The MarketAssurance from European leaders that Greece would receive assistance with its debts took the market higher early on Friday, but the Dow ended up just 9 points as investors worried that light trading volume meant a handful of buyers were driving it higher. The major indexes still managed a fourth straight week of gains, something the Dow hasn’t seen since August. The Dow and the S&P could post their strongest first quarter since 1999. This week sees the release of consumer confidence figures on Tuesday, a manufacturing report on Thursday and March employment numbers on Friday. It will be a short week for the markets, which will be closed for Good Friday. For the week, the Dow gained 1.01 percent to close at 10,850.36. The S&P climbed 0.59 percent to finish at 1,166.59, and the NASDAQ rose 0.87 percent to end the week at 2,395.13.

College Costs – The cost of tuition, fees, room and board at an average in-state public college has risen 6.2 percent per year over the past 20 years, reaching $15,213 for the 2009-2010 school year. If college costs had instead risen only by the rate of inflation (using the CPI) over the past 20 years (2.8 percent per year), then a year of college would cost $7,889 during the current school year. The consumer price index (CPI) is a measure of inflation compiled by the U.S. Bureau of Labor Studies (Source: College Board, Department of Labor, BTN Research).   

Government In Action – The average processing time for an individual awaiting a decision from Social Security with regard to a disability claim is 442 days (Source: Social Security, BTN Research).    

The Wealthiest – The top 10 percent of U.S. households (when ranked by total net worth) have a median net worth of $1.9 million (Source: Federal Reserve Survey of Consumer Finance, BTN Research).   

 

WEEKLY FOCUS – Helping Your Child Buy A Home 

If your children or grandchildren have turned the corner on thinking you know something (generally they learn in their 20s, but some get it earlier or later), they may be asking you for advice – or outright financial help – in purchasing their first home. And you may be asking yourself if they’re ready for such an important financial commitment. Here are some questions you should ask your child or grandchild before committing to more than sage advice.

Do they have a budget, and know how to use it? In addition to the house payment itself, ownership means insurance, utilities, property taxes and upkeep. Have they analyzed the full financial impact of those ongoing expenses? 

Do they have a reliable source of income? Consistency is key. If their employment situation or amount of income seems to fluctuate, a home may be too big a burden at this time. 

Is their debt under control? Banks look at total debt, including mortgage, credit cards and student loans. If those account for more than about 40 percent of total wages or salary, they may not qualify for enough money. Rule of thumb is no new debt for six months to a year before taking on a mortgage. 

Do they have emergency money? That Boy Scout motto still applies – be prepared. A three- to six-month cushion should be enough to cover mortgage payments in the event of disability, job layoff or natural disaster. 

How’s that credit report? A healthy credit report can translate to a better interest rate. Your children or grandchildren should get in the habit, if they haven’t already, of requesting their credit report annually. 

Should you help with the down payment? That’s the million-dollar question. Whether you want to help your children out or make them go it alone, you should determine the impact that it will have on your own financial situation. 

We can help you determine how helping could affect your big picture and give you ideas for structuring that down payment as a gift or an advance in the child or grandchild’s inheritance. Call our office for more

information. 

 

 

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe,

Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and

Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of

U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities

America. SAI# 303917
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The Market - The Dow closed Thursday at its highest level since Oct. 1, 2008, even as investor concerns rose regarding Greek debt and India’s central bank raising interest rates to fight inflation. The U.S. central bank left interest rates unchecked at its meeting on Tuesday, citing tame inflation, slight job market improvement and increased business spending on equipment and software. For the week, the Dow gained 1.11 percent to close at 10,741.98. The S&P climbed 0.87 percent to finish at 1,159.90, and the NASDAQ rose 0.29 percent to end the week at 2,374.41.

