DIPS IN New & PENDING HOME SALES
The number of signed home sale contracts fell 3.5% in December, according to the National Association of Realtors. Separately, a Census Bureau report showed that new home sales declined 2.2% in December.

MARQUEE sentiment INDEX at 11-MONTH PEAK
The Thomson Reuters/University of Michigan consumer sentiment index ended January at 75.0. This was way up from Decembers 69.9 mark, and it beat the 74.1 reading forecast by economists surveyed by Reuters.

PRECIOUS METALS GAIN ALLURE
At Fridays COMEX close, gold was +10.56% YTD, copper +13.18% YTD and silver +21.05% YTD. Crude futures finished last week at $99.56 per barrel on the NYMEX, putting oil merely at +0.74% YTD. (Retail gas prices were +3.67% for the month as of Friday.)

A STRONG MONTH COMES TO A CLOSE
With just a couple of trading days left, January is shaping up to be the best month for U.S. equities since October (see the YTD numbers below). Across last week, the S&P 500 rose 0.07% to 1,316.33 and the NASDAQ gained 1.07% to 2,816.55; the Dow slipped 0.47% to fall to 12,660.46.

Recently, a big-name economist disputed that belief. In a commentary for Bloomberg, former White House budget director Peter Orszag wrote that some of the statistics dont seem to back up this conventional wisdom, but perhaps it all depends on which statistics you cite.

A fact that cant be ignored. In mid-January, a widely reprinted Washington Post article mentioned that since the start of the recession, the population of U.S. workers older than 55 has increased by 12% to 3.1million.

Examining this Labor Department finding, the Post feature referenced longevity and the loss of traditional pension plans as contributing factors. It presented stories of older workers who didnt think they could easily retire, and quoted respected commentators such as Alicia Munell, director of the Center for Retirement Research at Boston College, who remarked that some of these people are just clinging by their fingernails to jobs.

But is there more to the story? It turns out that Americans were trending toward staying in the workforce longer even before the recession. In 1994, Orszag notes, 43% of Americans aged 60-64 were working; in 2006, it was 51%. Nearly half of 62-year-olds went and claimed Social Security benefits in 1994, but 12 years later, less than 40% of 62-year-olds followed suit.

Orszag mentions another factor that may have kept older employees working during the recession: declining home equity. Put that alongside diminished IRA and 401(k) balances, and there was every reason to stay on the job these last few years.

However, just because older Americans wanted to keep working didnt mean that they could.

In the 2011 edition of its respected Retirement Confidence Survey, the Employee Benefit Research Institute found that 45% of retirees ended their careers earlier than they wanted to, in many cases due to layoffs and health issues.

The Post article noted that the jobless rate for workers older than 55 was just 3.2% in December 2007 when the downturn began. In December 2011, it was up to 6.2%.

The percentage of employed Americans aged 60-64, which had steadily risen during the 1990s and early 2000s, has remained at roughly 51% for the past five years.

That brings us to Orszags central point: The bottom line is that peoples retirement decisions arent always entirely voluntary.

How about your retirement decision? Do you think you will retire when you want to retire? Are you prepared for retirement financially? A new year is a good time for a new look at the state of your finances and your retirement readiness. With astute planning, you might be able to retire sooner than you think.

MORE HOMES MOVING ON THE MARKET
The National Association of Realtors announced a 5.0% increase in existing home sales for December, with a 4.6% gain in sales of single-family houses. For all of 2011, existing home sales improved by 1.7% as the median sale price declined 3.9%. One negative real estate signal last week: in December, housing starts fell by 4.1%.

FEWEST INITIAL JOBLESS CLAIMS IN FOUR YEARS
The Labor Department said initial applications for jobless benefits dropped by 50,000 to 352,000 in the week ending January 14. That is the lowest number of initial claims taken in any week since April 2008.

GOLD GAINS 2% IN Five DAYS
Its 2.04% weekly advance on the COMEX led to a closing price of $1,664.00 Friday. Golds rise was not matched by oil (-0.37%) or the U.S. Dollar Index (-1.69%) last week. Oil ended the week at $98.33 a barrel on the NYMEX.

DOW RISES FOR A FOURTH STRAIGHT WEEK
Stocks have surprised many analysts this month, as Wall Street has paid more attention to earnings than to news from Europe. The weekly numbers: S&P 500, +2.04% to 1,315.38; NASDAQ, +2.80% to 2,786.70; DJIA, +2.40% to 12,720.48.

On January 12, interest rates on 30-year FRMs dropped to 3.89%. That was the third record-breaking week in a row, and the sixth week that rates were below 4.0

Interest rates are down across the board, as well: Freddie Mac is reporting 15-year FRMs are down to 3.16%, while 5/1-year ARMs and 1-year ARMs were down to 2.82% to 2.76%, respectively.

Lower rates could lead many to refinance. If youre considering it, you certainly wouldnt be alone in seizing the day; for the week of January 13, the Mortgage Bankers Association reported an increase of mortgage loan applications up 23% last week, with refinancing efforts up 26.4%.

Keep your eye on the big picture, though. While it might seem to your advantage to take your interest rate down a few percentage points, you need to know the answers to these three questions: 1) How much will you really save per month? 2) What are the lender points and fees? 3) How long will you be living in your current home?

For example: Knocking off a hundred dollars or more from your monthly payment might seem like a great idea, but how long are you planning to stay in your current home? As part of your agreement, your mortgage company could add a lender point (potentially thousands of dollars) and hundreds more in fees, making a refi short-sighted if theres a new house on your horizon.

On the other hand, if youre planning on staying in your home for several years, a refinance has the potential for big savings. If youre moving to a 15-year loan from your 30-year loan (or vice-versa) or from an Adjustable-Rate Mortgage into a Fixed-Rate, a long-term homeowner has a different scenario to consider.

Rates wont stay low forever. Theres no way to tell how long the trend will continue. An April 2010 headline in the New York Times proclaimed Interest Rates Have Nowhere to Go but Up. At that time, the average rate for a 30-year fixed mortgage was 5.31%. By January 2011, the rate had fallen to 4.71%.

Where advantageous rates are concerned, what comes down usually goes up. While you do have time to get on board with these low rates, nobody knows when they might take off again.

Consider your next move carefully. Refinancing may be an option, but its always a good idea to be fully informed before making such an important financial decision. Work with a qualified mortgage specialist to determine your options for refinancing, and then speak to your financial consultant for the big picture on how such a move might affect your financial future.

