🍦 Is a Retirement Crisis Looming?

PLUS: Home prices hit another record in May

Author

Aditya Raghunath
June 24, 2024

In partnership with

Bulls, Bitcoin, & Beyond

Market Moves Yesterday

S&P 500 @ 5,464.62 ( ⬇️ 0.16%)

Nasdaq Composite @ 17,689.36 ( ⬇️ 0.18%)

Bitcoin @ $62,253.66 ( ⬇️ 3.73%)

Hey Scoopers,

Happy Monday! We have an exciting newsletter for you today:

👉 A retirement crisis may be on the cards

👉 Home prices continue to rise

👉 Bitcoin slumps below $63k

So, let’s go 🚀

Market Wrap 📉

The S&P 500 index ticked lower on Friday as shares of market bellwether Nvidia pulled back for the second consecutive session. Nvidia shares have fallen more than 3% in each of the last two trading sessions.

Comparatively, the Dow Jones Industrial Average jumped 1.6% last week, reporting its best weekly performance since May.

Salesforce, Amgen, Nike, and Cisco Systems were the top performers on the Dow Jones index last week. Conversely, United Health was the biggest weekly loser.

The total U.S. market saw its highest trading volume since March 15 due to triple witching, which is the expiration of stock options, stock index options, and stock index future options.

Sarepta Therapeutics- Shares of the biopharma company surged 30% after the U.S. Food and Drug Administration approved the expanded use of its gene therapy.

Hertz Global - Shares of the car rental giant popped 16% after it announced an upsized bond offering to $1 billion, higher than its initial plan to raise $750 million as it aims to refresh its fleet of vehicles.

Asana - The stock jumped 15% after the software firm announced a buyback plan that would cost $150 million.

Have You Saved Enough for Retirement?

People are living longer, which is awesome, but it also means that your savings need to last much longer in retirement. Experts believe that AI is set to revolutionize healthcare which should extend lifespans significantly all around the world.

Alternatively, people aren’t saving enough for retirement. A report from the Federal Reserve’s survey of consumer finances states that just 10% of American retirees have saved more than $1 million.

So, if we use the 4% rule, which suggests withdrawing 4% of your annual retirement savings, a $1 million retirement corpus translates to $40,000 per year, which might not be enough to lead a comfortable life even if we account for social security benefits.

The U.S. Social Security Administration has warned that payroll taxes are likely to cover less than 80% of benefits by 2034. Further, the Employee Benefit Research estimates the U.S. has a retirement savings deficit of $3.83 trillion.

One solution to this problem is to work for two additional years, which can boost your retirement income by 20% due to higher savings, delayed withdrawals, and higher social security benefits.

Another strategy is to increase your investment contribution and horizon to benefit from the snowballing effect and the power of compounding.

For example, over a 40-year period, a $5000 annual investment would grow to $1 million, given annual returns of 7%. However, if you begin your investment journey after 10 years, your nest egg would be much lower at $500,000.

Home Prices Jump In May

A report from the National Association of Realtors stated home prices hit a new record in May.

  • The median sales price for existing homes stood at $419,300, up 5.8% year over year.

  • Sales totaled 4.11 million, down 0.7% but higher than estimates of 4.08 million.

  • Unsold inventory stood at 6.7% from April and stood at 3.7 months of supply, or 1.28 million.

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Bitcoin Is Under Pressure

Bitcoin has underperformed the equity markets after surging to all-time highs in March 2024.

  • Bitcoin long liquidations touched $48 million in the last 24 hours

  • Total liquidations for the broader crypto market stood at $153 million

  • Bitcoin currently trades 15% below its all-time high

Headlines You Can't Miss!

EU accuses Apple of breaching tech rules

Southeast Asia should help companies diversify their supply chain

Stocks are in their longest stretch without a 2% fall since the financial crisis

Nvidia’s brand value is much lower than Apple and Microsoft

Japan-based Metaplanet to buy $6.3 million worth of BTC via bond issuance

Chart of The Day

While indices such as the S&P 500 and Nasdaq are trading just below all-time highs, small-cap indices are trailing by a wide margin.

The rally has primarily been driven by tech giants such as Nvidia, Meta, Microsoft, Apple, and Amazon. This suggests that stocks across other sectors are still trading well below record highs.

Alternatively, small caps represent two-thirds of the labor market and are a leading indicator that suggests the overall market is overvalued. Is a market correction on the cards?

Meme of the Day

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DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.