Day: October 3, 2024

Ever wonder if you’re doing better financially than your friends? It’s a common thought, but you can’t ask them for their bank balance.

So, how do you figure it out without making things awkward? Here’s a simple, no-guesswork method using statistics and data.

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The Age Factor: Where Do You Stand?

Your age plays a big part in how much wealth you’ve had time to build. Check out these median and mean net worth numbers for different age groups:

• Under 35: Median: $39,040 | Mean: $183,380

• 35-44: Median: $135,530 | Mean: $548,070

• 45-54: Median: $246,700 | Mean: $971,270

• 55-64: Median: $364,270 | Mean: $1,564,070

• 65-74: Median: $410,000 | Mean: $1,780,720

• 75 and over: Median: $334,700 | Mean: $1,620,100

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Your friends might be different ages or in different financial situations, but if you’re above the median for your group, you might be doing better than you think!

Homeownership: The Big Wealth Booster

Owning a home tends to put you ahead in the wealth game. Here’s how homeownership stacks up:

Homeowners: About $396,200 in net worth

Renters: Around $10,400

If you’ve bought a house and most of your friends are still renting, you’re likely in a stronger financial position.

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Does Education Pay Off?

When you meet up with your old classmates, you might notice that education can affect net worth. Based on Federal Reserve data:

No high school diploma:

Median net worth: $20,780

Average net worth: $137,580

High school diploma:

Median net worth: $73,890

Average net worth: $304,590

Some college:

Median net worth: $89,280

Average net worth: $374,010

College degree:

Median net worth: $308,800

Average net worth: $1,516,910

The average net worth for college graduates is over $1.5 million, more than four times the average for those with some college education.

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Where You Live Matters

Location is key. If you’re in a high-cost area like California or New York, you’re likely doing better than someone in a lower-cost state. But remember, a big salary in Los Angeles might not stretch as far as a modest one in a more affordable place like Texas.

Career Paths: Who’s Earning What?

Of course, your career choice can significantly impact your net worth. Here are some average salaries for different professions:

• Doctors: The average physician salary across all specialties is $363,000.

• Lawyers: The average lawyer salary is $163,770 per year.

• Software Engineers: The average salary for a Software Engineer in the U.S. is $136,053.

• Teachers: The average salary for teachers is $69,544 per year.

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The Stuff You Can’t See

Here’s the tricky part – you can’t always tell who’s wealthier just by appearances. That friend with the flashy car might have a mountain of debt, while someone living more modestly could be sitting on a nice nest egg.

Does It Really Matter?

Your financial journey is unique. Instead of stressing over whether you’re richer than your friends, focus on your progress. What matters is whether you’re building toward the life you want, not where you rank compared to everyone else.

True wealth isn’t just about money. It’s about having enough to live comfortably, enjoy life, and keep the stress over bills to a minimum. If you’re doing that, you’re already winning – no matter what anyone else’s bank account says.

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This article Are You Richer Than Your Friends? Here’s How To Tell Without Asking originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Ulta Beauty (ULTA) has sustained a 32% drop from its 52-week highs, presenting a rare investment opportunity. As the leading specialty beauty retailer in the U.S., Ulta continues to post strong results despite a slowdown in sales growth, which has spooked some investors. In fact, the company remains highly profitable, keeps expanding its footprint, and returns tons of cash to shareholders. With shares now trading at compelling valuations and Warren Buffett recently taking a stake in the company, I believe Ulta offers a notable upside potential for long-term investors. Hence, I am bullish on the stock.

Investors Miss the Bigger Picture in Q2 Results

Ulta’s Q2 Fiscal 2024 results may have received a lukewarm response from the market, further fueling the cautious sentiment surrounding the stock. While net sales rose 0.9% year-over-year, reaching $2.55 billion, the market seems overly focused on the 1.2% dip in comparable sales, driven by a 1.8% decline in transactions. I understand why some might raise red flags over declining same-store sales, but I think this narrow focus misses the bigger picture. To me, the real story is Ulta’s ability to sustain its strength in a normalizing market, which only reinforces my bullish outlook on the stock.

In the Q2 earnings call, CEO Dave Kimbell emphasized that after experiencing an extended period of accelerated growth, the Beauty category is entering a normalization phase. Additionally, heightened competitive pressures in Prestige Beauty, particularly with the introduction of over 1,000 new distribution points by competitors in recent years, have challenged Ulta’s market share in key segments like Makeup and Hair Care​. Despite these headwinds, the company’s overall positioning remains strong, especially as it expands its store count and digital capabilities.

Should Investors Be Worried About Revenue Deceleration?

Despite the 0.9% growth in Ulta’s net sales for Q2 marking a noticeable slowdown compared to previous quarters, I still remain bullish on the stock. In fact, Ulta’s top-line growth has recorded a sequential deceleration for 13 out of the last 14 quarters. However, I don’t find this deceleration overly concerning. According to Circana data, the beauty industry grew by just 3% in the first half of 2024, with mass beauty barely advancing. In this context, Ulta’s recent performance is relatively consistent with industry trends. It’s also critical to remember that the company is cycling against tough comps from 2022 and 2023, which saw quarterly growth rates from 20% to 65%.

