArmenia, who had been historical allies,
kind of moving away from each other. And uh with Putin, Vladimir Putin

(22:11):
where he is uh internationally, uh, basically relative to the Western democracies.
You know, you never know whathe's gonna do. But nonetheless, you
know, you move forward, youkeep yourself abound. And that's why like
a sixty forty seventy thirty portfolio isappropriate for a lot of individuals, you

(22:33):
know, fifty five and above.You know, we we were now you
can you can lock ins that thatten year at force for forty and I
think that makes some sense for alot of people. Uh. Anyway,
So we kind of not going on, and there is a lot more that
will be discussing in the second halfrelative to a study by Transamerica. You

(22:59):
know about the different generations and theirconcerns, and you know how to navigate
through these markets regardless of your age. But right now, it's ten thirty
on the station depend upon for news, weather and information, New stock Gate
ten and one O three one wG. Y, Good morning, and
welcome back to the second half hourof the Capitol District's Money and Investment Program.
You're listening to the Fagan Financial Report. Dennis Fagan sitting here with my

(23:22):
son Aaron, as we do everySunday from ten till eleven right here in
New stock Gate ten and one Othree one w GI. You know,
spreading a kind of broadening out thetopic. A survey that was done by
the Transamerica Center for Retirement Studies,post Pandemic Realities, the retirement outlook of
the multi generational workforce. And wefound it very interesting and just you know,

(23:48):
and having done this, having beenin this business for since nineteen eighty
three, so literally forty years.Started the company in eighty nine, so
it's thirty four years. Aaron's beenwith us since twenty eleven, that's twelve
years. Seen a lot and andseeing a lot of U. There is

(24:10):
no right or wrong journey through life. You know when you think about it's
your journey, it's yours. Tospell out, it's you. You deal
with it, with the repercussions ofall of your choices, both positive and
negative, and and it's it's yours. It's your journey. There's nothing to
be sorry about. There's nothing.Maybe you waste money, maybe you do

(24:30):
this, maybe you don't waste money, wasting subjective as well. And I
know I'm rambling on here, butyou know what I mean, it's a
journey through life that that's that's yours. Yeah, And you know, we
have people come in all the time, and you know, we say,
hey, you know, over thirtyyears of four percent distribution, never ran
out and you know it. Butyou know, you never tell people,

(24:53):
you know, as financial advisor,like six percent is okay, seven percent
is okay, this is okay,that's okay. And you know most of
our clients end up with money whenthey die, So you know, it's
it's hard because I think in life, you even like, I'm thirty three
and all, happy birthday, andall I do is think about not all

(25:15):
I do, but I think alot about retirement, saving enough and having
enough money to get me through retirement. And I think, like, you
know, thirty years of that mindsetfor people, they forget why they saved,
and that that's to spend some moneyand enjoy the money that they saved,
you know, and and add kindof right it is, it is.
But even as you as you movethrough that right, as you as

(25:36):
you move into those years, youknow, let's say you're you're, you're
you're thirty five, there's all decisionsthat you make along the way that change
the trajectory of your retirement. It'salmost like the Titanic, and not in
a negative sense, but you know, whatever little turn a big ship makes,
you know, it affects where theyend up. Yeah, like the
butterfly. Yeah, and right,and the further you move out from that

(25:59):
that initial turn, the distance betweenthat initial turn and where you are now
is the further you are from whereyou would have been right, you know,
just a small turn. So sothis was this was very interesting in
my It's about forty pages and we'llprobably spend we will hopefully spend the second
half hour on this, and thisis really food for thoughts. Some of
the numbers and some of the sentimentthat was gained from this just to help

(26:23):
our listeners, and you know,breaks it down into the visions of aging
in retirement, current wealth, employmentand personal finances, retirement outlook and savings
four oh one k's, and thenretirement playing in enterprise. And if you
want a copy of it, youknow, it's right online. Just I
would just google Transamerica Center for RetirementStudies. And then you then post pandemic

(26:45):
realities, the retirement out look ofthe multigenerational workforce. So initially, you
know, if you know, lookingright at at the the generations, and
they did like a twenty or twentyfive minute surveys. They interviewed these four
the four generations. Generation Z,which was born between nineteen ninety seven to
two thousand and twelve, the Millennialsnineteen eighty one to nineteen ninety six,

(27:08):
Generation X nineteen sixty five to nineteeneighty and the Baby Boomers from nineteen forty
six to nineteen sixty four. Andif you look at the the some of
the some of the like looking atthe generations you know. On a page
ten of the study, it talksabout Generation Z born between nineteen ninety seven

