Long-Term Care Annuities

When planning for the potential cost of long-term care, you’ve probably considered long-term care insurance. But premiums can be expensive and if you do buy the coverage, you probably hope you never have to use it. The prospect of paying costly premiums for long-term care insurance that you might never use might discourage you. Enter the long-term care annuity.

What is it?

This hybrid product, offered by insurance companies, is a nonqualified annuity that provides long-term care benefits (it can’t be used with IRAs or employer-sponsored qualified retirement plans). These policies allow you to use the annuity proceeds for long-term care, and if you don’t use the long-term care benefit, you still have typical annuity options. For instance, you can convert the annuity to a stream of income payments (annuitization), redeem the annuity at its maturity (e.g., cash in the annuity), or, at your death, you can pass the remaining balance of your annuity to your named beneficiaries.

While policy provisions may differ from company to company, generally you put money into the annuity, usually in a lump sum or through a series of premium payments. You may also exchange another annuity or cash value life insurance for a long-term care annuity via a Section 1035 exchange. The annuity typically pays a fixed rate of interest each year. In addition, the annuity provides a long-term care benefit amount, usually equal to two or three times your annuity cash value, subject to a maximum benefit period, which is the maximum length of time that you may receive long-term care benefit payments from the annuity. Long-term care annuity benefits are usually paid monthly. There is usually a charge for the long-term care component (generally ranging from 0.4% to 1.25% of the annuity’s cash value) that is deducted from your annuity each year.

How does this product work?

Typically, long-term care annuities have the same qualification requirements as most stand-alone long-term care insurance policies. You first have to be considered “insurable” by the annuity company, which means you have to answer questions relating to whether you have suffered any major illness such as cancer or heart disease, or whether you have a significant cognitive impairment like Alzheimer’s disease. But you usually don’t have to undergo a physical, and the underwriting is generally less stringent than with stand-alone long-term care insurance, meaning it’s a little easier to qualify for the long-term care annuity.

Like most stand-alone long-term care policies, in order to be eligible for long-term care benefits from the annuity, you must either suffer from cognitive or mental incapacity or be unable to perform at least two of six activities of daily living that include feeding, bathing, dressing, transferring, continence, and toileting. Thereafter, benefits are typically available after a waiting period of between 30 days and 2 years (depending on the particular product).

Example: Say you pay $75,000 to purchase a long-term care annuity. You select a long-term care benefit equal to 200% of your annuity’s cash value, with a 5-year benefit period. Initially, your long-term care benefit equals $150,000 ($75,000 x 2). Let’s assume the annuity earns 4.5% per year and the cost of the long-term care provision is 0.5% per year. At the end of 20 years (presuming you take no withdrawals) the annuity is worth about $163,622 and the long-term care benefit amount is $327,244. This will provide maximum long-term care benefit payments of $5,454 per month for as long as 5 years. And even if cumulative long-term care payments exceed the annuity’s contract value ($163,622), the long-term care payments will continue until you either exhaust the long-term care benefit amount ($327,244) or you no longer need long-term care. (This is a hypothetical example. It does not represent a specific product. Product terms and conditions may differ. Check with the annuity issuer for specific product details.)

What about taxes?

Generally, withdrawals from an annuity are considered to come from earnings first and are subject to income tax. With respect to long-term care annuities in particular, prior to 2010, payments of long-term care benefits from annuities were also deemed to have been taken from annuity earnings first, then principal. Thus, each long-term care benefit payment was taxed as ordinary income to the annuity owner until all earnings within the annuity had been exhausted.

Beginning January 1, 2010, potentially favorable tax treatment applies to certain withdrawals from annuities purchased after 1996, if the withdrawals are used to pay for qualified long-term care insurance coverage. This means you won’t have to pay income tax on the benefits you receive from your long-term care annuity used to pay for long-term care expenses.

