When a spouse passes away, the emotion and magnitude of the loss can send our lives reeling. This profound change can also affect our finances. All at once, we have a to-do list before us, and the responsibility of it can make us feel pressured. With that in mind, this article is intended as a kind of checklist – a list of some of the key financial matters to address following the death of a spouse.

The first steps. These actions should come first. Some of these steps do require locating some documentation. Hopefully, your spouse kept these documents where you can easily find them – either at home, in a safe deposit box or in an online vault.

• Contact family members, friends and your spouse’s employer to tell them of your spouse’s passing. (As a courtesy, your spouse’s employer should put you in touch with the person overseeing its employee benefits plan or human resources department.)

• If your spouse owned a business, check to see what plans are in place for its short-term continuation. Will a partner or key employee take the reins for the time being (or for the long term) as a result of a defined succession plan?

• Arrange payment for funeral expenses.

• Gather/request as many records as you can find to document your spouse’s life and passing – birth and death certificates, a marriage certificate or divorce decree (if applicable), military service records, investment, insurance and tax records, and employee benefit information (if applicable).

The next steps. Subsequently, it is time to talk with the legal, tax, insurance and financial professionals you trust.

• Consult your attorney. Assuming your spouse left a will and did not die intestate (i.e., without one), that will should be looked at as a prelude to the distribution of any assets and the settlement of the estate. His or her written wishes should be reviewed.

• Locate your spouse’s insurance policy and talk to your insurance agent. Notify that agent of your spouse’s passing; he or she will work with you to a) get the claims process going, b) help you reevaluate your own insurance needs, and c) review and perhaps alter beneficiary designations.

• Notify your spouse’s financial advisor and by extension, the financial custodians (i.e., the banks or investment firms) through which your spouse opened his or her IRAs, money market funds, mutual funds, brokerage accounts, or qualified retirement plan. They must be notified so that these funds may be properly distributed according to the beneficiary forms for these accounts. Please note that the beneficiary forms commonly take precedence over bequests made in a will. (This is why it is important to periodically review beneficiary designations for these accounts.) If there is no beneficiary form on file with the account custodian, the assets will be distributed according to the custodian’s default policy, which often directs assets either to a surviving spouse or the deceased spouse’s estate.

Survivor/spousal benefits. These important benefits may help you to maintain your standard of living after a loss.

• Contact your local Social Security office regarding Social Security spousal and survivor benefits. Also, visit www.ssa.gov/pgm/survivors.htm online.

• If your spouse worked in a civil service job or was in the armed forces, contact the state or federal government branch or armed services branch about how to file for survivor benefits.

• Your spouse’s estate. To settle an estate, several orderly steps should be taken.

• You and/or your attorney need to contact the executor, trustee(s), guardians and heirs relevant to the estate and access the appropriate estate planning documents.

• Your attorney can also let you know about the possibility of probate. A revocable living trust (or other estate planning mechanisms) may allow you to avoid this process. Joint tenancy and community property laws in many states also help.

• The executor for the estate should obtain an Employer Identification Number (EIN) from the IRS. Visit: www.irs.gov/businesses/small/article/0,,id=102767,00.html

• Any banks, credit unions and financial firms your spouse had a financial relationship with should be notified of his or her death.

• Your spouse’s creditors will also need to be informed. Any debts will need to be addressed, and separate credit may need to be established for you.

Your own taxes & investments. How does all this affect your own financial life?

• Review the beneficiary designations on the IRAs, workplace retirement plans and insurance policies that are in your name. With the death of a spouse, beneficiary designations will likely have to be revised.

• Consider your state and federal tax filing status. A change in status may significantly alter your tax picture.

• Speaking of taxes, there may be tax implications surrounding any charitable gifts you and your spouse have recently arranged or planned to make. (If a deceased spouse leaves property to a surviving spouse or a tax-exempt charity, that property is exempt from federal estate tax. Any property gifted by your late spouse during his or her life is not subject to probate.)

• Presuming you jointly owned some assets, it is time to retitle them. In addition to real estate, you may have jointly owned bank accounts, investments and vehicles.

Things to think about when you are ready to move forward. With the passage of time, you may give thought to the short-term and long-term financial and lifestyle consequences of your spouse’s passing.

• Some widowed spouses ponder selling a home or moving to be closer to adult children in such circumstances, but this is not always the clearest moment to make such decisions.