(27:33):
to two thousand and twelve. Isthere people what like from twenty twenty six
five to twenty twelve to twenty sixeleven to twenty six young and of decades
to grow their retirement savings, theywill, according to the survey, they
will change employers many times throughout theircareers. Think of how that differentiates from
myself in their career, like Iworked through high school in the like,

(27:56):
but their career, I've had twojobs. I worked for an insurance company
from eighty three to eighty eight andeighty nine and then then this job.
They will change employers many times throughouttheir careers and likely spend time in self
employment, So they must be diligentin managing their retirement saving especially during transitions.
Yeah, and I think you seethat a lot with younger people is
you know, oh, I'm justI'm through a you know, transitional period

(28:18):
and need stop, you know,contributing to a four oh one K or
an IRA account. And then youknow, a couple of years goes by
and then you don't pick it andthen yeah, you kind of forget and
you're like, oh wow, Ihave to pick it back up, you
know, and it's much different now, you know, for let's say gen
Z, because as you were saying, you know, we've switched from you
know, a defined benefit plan toa defined contribution plan. So you know,

(28:40):
as you were saying, you know, those years of working thirty forty
years for the same company, gettinga pension and going on your marry way
and retirement are kind of over.You know, the you know, the
employee always has to you know,kind of be weighing the pros and kinds
of staying at the job, gettinganother job, getting promoted, things like

(29:00):
that, and all while you know, deciding, uh, you know,
where to how to how to savefor retirement. There's usually maybe a lag
period of six months or so beforeyou can get into let's say a company's
four on one K that happens alot of time, so you know,
yeah, it's tough for for it'stougher, let's say, for for Gen

(29:21):
Z and younger, younger generations toyou know, to navigate the early parts
of retirement and you know, theconstant contributions that you you have to be,
you have to you know, continueto do and also as you change
jobs to drag among those those priorfour on one case with your consolidation,

(29:41):
you know, right to make sureyou continue to sell there. But but
also when you came into the workplace, I think kind of frames your perspective
on the financial side or or actuallythe life's journey side, if you want
to, you know, broaden itout. And I love that term,
and there I believe it that lifeis just a wonderful journey. That Generation

(30:04):
Z entered the workforce shortly after COVIDnineteen. But if you think Generation Z
was born in nineteen ninety seven totwo thousand and twelve, nine, I
think that's what it's defined as.That means they probably if you got out
of college at twenty one years old, let's say you went to four year
college. Let's say you got yourmasters it was right before COVID, But
if it was if twenty eighteen,you would have graduated in the fall excuse

(30:30):
me, the spring of eighteen.You were probably only in the workforce for
about a year a year and ahalf when COVID hit and then unemployment skyrocket
it. Perhaps you were laid off, perhaps you were furloughed, perhaps you
were your hiring was delayed, whatever, but there was a lot of changes
that I think, you know,well, we'll then frame your outlook on

(30:51):
work maybe for the rest of yourlife, and maybe on life for the
rest of your life. So youknow, as we go through these four
different generations, a lot of that, a lot of your perspective might be
influenced by when you came into theworkforce. You know. It goes on
to say more than half of thoseexperienced one or more negative impacts on their
employment, ranging from layoffs and furloughsto reductions and hours and pay. Fifty

(31:14):
seven percent of troublemaking ends meet,and thirty percent of working two or more
jobs, and fifty seven percent havea side hustle. That's the generation below
you where because you're you're in thethe what do you in the millennials.
You're a millennial. Do you haveany insight into that people that age a
little bit or do you give it? Yeah? Well, you know what's
got me thinking about this was wasit Wednesday or Tuesday? We had a

(31:37):
client coming with his son and hewas nineteen years old and he's going to
school to be a linesman for hewanted to work for National Grid and he
had like fifteen grand saved up,and you know he wanted to you know,
start putting you know, money away. So he is so just a
little frame of mind he had,you know, let's say fifteen grand,

(32:00):
and he's asking me kind of torun some numbers and he wants put two
hundred dollars away a month beginning nowand see how much it would be worth.
And I told him that, youknow, just with you know,
let's say an eight percent way toreturn. You put two hundred bucks away
from now for thirty years until fortyyears until his retirement, he'd have over
a million dollars. And he's like, wow, that's great. And and

(32:22):
you know what you get from itis, you know, two hundred bucks
is a lot for some people amonth two hundred bucks Isn't that much for
some people, so it's hard tosay it's easy to do, but for
him it was. You know,he has he has a part time job
working for his dad. He caneasily do that and it will go a
long way. So he's kind ofasking me how much should he put away

