THE MARKETS

📈 Equity markets sold off as Treasury bond yields continued to march higher.

💼Economic News

10-year Treasury yields are currently hovering near 5% — levels not seen since the 2007 Global Financial Crisis. Additionally, the average 30-year fixed rate mortgage reached 8% this past week, the highest it has been in two decades. 

The 10-year Treasury rate has risen so dramatically for a number of reasons; namely, strong economic growth, inflation, and a significant increase in government debt issuance. The Federal Reserve's unprecedented pace of federal fund rate hikes over the past 19 months has also played a role. 

For Americans, a higher 10-year Treasury yield means more expensive credit terms for expenses like car loans, credit cards, student debt, and mortgages. On the other hand, this period of higher rates should hopefully bring prices back down to earth.

👀 What to Be on the Lookout for This Week

Keep an eye out for these economic reports:

• Monday: Chicago Fed National Activity Index

• Tuesday: S&P Global PMI figures

• Wednesday: 30-year fixed mortgage rate, home sales data

• Thursday: Durable goods orders data, Q3 GDP

• Friday: Core PCE, personal income and spending

Additionally, these companies will be reporting earnings:

• Monday: Bank of Hawaii, Cleveland-Cliffs

• Tuesday: 3M, Coca-Cola, General Electric, Spotify, Verizon, Microsoft

• Wednesday: Boeing, Hilton, Mattel, Meta Platforms

• Thursday: Comcast, Mastercard, Southwest Air, UPS, and Chipotle Mexican Grill

• Friday: ExxonMobil and Colgate-Palmolive

📰 In Other News

Social Media’s Changing Stance on News: Over the past decade, social media feeds have transformed into modern-day newspapers as people scroll through sites like X or Facebook to get their daily news updates. Controversial articles in particular have also benefited social media companies since they’re more likely to be clicked and commented on, driving engagement for the sites. 

However, regulatory agencies are now starting to crack down on how social media giants handle news. This means additional steps will be taken to counter misinformation on social media. Additionally, some countries have introduced legislation that would force social media companies to compensate news publishers whenever a news story is used on their sites. 

While news articles may be good for driving engagement, social media giants are now starting to question if it is worth the hassle.

• X — formerly Twitter — stripped headlines from news links and could even be forced to pull out of the eurozone entirely. 

• Meta Platforms blocked news from Instagram and Facebook in Canada and said its Twitter competitor Threads will not amplify news. 

Drugstores Are Down Bad: The nation’s largest drugstore chains — CVS, Walgreens, and Rite Aid — have been closing stores en masse as they battle three distinct issues: increased competition from Amazon, Walmart, and Dollar General; pharmacist strikes; and increased incidents of retail theft. These three issues have forced America’s largest drug stores to close locations across the country.

• CVS: Plans to close 900 stores by 2024.

• Walgreens: Plans to close 150 stores.

• Rite Aid: Filed for bankruptcy last week and plans to shutter 500 stores.

This industry-wide downturn is leaving a void in certain communities, making it more difficult for lower-income households in particular to get prescriptions filled and access other healthcare essentials. On the bright side, retailers like Amazon and Walmart continue to amplify investments in the space, possibly positioning them to fill that void.

YOUR ECONOMY

💃 Gen Z Women Are Serious About Retirement Savings

Gen Z’s Retirement Jump

Gen Z is serious about saving for retirement.

Compared to other generations, Gen Z is ahead of the curve. On average, Gen Z begins saving for retirement at age 19, considerably earlier than millennials at 25, Gen X at 30, and baby boomers, who typically start saving at age 35. This is likely due to advancements in financial technology that have made tools like 401(k)s, IRAs, and general investing platforms (like Allio 😉) more accessible to Gen Z at a younger age. 

What’s particularly noteworthy is that over 70% of women aged 18 to 26 are actively investing for retirement, surpassing the figures for millennials (63%), Gen X (55%), and baby boomers (57%). This uptick in young female investors could help reduce the ongoing gender gap that persists in retirement savings.

Closing the Gap

Most people are aware that women typically earn less than men — an issue known as the gender pay gap — which extends to the balances in retirement accounts. On average, men have 50% more savings in their retirement accounts compared to women. 