• Your own retirement planning needs. Certainly, you had an idea of what your retirement would be like together; to what degree does this life event change that idea? Will potential sources of retirement income need to be replaced?

• If you have minor children to take care of, will you be able to sustain the family lifestyle on a single income? How do your income sources compare to your fixed and variable expenses?

• Do you need to address college funding in a new way?

• If your spouse owned a business or professional practice, to what extent do you want (or need) to be involved in it in the future?

This article is intended as a checklist – a list of the important financial considerations to address in the event of a tragedy. If you find yourself referring to this article now or you decide to keep it in a drawer or on your computer for some unforeseen time in the future, please know that I am here to help you and assist you as you seek answers to your questions and a measure of financial equilibrium. Simply call or email me.

Are you one of those taxpayers worried about being audited? The fear may be overblown – according to Internal Revenue Service data, just 1.6 million taxpayers were audited in 2011. The agency reviewed about 1% of returns sent in by taxpayers making less than $200,000, and no more than 12% of millionaires had their returns scrutinized.

Still, no one likes extra stress courtesy of the IRS. Self-employed individuals seem to be magnets for audits – in fact, IRS data indicates that people who work for themselves and earn from $100,000-$200,000 yearly are five times more likely to get a second look from the agency than the typical employee.

Let’s look at some red flags that might get you extra IRS scrutiny. (We’ll end on a positive note – you or someone you know might be eligible for an unexpected federal tax refund from 2008.)

A Schedule C that hints at some odd bookkeeping. Schedule Cs get a close look annually as the IRS seeks to remedy the tax gap (the difference between federal taxes owed and federal taxes paid). As Schedule Cs are often filled out by solopreneurs and small business owners themselves, the chances increase for claiming substantial deductions that may be hard to substantiate.

Taxable income of $1 million or more. Millionaires work with accountants for a reason – generally speaking, returns prepared by tax professionals raise far fewer red flags than DIY ones. If you will make around $1 million this year, look back at the first paragraph of this article and consider whether or not it might be wise to defer some potentially taxable income into 2013.

Bad math. Calculators are readily available and they can be as crucial as software when it comes to filing your federal return. The IRS does spot mediocre mathematics in returns. It has even recalculated taxes to save people money in years when special tax credits were available, such as the Making Work Pay credit. However, it also finds unreported and underreported taxable income through the same scrutiny. In fact, the IRS found 4.2 million math errors last year on tax returns for 2010.

Huge deductions. Is your money-losing small business venture truthfully just a hobby? Did you really donate $4,000 worth of office supplies to a charity, and do you have the receipts to back that up? The IRS routinely checks returns for deductions that seem outlandish.

Living large. Does the IRS peruse social media? Yes it does, just as many people do. The IRS has done good detective work for years; its investigators know to check out DMV and employment records to get a better picture of an errant taxpayer. Today, photos and posts on Facebook and MySpace and Twitter can telegraph potentially valuable nuggets of information, particularly about young taxpayers who have come into wealth that their returns don’t seem to show.

If you’re reading this, you’re paying more attention than many others. That claim really isn’t so grandiose – a staggering number of Americans pay scant attention to their federal taxes. According to the 2012 Taxes and Savings Survey from Capital One Bank, 11% of American taxpayers choose to file at the last minute. For that matter, about 5% of Americans (that’s 7 million people) don’t file federal returns at all – and in some cases, it isn’t just because they don’t earn enough taxable income.

Could $5 gas arrive with summer? As of April 6, U.S. retail gasoline prices were up 20.15% YTD; on that date, AAA’s national survey had the price of regular unleaded averaging $3.94 per gallon. So what happens this spring and summer – traditionally when Americans tend to hit the road?

A new Christian Science Monitor/TIPP survey of 900+ adults finds that the average American expects pump prices of around $4.75 a gallon come July. That’s about 20% above where prices are now.

Is that perception cynical, or realistic? It depends on whether you think the latest price spike will eventually moderate according to the historical pattern.

Will the classic pattern hold? Short-term price jumps in retail gasoline are often partly tempered by lessening demand. That is, the price of gas climbs to a certain point where consumers simply decide to cut back on their driving. As demand drops, prices finally follow.

This could easily happen; it may happen soon. Yet when we look at the macro view, we have not been following the classic pattern. American consumer demand for gasoline has declined slightly in every year since 2007. (Before the recession, sales of big SUVs represented 20% of U.S. auto buying; now they account for 5% of it.) In fact, the federal government’s Energy Information Administration (EIA) believes that U.S. gasoline consumption will drop by another 7% over the next 25 years.