(32:43):
all this? And you know whatI kind of said was, you know,
in my twenties, I think thebest thing that he could do is
start doing this. And you know, it's great to have a million bucks,
don't get me wrong, but Ithink it also sets you up for
having good habits the older you getas well. So you know, what
I always say is, you know, the dollar amount's important, but just
getting in the habit of saving everysingle month is just as important as the
dollar amount. Into what I WhatI get is, you know, there's

(33:06):
a little work at a young agegoes a long way at an older age.
I think you can you can,you know, use that phrase through
through lots of things in life,through leading habits, through exercise, through
whatever. You know. Now,now we get into the next generation,
the millennials, which is which isyou. Millennials entered the workforce around the
Great Recession, which began in laterseven the experience a turbulent economy early in

(33:30):
their working careers, probably layoffs recentlyduring the pandemic. They in the end,
it's ay aftermath. They started thecareers with lots of student debt,
your student debt loan numbers, youknow, in the nine percent, because
the interest rate started like about twothousand, two thousand and eight was when
I went to college, So youknow, waited to start families, waited

(33:51):
to buy homes, waited to getmarried. And now now you're thirty four,
Now you have your own home,you have a child, you're married.
But you did come in during therecession. You spend a lot of
your money on you know, downpayment on a house or something like that.
Because I think in two thousand andabout five percent of homes were sold
were below to two hundred thousand.Now it's less than two percent. So

(34:15):
yeah, you know, I thinka lot of people, like people my
age, are forking up a lotof cash for their first home. And
I think the idea of a starterhome is kind of not as you know,
prevalent as as it was let's saytwenty thirty years ago. Well because
of inventory being solo be quote,because a price is staying so high.
And also if you think of justthe luck of the draw almost yeah,

(34:37):
if you waited two or three yearsto buy a home, now you're talking
interest rates seven seven and a halfpercent, which then you know it just
you know, and this is kindof it changes your frames, your your
your outlook on the future a littlebit, you know, with interest rates
where they are, I think,you know, I know, most of
your friends probably own their own home, at least from the ones I can

(34:58):
think about, but there's there,there's I'm sure there's a lot of millennials
out there that are you know,anywhere from twenty seven to looks like about
forty two or forty three that don'town their own home, that are like,
wow, am I ever going tobe able to get to buy a
home? Yeah? You know,yeah, the inventory is so low now.
And let's say, you know,if the average home prices, I
think it's like three hundred and ninetythousand dollars, you're talking about, you

(35:21):
know, an eighty thousand dollars downpayment, and it's still nesting gifts or
I think forty percent of people whobuy first homes are get their money from
a gift from their family so yeah, it's it's hard for people out there
to get that cash to to puta down payment on a home. It
also says this, and again it'sa survey of twenty two thousand people from
the Transamerica Center for Retirement Studies,that many millennials will be called upon this

(35:45):
caregivers for aging parents or loved ones. You know, but that's gonna be
quite the mix. And that thatthat you know then translates into you know,
and and the reason we're bringing youthrough the four generations is not because
those are our target audience. I'msure they're not. But think about you
know, you're a millennial, I'ma baby boomer. You know, many

(36:05):
of you guys will be calling yoursister Sam, will be called upon as
caregivers for aging parents, myself andyour mom. Unfortunately, the thing of
the country, at fifty three percentof adult males will end up in a
nursing home in America. I know, it's crazy. You have your barn,
don't you. I'm telling you,I'm I'm watching, I know,
And I was talking to Lauren aboutthat, like be moving in yeah eventually,

(36:27):
because because did Mom's gonna live alittle bit longer hopefully not too much.
But oh wow, you're killing usboth off. No, I'm there's
a documentary Netflix called Live to onehundred that I've been telling you want to
watch. That's like fifty three percentof adult males will live in a nursing
home. In a nursing home statisticallytakes about two to six years off your

(36:50):
life by going in there. Anda lot of it has to do with
loneliness. You know, you're welcome, You're welcome in thank you, you
know. But if you look atthe millennial again twenty seven to forty two
now faced if you don't own yourown home, perhaps still student debt,
higher mortgage interest payments, interest onyour mortgage when you do go to buy

(37:15):
a home, and perhaps down theroad, you know, the the the
really the decision of hey do Ihelp my mom and dad out if they
need it, And then that'll influenceyour work schedule, It'll influence you know,
taking kids to soccer, It'll influencewhat you can say for retirement and