More on exchanges

Prior to 2010, you couldn’t exchange your annuity for a long-term care insurance policy without incurring income tax on the earnings portion of the annuity. Now you can exchange your deferred annuity for either a stand-alone long-term care insurance policy or a long-term care annuity on a tax-free basis. However, with any exchange, be sure your current annuity has reached maturity before exchanging it; otherwise surrender charges may reduce your current annuity’s value. Also, if you exchange your current annuity for a long-term care annuity, you will likely incur a new surrender charge period that accompanies the new long-term care annuity. Surrender charges may apply to withdrawals you take from your annuity. However, surrender charges generally do not apply to long-term care benefit payments. Before entering into an exchange, you should talk to your financial professional or tax professional to be sure the exchange will be tax free.

Pluses/minuses

As with most insurance products, there are pluses and minuses to consider in determining whether a long-term care annuity is right for you. On the plus side:

• Long-term care annuities allow for tax-free withdrawals if used to pay for qualified long-term care coverage
• With typical long-term care insurance, if you don’t use the coverage, you generally don’t get a return of your premiums; but with a long-term care annuity, at your death you can pass any remaining annuity balance to your beneficiaries
• If you’re not in the best of health and you want some long-term care protection, you might not be able to qualify for stand-alone long-term care insurance. But, it’s generally easier to qualify for a long-term care annuity (e.g., you probably won’t need a physical)
• Once you put money in the annuity, you don’t have to make any more premium payments as you would with stand-alone long-term care insurance policies

On the other hand:

• Most long-term care annuities are funded with a single premium payment of at least $50,000, so you may need to have at least that much available in a lump sum
• Long-term care annuities, like most deferred annuities, come with surrender charges, so taking money out of the annuity that’s not used for long-term care expenses may be subject to surrender charges, income tax, and a penalty of 10% if taken before age 59½
• Currently, long-term care annuities do not qualify as partnership plans, which otherwise afford some asset protection when trying to qualify for Medicaid
• If you don’t deposit enough money into the long-term care annuity, you may not have enough protection to cover your long-term care expenses
• There’s a cost to purchase the long-term care benefit which can range from 0.4% to 1.25% of the annuity’s account value
• Since the cost of the long-term care portion of the annuity is deducted from your investment in the annuity (and not the earnings), you can’t take the cost of long-term care as a medical expense deduction

Is it right for you?

Whether a long-term care annuity is right for you depends on a number of factors. But the long-term care annuity is certainly a viable option available for long-term care planning that might merit a second look.

 

 

 

Securities offered through FSC Securities Corporation, member FINRA / SIPC . Investment advisory services offered through The Retirement Group, LLC, a registered investment advisor which is not affiliated with FSC Securities Corp. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities offered through FSC Securities Corporation, member FINRA / SIPC . Investment advisory services offered through The Retirement Group, LLC, a registered investment advisor which is not affiliated with FSC Securities Corp. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

 

 

Eleven Ways to Help Yourself Stay Sane in a Crazy Market

Keeping your cool can be hard to do when the market goes on one of its periodic roller-coaster rides. It’s useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are 11 ways to help keep yourself from making hasty decisions that could have a long-term impact on your ability to achieve your financial goals.

1. Have a game plan

Having predetermined guidelines that recognize the potential for turbulent times can help prevent emotion from dictating your decisions. For example, you might take a core-and-satellite approach, combining the use of buy-and-hold principles for the bulk of your portfolio with tactical investing based on a shorter-term market outlook. You also can use diversification to try to offset the risks of certain holdings with those of others. Diversification may not ensure a profit or guarantee against a loss, but it can help you understand and balance your risk in advance. And if you’re an active investor, a trading discipline can help you stick to a long-term strategy. For example, you might determine in advance that you will take profits when a security or index rises by a certain percentage, and buy when it has fallen by a set percentage.

2. Know what you own and why you own it

When the market goes off the tracks, knowing why you originally made a specific investment can help you evaluate whether your reasons still hold, regardless of what the overall market is doing. Understanding how a specific holding fits in your portfolio also can help you consider whether a lower price might actually represent a buying opportunity.

And if you don’t understand why a security is in your portfolio, find out. That knowledge can be particularly important when the market goes south, especially if you’re considering replacing your current holding with another investment.

3. Remember that everything is relative

Most of the variance in the returns of different portfolios can generally be attributed to their asset allocations. If you’ve got a well-diversified portfolio that includes multiple asset classes, it could be useful to compare its overall performance to relevant benchmarks. If you find that your investments are performing in line with those benchmarks, that realization might help you feel better about your overall strategy.