Who is to blame for the soaring prices? The Christian Science Monitor/TIPP survey asked for opinions. Close to a quarter of those polled put the blame on the oil industry; about 20% pinned the blame on speculators in the commodities market. Coming in third and fourth: the Obama administration (14%) and Congress (9%).

As the world is a global village, our gas prices are most influenced by the world oil market. Recently, the factor exerting the biggest influence has been the threat of supply disruption in the Middle East – but that’s not the only factor weighing on the market. We are using less oil and gasoline, but China and India and other emerging economies are using more – in fact, 10 million more cars hit the roads in China during 2010 alone.

In addition, the U.S. has become a net gasoline exporter for the first time in more than five decades as a consequence of key oil refineries along the east coast and in the Caribbean ceasing production. Also, many of our refineries can now produce gasoline for less than it would cost at Latin American or European supply points.

Basically, we are competing with the world for our gasoline – and the world oil market causes the big ripples in the equilibrium. This is why boycotting gas stations in your area for a day has little more than symbolic effect.

What could America do? The Obama administration could try some quick fixes, but some might not be popular. Releasing some of the inventory in the Strategic Petroleum Reserve could help – and in fact, announcing the release after the fact could potentially affect oil prices more than publicizing it beforehand.

To crimp speculators, the government could request that the New York Mercantile Exchange and Intercontinental Exchange (on which NYMEX crude and Brent crude get traded daily) boost margin requirements, a regulatory move which would discourage speculators from working with borrowed money. It could ask states to strictly enforce a more fuel-efficient, 55-mph speed limit on our nation’s highways, which would not please the trucking industry or the typical driver.

It seems every year we are tested by spikes in gas prices. As we transition (however gradually) from fossil fuels to other forms of energy, we may still have several of these episodes in our lifetimes.

Many of us associate April with taxes. We should also associate it with IRAs, for April is the month with the deadlines for IRA contributions and mandatory IRA withdrawals.

The deadline for your 2011 IRA contribution is April 17, 2012. Yes, April 17. This year, April 15 is a Sunday and April 16 falls on a holiday in the District of Columbia (Emancipation Day). So you get a little extra time to make your 2011 contribution if you (still) haven’t done so.

For tax years 2011 and 2012, you can contribute up to $5,000 to your Roth or traditional IRA. If you have multiple IRAs, you can contribute up to a total of $5,000 across the various accounts. (If you earn a lot of money, your maximum contribution to a Roth IRA may be reduced because of MAGI phase-outs.)

One exception: If you turned 50 in 2011, your Roth or traditional IRA contribution limit for 2011 is $6,000. If you will celebrate your 50th birthday during 2012, your 2012 contribution limit to your Roth or traditional IRA is $6,000.

You get 15½ months to make your IRA contribution for a given tax year. You can make your 2012 IRA contribution at any time until Monday, April 15, 2013.

Have you already made your IRA contributions for 2011 and/or 2012? Good for you. Hopefully, you contribute the maximum annually and make your contribution at the start of the year. The earlier that money is invested, the longer it can work for you.

Be sure to indicate the year of the IRA contribution on the check. This seems pretty basic, yet is too often overlooked. Write “2011 IRA contribution” or “2012 IRA contribution” or something equally simple and clear on your check (and include your account number on the check to help your IRA custodian). If you’re making your contribution electronically, be sure this gets communicated.

If you don’t tell your IRA custodian what year the contribution is for, it will be accepted as an IRA contribution for the current year per IRS guidelines.

Avoid racing against the clock. If you wait until the last minute, you may feel safe mailing your 2011 IRA contribution check to your IRA custodian with an April 17, 2012 postmark. That feeling might be unwarranted. Postmark deadlines for prior-year contributions vary among IRA custodians, and sometimes checks that arrive after the deadline count as current-year contributions regardless of postmark. Why not save yourself the risk and mail your 2011 contribution in with plenty of time to spare?

The recharacterization deadline for 2011 Roth IRA conversions is October 15. If you converted a traditional IRA to a Roth IRA last year and need to undo it for tax purposes, October 15 is the absolute deadline to “recharacterize” the Roth account. If you need to do this, please request a recharacterization with your IRA custodian well before October 15.

