Raphael Stevens

Life Changes

Early retirement may be a dream but it comes with risks and for all but the wealthiest Americans.
The earlier you retire, the greater the risks.
There is no substitute for crunching the numbers on the expected costs and sources of income you will have in retirement.

Kathrin Ziegler | DigitalVision | Getty Images

Life may be short but early retirement might be, too, if you don’t have a solid financial plan for life after work.
Whether it’s due to pandemic burnout, a new attitude on life or an optimism fueled by surging stock and real estate markets, more Americans appear to be retiring early, based on U.S. Bureau of Labor Statistics data.

The labor participation rate for Americans over age 55 ticked up 0.7% in January to 39.1% but remains well below the 40.3% recorded in February 2020 and has recovered more slowly than the rate for the general population.
“I think Covid has increased the interest in retirement generally and accelerated the number of people retiring early,” said certified financial planner Lazetta Rainey Braxton, co-CEO and senior financial planner at 2050 Wealth Partners in Brooklyn, New York. “People are rethinking everything and often more emotionally than practically.”
For those who have the resources, retiring from the daily grind opens a new world of opportunities. However, it comes with risks and for all but the wealthiest Americans — and the earlier you retire, the greater the risk.

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Here’s a look at other stories offering a financial angle on important lifetime milestones.

“If you don’t have debt, have a track record of living within your means and have enough resources to cover emergencies, knock yourself out,” said Danny Artache, a financial advisor based in Jupiter, Florida. “But if you run out of money, you could end up being a greeter at Walmart.”

Are you ready to retire both emotionally and financially?

There is no substitute for crunching the numbers on the expected costs and sources of income you will have in retirement. Simply settling on a “comfortable” nest egg figure will not cut it.

Costs include housing, insurance — if you retire early, you’ll need to buy health insurance before Medicare kicks in at age 65 — food, gas and vehicle expenses. Major income sources include pension payments, Social Security benefits and withdrawals from your investment portfolio.
Braxton advises her clients not to carry any debt into retirement, except in the rare cases where the value of the mortgage interest tax deduction is greater than the cost of your annual mortgage payments.

If you plan on traveling and/or taking on hobbies that cost significant money, incorporate that into your ledger.
“Don’t be afraid of your numbers,” Braxton said. “You need to know what they are.
“The more comfortable you are with those numbers, the more easily you can pivot when things change.”
And they will change. A widely accepted rule of thumb is that you will spend about 80% of your working income annually in retirement.
However, no matter how well you itemize expected costs and income sources in retirement, there will be curveballs. There are several major unknowns that make retirement planning particularly difficult.
“Retirement is the mother of all financial planning problems,” said Christine Benz, director of personal finance at Morningstar. “There are so many variables in the mix.”
The three biggest are your health and longevity, the performance of the investment markets and the level of inflation through retirement.

When you continue earning income, you don’t have to tap your investment portfolio and you increase your future Social Security benefits.

Christine Benz
director of personal finance at Morningstar

The first factor is entirely personal. Based on your current health and family history, you may not anticipate a long retirement, but conservative retirement modeling typically uses a 30-year time horizon.
Another rule of thumb, first articulated by financial planner William Bengen, is that with that conservative 30-year time horizon, you can safely withdraw 4% of your portfolio assets annually, assuming a 50-50 stocks-to-bonds portfolio.
The rule could use a tweaking, suggested Benz. The remarkably strong returns on stocks and bonds over the last 30 years may not be repeated in the next 30. In an environment of low bond yields and high equity valuations, investment returns could be thinner going forward.
“The next decade may not be great for market returns,” Benz said. “If we are dealing with higher inflation, it adds another risk.” Morningstar now estimates that the “safe” portfolio withdrawal rate should be lowered to 3.3%.
If that withdrawal rate combined with guaranteed pension and Social Security benefits can cover costs in your average year of retirement, you’re in good shape. However, if you are at all anxious about your financial position heading into retirement, keep working.

