Stocks Continue an Upward Climb

Our second quarter market recap shows stocks continue an upward climb. Which is a continuation of the positive momentum stocks have shown for the last year or so.

This is great news for those with IRAs, 401(k)s and, to a certain extent, those counting on pension benefits during their retirement years.

Let’s take a look at exactly how well the markets performed during the second quarter of 2017, as well as the first half of the year.

Second Quarter Market Returns

The Dow Jones Industrial Average increased 686.41 points or 3.32% during the period.

The S&P 500 increased 60.69 points or 2.57%.

And the Nasdaq rose 228.68 points equating to a 3.87% increase.

2017 First Half Returns

For the first half of 2017, the Dow Jones Industrial Average increased 1,587.03 points or 8.03%.

The S&P 500 jumped 184.58 points or 8.24%.

And, finally, the Nasdaq saw a 757.30 point increase for the first half of 2017 or a whopping 14.07% return.

Pretty solid returns from all the major markets all the way around.

Why This Matters

Regular readers of Savings Beagle know that my quarterly market recaps aren’t provided to show exactly how the stock markets are doing, rather, they’re used to illustrate the bigger economic picture.

Stock market returns should be of interest to everyone, even if you don’t personally own a single stock.

Often, people don’t connect that IRAs, 401(k)s and other retirement accounts are made up of stocks.

And almost never is it considered that public and private pension plans rely on solid investment returns, much of which come from stocks, to ensure they’re able to meet future obligations.

I’ve written how pensions normally require 7-8% investment returns annually to guarantee the payments they’ve promised.

And if you’ve ever used a retirement calculator (which is what many financial advisors enlist to help guide their advice) those, too, rely on a 7-8% annual return for the long-term calculations they provide.

When the markets miss those marks, anticipated retirement income may be in jeopardy.

Which makes saving that much more important.

Recently, markets have been behaving, and the target returns have been more than met.

But, it’s important to note, that’s making up for some significant downturns – 2008/2009 – and somewhat anemic growth rates in the subsequent years.

And those lackluster market returns, along with other factors, are resulting in funding shortfalls for both private and public pensions.

Since my last quarterly report, we’ve seen more than a few stories pertaining directly to the shaky nature of pensions in America.

In The Wall Street Journal:

• “Ill-funded Police Pensions Put Cities in a Bind”
• “UPS to Freeze Pension Plans for Nonunion Staffers”

And an even bigger, and ongoing issue, Chicago/Illinois’ budget woes continue, primarily the result of significantly underfunded teacher, police, fire and government worker pension plans.

In a recent Chicago Tribune article titled, “Illinois’ Financial Challenges Remain Despite Income Tax Increase,” it notes that although a tax increase has been adopted, the anticipated increase in revenue does nothing to address the $130 billion shortfall in the government worker pension systems.

These are just a few of the pension issues that can be found throughout the U.S.

What does this mean to you?

Well, if you are planning on receiving a specified pension payment in retirement, that may be in question.

And, for those who don’t have a pension as part of his/her retirement plan, you can likely expect a tax increase – less money in your pocket – to help cover the underfunding many public sector pension plans are facing.

All told, saving as much as you can, as early as you can, is vital to a sound financial future.

Which is where Savings Beagle comes in.

We’re here to find deals and pass along tips that’ll save you money, and help keep you on a sound financial course.

If you haven’t already, bookmark our site, follow us on Facebook, join us on Twitter or subscribe to our posts to ensure you receive every savings opportunity we’re able to pass along.

Saving money and planning for the future’s hard – we’re here to help make it a little easier.

Stock charts courtesy of morningstar.com