The RMD deadline is April 1. If you turned 70½ in 2011, you have until April 1 of this year to take your first Required Minimum Distribution from your traditional IRA – that is, your first mandatory income withdrawal. Your IRA custodian should have notified you of this deadline at the end of January, and many IRA custodians will typically calculate your annual RMD for you and offer to send you a check for the amount. (If not, many of them have online calculators or similar tools that will help you figure out your RMD amount.) If you have a Roth IRA, you are never required to take an RMD and you can still keep contributing to it after age 70½.

Keep the deadlines in mind – April will be here before you know it.

Every year, the IRS institutes big and little changes – and some don’t get as much notice as they should. This year is no exception. Here is a rundown of some of alterations and asterisks affecting taxpayers this year.

Don’t forget Form 8949. If you are reporting capital gains or losses for 2011, you must file this new form along with your return. Speaking of new paperwork, if you own foreign financial assets whose total value exceeds the applicable reporting threshold, you will need the new Form 8938.

Be sure to report Roth rollovers. Back in 2010, did you convert or roll over a traditional IRA to a Roth IRA or other Roth account? If you didn’t report the amount of the rollover on your 2010 federal return, you can report half the amount on your 2011 return 2011 and the remaining half in 2012.

A select few can still take the first-time homebuyer credit. By 2011, the credit had disappeared for just about everybody … but select military personnel and intelligence agents are still able to claim the credit for 2011.

If you’re deducting mileage, rates changed in the middle of 2011. The IRS is giving taxpayers a better break given the recent hikes in gas prices. So, if you’re deducting mileage driven while operating an automobile for business, the rate for the first six months of 2011 is $0.51 per mile, and the rate for the last six months of 2011 is $0.555 per mile. The standard deduction rate for medical or moving mileage was also raised: $0.19 a mile from January 1-June 30, $0.235 a mile from July 1-December 31. The mileage deduction rate for providing services for charitable organizations got no boost – for all of 2011, it is $0.14 per mile.

Fewer cars qualified for the alternative motor vehicle credit last year. Only new fuel cell motor vehicles qualified for the tax break in 2011.

Three healthcare changes to note. If you qualify for the health coverage tax credit (HCTC), that credit might be larger for 2011 thanks to recent law changes. Did you receive the 65% tax credit in any of the last 10 months of 2011? If so, you get to claim an additional 7.5% retroactive credit on your 2011 federal return – the HCTC was bumped up to 72.5% from 65%.

The range of qualified medical expenses was reduced for HSAs & MSAs last year. In 2011, only prescription drugs and insulin counted as qualified medical expenses for these accounts. Another asterisk worth noting: if you took a distribution from an HSA or MSA in 2011 that wasn’t used for a qualified medical expense, the tax penalty for that increased to 20% last year.

Lastly, take the self-employed health insurance deduction on your Form 1040 for 2011. If you are looking at Schedule SE and wondering where it went, it has migrated over to line 29 of Form 1040.

The AMT exemption amount got another COLA. Thanks to this adjustment, you are subject to the AMT for tax year 2011 only if you earned more than $48,450 as a single filer, $37,225 if married filing separately, or $74,450 if filing jointly.

Don’t send your return to an obsolete filing address. Some of the filing locations for federal tax returns have recently changed. Visit www.irs.gov to see where you should send your return this year – it is probably the same address as always, but check and see as it may be different.

Finally, you get two extra days. Procrastinators, take heart: once again, the federal filing deadline this year falls on Tuesday, April 17. That’s because April 15 is a Sunday and April 16 is a holiday within the District of Columbia (Emancipation Day).

The wealthiest taxpayers could be hit hard if the tax hikes in President Obama’s 2013 federal budget proposal become law. The good news is that the tax changes outlined by the President in mid-February may be softened by eventual bipartisan compromise. As currently proposed, they would impact the wealthiest Americans on several fronts.

The Bush-era tax cuts could expire for the rich. As envisioned, the top tax rate would reset to 39.6% for individuals earning more than $200,000 a year and couples earning more than $250,000 a year. The EGTRRA/JGTRRA cuts would be extended for the vast majority of taxpayers.