“Working longer in a job you hate is no good, but the job market is so strong you may be able to swing a more comfortable work/life balance,” Benz said.
The value of additional income-earning years is enormous. It will stretch your resources in retirement and reduce the risk of running out of money down the road.
“It has a multiplier effect,” Benz said. “When you continue earning income, you don’t have to tap your investment portfolio and you increase your future Social Security benefits.
“Your assets can continue to grow and possibly help you to delay taking Social Security,” she said, in order to receive a higher benefit.
Your retirement might be shorter, but it could be much sweeter. More

Check out the companies making headlines in premarket trading.
Coca-Cola — Shares of Coca-Cola rose about 1% after the company beat analysts’ expectations on the top and bottom lines in the recent quarter. The beverage giant reported adjusted earnings of 64 cents per share on revenues of $10.5 billion, while analysts expected 58 cents per share on $9.83 billion in revenue.

Twitter — Twitter ticked 5% higher on reports that the social media giant is close to a deal with Elon Musk. It comes a day after the company’s board reportedly met Sunday to discuss a takeover bid from Elon Musk, who has already secured $46.5 billion in financing.
Oil stocks —Shares of energy companies fell on Monday as oil prices fell on fears of a global slowdown amid lockdowns in Shanghai. Chevron, ConocoPhillips, and Marathon Oil dipped 2.2%, 2.6% and 2.8% respectively.
Kellogg — Shares of Kellogg dipped 1.8% after Deutsche Bank downgraded the stock to a hold. The bank cited the impact from workers’ strikes, rising inflation and supply chain disruptions among the reasons for the downgrade.
Verizon — Verizon shares fell 1% after Goldman Sachs downgraded the stock to neutral. The bank said Verizon is situated well for 5G growth but offers a lower potential return compared to peers like AT&T.
Penn National Gaming — The gaming stock rose 2.8% after Morgan Stanley named it a buy despite its recent underperformance. The bank also sees opportunities in its Barstool Sports and theScore businesses.

Warner Bros. Discovery — Warner Bros. Discovery’s stock fell 2.5% as investors continued to digest the news that the company would shutter its CNN+ service weeks after its launch.
Deere — The equipment manufacturer’s stock fell 3.4% after Bank of America downgraded the stock to neutral. The bank said it remains cautious on the farm economy and agricultural equipment space amid ongoing supply chain issues and other macro trends.

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Sustainable Energy

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GE says printer in Bergen, New York, is “the size of a three story building” and able to print tower sections as tall as 20 meters.
The facility in Bergen is described as being “at the heart” of a collaboration with cement giant Holcim and Cobod, a firm which specializes in 3D printing.
The work being done in New York state represents just one example of how companies involved in the wind energy sector are looking to find new ways of developing turbines.

A Haliade-X wind turbine photographed in the Netherlands on March 2, 2022. The Haliade-X is part of a new generation of huge turbines set to be installed in the years ahead.
Peter Boer | Bloomberg | Getty Images

A new research facility which hopes to 3D print the concrete bases of giant wind turbine towers has been launched, with those involved in the project hoping it will help to lower costs for the industry as turbines grow in size.
In an announcement last week, GE Renewable Energy said the research would “enable GE to 3D print the bottom portion of the wind turbine towers on-site at wind farms.” This would also, it said, reduce transportation costs.

Danielle Merfeld, who is chief technology officer at GE Renewable Energy, said in a statement that it was “particularly important to continuously improve the ways we design, manufacture, transport, and construct the large components of modern wind farms.”
The facility in Bergen, New York, is described as being “at the heart” of a collaboration with cement giant Holcim and Cobod, a firm which specializes in 3D printing. The multi-year partnership was announced back in 2020.

Read more about clean energy from CNBC Pro

According to GE, the printer in Bergen is “the size of a three story building” and able to print tower sections as tall as 20 meters. Henrik Lund-Nielsen, the founder and general manager of Cobod, said the printer was “the largest of its kind in the world” and could “print in excess of 10 tons of real concrete per hour.”
A grant from the U.S. Department of Energy has helped support research at the site, where a 20-strong team is pushing ahead with optimizing the technology. It’s expected that “first applications in the field” will take place at some point in the next five years, GE says.
The work being done in New York state represents just one example of how companies involved in the wind energy sector are looking to find new ways of developing turbines.

Firms such as Sweden-based Modvion, for instance, are focused on developing wind turbine towers using laminated wood. In April 2020, the business said it had installed a 30-meter tower on an island near Gothenburg.