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.

CONSUMER SENTIMENT INDEX INCREASES
The University of Michigan’s preliminary January consumer sentiment survey showed further improvement, with a gain from 69.9 to 74.0; the best reading since last May and better than the 71.5 economists polled by Reuters anticipated.

NEW BEIGE BOOK NOTES IMPROVING ECONOMY
The Federal Reserves new economic snapshot of its 12 banking districts showed 11 noting economic growth. The anecdotal survey noted improvement in auto and retail sales, manufacturing and consumer spending in the last six weeks of 2011.

S&P CUTS CREDIT RATINGS OF 9 EU NATIONS
After U.S. markets closed Friday, Standard & Poors downgraded a third of the European Union: it took France from AAA to AA+, cut ratings for Austria, Slovakia, Slovenia and Malta by a notch and booted the ratings of Italy, Portugal, Spain and Cyprus down two notches. S&P said the EUs debt reduction plan lacks sufficient size or scope. Additionally, EU talks on restructuring Greek debt fell apart Friday.

STOCKS ON A WINNING STREAK
The S&P 500 posted its second straight weekly gain across January 9-13, rising 0.88% to 1,289.09. The DJIA rose 1.67% to 12,422.06 and the NASDAQ gained 1.36% to 2,710.67. Last week also saw gains for the U.S. Dollar Index (0.24%) and COMEX gold (0.87%).

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.

Retirement plans. 401(k), 403(b) and 457 plan annual contribution limits rise slightly to $17,000, and you can contribute an additional $5,500 to these accounts if you are 50 or older this year. IRA contribution levels are unchanged from 2011: the ceiling is $5,000, $6,000 if you will be 50 or older in 2012.

As you strive to contribute as much as you comfortably can to these accounts this year, you will probably notice some changes with the retirement plan at your workplace. In 2012, retirement plan sponsors (i.e., employers) will have to note all of the fees and expenses linked to the funds in the plan to plan participants. So if you have a 401(k) or 403(b), you may notice some differences in the disclosures on your statements and you will probably notice more information coming your way about fees. There is also a push in Washington, D.C. to have financial companies provide lifetime income illustrations on retirement plan account statements, projections of your expected monthly benefit at retirement age.

Income taxes. Wealthy Americans are set to face greater income tax burdens in 2013, so 2012 may be the last year to take advantage of certain factors. For example, the top tax bracket in 2013 is slated to be at 39.6% instead of the current 35%. This year, capital gains and dividends will be taxed at 15% or less for everyone, 0% for those in the 10% and 15% tax brackets. In 2013, the qualified capital gains tax rate is scheduled to rise to 20% and qualified dividends will be taxed as ordinary income. So taking a little more income in 2012 could be smart.

In 2013, the wealthiest Americans are supposed to be hit with new Medicare taxes: a new 3.8% levy on unearned income (such as capital gains, income from real estate, dividends and interest) and a new 0.9% tax or earned income. So next year, the truly wealthy could effectively face in the neighborhood of 45% federal taxes.

Additionally, the IRS is planning to limit itemized deductions for upper-income taxpayers in 2013. A phase-out will also apply for the personal exemption deduction.

Estate & gift taxes. At the end of 2012, some very nice estate tax breaks could sunset. Barring action by Congress, 2013 could see a 20% leap in the federal estate tax rate from 35% to 55%. The individual estate tax exclusion (currently $5.12 million) is scheduled to be reduced to $1 million.

As we have unified gift and estate tax rates, those numbers and percentages also apply to gift taxes. That is, from 2012 to 2013 top federal gift tax rate is set to go from 35% to 55% and the lifetime gift tax exemption amount is scheduled to fall $4,120,000 per individual to $1 million. The annual gift tax exemption is $13,000 per recipient in 2012; there is an exemption limit for qualifying educational and medical payments. If you want to gift relatives or friends, you may want to avoid procrastinating for another very good reason: when you make such a gift early in a year, the recipient will gain both the principal and any appreciation tied to the gifted asset in that year.

Speaking of gifts, we said goodbye to charitable IRA gifts in 2011. The IRA charitable rollover, a boon to non-profits and a handy tax deduction option for taxpayers older than age 70, was not extended into 2012, not even temporarily as a sweetener to the payroll tax extension bill. There is hope it will be back. Two bills have been introduced in Congress with that goal, one sponsored by Sen. Olympia Snowe (R-ME) and Sen. Charles Schumer (D-NY) and another by Rep. Wally Herger (R-CA) and Rep. Earl Blumenauer (D-OR). The proposed legislation would let IRA owners start making charitable IRA gifts at age 59 and remove the $100,000 limit on the rollovers.

The limits on the generation-skipping transfer tax could change, too: assuming the Bush-era tax cuts do sunset, the GSTT rate would jump from 35% this year to 55% in 2013, with the GSTT exemption falling from $5,120,000 per person this year to roughly $1.3 million per person next year.

So given all these changes, it might be wise to meet with the financial professional you know and trust early in 2012 as you strive to start the year off on the right foot. You have until April 17th to file your 2011 federal return, but you can plan for 2012 and beyond now.

MANUFACTURING, SERVICE SECTOR GAUGES RISE
According to the twin barometers of the Institute for Supply Management, the U.S. manufacturing and non-manufacturing sectors continued to expand last month. ISMs service sector PMI came in at 52.6, up 0.6% from the November reading; its manufacturing PMI rose to 53.9 from Novembers 52.7 mark.

BIG GAINS OUT OF THE GATE FOR GOLD & CRUDE
The first trading week of 2012 saw crude oil futures rise 2.73% to top $100 a barrel again; futures settled at $101.56 Friday on the NYMEX. Gold went back above the $1,600 level with a $50.30 weekly advance. Gold futures were up 3.21% for the week; Fridays closing price on the COMEX was $1,616.10.

STOCKS START 2012 WITH GAINS
Across January 3-6, the Dow rose 1.17% to 12,359.92, the NASDAQ climbed 2.65% to 2,674.22 and the S&P 500 advanced 1.61% to 1,277.81. Optimism prevailed despite more woes from the Eurozone: Fitch Ratings lowered Hungarys credit rating to junk status on Friday and the euro fell to a 16-month low versus the dollar.