A new kind of AMT could emerge. President Obama would like to see a “Buffett rule”, basically a simplified take on the Alternative Minimum Tax. This new rule (inspired by Warren Buffett’s now-famous New York Times editorial) would impose a 30% income tax floor for anyone earning more than $1 million a year. Yet while President Obama has mentioned this idea in speeches, the proposed 2013 budget contains no details of it. The White House says that the President would prefer to get to the details after broader revisions to the tax code. Even then, a “Buffett rule” might be hard to implement in practice.

Tax rates on capital gains & dividends would rise. Long-term capital gains would be taxed at 20% instead of 15%. Dividends amassed by businesses and taxpayers in the highest income tax bracket would be taxed as ordinary income, at 39.6%.

Investment income could be reduced by a healthcare surtax. As a condition of the Health Care & Education Reconciliation Act of 2010, the highest-earning U.S. households would be hit with a new 3.8% Medicare tax on unearned income in 2013.

This levy would only affect taxpayers who realize huge amounts of investment income; gains exceeding $250,000 for an individual or $500,000 for a married couple. (The Tax Foundation estimates it would affect 2% of U.S. households.) For these taxpayers, dividends would effectively be taxed at 43.4%. The tax would also apply to income derived from real estate investment.

Deductions would be decreased. The President’s 2013 budget would cap deductions of qualified expenses at 28% for those in the top two income brackets. Right now, these taxpayers can deduct 33% and 35% of qualified expenses. Non-profits, the real estate industry and state and local governments seem likely to disfavor the cap.

Estate taxes would rise. In 2012, we have a 35% federal estate tax with a $5.12 million individual exemption. The proposed 2013 federal budget would put the estate tax at 45% with a $3.5 million individual exemption.

Other tax proposals. The envisioned 2013 federal budget would also:

• Make the $2,500 American Opportunity Tax Credit permanent
• Make the R&E credit for businesses permanent
• Authorize gradual increases in estate and gift taxes and revise rules for taxing different forms of trusts
• Offer a tax credit to employers expanding payrolls in 2012 (of up to 10% of the increase in wages subject to payroll taxes)
• Carry the bonus depreciation extension (on new equipment) for businesses through 2012
• Hike taxes on global corporations headquartered in the U.S. across the next ten years through less lenient foreign tax credits and restrictions on opportunities to defer taxes on foreign profits
• Recoup costs from the 2008 Wall Street bailout through fees charged to financial institutions holding more than $50 billion in assets
• Cut assorted tax breaks for energy companies

How much of this budget draft will make it through Congress? Good question. Much of what the President is proposing may not be realized, but with the federal government badly needing to reduce its deficit, many of these changes could end up taking effect. Taxpayers and their advisors will want to keep their eyes on Washington.

After you turn 70, the IRS requires you to withdraw some of the money in your retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).

While you never have to make withdrawals from a Roth IRA, you must take annual RMDs from traditional, SEP and SIMPLE IRAs, pension and profit-sharing plans and 401(k), 403(b) and 457 retirement plans annually past a certain age. If you dont, severe financial penalties await.

If you are still working as an employee at age 70, you dont have to take RMDs from a profit-sharing plan, a pension plan, or a 401(k), 403(b) or 457 plan. Your initial RMDs from these accounts will only be required after you retire. However, you must take RMDs from these types of accounts if you own 5% or more of a business sponsoring such a retirement plan.

You must take RMDs from IRAs after you turn 70 regardless of whether you are still working or not.

The annual deadline is December 31, right? Yes, with one notable exception. The IRS gives you 15 months instead of 12 to take your first RMD. Your first one must be taken in the calendar year after you turn 70. So if you turned 70 in 2011, you can take your initial RMD any time before April 1, 2013. However, if you put off your first RMD until next year you will still need to take your second RMD by December 31, 2013.

Calculating RMDs can be complicated. You probably have more than one retirement savings account. You may have several. So this gets rather intricate.

Multiple IRAs. Should you have more than one traditional, SEP or SIMPLE IRA, the annual RMDs for these accounts must be calculated separately. However, the IRS gives you some leeway about how to withdraw the money. You can withdraw 100% of your total yearly RMD amounts from just one IRA, or you can withdraw equal or unequal portions from each of the IRAs you own.

401(k)s and other qualified retirement plans. A separate RMD must be calculated for each qualified retirement plan to which you have contributed. These RMD amounts must be paid out separately from the RMD(s) for your IRA(s).

Inherited IRAs. The same applies; a separate RMD must be calculated for each inherited IRA you have, and these RMD amounts must be paid out separately from RMD(s) for your other IRA(s).