These two issues are closely intertwined. After all, if one segment of the population makes more money, it’s natural that they would also have more saved for retirement. Additionally, women have also had significantly less time to invest. This is because the Equal Credit Opportunity Act — the legislation that allowed women the right to open their own bank account — wasn’t passed until 1974. Older generations of women are likely behind on saving because retirement accounts were simply not as accessible. 

But, fortunately, this trend is starting to change. 

Fidelity, one of the largest providers of IRAs in the US, reported a 48% rise in female customers since 2019. This spike is being driven by millennial and Gen Z women. Fidelity also reported that Gen Z women are investing at higher rates than older generations.

🤔 How To Tell if You’re Behind on Retirement Planning

Falling Behind?

Saving for retirement isn’t meant to be a race against your peers. Instead, it is a race against yourself to reach financial goals. With that in mind, it’s important to set clear financial milestones so that you can track your progress. 

According to a recent survey from Bankrate, 56% of American adults stated they feel “behind” when it comes to saving for retirement. However, when asked how much money they would need to save for retirement, the majority of respondents said they “don’t know.” 

More than half of Americans may feel that they are falling behind in saving for retirement mainly because they are uncertain about how to save or how much they need to save.

How Much Should You Save?

According to Bankrate’s survey, the most common estimate for retirement savings falls between $1 and $2 million. While this provides a ballpark range, it can be somewhat misleading because the amount needed for retirement depends on individual lifestyle preferences. 

Instead of aiming for an arbitrary lump sum, a more practical approach is to target a multiple of one’s income, with lifestyle considered. To provide an estimate of how much to save, here are Fidelity’s recommendations. 

• Age 35: Aim to have 2x your annual salary saved.

• Age 51: Aim to have 6x your annual salary saved.

• Age 67: Aim to have 10x your annual salary saved.

According to retirement account data from Vanguard, people between 25 and 34 years old have an average 401(k) balance of $30,017. Even those in the 55-64 age bracket only have an average of $207,874. 

💡Check out Allio's Retirement Calculator to see if you're on track.

Preparing for Retirement

Preparing for retirement can be a daunting task. Many aspects of retirement — like investing, compound interest, and tax implications — are typically not covered in school. This leaves many without a clear understanding of how to save and plan for their retirement. 

Here are 3 strategies to help you get started: 

#1: Contribute to an employer-sponsored 401(k)

The 401(k) offered as part of your benefits package may come with employer matching. In 2022, Investopedia found that the most common employer match is 50 cents on the dollar, up to 6%.  

Even if your company doesn't offer matching, 401(k)s are a terrific investment vehicle for those getting started. They don’t require much market knowledge as you have the option to select a target retirement age. With target-date funds, an asset manager will make risk decisions for you and automatically rebalance the fund to be more conservative the closer you get to receiving a disbursement.  

#2: Open an IRA or a Roth IRA

Another retirement savings vehicle is an Individual Retirement Account (IRA). With a traditional IRA — or a traditional 401(k) — you won’t have to pay taxes on whatever you contribute until you start making withdrawals. Many financial planners recommend a Roth IRA where contributions are taxed up-front because you’d likely pay a higher tax rate later in life. If you anticipate being a high earner throughout your career, a Roth IRA is the smart choice. 

#3: Use a high-quality robo-advisor (like Allio)

If you’re a beginner, saving and investing can feel daunting and out of reach – like something only finance experts can do successfully. Well, it’s not. That’s why we created Allio; to provide financial wellness for all – even younger investors. 

The main goal of retirement planning is to invest money as soon as possible so that it can grow over time. It ensures a more substantial sum by the time retirement rolls around. So get started today!

POCKET CHANGE

Taylor Swift: The Eras Tour raked in around $97 million during its opening weekend. This is enough to make it the highest-grossing concert film of all time. 

Americans are dressing up as big spenders for Halloween this year. Consumers are set to spend around $3.6 billion this year. Candy companies like Mars started prepping for the holiday two years in advance. 

Almost half of young shoppers are open to holiday shopping early — especially if it means getting a discount. However, 80% of shoppers 65 and older said sales and promotions won’t impact their shopping schedule. 

38% of recent homebuyers used family money in order to afford their down payment. Roughly 75% of aspiring homebuyers say affordability is keeping them from owning a home. 

53% of Gen Z see the high cost of living as a barrier to their financial success. Additionally, 73% have changed their spending habits in response to persistently high inflation.