Saratoga Springs, NY. – January 6, 2012 – Bill Losey, author and retirement expert and advisor, recently wrote an article urging readers to consider developing a budget for retirement. With this article, found on his website http://www.BillLosey.com, titled “Budgeting For Retirement – It Makes Sense Yet Many Retirees Live Without One” Bill explains the importance of planning your retirement budget before retirement.  Bill also touches on some factors that can cause retirees to stray from their budget, and how they can try to avoid such a circumstance.

“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,” writes Bill.  “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.”

On the subject of “budget wreckers,” Bill writes, “There are a few factors that can cause you to stray from a retirement budget. You can’t do much about some of them (sudden health crises, for example), but you can try to mitigate others.”  Some of these include supporting your kids, grandkids or relatives with gifts or loans; withdrawing more than your portfolio can easily return; and dragging big debts into retirement that will nibble at your savings.

Bill Losey launched his business seven years ago with one goal in mind – to offer advice and solutions to those planning for retirement.  This latest article is one of many helpful articles that Bill writes frequently to make planning for retirement seem less daunting and more achievable.

To read the entire article, please visit http://www.billlosey.com/articles/budgeting-for-retirement-it-makes-sense-yet-many-retirees-live-without-one.php

Other recent articles written by Bill Losey include “In This Volatile Market, Perspective Is Valuable”, “Uncertainty Over Italy – The EU May Forego A Bailout”, “Changes in IRA & 401(k)s for 2012″ and “U.S. Stock Indexes Held Their Own in 2011 Despite The Geo-Political Turmoil,” among others.

Bill is a nationally known and respected retirement expert, specializing in 401k rollover advice, self-directed IRA rollovers, 401k direct rollovers, and many other investment and retirement strategies.  Bill’s company, Bill Losey Retirement Solutions, LLC, is an independent registered investment advisory firm that caters primarily to couples as well as divorced and widowed women nationwide (age 50-70) who demand objective financial and retirement advice; customized, fee-only investment management; attention to detail; and impeccable service.

Each issue of Bill Losey’s award-winning free weekly email newsletter, Retirement Intelligence®, reveals how-to-articles, secrets, investment ideas, a “Joke Of The Week”, fitness and diet tips, and promotes upcoming seminar dates to keep subscribers “in-the-know.”  Bill and his staff seek to provide informative and entertaining information readers can use to simply and confidently enhance their health, wealth and happiness.

Retirement Intelligence® is a $497 value, but is available for free on Bill’s website http://www.MyRetirementSuccess.com

To learn more about Bill Losey Retirement Solutions, please visit http://www.BillLosey.com and http://www.MyRetirementSuccess.com.

About Bill Losey, CFP®, CSA
America’s Retirement Strategist®

Bill Losey, CFP®, caters to women and couples (age 50-70) who seek to reduce post-retirement risk and generate a predictable, sustainable, increasing stream of retirement income they won’t outlive.  As a qualified professional in the areas of retirement strategies, personal finance and investment management, Bill has been seen and heard on hundreds of TV and radio stations such as FOX News, NPR, CBS News, CNBC, Business Week, TIME, AARP, U.S. News & World Report, and Oprah & Friends.

Bill has over 20 years experience in the financial services industry and is a Certified Financial Planner™ practitioner, a Certified Senior Advisor and Certified Retirement Coach.  He is the owner of Bill Losey Retirement Solutions, LLC, a fee-based registered investment advisory firm serving a small nationwide clientele.  Bill is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional and he publishesRetirement Intelligence®, a free, weekly, award-winning newsletter that reaches over 5,000 subscribers worldwide.  Formerly, Bill was the “resident retirement expert” on CNBC’s “On the Money” television program.

In his leisure time, Billy, as his friends call him, loves to sing.  He is an accomplished vocalist and has performed the National Anthem at Madison Square Garden, the Pepsi Arena, and other sporting venues.  Currently Bill is the lead singer of a vocal duo called The New York Lounge Lizards. He has been married for nearly 25 years to his wife Tori.  Together they have three sons, two dogs, and one fish.

Learn more at www.BillLosey.com or by calling 518-581-1666.

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.

The Dow Jones Industrial Average bucked a global trend and advanced in 2011. The index rose 11.95% in the fourth quarter, a move that separated it from a pack of overseas benchmarks that finished the year with double-digit percentage losses. In terms of price return, the S&P 500 recorded its smallest annual change since 1947 (see below). The S&Ps total return for 2011 was +2.11%. With all the fears about Europe and the Federal Reserve keeping interest rates incredibly low, long-term Treasuries had their best year since 2008 with a total return of 33%.

CONSUMER CONFIDENCE BAROMETER RISES

The Conference Board’s index of consumer confidence saw a big jump north in December, soaring 9.3 points to 64.5. Economists surveyed by Reuters had expected it to come in at 58.3.

HOME SALE PRICES DOWN, HOME SALE CONTRACTS UP

The good news? The National Association of Realtors said its pending home sales index reached a 19-month peak in November, moving to 100.1 for a 5.9% annual gain. The bad news? The October edition of the S&P/Case-Shiller Home Price Index slipped 1.2% from its September level.

HIGHS & LOWS IN KEY COMMODITIES FOR 2011

Gold lost 10.48% for the month but went +10.23% for the year, in contrast to copper (-22.73%) and silver (-9.77%). Crude oil advanced 8.15% in 2011, while retail gas prices rose 6.41%. Notable yearly dives were made by natural gas (-32.15%) and cotton (-36.69%). The U.S. Dollar Index gained 1.56% on the year.

A MINOR RETREAT TO END THE YEAR

All three major U.S. stock indices lost ground in the last trading week of 2011. The four-day performances across December 27-30: DJIA, -0.62% to 12,217.56; NASDAQ, -0.52% to 2,605.15; S&P 500, -0.61% to 1,257.60.

Prior to 2011, wage-earners were paying 6.2% in Social Security taxes. If Congress agrees to lengthen the payroll tax holiday across 2012, workers will merely pay 4.2% on the first $110,100 of wages next year.

The latest extension in jobless benefits means that about 1.8 million Americans out of the workforce will keep getting unemployment checks averaging about $296 per week.

Medicare payments to physicians will not diminish by 27% come January.

The stopgap measure is both a relief and a prelude to much more debate. In total, the new legislation is projected to cost the federal government about $33 billion.