This is why you should talk to your financial or tax advisor about your RMDs. It is really important to have your advisor review all of your retirement accounts to make sure you fulfill your RMD obligation. If you skip an RMD or withdraw less than what you should have, the IRS will find out and hit you with a stiff penalty: you will have to pay 50% of the amount not withdrawn.

Are RMDs taxable? Yes, the withdrawn amounts are characterized as taxable income under the Internal Revenue Code. Should you be wondering, RMD amounts cant be rolled over into other tax-deferred accounts and excess RMD amounts cant be forwarded to apply toward next years RMDs.

What if you dont need the money? If you are wealthy, you may come to see RMDs as an annual financial nuisance, but the withdrawal amounts may be redirected toward opportunities. While putting the money into a savings account or a CD is the usual route, there are other options with potentially better yields or objectives. That RMD amount could be used to:

Start a grandchild’s education fund.

Fund a long term care insurance policy.

Leverage your estate using life insurance.

Diversify your portfolio through investment into stock market alternatives.

There are all kinds of things you could do with the money. The withdrawn funds could be linked to a new purpose.

So to recap, be vigilant and timely when it comes to calculating and making your RMD. Have a tax or financial professional help you, and have a conversation about the destiny of that money.

If you meet with a financial professional, be sure to ask a critical question. If you make an appointment with a financial consultant on behalf of yourself, your family or your company, make the following inquiry before the meeting ends:

Are you held to a suitability standard or a fiduciary standard?

This distinction is very important. You should be aware of the difference.

What is a suitability standard? Investment brokers are frequently asked to abide by suitability standards: when they recommend a financial product to a client, they are ethically bound to recommend a product which is suitable for that client.

As laid out in the manual of FINRA (the Financial Industry Regulatory Authority, formerly known as the NASD or National Association of Securities Dealers), the suitability standard has long demanded that a broker make reasonable efforts to obtain information on four aspects of a clients financial life:

• Financial status
• Tax status
• Investment objectives
• Other information used or considered to be reasonable

These factors (and others) have a hand in determining whether a financial product or securities transaction is deemed “suitable” for a client.

Suitability standards emerged in response to an age-old Wall Street problem. Decades ago, stock brokers garnered all sorts of bad publicity for calling their clients up and recommending hot stocks or funds that were utterly inappropriate for them. The investors may have gotten burned, but the brokers got their sales commissions.

Suitability standards are good, make no mistake. The problem is that they could be even better.

Even with a suitability standard, a broker has no specified duty to act in a clients best interest. So while that broker may recommend a suitable fund, stock or other financial product to you, he is not prohibited from recommending an investment that will result in a bigger commission for him or higher costs for you.

If a broker has a proprietary security that seems suitable for you, the broker may promote it ardently to you even though better-performing securities might be available.

In 2005, the SEC determined that broker-dealers will not be deemed to be investment advisers and therefore are not subject to the same fiduciary standards as Registered Investment Advisors (RIAs) when recommending investments to clients.

In 2011, FINRA Rules 2090 and 2111 expanded the existing suitability obligations while creating new ones. Any recommendations of investment strategies and any recommendations to hold securities within an investment strategy must now be suitable for the particular client, and the investor profile compiled by the broker to judge suitability must consider additional factors.

What is a fiduciary standard? This is the standard that Registered Investment Advisors must uphold. An RIA may be an individual or a financial firm. The Registered adjective refers to being registered with either the Securities & Exchange Commission (SEC) or a state securities agency.

RIAs have a fiduciary duty (a legal requirement) to act in the clients best interest regardless of the level of compensation the advisor may receive as a result of recommendations or actions. Fundamentally, this comes down to two points as stated by the SEC:

The advisor must avoid conflicts of interest.

The advisor is prohibited from overreaching or taking unfair advantage of a clients trust.

A Registered Investment Advisor is not supposed to pitch products, strategies or securities transactions with the idea that this will be a win-win for both of us. The clients best interest comes first and it is the only interest that matters.

Seek strong standards. When you enter an advisory arrangement with a financial professional or financial consulting firm, the agreement you sign should tell you whether the advisor is held to a suitability standard or a fiduciary standard. In the opinion of many investors and financial professionals, a fiduciary standard clearly amounts to a higher standard.