Even a diversified portfolio is no guarantee that you won’t suffer losses, of course. But diversification means that just because the S&P 500 might have dropped 10% or 20% doesn’t necessarily mean your overall portfolio is down by the same amount.

4. Tell yourself that this too shall pass

The financial markets are historically cyclical. Even if you wish you had sold at what turned out to be a market peak, or regret having sat out a buying opportunity, you may well get another chance at some point. Even if you’re considering changes, a volatile market can be an inopportune time to turn your portfolio inside out. A well-thought-out asset allocation is still the basis of good investment planning.

5. Be willing to learn from your mistakes

Anyone can look good during bull markets; smart investors are produced by the inevitable rough patches. Even the best investors aren’t right all the time. If an earlier choice now seems rash, sometimes the best strategy is to take a tax loss, learn from the experience, and apply the lesson to future decisions. Expert help can prepare you and your portfolio to both weather and take advantage of the market’s ups and downs.

6. Consider playing defense

During volatile periods in the stock market, many investors reexamine their allocation to such defensive sectors as consumer staples or utilities (though like all stocks, those sectors involve their own risks, and are not necessarily immune from overall market movements). Dividends also can help cushion the impact of price swings. According to Standard & Poor’s, dividend income has represented roughly one-third of the monthly total return on the S&P 500 since 1926, ranging from a high of 53% during the 1940s to a low of 14% in the 1990s, when investors focused on growth.

7. Stay on course by continuing to save

Even if the value of your holdings fluctuates, regularly adding to an account designed for a long-term goal may cushion the emotional impact of market swings. If losses are offset even in part by new savings, your bottom-line number might not be quite so discouraging.

If you’re using dollar-cost averaging–investing a specific amount regularly regardless of fluctuating price levels–you may be getting a bargain by buying when prices are down. However, dollar cost averaging can’t guarantee a profit or protect against a loss. Also consider your ability to continue purchases through market slumps; systematic investing doesn’t work if you stop when prices are down. Finally, remember that the return and principal value of your investments will fluctuate with changes in market conditions, and shares may be worth more or less than their original cost when you sell them.

8. Use cash to help manage your mind-set

Cash can be the financial equivalent of taking deep breaths to relax. It can enhance your ability to make thoughtful decisions instead of impulsive ones. If you’ve established an appropriate asset allocation, you should have resources on hand to prevent having to sell stocks to meet ordinary expenses or, if you’ve used leverage, a margin call. Having a cash cushion coupled with a disciplined investing strategy can change your perspective on market volatility. Knowing that you’re positioned to take advantage of a downturn by picking up bargains may increase your ability to be patient.

9. Remember your road map

Solid asset allocation is the basis of sound investing. One of the reasons a diversified portfolio is so important is that strong performance of some investments may help offset poor performance by others. Even with an appropriate asset allocation, some parts of a portfolio may struggle at any given time. Timing the market can be challenging under the best of circumstances; wildly volatile markets can magnify the impact of making a wrong decision just as the market is about to move in an unexpected direction, either up or down. Make sure your asset allocation is appropriate before making drastic changes.

10. Look in the rear-view mirror

If you’re investing long term, sometimes it helps to take a look back and see how far you’ve come. If your portfolio is down this year, it can be easy to forget any progress you may already have made over the years. Though past performance is no guarantee of future returns, of course, the stock market’s long-term direction has historically been up. With stocks, it’s important to remember that having an investing strategy is only half the battle; the other half is being able to stick to it. Even if you’re able to avoid losses by being out of the market, will you know when to get back in? If patience has helped you build a nest egg, it just might be useful now, too.

11. Take it easy

If you feel you need to make changes in your portfolio, there are ways to do so short of a total makeover. You could test the waters by redirecting a small percentage of one asset class to another. You could put any new money into investments you feel are well-positioned for the future, but leave the rest as is. You could set a stop-loss order to prevent an investment from falling below a certain level, or have an informal threshold below which you will not allow an investment to fall before selling. Even if you need or want to adjust your portfolio during a period of turmoil, those changes can–and probably should–happen in gradual steps. Taking gradual steps is one way to spread your risk over time, as well as over a variety of asset classes.