More Rolling Over – A new study by Charles Schwab of its 401(k) plans found that 69 percent of plan participants roll over their 401(k) account when changing jobs. Of that group, 80 percent moved their savings to an IRA, 8 percent moved the money to their new employer’s plan, and 10 percent took cash distributions. A similar study in 2008 found only 57 percent of 401(k) plan participants rolled over their accounts. (Source: Financial Planning) 

Deep Pockets – If Medicare projections of health cost increases hold true, median annual out-of-pocket costs will double over the next 30 years, according to a survey from the Urban Institute. The study found that almost 10 percent of people 65 and older will spend more than $14,000 on health care annually by the time the youngest boomers reach age 76 in 2040. With household income expected to grow more slowly, the percentage of wealth that a household spends on health care will increase from 10 percent to 19 percent over the next three decades. (Source: Boomer Market Advisor) 

Retirement Home – The decline in home-equity valuations may wind up being a bigger blow to future retirees than the stock market turmoil of 2008 and 2009. According to the Center for Retirement Research (CRR), the drop in home equity has put more than 60 percent of U.S. households’ retirements at risk. CRR’s National Retirement Risk Index, which is based on conservative assumptions, is a percentage gauge of how many working Americans are at risk of being unable to maintain their standard of living during retirement. (Source: Financial Advisor, Center for Retirement Research)  

WEEKLY FOCUS – A New Mindset For Income Distribution 

In terms of your finances, your preretirement earning years focus on accumulation and growth of your money. You earn money from your job or business to pay for your current living expenses. You set some aside for emergencies and for future needs like college and retirement. Your goal is to accumulate as much as possible by earning it and investing it. After retirement, you typically no longer have money earned from your job or business to pay for your living expenses. You need safety and liquidity to ensure available funds for day-to-day costs of living, along with growth to help ensure your funds last your lifetime. The growth-oriented portfolio structure of your earning years may no longer apply as you enter into retirement, and you may have to change the way you evaluate your portfolio’s performance. 

In fact, in an effort to help reduce risk and protect principal, many retirees move their assets to more conservative investments. Such a portfolio is designed to provide higher rates of current income and less volatility. Put another way, your need to preserve what you have now typically outweighs your need to grow your money at the same rate as the stock market, although you still need enough growth to ensure inflation doesn’t reduce your purchasing power during retirement. A retirement distribution plan seeks to find that middle ground between reduced risk and greater return, taking into consideration all income streams (i.e., Social Security, wages, pensions, investment income, annuity income, etc.), assets, inflation risk, investment risk and tax exposure. Numerous variables can come into play, so each factor must be evaluated based on each individual’s circumstances. 

Creating a retirement distribution plan can be complex and requires a thorough understanding of investment products and strategies and their associated risks. We can help you create a plan designed to efficiently and effectively use the assets you’ve accumulated to fund your retirement. Call our office if you have questions.

 * The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and

Pacific

Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of

U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities

America. SAI# 303816
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The Market

Wall Street ended higher for the week on positive reports for retail sales and household wealth. February retail sales rose 0.3 percent over January, beating the 0.2 percent increase expected by economists surveyed by Briefing.com. February retail sales were 3.9 percent higher than the same month a year ago. American household net worth increased 1.3 percent to $54.2 trillion in the fourth quarter, the third consecutive quarter of gains. Stocks provided the biggest boost, rising in value by 4 percent from Oct. 1 to Dec. 31, 2009. Consumer sentiment has declined since the end of February from an index reading of 73.6 to 72.5 as of mid-March. Economists had expected a slight increase. The Federal Reserve meets this week and is expected to leave interest rates unchanged, according to the Associated Press. For the week, the Dow gained 0.68 percent to close at 10,624.69. The S&P climbed 1.06 percent to finish at 1,149.99, and the NASDAQ rose 1.78 percent to end the week at 2,367.66.

Results By State – The average home in the

U.S. has appreciated 1.7 percent (in aggregate, not per year) over the past five years (i.e., 2005-09). Homes in

Wyoming have performed the best, gaining 26.7 percent on average. Homes in

Nevada have fared the worst, losing 40.4 percent of their value (Source: Federal Housing Finance Agency, BTN Research). 

 

What Alan Watches – The yield on the 10-year Treasury note closed at 3.62 percent at the end of February 2010, down 0.22 percent from its 3.84 percent level on Dec. 31, 2009. Because of the close connection between the yield on the 10-year Treasury note and mortgage interest rates, former Fed Chairman Alan Greenspan said in a speech on Feb. 23, 2010, that the 10-year Treasury yield is the “one statistic that I watch every morning and every afternoon” (Source: Credit Union National Association conference, BTN Research).    

Our Part – Out-of-pocket medical spending by Americans (i.e., deductibles, coinsurance and copayments but not including monthly health insurance premiums) totaled $284 billion last year, 11 percent of our nation’s aggregate 2009 health care spending of $2.5 trillion (Source: Centers for Medicare and Medicaid Services, BTN Research). 

