• You’ve already taken the first step toward securing your future by choosing to work with New York Life. • New York Life has been keeping its promises — in good times and bad — since 1845. • We have one of the highest-quality, most thoroughly diversified investment portfolios in the industry, which puts us in a good position to cope with volatile market conditions. • Around the country, people are realizing that quality matters and the company you choose to do business with is critical. As a result, New York Life is experiencing record market share. • We maintain the highest possible ratings currently awarded to a life insurer for financial strength. • As a mutually-owned life insurance company, we are uniquely aligned with our policyholders. We do not focus on short-term profit goals, but remain focused on your long-term interests. • Whether you need insurance — or reassurance — New York Life is here to help.
• Today is an unprecedented time in America and across the world. We are experiencing perhaps the most challenging economic environment of our lifetimes. • With that in mind, we’ve prepared this economic update to provide you with an overview of the current financial environment. We’ll discuss today: – Where we’ve been as a country, and the impact of The Great Recession; – Where we stand today — not only in this country — but across the world, and the impact that other countries have financially on the U.S.; and – Where we believe we are headed in the near and distant future. • And perhaps most important, how all of this affects YOU, and the importance of mapping out a game plan for success to help secure your financial future in the face of this environment.
• Now let’s talk about the current economy. • 2007 marked the beginning of a volatile period for investors that some now refer to as “The Great Recession.” During that time, U.S. debt levels grew to a record high of $12 trillion.
• The government wasn’t the only one over-leveraging. Large, household-name financial institutions, like Lehman Brothers, struggled financially or closed shop altogether.
• Many personal investment portfolios declined significantly in value, and personal savings rates fell. The total loss of household wealth was staggering. Add to that the collapse of the U.S. housing and commercial real estate markets, and the dangers of overleveraging became very clear.
• So, where are we now? There are signs of improvement but we’re not out of the woods yet. In fact, the current environment is in many ways much more challenging than it was during the height of the recession. Because this time it’s different. • This time, the health of the global economy itself is threatened by foreign debt burdens and unpredictable natural and political calamities. • World equity markets continue to be extremely volatile. • And adding to the confusion and fear, economists don’t agree on whether the financial turmoil will be short-lived, or will go on for a long period of time.
• Europe is in financial crisis, and as we know, what happens there affects what happens here in the U.S. • What the chart here demonstrates is: – When interest rates go up, they cause a drop in the market value of trillions of dollars’ worth of European bonds. – People are encouraged to invest in government bonds because they are paying out at higher interest rates. – The higher interest rates put Europe at risk of failing on their promise • What does that mean for the U.S.? – Holders of European sovereign debt are at risk of default and are also sensitive to any decline in the value of the Euro. – U.S. banks with counterparty exposure to the European financial system may be vulnerable, potentially leading to a credit crisis here as well. – A European recession, which seems very likely, will weigh on global GDP and corporate profitability here in the US as exports falter.
• In the U.S., we are facing record budget deficits, and what feels to many like never-ending political gridlock in Washington when it comes to finding solutions. These problems were highlighted by the Debt Ceiling fiasco this past summer. • Bringing that point home, Standard & Poor’s took the dramatic and historic step of downgrading the financial status of the U.S. in August 2011, citing the weakened “effectiveness, stability and predictability” of American policymaking and political institutions.
• Unemployment in this country remains stubbornly high, with roughly 24 million Americans unemployed or only “partially” employed. Many are still searching for a job, but some sadly have given up looking altogether.
• But not all the news is negative. There are some positive things happening, too. Technically, the U.S. is no longer in a recession. The economy in the U.S. and most parts of the world is growing, the stock market is rebounding and company profits are increasing.
• And, with interest rates at an all-time low, there’s probably never been a better time to borrow money to purchase a home, automobile, etc.
• And as the chart here demonstrates, Americans are saving more than they were a decade ago.
• Which is important, since personal responsibility for one’s financial future has become absolutely essential in this new reality. Personal planning simply isn’t what it used to be. • Needs have changed, people are living longer than ever before, and resources have changed. • In the past, people generally worked for the same company throughout their career and retired around age 65. With the average life expectancy at the time at 75 years old, a typical retirement lasted 10 years. And retirees could count on Social Security, company pensions and home equity to help fund their retirements. • College was more affordable back then as well. Now, the cost of higher education is double what it used to be, and young people are entering the workforce with increasing debt. • Today, the job market is much more fluid and people may change jobs or careers several times during their lifetimes. Interest rates are low, but it is harder to qualify for a mortgage — the American dream of owning your own house remains out of reach for many. • People are living longer, as well, and must increasingly rely on personal savings and assets in order to maintain their lifestyles.
Finally, the old safety nets that were available to prior generations are quickly disappearing. Social Security is shaky at best, and many companies have begun moving away from offering their employees traditional benefits like pensions or health care in retirement. And with longer life expectancies, maintaining one’s lifestyle and not running out of money in retirement become vital concerns. All in all, the need for planning is greater than it’s ever been.
• That’s why we’ve developed a game plan for your financial success. • First, it’s important to take ownership of your financial strategy. Don’t just sit back and hope for the best. • Next, review what you currently have, identify any potential gaps, and work with your financial professional to prepare for your future now, so there are no surprises later. • Build on lessons learned from the economic crisis by applying sound principles to your financial strategy. Avoid over-leveraging financially and increase your savings if you haven’t already. • And remember, in today’s volatile environment, the company you choose to do business with is more critical than ever. Quality matters. • That’s why I’m here today. I am reaching out to all of my clients, to see how you are doing in light of all that’s happened in the last several years. I want to be sure you are comfortable with your situation and feel fully prepared for the future. • How have you personally been impacted, and what concerns do you have? • How can I help? • Do you have any questions before we begin reviewing your financial strategy?