 

The information in these materials may change at any time and without notice.Group, LLC, a registered investment advisor which is not affiliated with FSC Securities Corp. Securities provided by FSC Securities Corporation, member FINRA / SIPC . Investment advisory services offered through The Retirement Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot  assure the  accuracy   or completeness of these materials.

The Power of Dividends in a Portfolio

It wasn’t so long ago that many investors regarded dividends as roughly the financial equivalent of a record turntable at a gathering of MP3 users–a throwback to an earlier era, irrelevant to the real action.

But fast-forward a few years, and things look a little different. Since 2003, when the top federal income tax rate on qualified dividends was reduced from a maximum of 38.6%, dividends have acquired renewed respect. Favorable tax treatment isn’t the only reason, either; the ability of dividends to provide income and potentially help mitigate market volatility is also attractive to investors. As baby boomers approach retirement and begin to focus on income-producing investments, the long-term demand for high-quality, reliable dividends is likely to increase.

Why consider dividends?

Dividend income has represented roughly one-third of the total return on the Standard and Poor’s 500 since 1926. According to S&P, the portion of total return attributable to dividends has ranged from a high of 53% during the 1940s–in other words, more than half that decade’s return resulted from dividends–to a low of 14% during the 1990s, when investors tended to focus on growth.*

If dividends are reinvested, their impact over time becomes even more dramatic. S&P calculates that $1 invested in the Standard and Poor’s 500 on January 1,1929 would have grown to $66.48 by 2012. However, when coupled with reinvested dividends, that same $1 investment would have resulted in $1,832.45.* (Bear in mind that past performance is no guarantee of future results, and taxes were not factored into the calculations.)

If a stock’s price rises 8% a year, even a 2.5% dividend yield can push its total return into double digits. Dividends can be especially attractive during times of relatively low or mediocre returns; in some cases, dividends could help turn a negative return positive, and also can mitigate the impact of a volatile market by helping to even out a portfolio’s return. Another argument has been made for paying attention to dividends as a reliable indicator of a company’s financial health. Investors have become more conscious in recent years of the value of dependable data as a basis for investment decisions, and dividend payments aren’t easily restated or massaged.

Finally, many dividend-paying stocks represent large, established companies that may have significant resources to weather an economic downturn–which could be helpful if you’re relying on those dividends to help pay living expenses.

The corporate incentive

Financial and utility companies have been traditional mainstays for investors interested in dividends, but other sectors of the market also have begun to offer them. For example, investors have been stepping up pressure on cash-rich technology companies to distribute at least some of their profits as dividends rather than reinvesting all of that money to fuel growth. Some investors believe that pressure to maintain or increase dividends imposes a certain fiscal discipline on companies that might otherwise be tempted to use the cash to make ill-considered acquisitions (though there are certainly no guarantees that a company won’t do so anyway).

However, according to S&P, corporations are beginning to favor stock buybacks rather than dividend increases as a way to reward shareholders. If it continues, that trend could make ever-increasing dividends more elusive.

Differences among dividends

Dividends paid on common stock are by no means guaranteed; a company’s board of directors can decide to reduce or eliminate them. The amount of a company’s dividend can fluctuate with earnings, which are influenced by economic, market, and political events. However, a steadily growing dividend is generally regarded as a sign of a company’s health and stability. For that reason, most corporate boards are reluctant to send negative signals by cutting dividends.

That isn’t an issue for holders of preferred stocks, which offer a fixed rate of return paid out as dividends. However, there’s a tradeoff for that greater certainty; preferred shareholders do not participate in any company growth as fully as common shareholders do. If the company does well and increases its dividend, preferred stockholders still receive the same payments.

The term “preferred” refers to several ways in which preferred stocks have favored status. First, dividends on preferred stock are paid before the common stockholders can be paid a dividend. Most preferred stockholders do not have voting rights in the company, but their claims on the company’s assets will be satisfied before those of common stockholders if the company experiences financial difficulties. Also, preferred shares usually pay a higher rate of income than common shares.

Because of their fixed dividends, preferred stocks behave somewhat similarly to bonds; for example, their market value can be affected by changing interest rates. And almost all preferred stocks have a provision that allows the company to call in its preferred shares at a set time or at a predetermined future date, much as it might a callable bond.