WEEKLY FOCUS – Help Your Family Plan Your Care 

Becoming increasingly dependent on others for the normal activities of daily life can be a harsh reality. It can be even harder to admit needing help. Creating a plan for how you, your family and your medical professionals will handle that possible scenario can alleviate misunderstanding and confusion when a crisis arises. Here are six tips to help you prepare:1.    Pick a point of contact. One sibling or other close relative should be in charge of communicating with doctors. This person should have a health care power of attorney for you.2.    Find a family-friendly primary doctor. You likely receive care from multiple specialists. Decide on or find one doctor to be the primary medical resource for your family. Make sure reports from specialists are being sent to the primary doctor. If you live a distance from your family, consider asking your doctor if he or she is willing to communicate via email.3.    Create a central storage place for vital documents, including medical records, Social Security number and health insurance policy

information. Hard copies should be duplicated and stored in at least two fire- and water-proof locations. Digital imaging and storage services offer a convenient place to access files remotely.4.    Talk to your family about long-term care insurance. Nursing home costs continue to rise faster than inflation and can quickly deplete your savings. Generally, long-term care premiums increase as you age, and you may not be approved for coverage at all. 5.    Create a care circle. A network of neighbors and friends can give you some reassurance that others will be in touch regularly and know how to contact your family in an emergency.6.    Discuss finances. The point-of-contact relative, or another relative equipped to deal with financial matters, should have a financial power of attorney. This person should know the location of your key accounts and policies and the names and phone numbers for your key advisors. 

A final word of advice: Don’t ask your family to make promises they can’t keep, like withholding

information from other family members or vowing not to place you in a nursing facility. Discussing such issues ahead of time can help you and your family avoid these situations. If you would like help in creating a plan for those times when you are unable to care for yourself, contact our offices. We are happy to include your family and your other professional advisors, including your attorney, accountant and insurance professional, in creating a comprehensive plan. 

 

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe,

Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and

Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of

U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities

America. SAI# 303643 

 

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The Market

The nation’s unemployment rate surprised Wall Street on Friday with a smaller than expected loss of jobs. The Labor Department reported 36,000 fewer jobs in February, compared to the 50,000 drop that analysts had expected, according to a Reuters poll. The unemployment rate remained steady at 9.7 percent, better than the 9.8 percent economists had predicted. Consumer borrowing rose by $4.96 billion, or 2.43 percent, in January after nearly a year of declines. The Federal Reserve, which reported the numbers, revised December’s consumer borrowing to a 2.23 percent drop. For the week, the Dow gained 2.33 percent to close at 10,566.20. The S&P climbed 3.12 percent to finish at 1,138.70, and the NASDAQ rose 3.94 percent to end the week at 2,326.35. 

Taking Control – Thirty-seven percent of American workers age 45-59 have increased their retirement savings percentage and anticipate working longer before retirement as a result of the 2007-09 bear market for stocks (Source: Center for Retirement Research, BTN Research).   Prediction – Five years ago last week (March 2, 2005), then Fed Chairman Alan Greenspan told the House Budget Committee that the U.S. government needed to undertake “major deficit-reducing actions.” Greenspan said, “I fear we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver” (Source: House of Representatives, BTN Research).   

Hard Worker – The average productivity of the American worker (defined as output per hour of work) has increased 30 percent over the last decade (i.e., 2000-2009). Mathematically, this means the quantity of work done in 1999 during a 40-hour work week could now be completed in less than 31 hours (Source: Department of Labor, BTN Research).    

WEEKLY FOCUS – Treat Your Career As A Valuable Resource The current recession has some retirees considering at least a part-time job to supplement their portfolio drawdown. Many near-retirees have decided to continue working a few more years to allow their portfolios to recover from the market declines. The labor market, however, has put a monkey wrench into those admirable plans. With many Americans underemployed, part-time work has become scarce, and even those still working full-time may find their employment jeopardized by workforce reductions. 

Hardest hit may be those in their 50s who have long years of tenure in their jobs. Companies looking to reduce labor costs often look to get employees with long service records off the books, in favor of new employees. Many of these workers have insufficient funds to retire early, even with a severance or early retirement package from their employer, as they haven’t hit several important retirement milestones: age 59 ½ to start taking qualified plan or IRA distributions without penalty, age 62 to start receiving Social Security benefits, and age 65 to qualify for Medicare. Keeping skills and credentials up to date has never been more important for this group. Make yourself more valuable to your current employer or more attractive to a prospective one by earning a new certification to help in your job, expanding your education into a complementary or related field or learning a computer application more expected of the “kids” at the company. 