In the meantime, Ulta has continued executing its expansion strategy, opening 17 new stores during the quarter (it also closed one, hence the 16 net) and ending the period with 1,411 stores. Along with strong digital sales and membership metrics, Ulta’s resilience as it traverses an evolving competitive landscape is quite evident. The company had 43.9 million active members at the end of the quarter, up 5% compared to last year, which should further support its top-line performance in the quarters ahead.

Profitability Remains Robust Despite Margin Pressures

Another important point to highlight, despite the current downturn in share prices, is that profitability remains a key factor for optimism. Although its gross margin fell to 38.3% from 39.3% a year earlier, the company remains highly profitable​. The decrease was primarily driven by lower merchandise margins and higher store fixed costs, including payroll and benefits​.

Yet, Ulta’s operating margin held a solid 12.9% despite these pressures. However, the company effectively demonstrated its ability to manage its cost structure, with its debt-free balance sheet providing additional support due to the absence of interest expenses and the contribution of interest income.

Valuation & Share Buybacks Signal a Buying Opportunity

Regarding its valuation, I view Ulta as one of the cheapest specialty retailers on the market. The company trades at a forward P/E of 17.4 times this year’s expected EPS, with earnings growth expected to rebound from next year. Given Ulta’s prolonged track record of revenue and earnings growth, as well as its clean balance sheet and aggressive capital return profile, I find today’s valuation multiple quite compelling.

Speaking of aggressive capital returns, Ulta repurchased $212.3 million worth of stock in Q2, pushing the total amount of repurchases over the past four quarters to $962.7 million. The company has now retired nearly 27% of its shares outstanding over the past decade, while $1.6 billion remains under its $2 billion repurchase authorization.

Warren Buffett Shows Confidence in Ulta

Warren Buffett’s Berkshire Hathaway ($BRK.A)($BRK.B) invested roughly $266 million in Ulta Beauty last month (now valued at around $269 million), which can naturally be seen as a strong endorsement of the company’s long-term potential. Known for identifying undervalued companies with solid fundamentals, I think Buffett’s investment shows trust in Ulta’s ability to endure near-term challenges while confirming the stock’s compelling valuation at today’s price levels.

Is ULTA Stock a Buy, According to Analysts?

Looking at Wall Street’s view on the stock, Ulta Beauty maintains a Moderate Buy consensus rating based on 13 Buys, nine Holds, and two Sells assigned in the past three months. At $404.83, the average ULTA stock price target implies 4.22% upside potential.

If you’re unsure which analyst you can trust when you want to buy and sell ULTA stock, Christopher Horvers is the most accurate analyst covering the stock (on a one-year timeframe). He boasts an average return of 16.64% per rating and a 71% success rate. Click on the image below to learn more.

See more ULTA analyst ratings

Key Takeaway

In conclusion, despite Ulta’s recent slowdown in sales growth and investor concerns over declining same-store sales, the company’s investment case remains compelling. Ulta keeps expanding its store footprint, maintaining solid profitability, and returning significant capital to shareholders through stock buybacks.

With Ulta’s valuations looking rather attractive at its current levels, a debt-free balance sheet, and Warren Buffett’s recent investment signaling confidence, I believe Ulta is well-positioned for noteworthy long-term returns.

Disclosure

When it comes to claiming Social Security, most retirees can’t wait to start collecting those checks. A 2020 report from the Bipartisan Policy Center found that more than 70% of Social Security beneficiaries currently claim their benefits before age 64. In fact, 29% of new retirees claimed their benefits before age 62 in 2022.

Delaying your benefits beyond full retirement age (FRA) will result in larger Social Security payments when the time comes to collect. A retirement strategy known as the Social Security bridge is one way to create an enlarged stream of guaranteed income without an annuity. Researchers at the Center for Retirement Research at Boston College recently examined this relatively unknown strategy and found that many workers would use it if given the opportunity.

A financial advisor can help you make a plan for creating stable and reliable income in retirement. Find a trusted advisor today.

The Social Security ‘Bridge’ Strategy Definition

The bridge strategy is a method for locking in higher lifetime Social Security benefits by using 401(k) assets as a stopgap. Instead of claiming Social Security immediately after leaving the workforce, a new retiree uses their 401(k) assets or other savings as a substitute for Social Security until age 70 when they can claim their largest possible benefit.

Delaying Social Security until the maximum claiming age (70) can increase a retiree’s benefits by 76% compared to claiming at age 62, according to Alica H. Munnell and Gal Wettstein of the Center for Retirement Research at Boston College. That’s because benefits increase by as much as 8% for every year they are delayed between FRA and age 70. On the flip side, claiming Social Security before reaching FRA diminishes a person’s benefit.

The bridge strategy capitalizes on this incentive and creates a larger stream of annuitized income.