(37:35):
the like. So it's not aneasy situation to be in being a millennial.
And I think that's some of theirconcern that they have expressed in this
survey and so that's why you wouldneed it. Says only about a third
of millennial workers have a financial strategyfor retirement or a written plan for retirement.
And I don't know if a writtenplan, but I think it goes

(37:57):
back to what you said earlier andthat it does may sense to maybe not
have a written retirement plan at thispoint, but to form good habits.
And you were saying for the genzs to to uh get in the habit
of saving regularly at least matching thematch of your employer. Yeah, and
you know, and but you know, and I will you know, you

(38:17):
know before you walk out the doorbetween it, Let's say you you don't
own your home rent, You certainlyhave rent, but you also between your
cable and cell bill. What's thatfour hundred bucks a month? You got
four hunred bucks a month that wedidn't have. Right when you walk out
the door, Well, wait,what that you're paying? Wait you're paying
if you have cable and cell phone. You've got four hundred dollars and bills
I didn't have. We didn't havethat when we were growing up. There

(38:38):
was no cell and no cable.Yeah, that's true. And now so
you have that cost that we didn'teven have. Let's get on to the
next generation. The Well, it'sfunny too, you know, I guess
it's not our target our target targetaudience. But I met with two clients
with their kids in the past fewright, and like, you know,
it's hard because financial advice and like, I think kind of coincides with life

(39:02):
advice sometimes too, and like andI don't think the parents were too happy
with how I worded it, butit was basically like, you know,
get in the good habits of saving, don't take on debt. But you're
only in your twenties once. Youknow, I'm thirty four right now.
Being in your twenties gives you youshould be doing things that you should be
spending money as well. Like I'mnot saying going to debt to go on

(39:25):
trips, but you know, Ihave a family now I can't do things
that I used to do. Youknow, there's only kind of one period
of time in your life too,that in retirement where you can do things
that that you want to do foryourself. Well, also think about it,
there's there's things that you're not Youmight have the money and not the
family in your retirement, you don'thave the physical capabilities, yeah, anymore

(39:47):
to do the things like if youwanted to hike the Appalachian Trail or do
this or do that. You knowyou may you don't mean you might have
the physical capabilities when you're retired.So so that's why I kind of go
with set set up good habits.As you know, setting up good habits
is just as important as the dollaramount, because if you set up good
habits at a younger age, thosewill follow through and don't get into debt,

(40:10):
try and save monthly, and youshould be in pretty good shape and
be rational with your purchases. Likeeverybody, you know, is now the
time in your twenties to buy avery expensive car? Yeah? You know,
probably not, you know what Imean. Maybe it is for some
people, but it's not. Andlike I say to people clients who can,
I'm like the doctor who smokes,you know, I get to look
at your stuff and tell you notto smoke, But you don't know that

(40:34):
I smoke. And you know,certainly have your mother and I have some
some bad habits financially ourselves. GenerationX entered the workforce in the eighties and
nineties as the fine benefit plans werestarting to vanish from the retirement landscape.
Just met with a couple of clientsand that's their big that's their big issue
now they're they're fifty six, fiftyseven. They don't have a defined benefit

(40:54):
plan and remember that providing monthly incomelike the like the state or a big
companies. So they are on theirown and that brings with it a lot
of worries moving forward. What arewe gonna say here, No, it's
you know it. You don't wantto say, hey, it's so much
harder for younger people or whatever,but you know, that is so much

(41:15):
harder. Think of how many clientswe have that don't have anything saved in
there, you know that that don'thave much savings, or people that I
know because they don't need it.They have seven thousand dollars coming in a
month from a pension that's gone,you know, if those pensions are those
pensions are gone for forever, really, you know. So that's that's really
hard for you know, for formillennials essentially, because you know, having

(41:39):
the burden of having to save foryour retirement is hard. I think you
can move that right up to Generationxers. I think there's very few people
that are fifty eight and younger unlessyou market for municipality that have a strict
defined benefit plan. A lot ofthem got rid of their defined benefit plan
ten or fifteen years ago. Theythem and then coupled with a four now

(42:01):
they have a four oh one Kwhere they're matching. So let's say I
was and I'm a little older babyboomhere. But if I had a pension
that would have when I was twentyfive. Oh no, if you worked
forty years here, you're gonna geteight thousand dollars a month when you retire,
maybe fifteen years after I retired,or excuse me, when working for
this company as defined as defined benefitplans, when out the window and define

(42:23):
contributions came in, they froze thatplan and said, oh no, you're
gonna have a thousand dollars a monthwhen you retire. But you're going to
have but you're going we're gonna matchthree percent of whatever you put into your
four O one K. So that'sit. So right now, there's a
lot of those generation extras that aresaving for retirement, but they only have
about eighty two thousand dollars on theaverage that's the median saved up in total