Who will pay for these extensions? The direct answer: Fannie Mae and Freddie Mac. The indirect answer: American homeowners and homebuyers.

Title IV of the new law (Mortgage Fees and Premiums) notes that Fannie and Freddie will be boosting guarantee fees on new loans next year. If the payroll tax holiday is approved for all of 2012, anyone who buys or refinances next year will end up giving back about 20% of the approximately $1,000 tax break.

Instead of collecting from borrowers directly with a fee hike, the twin GSEs will increase fees for banks and other lending institutions starting in January. The Congressional Budget Office projects that this will raise $35.7 billion across 2012-2021, with the revenue going to the Treasury rather than to Fannie and Freddie.

Comparatively speaking, this means that mortgage costs will be about $17 a month higher for someone purchasing a $200,000 home next year.

What about that pipeline? Yes, the proposed 1,700-mile Keystone oil pipeline that would run from Alberta to the Gulf of Mexico. House Republicans had wanted it as a sweetener to the bill, contending that it would create tens of thousands of jobs.

The newly passed legislation requires President Obama to either approve or kill the controversial project by March 1. The State Department says it cant manage a required environmental review by March 1 and therefore wont be able to recommend the project; citing White House sources, the New York Times says the President will abide by the State Departments guidance. However, that doesnt prohibit TransCanada (the company behind the pipeline) or any other energy company from introducing a similar idea.

The new agreement is effectively a postponement. When Congress returns to Capitol Hill next month, the debate over the yearlong extension of the payroll tax reduction should intensify. There will be three points of contention:

How to pay for the full-year extension. Democrats wanted a new tax on millionaires, while House Republicans preferred a federal pay freeze. The projected cost of the yearlong payroll tax cut is $112 billion.

Rethinking long-term jobless benefits. House Republicans have talked about ending benefits at 59 weeks, something Democrats do not favor.

Consideration for the health of the Social Security trust fund. If Americans do end up paying 2% less in Social Security taxes for all of 2012, how does the trust fund make up the slack? Some legislators want the Treasury to take care of the shortfall; others worry that the payroll tax will be permanently set at the current level and open the door to reduced Social Security benefits in the future.

Payroll taxes are reduced through February; in terms of the drama surrounding his issue, its only an intermission.  Stay tuned.

GAINS IN HARD GOODS ORDERS, CONSUMER SPENDING
Novembers consumer spending increase was tiny: 0.1%. Wages advanced just 0.1% as well. However, last month also saw a 3.8% rise in durable goods orders (the best month for that indicator since July).

IMPROVED HOME SALES, HOUSING STARTS
The Census Bureau reported a 1.6% increase in new home purchases in November, with the new home inventory at its smallest since March 2006. Housing starts hit a 19-month peak in November, soaring 9.3% on the month. Existing home sales also improved notably in November, rising 4.0%; according to the National Association of Realtors, that was the best month since January.

CONSUMERS FEELING MERRIER
Decembers final Thomson Reuters/University of Michigan consumer sentiment survey came in at 69.9 compared with Novembers final 64.1 mark. That also beat the 68.0 estimate forecast by economists Reuters had surveyed.

A YEAR-END RALLY GETS ROLLING
Stocks showed definite momentum last week. The 5-day performances: DJIA, +3.60% to 12,294.00: NASDAQ, +2.48% to 2,618.64; S&P 500, +3.74% to 1,265.33. At the close on Friday, oil settled at $99.68 on the NYMEX, gold closed at $1,606.00 on the COMEX, retail gasoline prices had fallen 2.15% in the past 30 days and natural gas futures were at lows unseen in four years.

Legally, just who is a beneficiary? IRAs, annuities, life insurance policies and qualified retirement plans such as 401(k)s and 403(b)s are set up so that the accounts, policies or assets are payable or transferrable on the death of the owner to a beneficiary, usually an individual named on a contractual document that is filled out when the account or policy is first created.

In addition to the primary beneficiary, the account or policy owner is asked to name a contingent (secondary) beneficiary. The contingent beneficiary will receive the asset if the primary beneficiary is deceased.

Some retirement accounts and policies may have multiple beneficiaries. Charities, schools and nonprofits are also occasionally named as beneficiaries. If you have individually listed one (or more) of your kids or grandkids as designated beneficiaries of your 401(k) or IRA, that designation should override a charitable bequest you have stated in a trust or will.

A will is NOT a beneficiary form. When it comes to 401(k)s and IRAs, beneficiary designations are commonly considered first and wills second. If you willed your IRA assets to your son in 2008 but named the man who is now your ex-husband as the beneficiary of your IRA back in 1996, those IRA assets are set up to transfer to your ex-husband in the event of your death. Sometimes beneficiary forms are revised; often they are never revised.

If a retirement account owner passes away, what steps need to be taken? First, the beneficiary form must be found, either with the IRA or retirement plan custodian (the financial firm overseeing the account) or within the financial records of the person deceased. Beyond that, the financial institution holding the IRA or retirement plan assets should also ask you to supply:

• A certified copy of the account owner’s death certificate
• A notarized affidavit of domicile (a document certifying his or her place of residence at the time of death)

If the named beneficiary is a minor, a birth certificate for that person will be requested. If the beneficiary is a trust, the custodian will want to see a W-9 form and a copy of the trust agreement.

If you are named as the primary beneficiary, you usually have four options regardless of what kind of retirement savings account you have inherited:

1. Open an inherited IRA and transfer or roll over the funds into it.
2. Roll over or transfer the assets to your own, existing IRA.
3. Withdraw the assets as a lump sum (liquidate the account, get a check).
4. Disclaim as much as 100% of the assets, thereby permitting some or all of them to be inherited by a contingent beneficiary

However, these options may be influenced or limited by four factors:

1. The kind of retirement plan you have inherited.
2. Whether the named beneficiary is a spouse, non-spouse, trust or estate.
3. The age at which the account owner passed away.
4. The resulting tax consequences.

Before you make ANY choice, you should welcome the input of a tax advisor.