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Back in the U.S., the significant dimensions of the printer at Bergen also reflects a growing interest — and need — for technology that will enable companies to develop huge wind turbines.
The last few years have seen a number of major players in the sector announce details for large turbines.
GE Renewable Energy’s Haliade-X turbine, for instance, will have a height of up to 260 meters (853 feet), a rotor diameter of 220 meters and 107-meter blades. In China, Aug. 2021 saw MingYang Smart Energy release details of a 264-meter tall design that will use 118-meter blades.
Elsewhere, Danish firm Vestas is working on a 15-megawatt turbine that will have a rotor diameter of 236 meters and 115.5-meter blades while Siemens Gamesa Renewable Energy is developing a turbine that incorporates 108-meter blades and a rotor diameter of 222 meters. More

SpaceX will start providing wireless internet on Hawaiian Airlines flights from the Starlink satellite network as early as next year, the airline said.
Hawaiian told CNBC that it plans to offer Starlink service to passengers for free.
The deal marks the first for Elon Musk’s space company with a major airline.

Hawaiian Airlines plane
Louis Nastro | Reuters

SpaceX will start providing wireless internet on Hawaiian Airlines flights from the Starlink satellite network as early as next year, a service the airline told CNBC it plans to offer to passengers for free.
The deal marks the first for Elon Musk’s space company with a major airline. Starlink is SpaceX’s network of about 2,000 satellites in low Earth orbit, designed to deliver high-speed internet to consumers and businesses anywhere on the planet.

Hawaiian’s plan for complimentary connectivity with Starlink could increase pressure on rivals to offer free Wi-Fi for travelers, something currently available on JetBlue Airways. For example, Delta Air Lines CEO Ed Bastian said in 2018 that the airline wants to offer complimentary, high-speed Wi-Fi on its planes. It tested it on some flights in 2019.
The installation of Starlink terminals, also known as antennas, is expected to start next year on Hawaiian planes. The airline has yet to begin testing Starlink on an aircraft, and there are “certification issues that need to be worked through before we’re ready to operate the product,” Avi Mannis, Hawaiian’s chief marketing and communications officer, said in an interview. “But we’re confident that there’s a path forward for that.”
The airline declined to disclose the financial details of its deal with SpaceX.
Hawaiian doesn’t currently offer inflight Wi-Fi and has an extensive network of flights over the Pacific Ocean, serving the mainland U.S., Japan, Australia and New Zealand, among other destinations, from Hawaii. It plans to offer Starlink connectivity on its flights out of its home state to cities throughout the mainland U.S. and to its international destinations.
“Historically, we’ve looked at our market and not seen great options over the Pacific. We actually don’t have any connectivity on our fleet today,” said Mannis. “The options have been improving over time, but we have waited until there was a product offering … that we thought would live up to the expectations of our guests.”

At the end of 2021, publicly traded Hawaiian had 24 Airbus A330-200s and 18 A321s. It plans to outfit its forthcoming Boeing 787s with Starlink as well. Its 717s used for intraisland flying are excluded from the deal, Mannis said.

Mannis didn’t specify what internet speed SpaceX advertised that Starlink would deliver on the planes, but said that “the kinds of performance that they have been talking about and have demonstrated have been very impressive.”
In a news release from Hawaiian, Jonathan Hofeller, vice president of Starlink commercial sales at SpaceX, also touted the product’s performance, “Hawaiian Airlines is ensuring its passengers will experience high-speed internet the way we expect it in the 21st century, making hassles like downloading movies before takeoff a relic of the past.”
Mannis, the executive at Hawaiian, emphasized that SpaceX’s vision for inflight internet “is quite different” than other competing satellite broadband providers, saying the goals for Starlink are that service “should be fast, and it should be frictionless, and it should be free.”
SpaceX last year said it was in contact with several airlines to provide inflight service.
Last week, semi-private charter flights provider JSX said it reached a deal for Starlink Wi-fi, the first carrier to do so. SpaceX currently has about 250,000 total Starlink subscribers, which includes both consumers and enterprise customers. Users pay $110 a month for the standard service and $500 a month for the premium tier, in addition to hardware fees.
Hawaiian is scheduled to report quarterly results after the market closes on Tuesday.

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Overcoming doggedly high inflation will require interest rates to be pushed into the “pain zone,” the Man Group CEO has said.
Speaking to CNBC, Luke Ellis said he doubted that central banks would have the conviction to move aggressively enough this year.
“What that means is the inflation goes on for longer, which means the end pain is greater,” he said.