(42:46):
household retirement accounts some of their concernsor can they retire fully, retire with
a comfortable lifestyle and do the thingsthat they want to do. Their concern
about social security as everybody is,and I think they justifiably have to be
concerned about not social security benefits beingthere as I don't think baby boomers do,

(43:07):
but in the format that it's intoday, without you know, more
stringent restrictions on uh, you know, taxes and payouts. The fourth generation
are baby boomers. Baby boomers haveyou know, basically uh, move from
the fine benefit plans to define contributionplans. They're working at a much too

(43:29):
a much older age. Uh.They are kind of not seeing retirement as
going cold turkey. They are keepingtheir hand in and that's what we firmly
believe is productive for that for individuals, you know, unless you have a

(43:49):
horrible job and a huge cushion,we strongly suggest that you know, for
baby boomers, you're looking to addflexibility into your into your life so that
you have the time to do whatyou want to do, but also the
money to do what you want todo. So look for ways to cut
back in your work schedule, talkto your employer as you approach which you

(44:12):
work, what you would want tobe a retirement age, and talk to
your employer about, you know,maybe going part time, job sharing,
you know, when are you goingto take Social Security? And they like
forty one percent of baby boomers expectsocial Security to the retirement sources of income.
A lot of them don't work foremployers with a flexible work schedule,
so they're really trying to figure thatout, uh, you know, as

(44:37):
you go. So that's where FaganAssociates were commanding. They have about two
hundred ninety thousand dollars as the medianfor savings and according to the survey,
most expect you didn't need at leastfive hundred thousand dollars two thirds only two
thirds say their employers are age friendly. They're by offering job opportunities, working
arrangements, work part time, flexibleschedules, and the like. And I

(44:59):
think that's a big gets you nowthat a lot of your your formal employers,
it seems like you're more traditional employersdon't have flexibility to accommodate. I
don't think the changing workforce post pandemic, changing workforce. I don't know how
you feel about that air you know, as you move, you know.

(45:20):
So those are like the four generationsand some of their concerns and most plan
to plan to everyone plans to livea long time. So I think if
you, if you were to recapsualizeit, I think the first generation to
you know, uh, get intogood habits. Second generation, that's generations

(45:44):
to don't incur debt if you don'thave to think through those big purchases as
well as small purchases, but obviouslybig purchases more, uh, match the
company, match uh. Live withinyour means, and as you get older,
become you know, get a moreget a more formalized plan down.

(46:06):
Make sure on a regular basis thatyou are you know, getting your Social
Security benefits. If you're changing jobs, make sure you're allocated correctly, you
know, maybe one support if you'rea financial advisor, maybe once a year.
I think once a year is enough. Make sure that hey, you
know, you're allocated correctly for yourage and where you are at in life,
which let's say you're fifty and under, that would be what would in

(46:27):
the stock more would the vast majorityYeah, probably yeah, I think if
I was fifty, i'd have sixtypercent of my money in the market.
Okay, you know, what doyou think I would say more than that?
You know, you know, uh, you know right now our growth
and income fund is probably sixty sevenor sixty eight percent in the market.
That's where people are retired. Butyou know it depends. But but you're
right, you know, with withinterest rates picking up to five percent,

(46:49):
I know that's what I'm thinking,like that forty percent. And you know,
even if if you go outside alittle bit risk ear bonds, you
know, you can go to youknow, corporates and get six seven start
integrating that into your portfolio a littlebit. So yeah, I think work
within your risk talents, and Iyou know, you know, I guess
you know, Mom and I atour age, seventy per cents in the

(47:09):
stock market, thirty percents in bondsin cash. You know, if you're
willing to accept the ups and downsof the market, then then you go
still working and so you still havea cash flow coming in. So I
think that's important for your That's true, that's true. So that'll just about
do it. Look, we barelygot through this bebe'll touch on it next
week and pick it up from there, you know, finish the rest of

(47:32):
this study. So if you likedwhat you heard, please feel free to
email us at fagan Asset dot com. We can we can send you a
copy of the study. It isonline a Transamerica Study for Retirements, Starins
America Center for Retirement Studies, postPandemic Realities. Just google that and you'll
get it. If you need toget a hold of us five and eight,
two, seven, nine, tenforty four, check us out on
the webit Fagan Asset dot com,Like us on Facebook and be happy to

(47:54):
get in touch with it. Ifyou want a plan for retirement, please
feel free to get in touch withus. Take care of Take care