What if you are a spousal beneficiary? If that is the case, you may elect to:

• Roll over or transfer assets from a traditional IRA, Roth IRA, SEP-IRA or SIMPLE IRA into your own traditional or Roth IRA, or an inherited traditional or Roth IRA
• Withdraw the assets as a lump sum
• Roll over or transfer qualified retirement plan assets from a 401(k), 403(b), etc. into your own retirement account, or take them as a lump sum
• Disclaim up to 100% of the assets within 9 months of the original account owners death

What if you are a non-spousal beneficiary? If this is so, you may elect to:

• Roll over or transfer assets from a traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA or qualified retirement plan into an Inherited IRA
• Withdraw the assets as a lump sum
• Disclaim up to 100% of the assets within 9 months of the original account owners death
• Leave the assets in the plan (sometimes permissible with qualified retirement plans)

What if a trust, estate or charity is named as the beneficiary? If that is the circumstance, there are three choices:

• Transfer assets from a traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA or qualified retirement plan into an Inherited IRA
• Withdraw the assets as a lump sum
• Disclaim up to 100% of the assets within 9 months of the original account owners death

The next calendar year will be very important. Inheritors of retirement accounts have until September 30 of the year following the original account owners death to review and remove beneficiaries, and until December 31 of that year to divide the IRA assets among multiple beneficiaries. Usually, December 31 of the year after the original retirement plan owners passing is the deadline for the first RMD (Required Minimum Distribution) from an inherited traditional or Roth IRA.

Now, how about U.S. Savings Bonds? If you are named as the primary beneficiary of a U.S. Treasury Bond, you have three options:

• Redeem it at a financial institution (you will need your personal I.D. for this).
• Get the security reissued in your name or the names of multiple beneficiaries. You do this via Treasury Department Form 4000, which you must sign before a certifying officer at a bank (not a notary). Then you send that signed form and a certified copy of the death certificate to a Savings Bond Processing Site.
• Do nothing at all, as the primary beneficiary automatically becomes the bond owner when the original bond owner passes away.

What about savings & checking accounts? Bank accounts are often payable-on-death (POD) assets or Totten trusts. All a beneficiary needs to claim the assets is his or her personal identification and a certified copy of the death certificate of the original account holder. There is no need for probate. (Some states limit charities and non-profits from being POD beneficiaries of bank accounts.)

How about real estate? Lastly, it is worth noting that about a dozen states use transfer-on-death (TOD) deeds for real property. If you live in such a state, you have to go to the county recorder or registrar, usually with a certified copy of the death certificate and a notarized affidavit which informs the recorder or registrar that ownership of the property has changed. If the deed names multiple beneficiaries and some are dead, the surviving beneficiaries must present the recorder or registrar with certified copies of the death certificates of the deceased beneficiaries.

HAS INFLATION PEAKED?
The federal governments Consumer Price Index was flat in November after a 0.1% retreat in October. While core inflation rose 0.2% last month, the Federal Reserve now expects 1.7% inflation across 2012 compared to a projected 2.8% for 2011. Producer prices were up 0.3% in November; core PPI advanced 0.1%. The year-over-year rise in wholesale prices was 5.7%, the smallest 12-month gain since March.

RETAIL SALES RISE 0.2% in NOVEMBER
While many economists hoped for a bigger advance, the November increase marked the sixth straight monthly gain for the indicator. Lower gas prices may have left consumers with greater discretionary funds: on Friday, AAA said a gallon of regular unleaded averaged $3.25 nationally, 18.4% below a peak hit in early May.

GOLD & OIL TAKE A HIT
Gold lost a whopping 6.93% last week; oil fell 5.49%. Gold settled at $1,597.90 on the COMEX and oil closed Fridays NYMEX trading day at $93.87.

STOCKS PULL BACK
Citing the absence of a credible financial backstop in the EU debt crisis, Fitch Ratings downgraded France Friday and placed the credit ratings of Spain and Italy on review. It was a wan note to end a rough week, as these numbers point out: DJIA, -2.61% to 11,866.39; S&P 500, -2.83% t0 1,219.66; NASDAQ, -3.46% to 2,555.33.

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.

SERVICE SECTOR GROWTH MODERATES
The 52.0 reading on the Institute for Supply Managements November service sector index was the lowest since January 2010. Anything above 50 still denotes expansion, but the reading disappointed investors; economists polled by Reuters had forecast a 0.6% gain to 53.5.

MORTGAGE APPS RISE ALMOST 13%
The Mortgage Bankers Association reports that home loan demand hit a four-month peak in the week of November 28-December 2. According to Freddie Macs latest figures, the average rate on the 15-year FRM was 3.27% last week; interest rates on 30-year FRMs averaged 3.99%.

GOLD & OIL RETREAT FOR THE WEEK
espite strong Friday gains, oil and gold both had down weeks. Oil futures slipped 1.54% across five days to $99.41 while gold futures lost $34.20 across the same time frame to settle at $1,712.80 per ounce on the COMEX December 9.

RALLY REACHES TWO WEEKS
A new EU fiscal treaty helped stocks push north Friday, (even with the UK opting out of the deal). Across December 5-9, the DJIA gained 1.37%, the S&P 500 0.88% and the NASDAQ 0.76%. At the close on Friday, the Dow was at 12,184.26, the S&P at 1,255.19, and the NASDAQ at 2,646.85.

Saratoga Springs, NY. – December 9, 2011 – Bill Losey, author and retirement expert and advisor, recently wrote an article offering his perspective on the 2011 markets and their performance for the year. With this article, found on his website http://www.BillLosey.com, titled “In This Volatile Market, Perspective Is Valuable” Bill explains the importance of having the right perspective when evaluating your investments and the market in general.

“If your pessimism increased this year, you aren’t alone. This is a very challenging environment, even for fund managers. A recent Wall Street Journal piece referenced that some traders are reluctant to make a decisive move for fear of triggering a big price swing on a particular stock. Liquidity has also been reduced in this market,” writes Bill.   “While this sounds gloomy, a little perspective is helpful. When it comes to stocks, it is really about the long term.”

Bill Losey launched his business six years ago with one goal in mind – to offer advice and solutions to those planning for retirement.  This latest article is one of many helpful articles that Bill writes frequently to make planning for retirement seem less daunting and more achievable.

“Instead of fleeing the market when stocks hit headwinds, the seasoned advisor takes a moment to consult his or her financial professional of choice and adjusts the sails in response while still investing consistently with quality as a key criterion. That approach may help you ride through this year and next and give you a chance to outperform the emotionally-driven investor in the long term,” concludes Mr. Losey.