LONDON — Overcoming doggedly high inflation requires interest rates to be pushed into the “pain zone.” But whether any central bank has the nerve to do it is the question, according to investment manager Man Group.
“To actually fight inflation will require a central bank to show that they’re willing to put rates into the pain zone,” CEO Luke Ellis told CNBC’s Geoff Cutmore Monday.

For the Federal Reserve, that task should be “relatively easy,” given the backdrop of strong real and nominal growth in the U.S. For the European Central Bank, battling a lackluster growth environment, the job is somewhat harder, he acknowledged.
Still, Ellis said he doubted that even the Fed would have the conviction to move aggressively enough this year — especially as headline inflation figures show signs of tapering off and U.S. midterm elections approach in November.
“The likelihood that the Fed will move really aggressively during the course of this year to push rates up high enough that it causes the pain this year, I personally really doubt,” he said.

U.S. consumer prices rose 8.5% in March to hit their highest level in three decades, but a slight ebb in core inflation offered some hope that inflation may be nearing its peak. Ellis suggested it could drop to 5-6% by the end of the year.

It’s a matter of will they have the gumption to really drive rates up to stop the inflation.

Luke Ellis
CEO, Man Group

“What that means is the inflation goes on for longer, which means the end pain is greater,” he continued. “But it’s a matter of will they have the gumption to really drive rates up to stop the inflation.”

As such, the fund manager advised investors to position their portfolios for an “extended process of tightening.”

Goodnight Netflix

Corporate earnings have so far remained strong overall as companies have benefited from robust nominal growth, said Ellis.
However, there is a risk of markets becoming complacent.
“If you’ve got a company that’s got some pricing power and got some leverage, actually this is a pretty good environment — until the central banks do something about it,” Ellis said.
Discretionary stocks like Netflix, in particular, which has come under pressure from post-pandemic consumer cost cutting, could be in for a particularly bumpy ride ahead, he noted.
“If you’ve got a company like Netflix with no pricing power, I mean, sorry, but goodnight.”

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China’s capital city of Beijing reported a spike in Covid cases over the weekend, and warned more would be found since the virus had spread undetected in the city for a week.
The city’s business district of Chaoyang began three days of mass testing on Monday for anyone living or working in the region.
The increase in cases in Beijing come as mainland China faces its worst Covid outbreak since early 2020 and most of Shanghai, China’s largest city, remains under prolonged lockdown.

China’s capital city of Beijing reported a spike in Covid cases over the weekend and began mass testing Monday in the business district of Chaoyang. Within the district, one community that’s pictured here became classified as a high-risk area.
Jiang Qiming | China News Service | Getty Images

BEIJING — China’s capital of Beijing warned over the weekend that Covid had spread undetected in the city for a week, and that more cases would be found with investigation.
The main business district of Chaoyang began three days of mass testing on Monday for anyone living or working in the region, which is home to many embassies and foreign businesses. The district accounted for most of the 42 new Covid cases reported in Beijing since Friday.

Only specific apartment buildings have been locked down in Beijing. Schools mostly remain open, but the Chaoyang business district ordered a halt of all in-person group activities and training courses, including arts and sports.
In a small portion of the district one subway stop south of the main business area, all restaurants, entertainment venues, indoor gyms and non-essential businesses are to close as of Monday morning. Local authorities added that residents in the affected area should generally work from home and not go out unless necessary, according to state media.
The increased cases in Beijing come as mainland China faces its worst Covid outbreak since early 2020. The country has stuck to a stringent zero-Covid policy of using swift lockdowns, quarantines and travel restrictions to control outbreaks of the virus.
Most of Shanghai, China’s largest city, remains under prolonged lockdown and reported more than 100 new Covid-related deaths since Friday.
Nationwide, Shanghai by far accounted for the most Covid cases, reporting for Sunday more than 2,400 cases with symptoms and more than 16,900 without.

Beijing and Shanghai rank among China’s ten largest provincial-level regions based on GDP, according to Wind Information. The data showed Beijing’s economy grew by 4.8% in the first quarter, the same as the national level, while Shanghai’s rose by 3.1% as targeted lockdowns rose in March.
Service industry workers affected by the latest round of cases in Beijing’s Chaoyang business district can receive 100 yuan ($15.38) a day, for a maximum of 21 days, municipal authorities said.
Anecdotally, news of the spike in cases and mass testing prompted locals to rush to stock up on food.

