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November 2018 Whitepaper

On June 22, 2018, The Wall Street Journal declared that Americans are facing a financial catastrophe. For the first time since Harry S. Truman was president, the next generation of retirees will be in worse financial shape than the prior generation. More than 40% of U.S. households won't be able to maintain the living standard they enjoyed while working after they retire. The reason is straightforward: we're not saving enough.

In a recent National Housing Partnership Foundation study of 1,000 non-retired baby boomers, one-third reported having no retirement savings. Despite that stark reality, 70% of the respondents had no problem with their circumstance. Instead, they were at least somewhat confident that things would work out. Thankfully they have jobs!

"How America Saves" is an annual Vanguard report that reviews their clients' savings habits. Being one of the nation's top service providers for defined contribution plans such as 401(k)s, Vanguard's findings are representative of how American workers are preparing for retirement. The 2017 survey found that the median employee had an account balance of just $26,300. Remember, the "median" is that strip of land that divides the road in two halves, which means half of Vanguard's accounts had saved less than $26,300 – that's practically nothing! Looking more closely at long-term patterns, remarkably, that median value hasn't changed in close to a decade, even after generously adjusting for both inflation AND the positive impact of a nine-year bull market in domestic stocks. What a missed opportunity.





Switching from long-term saving for retirement to just having some cash in the bank. . . the financial news website, GoBankingRates, found in a 2016 survey that 69% of Americans had less than $1,000 in their account ready to meet an emergency. Presumably, if an emergency were to occur, these individuals would need to sell assets or incur debt to meet that obligation. A 2017 survey by GoBankingRates confirmed this financially precarious situation. It reported that 49% of Americans live paycheck to paycheck, and that 61% couldn't cover six months of living expenses with their current savings. These surveys paint a disturbing picture of savings in America




How did we become so fiscally irresponsible? Post-World War II Americans didn't have to worry much about their retirement, and therefore, how much money they had in the bank. In 1935, the Social Security Act took care of that, guaranteeing Americans a base level of welfare in their retirement. Post-World War II corporate America was very generous to its workers. Soldiers returning home received guaranteed pensions as part of their employment benefits package – true in both public and private roles. If you were an especially prudent individual, there was a third source of retirement income to count on: after-tax savings accumulated during your working career. These income sources make up the three "legs" of your retirement stool: Social Security, employee pensions, and personal savings (including IRAs and 401(k)s), For just showing up to work, our parents' generation was guaranteed the first two of these, ensuring comfortable retirement lifestyles.

Contrast that experience against our situation today. While previous generations enjoyed corporate-sponsored pensions, today's generation of savers is left self-administering their personal 401(k)-type plans. The responsibility for saving and then thoughtfully investing one's savings has shifted away from the corporation to the individual. While we are still entitled to receive Social Security, no one can be expected to live on that leg of the stool alone. However, few of us are educated on how to build those two additional legs of savings during our working lifetime. Master Edwards, my daughter's childhood taekwondo instructor, always reminded his students: "Practice makes permanent." With no good role models teaching us how to save, Americans today practice bad financial habits that have become permanent. Time is running out for too many of us, leaving only one unrealistic strategy: Hope.

As we enter 2019, in hopes of helping you build good financial habits that become permanent, we plan to produce a follow-up white paper where we will share sound savings strategies, explore the concept of how much savings is "enough", and look deeper into how much you'll need for retirement.

Sources


https://www.wsj.com/articles/a-generation-of-americans-is-entering-old-age-the-least-prepared-in-decades-1529676033
http://www.nhpfoundation.org
https://institutional.vanguard.com/iam/pdf/HAS18.pdf
https://www.gobankingrates.com/saving-money/savings-advice/data-americans-savings/
https://www.gobankingrates.com/making-money/jobs/survey-great-recession-aftershocks/

Disclosure


WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV.

WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account "separate" and distinct from all others we manage.

An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost.

In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax.

Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon.

WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.

Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly.

WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly

WARRANTIES & DISCLAIMERS

There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

View Disclosure
WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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