To read the entire article, please visit http://www.billlosey.com/articles/in-this-volatile-market-perspective-is-valuable.php

Other recent articles written by Bill Losey include “Medicare Open Enrollment Ends December 7th!”, “Uncertainty Over Italy – The EU May Forego A Bailout”, “Changes in IRA & 401(k)s for 2012″ and “The Latest on Social Security,” among others.

Bill is a nationally known and respected retirement expert, specializing in 401k rollover advice, self-directed IRA rollovers, 401k direct rollovers, and many other investment and retirement strategies.  Bill’s company, Bill Losey Retirement Solutions, LLC, is an independent registered investment advisory firm that caters primarily to couples as well as divorced and widowed women nationwide (age 50-70) who demand objective financial and retirement advice; customized, fee-only investment management; attention to detail; and impeccable service.

Each issue of Bill Losey’s award-winning free weekly email newsletter, Retirement Intelligence®, reveals how-to-articles, secrets, investment ideas, a “Joke Of The Week”, fitness and diet tips, and promotes upcoming seminar dates to keep subscribers “in-the-know.”  Bill and his staff seek to provide informative and entertaining information readers can use to simply and confidently enhance their health, wealth and happiness.

Retirement Intelligence® is a $497 value, but is available for free on Bill’s website http://www.MyRetirementSuccess.com

To learn more about Bill Losey Retirement Solutions, please visit http://www.BillLosey.com and http://www.MyRetirementSuccess.com.

About Bill Losey:

Bill Losey, CFP®, CSA, America’s Retirement Strategist®, is a highly sought-after advisor, retirement authority, thought-leader, author and TV personality because he makes the complicated and mundane topics of investing and retirement fun!

Bill has over 20 years experience in the financial services industry and is a Certified Financial Planner™ practitioner, a Certified Senior Advisor and Certified Retirement Coach.  He is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional (a 2008 Finalist at The Indie Excellence Book Awards), Founder of National Retirement Planning Month, and he publishes Retirement Intelligence®, an award-winning weekly newsletter that reaches thousands of subscribers worldwide.

As a qualified professional in the areas of retirement strategies, personal finance and investing, Bill has been seen and heard on the FOX Business Network, CNBC, ABC News Now, CNN Radio, the CBS Evening News, Oprah & Friends, Martha Stewart Living Radio, Montel William’s “Montel Across America”, CBS6-TV, CW11 Morning News, Retirement Living TV, Leading Experts TV, the CBS Radio Network, TIME, AARP Magazine, BankRate.com, CNNMoney.com, Forbes, Aol.com, SmartMoney.com, Morningstar.com, the Wall Street Journal Online, U.S. News & World Report, BusinessWeek.com, Kiplinger’s Personal Finance, AARP Bulletin, CNNfn, FOX’s “Hannity & Colmes”, Wall Street Journal Blogs, Yahoo! Finance, MainStreet.com, Bloomberg Business Radio, CNN.com, FOX News Radio, The Motley Fool, KABC Radio, Federal News Radio, the Armed Forces Radio Network, Wall Street Journal Sunday, Credit.com and hundreds of radio stations nationwide.  Bill formerly was the resident retirement expert on CNBC’s “On The Money”; wrote a monthly column called “Dollars & Sense” for Life @ Home magazine; wrote a weekly column called “Making Work Optional” for The Saratogian; was a financial commentator for RNN-TV; and was the guest host of “Money Matters”, a daily personal finance radio program simulcast throughout NY, NJ and CT.  

In addition to his frequent TV and radio appearances, Bill is a freelance contributor to the AARP, and is the Retirement Success Expert for Boomj.com, a baby-boomer social networking website, and the Guide to Retirement & Retirement Planning at SelfGrowth.com.  He has also appeared in New York Daily News, Financial Planning, Investor’s Business Daily, Boston Herald, Personal Excellence, Investment News, The Chicago Tribune, Cents, Oprah.com, The Daily Herald, Inside Information, The Atlanta Journal Constitution, the Journal of Financial Planning, Bottomline Wealth, Hudson Valley Business Journal, Life After 50, Business Life, Plan Advisor, Triathlete, Peoria Journal Star, Kokomo Tribune, The Telegraph Newspaper, AmericanChronicle.com, Senior Market Advisor, Boomer Market Advisor, Reach!, Violet for Women, Boom News, Next!, The Albany Times-Union, The Richmond Times Dispatch, The Sun News, Afro American, Seacoast Newspapers, GrandParents.com, NationalPost.com, ThirdAge.com, American Chronicle, Press & Sun Democrat, LiveStrong.com, The Pacific Business Journal, RetirementForMen.com, The Liberty Tribune, PlacesOfValue.com, Bucks County Courier Times, Central Valley Business Journal, Vermont Maturity Magazine, The Orlando Sentinel, Salt Lake Tribune, SeniorMarketAdvisor.com, The Tampa Tribune, The Troy Record, Alexandria Daily Town Talk, Richmond-Times Dispatch, Portsmouth Herald News, Today’s Charlotte Woman, Dos Mundos, TotallyHer.com, The Saratoga Business Journal, Saratoga Today, PhillyBurbs.com, Oneida Dispatch, Spirit of Saratoga, Senior Beacon, The Bergen Record, The Northeast Pennsylvania Business Journal, Pennsylvania Business Central, Arkansas Aging, TownHall.com, National Underwriter Life & Health, TheStarPress.com, RedwoodAge.com, Asset Magazine, SeniorsForLiving.com, The Australian Financial Review, Asian Enterprise Magazine, Mail Tribune, Registered Representative, The Capital District Business Review and The Chronicle of Higher Education.  Bill’s first book, 101 Stock Market Guarantees, was published in 2004.

In his leisure time, Billy, as his friends call him, loves to sing.  He is an accomplished vocalist and has performed the National Anthem at Madison Square Garden, the Pepsi Arena and other sporting venues.  His love of singing and knowledge of money, combined with his witty sense of humor and desire to fight financial illiteracy, come full circle with his development of hilarious financial-related song parodies found at www.PerfectHarMoney.com.

Bill is a graduate of Marist College and obtained his certification in financial planning from The College for Financial Planning in Denver.  He is a member of the Society of Certified Senior Advisors and the National Ethics Bureau.  Active in his community, Bill has coached youth soccer and basketball, and has volunteered to help raise money for Special Olympics, March of Dimes, Make-A-Wish Foundation and the American Heart Association.  Additionally, he has volunteered his time to advise individuals at the Financial Planning Clinic sponsored annually by the Certified Financial Planner Board of Standards Inc.