“Using their 401(k) assets as a substitute for Social Security benefits when they retire – as a ‘bridge’ to delayed claiming – would allow participants, in essence, to buy a higher Social Security benefit,” Munnell and Wettstein wrote. “The potential for enhancing annuity income through Social Security is substantial, since the majority of retirees claim before their FRA and about 95 percent claim before age 70.”

And unlike a traditional annuity, Social Security benefits are adjusted annually for inflation to preserve a beneficiary’s purchasing power. Then again, a Social Security bridge may not be beneficial for people with shorter life expectancies. It will also reduce a person’s nest egg earlier in retirement and may diminish or completely deplete the inheritance they plan leave for loved ones.

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Annuities vs. Social Security Bridge

An annuity is a contract you sign with an insurance company, whereby you pay a lump sum or make periodic payments in exchange for guaranteed payments at a later date. Although they are often considered expensive and complex, annuities can provide peace of mind to retirees who are worried they may outlive their savings.

“Although annuities would ensure higher levels of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with most retirement investing, the market for annuity products is miniscule,” Munnell and Wettstein wrote, adding that academics have argued for decades that using retirement assets to purchase an annuity can mitigate longevity risk.

But the researchers noted that people are reluctant to exchange the 401(k) balances they’ve spent decades accumulating for a future income stream.

“Moreover, they often do not appreciate the insurance that annuities provide against running out of income, and tend to view the low expected returns associated with this service within an investment framework … The complexity of annuities and consumer distrust of insurance companies further reinforce biases against buying them as investments.”

Instead of using 401(k) assets to buy an annuity from an insurance company, the Social Security bridge strategy pays the retiree an amount equal to the Security benefits they would have claimed at retirement. By delaying Social Security until age 70, the retiree maximizes their eventual benefits and creates a larger stream of annuitized income.

Also, unlike payments from annuities, Social Security benefits are adjusted annually for inflation, which helps retirees protect their purchasing power.

“Purchasing additional Social Security income does not involve handing over accumulated assets to an insurance company, provides a familiar form of lifetime income that is adjusted for inflation, and does not expose the purchaser to higher costs from adverse selection,” Munnell and Wettstein wrote.

Consider using SmartAsset’s free tool to match with up to three fiduciary advisors if you’d like to discuss your Social Security strategy.

Should You Use the Bridge Strategy?

To gauge this strategy, the Center for Retirement Research conducted an online survey in early 2021 that asked participants whether they would use an employer “bridge” plan that would automatically pay them an amount equal to their Social Security benefits from their 401(k) balance when they retire.

The survey, which was administered by the Nonpartisan and Objective Research Organization at the University of Chicago, polled 1,349 workers between the ages of 50 and 65 with at least $25,000 in their 401(k) accounts.

Researchers learned that despite the novelty of the strategy, a “substantial minority” of respondents said they would use the bridge. In fact, nearly 27% of participants who were given only a limited description of the concept said they would use it if offered by their employer.

The more information respondents were given about the Social Security bridge strategy, the most interested they were. Almost 33% reported a similar interest when the bridge option was framed as insurance with both its pros and cons explicitly explained. Thirty-five percent of the respondents who were given a thorough explanation of the mechanics of the bridge option said they would use it if offered the chance.

Meanwhile, over 31% of respondents said they would not opt out of the bridge option if it was their employer’s default offering.

“The results show that a substantial minority would be interested in the bridge option,” Munnell and Wettstein wrote. “Furthermore, individuals presented with the pros and cons of annuitization versus investment chose to allocate a small but meaningfully larger share of their assets to the bridge strategy.”

“More strikingly, those defaulted into the bridge option ended up allocating much more of their assets to the bridge,” they added.

Consider speaking with a financial advisor if you have question about your own Social Security benefit options.

Bottom Line

The Social Security bridge is a method for delaying Social Security benefits until age 70, whereby a retiree temporarily supports themselves using 401(k) assets or other savings. As a result of delaying their benefits until age 70, a retiree enhances their future payments by approximately 76% compared to claiming Social Security at the earliest possible time (age 62). The Center for Retirement Research at Boston College found that approximately a third of workers between 50 and 65 years old would use this strategy if their employer offered it.

Retirement Planning Tips

• The 4% Rule is perhaps the most well-known rule of thumb when it comes to retirement planning. The strategy dictates that a retiree can withdraw 4% of their savings in the first year of retirement (adjusting subsequent withdrawals for inflation) and have enough money to last 30 years. However, researchers recently found the 4% Rule may be outdated. New research suggests that retirees following a fixed withdrawal strategy should only take out 3.3% of their savings in the first year.

• A financial advisor can help you plan for retirement and devise a withdrawal strategy that meets your needs. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Photo credit: ©iStock.com/mphillips007, ©iStock.com/Zinkevych, ©iStock.com/FredFroese

The post Boost Your Social Security Benefits in Retirement With This ‘Bridge’ Strategy appeared first on SmartAsset Blog.