2011 had a definite downside. Statistically, 2011 may end up being characterized as the year stocks stood still: the S&P 500 lost .003%, its smallest year-over-year change of any kind since 1947. Yet it was hardly a placid year; every week seemed to feature big rallies and selloffs, and seemingly every time we checked in on a financial website or TV program, some new anxiety had emerged.

If it wasnt the debt crisis in the European Union, it was legislators on Capitol Hill. If it wasnt the housing market, it was the job market (and in truth, the two were inescapably linked). Investors were jittery, and as emotions affect stocks as much as earnings and fundamental indicators, the great broad index of the American stock market wound up generating a less than thrilling return.

However, there was also an upside. Is the glass half-empty or half-full at this point? Thats a good question. Bulls were heartened by the way U.S. stocks held up in 2011. Comparatively speaking, the rest of the world may be marveling at how well we did:

DJIA: +5.53%

S&P 500: -0.003% (+2.11% with dividends)

NASDAQ: -1.80%

Russell 2000: -5.45%

Now look at how these foreign indices fared in 2011, according to performance data from the Wall Street Journals website:

DAX (Germany): -14.7%

CAC 40 (France): -17.0%

Bovespa (Brazil): -18.1%

All Ordinaries (Australia): -15.2%

Shanghai Composite (China): -21.7%

Hang Seng (Hong Kong): -20.0%

Nikkei 225: -17.3%

The DJIA was a member of the fortunate five, one of just five consequential benchmarks around the world that managed a 2011 advance. The others? Indonesias Jakarta Composite (+3.2%), Malaysias Kuala Lumpur Composite (+0.8%), the Manila Composite in the Philippines (+4.1%) and Venezuelas Caracas General (+79.1% in a nation where inflation is running at 26%).

So the evidence points to a degree of decoupling taking place last year. Stateside, investors may have been distracted and troubled by news about EU debt and a slowdown in manufacturing in the Asia-Pacific region, but there was still some residual confidence, which was bolstered in the fourth quarter by some positive news about consumer spending and retail sales, a declining jobless rate, a bit of life in what had seemed a moribund real estate market, and banks being more open to commercial loans.

Will our relative good fortune continue? In 2012, will Wall Street pay more attention to domestic indicators and earnings than the headaches plaguing other economies?

We are all interconnected, of course; financially, the world is a small place. It is very possible that the big market swings characteristic of 2011 will repeat in 2012; currently, few things move the market up or down like news from the EU. However, with many of the EU economies veering toward recession and emerging markets cooling down, a U.S. economy that might realize but a small percentage of growth may start to look very strong indeed to the rest of the world, and that offers hope that our financial markets may perform better next year than some analysts expect.

You wont be able to withdraw an unlimited amount of money in retirement. So a retirement budget is a necessity. Some retirees forego one, only to regret it later.

Run the numbers before you retire. Often people need about 70-80% of their end salaries in retirement, but this can vary. So years before you leave work, sit down for an hour or so (perhaps with the financial professional you know and trust) and take a look at your probable monthly expenses. Online calculators can help.

The closer you get to your retirement date, the more exact you will need to be about your income needs. You first want to look for changing expenses: housing costs that might decrease or increase, health care costs, certain taxes, travel expenses and so on. Next, look at your probable income sources: Social Security (the longer you wait, the more income you can potentially receive), your assorted IRAs and 401(k)s, your portfolio, possibly a reverse mortgage or even a pension or buyout package.

While selling your home might leave you with more money for retirement, there are less dramatic ways to increase your retirement funds. You could realize a little more money through tax savings and tax-efficient withdrawals from retirement savings accounts, through reducing your investment fees, and getting your phone, internet and TV services from one provider.

If you have just retired or are about to, you will enter 2012 with some financial breaks. Social Security benefits will increase by 3.6% next year, Medicare Part B premiums will only rise $3.50 instead of the $10 that Medicare projected, and the Part B deductible will be $22 cheaper in 2012 ($140).

Budget-wreckers to avoid. There are a few factors that can cause you to stray from a retirement budget. You cant do much about some of them (sudden health crises, for example), but you can try to mitigate others.

Supporting your kids, grandkids or relatives with gifts or loans.

Withdrawing more than your portfolio can easily return.

Dragging big debts into retirement that will nibble at your savings.

Budget well & live wisely. These are times of low interest rates and modest Wall Street gains. Given those factors, creating a retirement budget makes a lot of sense. A budget and the discipline to stick with it may make a financial difference.