The Markets February 8, 2008

Markets Register One of Worst Ever Starts

Standard&Poor’s global stock market review, The World by Numbers, indicates world markets registered one of the worst ever starts to a new year.
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World equity markets lost a combined $5.2 trillion in January, emerging markets fell 12.44%, and developed markets lost 7.83%, according to an S&P press release. “There were few safe havens in January as 50 of the 52 global equity markets ended the month in negative territory, with 25 of them posting double-digit losses,” said Howard Silverblatt, Senior Index Analyst at Standard & Poor’s, in the release.

All 26 developed equity markets posted negative returns in January, with 16 losing at least 10% of their value. The January declines negated all previous market gains, leaving all developed markets in the red for the trailing three-month period, S&P said. Twelve-month returns were mixed with 15 developed markets in positive territory and eleven in the red – six with double-digit negative returns.

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In the world’s emerging equity markets, gains were posted by Morocco (+10.17%) and Jordan (+3.11%). Turkey lost 22.70%, followed by China (-21.40%), Russia (-16.12%), and India (-16.00%). Only five emerging markets are positive for the three-month period ending January.

All ten GICS sectors posted losses in January. Information Technology posted a gain of 11.57%, while the Energy sector remained close behind at -11.45%. In general, non-U.S. Consumer related (Discretionary and Staples) issues did worse than their U.S. counterparts, as did Financials.

Although both declined for the month, value (-6.98%) outperformed growth (-8.63%). Asian Pacific Growth dropped 15.95% and European Value declined 17.05% for the three-month period.

The S&P/Citigroup World by Numbers Report for January can be accessed by going to www.worldbynumbers.standardandpoors.com.

Data & Research February 8, 2008

Many Surprised by Expenses in Retirement

Many retirees have been finding that their expenses are higher than anticipated in retirement, according to a survey released by the U.S. division of Sun Life Financial Inc.
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Overall retirement expenses were higher than predicted for 36% of 60-69 year olds, 52% of 70-79 year olds and 66% of 80-89 year olds who responded to the survey, according to a Sun Life press release. When asked what they would do differently, retirees said they would start saving earlier and/or put more money aside.

A large financial concern among both pre-retirees and retirees surveyed was health-care costs. More than half of all respondents noted that health insurance or out-of-pocket prescription drug costs are the primary financial obligations beyond living expenses in retirement.

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Seventy-two percent of 50-59 year olds said they are concerned about the escalating costs of health care insurance they may face in retirement. Three-quarters (75%) of 80-89 year olds are currently addressing, or plan to address, financial obligations related to out-of-pocket drug prescription expenses, the release said.

While retirees are experiencing higher than anticipated expenses, they do not plan on reducing spending on desired activities, according to the survey results. Aside from normal living expenses, respondents in their 50s, 60s, and 70s expect to spend up to $600,000 on additional activities.

Estimated spending on domestic travel, international travel, hobbies, charitable donations, luxury items such as a car, home improvements, a second home, and a new business totaled $578,000 for respondents in their 50s, $611,000 for respondents in their 60s, and $652,000 for respondents in their 70s.

The survey was conducted online from April 24 – May 7, 2007, with pre-retirees and retirees, ages 55-59 years old (200 people); 60-69 years old (200); 70-79 years old (201); 80-89 years old (40). All respondents have at least $250,000 in invested assets, and work with financial professionals in making investment decisions.

The full research report, The Expense Reality, can be seen here.

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