Look before you leap

Investing in dividend-paying stocks isn’t as simple as just picking the highest yield. If you’re investing for income, consider whether the company’s cash flow can sustain its dividend.

Also, some companies choose to use corporate profits to buy back company shares. That may increase the value of existing shares, but it sometimes takes the place of instituting or raising dividends.

If you’re interested in a dividend-focused investing style, look for terms such as “equity income,” “dividend income,” or “growth and income.” Also, some exchange-traded funds (ETFs) track an index comprised of dividend-paying stocks, or that is based on dividend yield.

Note: Be sure to check the prospectus for information about expenses, fees and potential risks, and consider them carefully before you invest.

Taxes and dividends

The American Tax Relief Act of 2012 increased the maximum tax rate for qualified dividends to 20% for individuals in the 39.6% federal income tax bracket. For individuals in the 25%, 28%, 33%, or 35% marginal tax bracket, a 15% maximum rate will generally apply, while those in the 10% or 15% tax bracket will still owe 0% on qualified dividends. Depending on your income, dividends you receive may also be subject to a 3.8% net investment income tax (also referred to as the unearned income Medicare contribution tax).

Qualified dividends are those that come from a U.S. or qualified foreign corporation, one that you have held for more than 60 days during a 121-day period (60 days before and 61 days after the stock’s ex-dividend date). Form 1099-DIV, which reports your annual dividend and interest income for tax accounting purposes, will indicate whether a dividend is qualified or not.

Some dividends aren’t taxed at the same rate as qualified dividends, and a portion may be taxed as ordinary income. Also, some so-called dividends, such as those from deposits or share accounts at cooperative banks, credit unions, U.S. savings and loan associations, and mutual savings banks actually are considered interest for tax purposes.

 

 

 

 

 

 

 

 

 

 

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of Patrick Badiuk, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, access.att.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Glaxosmithkline, Northrop Grumman, Raytheon, ExxonMobil, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Patrick Badiuk is a Representative with FSC Securities and may be reached at www.theretirementgroup.com.

Economic Update 5/27

May 27, 2013

    

APRIL DATA AFFIRMS HOUSING REBOUND

Last month brought a 2.3% gain in new home sales and an 0.6% increase in existing home sales. Distressed properties (short sales and foreclosures) represented only 18% of residential resales in April, the National Association of Realtors noted; compare that with 28% of sales in April 2012. NAR also announced that the median existing home price was $192,800 in April, 11.0% higher than a year ago. The pace of new home buying has improved 29.0% in the past 12 months, according to the Census Bureau.^1,2

FED MINUTES DISCLOSE THOUGHTS OF TAPERING QE3

The May 1 Federal Open Market Committee minutes were released last Wednesday, shortly after Federal Reserve chairman Ben Bernanke mentioned the need to sustain the central bank’s current stimulus effort in Congress. The minutes, however, noted that “a number” of Fed officials were open to scaling down QE3 as soon as June if economic indicators sufficiently improved. Concern and confusion about these mixed messages put more volatility into the markets and factored into a 3-day losing streak for the S&P 500.³

DURABLE GOODS ORDERS UP 3.3% IN APRIL

This contrasts with March’s 5.9% decrease. With transportation orders factored out, the April increase was still 1.3%. Census Bureau reports have noted improvements in hard goods orders in two of the past three months, even with the sequester.⁴

RUSSELL 2000 REACHES A MILESTONE

While the small-cap benchmark fell 1.20% last week, it also made history on May 20: it attained the 1,000 level for the first time. The RUT settled Friday at 984.28. The S&P 500 (-1.07% to 1,649.61), DJIA (-0.33% to 15,303.10) and NASDAQ (-1.14% to 3,459.14) all slipped last week.^4,5,6,7

