Market Wrap-Up for Oct.15 (C, GS, CNX, HD, LOW, more)

As we get set to kick off a huge week for earnings, investors had started a bit slowly in the early going, but the buying did pick up to give us one of the better closes we have seen in a while.

Financial stocks picked up a bit following Citigroup’s (C) earnings beat this morning. Goldman Sachs (GS) and J.P. Morgan (JPM) were just a couple of names making strides in today’s session. In other earnings-focused news, two energy-related giants came out with cautionary comments about their current quarters today. Consol Energy (CNX) and Entergy (ETR) both said they expect to miss analyst estimates this period. Elsewhere, positive analyst commentary helped lift home improvement giants Home Depot (HD) and Lowe’s (LOW). Both stocks have seen share prices gain nicely in 2012, with investors hoping a potential housing rebound will lead to higher demand for their home improvement and construction products. In contrast, cautious Wall Street commentary had stocks like Hasbro (HAS) and Wells Fargo (WFC) moving lower for much of the day.

Social Security Number Crunchers Bracing for Small Increase

As many retirees await tomorrow’s official announcement about the 2013 Social Security increase, several reports are indicating the size of the increase could be between 1% and 2%, which would be in line with multi-decade low increases. With government data indicating little to no inflation (calling Jack Welch!), anything more than a small increase is highly unlikely.

In fact, in two of the last three years, the Social Security Administration has made no cost-of-living increases at all. Compare that trend to the last 37 years, where the average annual increase was 4.2%, and you can see why more and more individuals are seeking retirement income from sources such as dividend-paying stocks.

When it comes to actually collecting Social Security benefits, we tend to chime in on the side of delaying payments if feasible. Keep in mind that taking benefits at age 62 locks in payments that are only 75 percent of what they would be at the normal retirement age of 66. Delaying benefits at age 66 will raise them by 8 percent a year until age 70, after which benefits do not increase with age. This strategy, along with staying in the workforce as long as possible, could help maximize your retirement income.

A Strategy for Retirement Fund Withdrawals

If you are already retired, you need to use a smart strategy regarding the money you withdraw from your accounts to cover everyday living expenses. Many financial advisors tend to use a 4% annual withdrawal rate when discussing retirement savings withdrawals. With this approach, investors withdraw 4% of their retirement balance in the first year of retirement, or let’s say $20,000 from a $500K portfolio. The dollar amount of the withdrawal could be adjusted each year to keep up with inflation. So whether you are deriving income from dividend-paying stocks, bonds, bank CDs, or other sources, you can at least have a starting point (4% withdrawal rate) to factor from.

Doing the bare minimum (for example, saving a set amount each month to invest, but never pushing harder to raise the amount you invest over time) will likely leave many short of an enjoyable period later in life. Some may think that their current financial obligations will eventually wind down, and then they’ll really begin to stockpile away money for their golden years. Unfortunately that is almost never the case. Too many unforeseen events can happen (divorce, a family death, getting laid off, etc.), and you can’t afford to lollygag when you could be doing more — all the while still enjoying life’s finer moments as well.

Building wealth requires you to aside funds and invest them in income-producing assets (dividend-paying stocks is our immediate focus, but it can be investing into growing your business even more, or buying a property that can be cash-flow positive). If you are already retired, it may mean coming back in the work force part-time to ease the amount of money you are withdrawing from your savings (if you are unable to work because of a disability, there can be work you do from home possibly) or not being gun-shy when it comes to staying active as an investor. Regardless, taking charge of your financial profile is paramount to getting the most out of your later years.

I hope everyone had a chance to check out our Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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