Bill has been married for 21 years to his wife Tori.  Together they have three sons, two dogs, and two fish.

For more information, please visit http://www.BillLosey.com

SOME (MOSTLY) POSITIVE HOUSING NEWS
Pending home sales soared 10.4% in October, the National Association of Realtors reported. New home sales also were up 1.3% in that month according to the Census Bureau. The September edition of the S&P/Case-Shiller Home Price Index showed price gains in 14 of 20 metro markets; the index gained 0.1% in the third quarter, but was down 3.9% from a year ago.

MANUFACTURING SECTOR EXPANDS
The Institute for Supply Managements manufacturing index showed sector growth in November. It came in at 52.7; economists polled by Briefing.com had forecast it would read 51.0.

OIL TOPS $100 AGAIN, GOLD ADVANCES
Crude prices ended the week at $100.96 on the NYMEX, going up 4.33% in five days. Gold futures had their best week in more than a month (+3.64%) and settled at $1747.00 Friday.

S&P 500 GAINS 7.4% IN 5 DAYS
The index had its best week since March 2009, going +7.39% to settle at 1,244.28 Friday. A coordinated central bank move to make cheaper dollar loans available to EU lenders set off a massive Dow rally Wednesday, a big factor behind great weeks for the DJIA (+7.01 to 12,019.42) and NASDAQ (+7.59% to 2,626.93).

The big question: how to pay for it. Democratic leaders see a simple way to keep the payroll tax holiday going: they want a new tax on Americans who earn more than $1 million. Republicans didnt exactly get behind that bill. They countered with their own version, which in the words of Senate Minority Leader Mitch McConnell (R-KY) would institute a three-year pay freeze on federal civilian employees including members of Congress [and] reduce the federal workforce gradually by 10%. That bill also went down to defeat.

A follow-up question: should we keep paying for it? In 2011, the federal government reduced Social Security taxes by 2% on employee incomes of up to $108,600. The current payroll tax break is being subsidized by the Treasury. Is it wise to lower Social Security taxes when involuntary federal budget cuts loom in 2013 and credit rating agencies are monitoring our level of fiscal responsibility?

Some Democrats want to reduce the payroll tax down to 3.1% for workers and businesses in 2012 (companies would pay only 3.1% in Social Security taxes on their first $5 million in payrolls). Sen. Sherrod Brown (D-OH) has a bill that would take that $5 million limit to $12.5 million for businesses that expanded their workforces.

The payroll tax holiday might turn out to be about as temporary as the Bush-era tax cuts, still alive 11 years after passage (and not dead yet). The key to making the present 4.2% Social Security tax rate permanent? Finding a new and permanent method to pay for it that doesnt risk siphoning dollars away from the Social Security Trust Fund.

HOUSEHOLD CONFIDENCE RISES
Americans seems to be feeling less pessimistic about the economy. The final November Thomson Reuters/University of Michigan consumer sentiment survey came in at 64.1, much better than the final October mark of 60.9.

HOME SALES, DURABLE GOODS ORDERS ENCOURAGE
The National Association of Realtors reported a 1.4% increase in existing home sales in October and a 2.2% monthly reduction in the backlog of unsold properties, taking the inventory down to 8.0 months. Overall hard goods orders declined 0.7% in October but were up 0.7% with transportation orders factored out; economists polled by Bloomberg News had expected a 1.2% overall monthly retreat.

GOLD DIPS UNDER $1,700
The precious metal slipped2.27% last week, and it is down 5.71% in the past two weeks; prices settled at 1,685.50 an ounce. Oil lost 0.92% last week on the NYMEX to settle at $96.77 at closing.

BUYERS CROWD THE MALLS, BUT NOT WALL STREET
Stocks were hit hard during a short trading week by two developments: the failure of the super committee on Capitol Hill and a German bond auction at which 35% of the 10-year notes offered went unsold. The numbers for the week: DJIA, -4.78% to 11,231.78; S&P 500, -4.69% to 1,158.67; NASDAQ, -5.09% to 2,441.51.

If your pessimism increased this year, you aren’t alone. This is a very challenging environment, even for fund managers. A recent Wall Street Journal piece referenced that some traders are reluctant to make a decisive move for fear of triggering a big price swing on a particular stock. Liquidity has also been reduced in this market.

While this sounds gloomy, a little perspective is helpful. When it comes to stocks, it is really about the long term.

This year hasn’t been a disaster, just a struggle. The market has seen far worse stretches than this. Looking at CNNMoney’s handy 5-year chart, the S&P 500 lost 24.06% across the years of 2008-09; yet even with all the drama of 2011, the index is still +3.91% since the start of 2010.

On January 14, 2000, the Dow closed at a new all-time high of 11,722.98. On October 9, 2002, it was 37.85% lower after a bear market memorable for a 77.93% decline in the NASDAQ. Yet even in the wake of the dot-com bust and 9/11, the Dow was not crippled. It rose 61% over the next four years to hit a new all-time high of 11,727 on October 3, 2006.

The blue chips have risen and fallen since then, and so have small caps and tech stocks. Yet investors can still made money in bad Wall Street years; no one invests directly in an index, so the potential to beat the market remains.

Comparatively speaking, were holding up pretty well. As we bid goodbye to Thanksgiving weekend, we can be thankful that our stock market is performing better than many others. At the closing bell on November 25, the DJIA was at -2.99% YTD; nearly all the worlds other important stock indices were posting double-digit YTD losses.

How well-diversified is your portfolio? From 1990-2009, the S&P 500 returned an average of 8.2% annually, yet the typical investor averaged a 3% yearly return. Why? Investors chased performance. They got emotional, responded to headlines, and ignored fundamentals of diversification and patience. They bought at market peaks and bailed out at market lows, and then they waited for that rare perfect moment to get back into equities.

Instead of fleeing the market when stocks hit headwinds, the seasoned advisor takes a moment to consult his or her financial professional of choice and adjusts the sails in response while still investing consistently with quality as a key criterion. That approach may help you ride through this year and next and give you a chance to outperform the emotionally-driven investor in the long term.

Do you have concerns about your investments right now? I’m happy to help you address them. Lets talk about where you are at right now with your portfolio and the level of progress you are making toward your financial objectives. The more you understand about the long-term behavior and potential of the market, the more you realize the need (and value) of patience and perseverance.