THIS WEEK: U.S. financial markets are closed Monday in observance of Memorial Day. Tuesday sees the release of the March S&P/Case-Shiller Home Price Index, the Conference Board’s May consumer confidence survey and earnings from Tiffany & Co. and Wet Seal. DSW and Chico’s announce Q1 results on Wednesday. In addition to new initial jobless claims figures, Thursday offers NAR’s report on April pending home sales, the federal government’s second estimate of Q1 GDP, and earnings from Krispy Kreme, BigLots! and Costco. Friday, the Commerce Department issues its report on April personal spending and the University of Michigan’s final May consumer sentiment survey arrives.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+16.78	+22.13	+4.52	+7.79
NASDAQ	+14.56	+21.83	+8.30	+12.91
S&P 500	+15.66	+24.91	+3.98	+7.68
REAL YIELD	5/24 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	-0.26%	-0.38%	1.36%	1.72%

 

Sources: usatoday.com, thestreet.com, bigcharts.com, treasury.gov – 5/24/13^4,7,8,9,10

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

«RepresentativeDisclosure»

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The 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 Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – csmonitor.com/Business/new-economy/2013/0523/New-home-sales-rise-but-market-still-a-long-way-from-normal [5/23/13]

2 – realtor.org/news-releases/2013/05/april-existing-home-sales-up-but-constrained [5/22/13]

3 – reuters.com/article/2013/05/22/markets-usa-stocks-idUSL2N0E321R20130522 [5/22/13]

4 – thestreet.com/story/11933260/1/sp-poised-for-three-day-losing-streak-amid-qe-wind-down-chatter.html [5/24/13]

5 – marketwatch.com/story/russell-2000-index-breaks-above-1000-2013-05-20 [5/20/13]

6 – blogs.barrons.com/stockstowatchtoday/2013/05/24/dow-ekes-out-friday-gain-down-for-the-week/ [5/24/13]

7 – usatoday.idmanagedsolutions.com/stocks/overview.idms?index=SP500 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F24%2F12&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F24%2F12&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F24%2F12&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F23%2F08&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F23%2F08&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F23%2F08&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F23%2F03&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F23%2F03&x=0&y=0 [5/24/13]

8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F23%2F03&x=0&y=0 [5/24/13]

9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [5/24/13]

10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [5/24/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Patrick Badiuk, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Patrick Badiuk is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Lump Sum Pension Payouts for Rollovers

Give those dollars the opportunity for further tax-deferred growth.

     

A big payout leads to a big question. If you are taking a lump sum pension payout from your former employer, what is the next step for that money? It will be integral to your retirement; how can you make it work harder for you?

Rolling it over might be the right thing to do. If you don’t have substantial retirement savings, that lump sum may be just what you need. The key is to plan to keep it growing. That money shouldn’t just sit there.

Even tame inflation whittles away at the value of money over time. Most corporate pension payments aren’t inflation-indexed, so those monthly payments eventually purchase less and less. Lump sums are just as susceptible: if you receive $100,000 today, that $100,000 will buy 50% less by 2028 assuming consistent 3% inflation (and that is quite an optimistic assumption).^1,2

Putting it in the bank might cause you some financial pain. If you just take your lump sum payout and deposit it, all that money will be considered taxable income by the IRS. (There are very few exceptions to that rule.) Moreover, you won’t get the whole amount that way: per IRS regulations, your employer must withhold 20% of it.^2,3

Don’t you want to postpone paying taxes on those assets? By arranging a rollover of your lump sum distribution to a traditional IRA, you may defer tax on those dollars. You can even defer tax on a distribution already paid to you if you roll over the taxable amount to an IRA within 60 days after receipt of the payout.³    

In doing so, you are keeping those assets in a tax-deferred account. They can be invested as you like, and that money will not be taxed until it is withdrawn. (You may only transfer a lump sum distribution from a company pension plan into a traditional IRA – you may not transfer it to a Roth IRA.)⁴ 

If you are considering taking a lump sum payout, make sure you position that money for additional tax-deferred growth. Talk to a financial professional who can help you with the paperwork and get your IRA rollover going.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of Patrick Badiuk, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – money.cnn.com/2012/09/01/pf/expert/pension-payments.moneymag/index.html [9/1/12]

2 – http://www.kiplinger.com/article/retirement/T037-C000-S002-pensions-take-a-lump-sum-or-not.html [9/11]

3 – http://www.irs.gov/taxtopics/tc412.html [1/4/13]

4 – http://www.fool.com/retirement/manageretirement/manageretirement2.htm [1/21/13]