Staying connected to colleagues and peers outside your company can also prove worth the time if you find yourself looking for work. If you don’t belong to a professional group, join one, and if you haven’t been active, get back in touch. Networking helps more unemployed professionals land new jobs than any job posting website. Treat your career as the valuable resource it is. The ability to work as long as you are able is one of your most important assets for preparing for retirement. If you need help creating a “plan B” for keeping your retirement plan on track if you become unemployed, call our office for an appointment. 

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and

Pacific

Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of

U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities

America. SAI# 303558

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The Market

The Dow and the S&P ended February with their best gains since November, climbing 2.6 percent and 2.9 percent respectively, while the NASDAQ had its best month since December, gaining 4.2 percent. All three indexes had small declines for the week, however, as existing home sales recorded an unexpected drop in January and consumer sentiment fell in February. Those signs of the economy’s ongoing struggle to recover were offset slightly by a revised gross domestic product report from the Commerce Department, which showed the economy grew at a 5.9 percent annualized rate in the fourth quarter, compared to the 5.7 percent pace previously reported. For the week, the Dow lost 0.69 percent to close at 10,325.26. The S&P fell 0.37 percent to finish at 1,104.49, and the NASDAQ declined 0.25 percent to end the week at 2,238.26.

Paper or Plastic? – Over the 25 years from Dec. 31, 1983, to Dec. 31, 2008, outstanding credit card balances in the

U.S. grew by 10.5 percent per year, reaching $957 billion. From the end of 2008 to the end of 2009, outstanding credit card balances fell by 9.5 percent to $866 billion. The government has tracked credit card data since 1968. Last year’s drop in the outstanding credit card balances nationwide was the first time ever that the year-over-year change was negative (Source: Federal Reserve, BTN Research). 

We Are Saving More – The national personal savings rate in the

U.S. was 4.6 percent as of Dec. 31, 2009, the highest year-end rate since Dec. 31, 1996. As recently as March 31, 2008, the national personal savings rate was 1.2 percent. As of Dec. 31, 1984 (i.e., 25 years ago), the rate was 10.4 percent (Source: Bureau of Economic Analysis, BTN Research).  

In the Business of Health – The five largest U.S. health insurance companies had combined profits in 2009 of $12.2 billion, up from $7.8 billion of profits in 2008 (Source: Health Care for America Now, BTN Research).  

 

WEEKLY FOCUS – Identity Theft: Deter, Detect, Defend 

The Federal Trade Commission (FTC) reported last week that for the first time since it started tracking identity theft a decade ago, the number of complaints it received dropped in 2009. Even with a 10 percent decline, however, the FTC still logged 278,078 reports of identity theft. Other types of fraud jumped by 24 percent in 2009, possibly due to the economy. Debt collection fraud topped the “other” list, accounting for nearly 10 percent of all complaints. Reports of credit card fraud more than tripled in 2009. 

These numbers reflect only consumers who self-reported the fraud to the FTC. Of all fraud complaints reported, nearly half (48 percent) of victims say their first contact with the perpetrator came through    the Internet, with another 12 percent making contact through a website and 10 percent through a phone call. 

The FTC recommends that consumers use an approach of deter, detect and defend. Deter identity theft by safeguarding your Social Security number and other personal

information, shredding financial documents, deleting unsolicited emails and avoiding easy-to-guess computer passwords. Detect identity theft by watching for unexpected account statements or bills that do not arrive as expected, denials of credit for no apparent reason, and calls or letters about purchases you did not make. Monitor your credit card report and your financial statements closely. 

Defend against identity theft as soon as you suspect it by placing a fraud alert on your credit reports, closing any accounts that may be at risk, filing a police report and reporting the incident to the FTC. 

Protecting your personal

information is important to us. We will never send confidential

information such as account numbers, balances or statements to you by email. Once your account has been opened, we should never need to ask for your Social Security number by phone. If you ever doubt that a person claiming to represent our firm actually does work for us, please don’t hesitate to end the call and then call our office directly to verify. We’re your partner in ensuring only you have access to the assets you’ve working so hard to attain. 

 

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe,

Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and

Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of

U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities

America. SAI# 303418

 

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