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View from the Gulf

The global vacation rental market — valued at $22.7 billion in 2020 — will surpass a whopping $111.2 billion by 2030, according to a Precedence Research study late last year.
The research spoke of a “revenge tourism” trend with millennials and the younger generations driving growth during the first few years after the coronavirus pandemic.

Luxury Explorers has properties like Villa Botanica in the exclusive Emirates Hills, often referred to as the “Beverly Hills” of the UAE.
Luxury Explorers’ Collection

DUBAI, United Arab Emirates — In the Middle East, a new breed of high-end vacation rental firms are scrambling to meet the needs of today’s traveler — who has very different preferences post-pandemic.
The global vacation rental market — valued at $22.7 billion in 2020 — will surpass a whopping $111.2 billion by 2030, according to a Precedence Research study late last year. The research spoke of a “revenge tourism” trend with millennials and the younger generations driving growth during the first few years after the coronavirus pandemic.

According to the analysts, this is mainly driven by the rising awareness among travelers on the extra space and comfort offered by vacation rentals, not to mention, in some extreme cases, the “extras” like high-tech gyms, private cinema screens, smart home appliances, as well the services of personal attendants, butlers, and even chefs. 
One firm looking to cash in on this is Dubai-based travel agency Luxury Explorers. During the pandemic, the company saw which way the wind was blowing and took a leap into the premium holiday homes business, establishing the Luxury Explorers’ Collection in mid-2020.
The firm has properties like Villa Botanica in the exclusive Emirates Hills, often referred to as the “Beverly Hills” of the UAE. Luxury Explorers’ Collection CEO Mohammed Sultan told CNBC: “The idea really started in 2018 when we found out some of our VIP clients working with our agency were keen to spend their holidays in luxury vacation homes and villas when they travel around the world.”
“At that time Dubai didn’t have the level of premium holiday rentals that these clients were experiencing in Southern France, Italy, and Los Angeles — areas which are well developed in terms of short-stay lettings.” 
“It was then we decided to set our sights on pioneering the local market’s evolution by offering high-end properties that are not only visually stunning but at the same time rich with exclusive perks and personalized concierge services.”

Weathered the pandemic storm

The company is a notable UAE success story. It has 20 properties in Dubai — mainly big villas in prime locations or swanky apartments in iconic buildings like the soaring Burj Khalifa — and is expanding fast with five properties set to open in Mecca in Saudi Arabia, and one in Abu Dhabi. Its well-heeled clients include the very wealthy, celebrities, sports personalities, and politicians.
Meanwhile, rentals firm Maison Privee has received recognition in the Middle East with its portfolio of luxury villas, penthouses and apartments. Dubai’s Deluxe Holiday Homes also reported a 150% increase in its property portfolio last year, despite the pandemic travel lull, and short-term rental operator Kennedy Towers has spoken of solid demand in the region.
Globally, rental homes fared better than hotels during the pandemic, according to a 2020 joint study undertaken by research companies STR and AirDNA.

The study covered 27 international markets and found that while demand for both hotels and short-term rentals was badly affected by the health crisis, rentals weathered the pandemic better, primarily because of preferences for larger living spaces, full-service amenities, and the need for social distancing.  
Leading holiday home companies confirm they have indeed seen consistently high occupancy since the beginning of the pandemic. “We’ve been averaging 92% since our inception in August 2020,” Harrison Moore, managing director at Key View Vacation Homes Rental in Dubai, told CNBC.
He added: “So far in 2022 we have seen a year-on-year increase of 33% on our average daily rate. One of the main drivers for this has been Dubai being one of leading innovators when it comes to safety protocols linked to Covid-19.”

Enter hotel brands

Unsurprisingly, major hotel brands have gotten into the vacation rental game. One such venture is Marriott’s rental service called Homes & Villas by Marriott International, which now boasts rental homes in over 100 destinations.  
Marriott’s expansion into this area began after its 2018 pilot project on home rentals, called Tribute Portfolio Homes, revealed that the average guest stay was more than triple that of the typical hotel stay.
On the more budget-friendly side of things, Airbnb has also been doing brisk business in the Middle East for several years, with some Insta-ready homes for rent. These include everything from an ancient riad in Marrakesh — with a courtyard featuring an emerald green pool — to a traditional wooden chalet in the mythic mountains of Lebanon. More