 The Retirement Group is not affiliated with nor endorsed by fidelity.com, Verizon, Bank of America, ING Retirement, netbenefits.fidelity.com, AT&T, Qwest, Chevron, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, access.att.com, Merck, Hughes, hewitt.com, resources.hewitt.com, Pfizer, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Patrick Badiuk is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Weekly Economic Update 5/20

May 20, 2013

    

SUBDUED INFLATION IN APRIL

Consumer and producer prices retreated last month. The federal government’s Consumer Price Index fell 0.4%, a monthly descent unseen since December 2008; the Producer Price Index declined 0.7%, its biggest monthly drop in three years. Consumer prices also fell for a second straight month; the last time that happened was in late 2008. The core CPI did rise 0.1% in April; the yearly gain in the overall CPI was just 1.1%.¹

THREE MORE POSITIVE SIGNS FOR THE ECONOMY

The University of Michigan’s initial May consumer sentiment survey came in at 83.7 – its highest level since July 2007, 7.3 points above the final April mark. After falling 0.2% for March, the Conference Board’s index of U.S. leading indicators rose 0.6% for April. Census Bureau data showed retail sales ticking up 0.1% in April and 3.7% in the past year.^2,3

HOUSING STARTS PLUNGE, BUILDING PERMITS SOAR

While the year-over-year increase was 13.1%, housing starts plummeted 16.5% in April, largely due to a 37.8% drop in apartment starts. On the other hand,  last month brought a 14.3% rise in building permits … marked by a 40.6% jump in permits for apartment construction.⁴

BULLS KEEP RUNNING

The S&P 500 is now on a 4-week winning streak. It rose another 1.98% last week to settle at 1,666.12 Friday. Complementing that 5-day gain, the NASDAQ went +1.82% last week while the DJIA went +1.56%; at Friday’s closing bell, the NASDAQ settled at 3,498.97 and the Dow at 15,354.40. A truly impressive factoid: the NASDAQ and S&P have gained 1% or more in each of the past four weeks.⁵

THIS WEEK: Monday brings earnings from Campbell Soup, TiVo and Urban Outfitters. On Tuesday, Best Buy, Home Depot, Medtronic, Vodafone, Saks, TJX and NetApp announce quarterly results. Wednesday, NAR releases its report on April existing home sales, the Federal Reserve releases the May 1 FOMC minutes, and Fed chairman Ben Bernanke testifies before Congress; Staples, L Brands, PetSmart, Toll Brothers, Target, Lowe’s and Hewlett-Packard post earnings. The Census Bureau report on April new home sales appears Thursday, along with the March FHFA housing price index and earnings from Dollar Tree, Gamestop, Ralph Lauren, Sears Holdings, Gap, Ross Stores, Aeropostale and Pandora. Friday offers the April durable goods orders report and Q1 results from Abercrombie & Fitch.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+17.17	+23.40	+3.65	+7.69
NASDAQ	+15.88	+24.36	+7.67	+12.74
S&P 500	+16.82	+27.69	+3.38	+7.64
REAL YIELD	5/17 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	-0.31%	-0.35%	1.41%	1.84%

 

Sources: cnbc.com, bigcharts.com, treasury.gov – 5/17/13^5,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

«RepresentativeDisclosure»

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The 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 Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – businessweek.com/news/2013-05-16/consumer-prices-in-u-dot-s-dot-dropped-more-than-forecast-in-april [5/16/13]

2 – bloomberg.com/news/2013-05-17/u-s-stock-futures-rise-before-leading-indicators-data.html [5/17/13]

3 – census.gov/retail/marts/www/marts_current.pdf [5/13/13]

4 – latimes.com/business/money/la-fi-mo-housing-starts-construction-building-permits-economy-20130516,0,7678305.story [5/16/13]

5 – cnbc.com/id/100746158 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F17%2F12&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F17%2F12&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F17%2F12&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F16%2F08&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F16%2F08&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F16%2F08&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F16%2F03&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F16%2F03&x=0&y=0 [5/17/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F16%2F03&x=0&y=0 [5/17/13]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [5/17/13]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [5/17/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Patrick Badiuk, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Patrick Badiuk is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.