The big divide was over the Bush-era tax cuts. While Sen. John Kerry (D-MA) reminded the public and his fellow legislators that “we are not a tax-cutting committee, we’re a deficit-reduction committee,” there was stiff opposition to rolling back the EGTRRA and JGTRRA cuts of the 2000s. The super committee paired some strange bedfellows among Capitol Hill legislators, so this head-butting was not unexpected.

What happens now? As the super committee failed to create a plan to trim $1.2 trillion or more from the federal deficit, that sets things up for an automatic $1.2 trillion in cuts effective over a 10-year stretch beginning January 2, 2013. According to the Budget Control Act passed in summer 2011, that $1.2 trillion will be slashed almost 50/50 from the defense budget and government services programs. Social Security and Medicaid payments, military pay and veteran’s benefits will be exempt from cuts; current Medicare recipients will not be directly affected. This default deficit reduction could mean as much as a 9.3% cut to some federal programs, by the estimate of the left-leaning Center for Budget and Policy Priorities.

This is what the super committee’s apparent failure means politically. Economically, it could result in pain for American investors given the probable impact on our credit rating, stock market, tax laws and economic growth.

Is another downgrade ahead? Standard and Poor’s cut the U.S. credit rating a notch to ‘AA+’ on July 14, and it warned that another cut to ‘AA’ was possible by mid-2013 without decisive federal action on the issue. After the super committee conceded defeat on November 21, S&P, Fitch’s and Moody’s stood pat regarding a possible downgrade.

What might be in store for the market? In a November 21 note to investors, Goldman Sachs equity strategist David Kostin warned that the S&P 500 could potentially correct to 1100 as a result of this gaffe. Other analysts are less gloomy; some feel that the market may have priced this one in and will at least maintain some momentum barring a second downgrade (Monday’s selloff certainly could have been worse).

What does this mean tax-wise? The Bush-era tax cuts are set to expire at the end of 2012 as part of the involuntary deficit reduction now set to occur. There could be other possible tax consequences as a result of the super committee’s failure. Unless Congress unexpectedly passes the President’s American Jobs Act, the payroll tax holiday will go away in 2012 (worth about $935 to the average worker, which some legislators wanted to make permanent). RBC Capital Markets analysts warn that taking the payroll tax back to 6.2% could shave 1% of U.S. GDP next year. For businesses, the current “bonus” depreciation write-offs for new capital equipment and the R&E tax credit could also become casualties. Additionally, when you do a broad cut to federal programs, you are impacting payments from Washington to state programs; state taxes could rise to compensate for that lost money.

How about Medicare, the SSA & jobless benefits? While Medicare recipients won’t be bitten by the default deficit reduction, payments to Medicare providers could be shrunk by 2%. Long-term unemployment insurance would also dry up for 2.1 million Americans by February, according to the Department of Labor’s forecast; JPMorgan Chase economists think that development alone might hurt U.S. GDP by 0.75%.

The Social Security Administration is in line for budget cuts as a result of the super committee’s indecision, along with Head Start and federal job training programs. A Congressional Budget Office analysis shows that the Pentagon would face the largest cut in 2013 (10%). Federal agriculture, environmental and education programs would face cuts of approximately 8% starting in that year.

Could congress “undo” this? President Obama is emphatic that there will be no rewind on this one. While there could be a move in Congress to try and nullify or alter the automatic budget cuts, the President has said he will not support such a bill.

There had to be deficit reduction at some point, and the legislators of the super committee faced a Herculean task to come up with a plan that satisfied their many constituencies. However, it will be difficult to convince economists and investors that doing nothing is better than doing something; this unpalatable easy out may leave many in the lurch.

Some key dates to remember. This fall and winter, there are three periods in which Medicare beneficiaries can either enroll or disenroll in forms of coverage:

• Now through December 7: Open enrollment period. This is when you can elect to leave Original Medicare (Parts A and B) for a Medicare Advantage Plan (Part C) and change your prescription drug coverage (Part D). You can also elect to get out of a Part C plan and go back to Parts A and B during this period.
• December 8: Annual enrollment period begins for 5-star plans. This is new: As you probably know, Part C and Part D plans are assigned ratings. Beginning December 8, a 365-day window opens for you to enroll in a 5-star Part C or Part D plan. You can do this once per 365 days. How do you find the 5-star plans? Visit www.medicare.gov/find-a-plan.
• January 1-February 12: Disenrollment. If you joined a Part C plan in late 2011 and want to reverse that decision, you can disenroll from that Medicare Advantage plan in this window of time and go back to Original Medicare with a stand-alone Prescription Drug Plan (Part D). Your Original Medicare coverage resumes on the first day of the month after the plan receives your enrollment form (either February 1 or March 1, 2012).

What should you look for in a Part C or Part D plan? Be sure to take a look at a few key factors.

• While premiums matter, overall plan expenses ultimately matter most; scrutinize the copays, the co-insurance and the yearly deductibles as well. Attractively low premiums might not tell you the whole story about the value of a Medicare Advantage plan.
• How inclusive is the plan network? Assuming the plan has one, does it include the hospitals you would choose and the physicians that now treat you?
• Regarding Part D, how wide-ranging is the prescription drug coverage? Look at the list of approved drugs (the formulary). If the drugs you want or need aren’t listed, you are probably going to have to open your wallet to pay for them. The frustrating thing about formularies is how they change; drugs on this year’s list may not always be on next year’s list.
• One nice thing to note about Part D coverage for 2012: Medicare beneficiaries who enter the coverage gap for prescription drugs next year (sometimes referred to as “the doughnut hole”) will end up paying just 50% of the price of name-brand drugs and just 86% of generics. Some Part D plans may help you realize greater savings via discounts.

Part B premiums are rising, but not drastically. They were expected to increase given the 2012 cost-of-living adjustment for Social Security benefits, but the hike isn’t as dramatic as some seniors feared it would be. Monthly Part B premiums are going up by $3.50 a month next year to $99.90, well under the $106.60 estimate projected earlier in 2011 by Medicare trustees.

Medicare Advantage premiums may fall. The Department of Health and Human Services estimates that Part C premiums will be 4% cheaper in 2012 than in 2011. It also projects that Part D premiums will stay about the same in 2012.