In the classic market psychology, you “sell in May and go away” with the belief that stock prices will plateau or retreat in spring and summer, and then you return to stocks in the fall, taking advantage of bargains and factors that will encourage a hot fourth quarter.

In the last several years, we have seen all kinds of stock market behavior, some of it extraordinary. So is there any credence to this approach now?

The argument for “going away”. Over the last 12 months, investors who held to this belief made out pretty well. From May 1-November 1, 2011, the Dow lost 6.7%. From November 2011 through April 27, 2012, it gained 10.7%.

If we open a historical window – specifically, The Stock Trader’s Almanac – back to 1926, we see the S&P 500 rising 4.3% on average during May-October and gaining an average of 7.1% from November-April.

Unsurprisingly, STA editor-in-chief Jeff Hirsch is an advocate of the “sell in May” approach. So is Sam Stovall, who is of course the chief equity strategist at S&P Capital IQ. As Stovall just noted to Forbes, since 1945 the S&P 500 has gained just 1.2% during the average May-October run yet advanced 6.9% during the average November-April period.

While these numbers are pretty compelling, you know what they say about statistics.

Is the argument principally flawed? If you do sell in May, where do you put your money after dumping those stocks? The strategy assumes you know of a better place – an alternative to equities offering greater yield and less risk.

Larry Swedroe, director of research for Buckingham Asset Management, recently told CBS MoneyWatch that the “sell in May” approach amounted to “pure randomness”. He made his claim by running numbers in calendar years from 1950-2007 with the hypothesis of reinvesting money pulled out of equities into 30-year Treasuries during the assumed 6-month market lull. According to his research, the “buy and hold” crowd would have outperformed the “sell in May” crowd in the time frames 1950-2007, 1980-2007 and 1990-2007, with the “sell in May” adherents triumphing in the time frames of 1960-2007, 1970-2007 and 2000-2007.

The case for staying in the market. Even if the performance numbers mentioned in the fourth, fifth and sixth paragraphs of this article were absolutely predictable annually, what would the compelling argument be for ditching stocks? Gains would still occur in spring and summer; they would just be lesser gains.

Let’s go from hypothesis to reality, specifically what is occurring right now. An investor wanting a divorce from risk for the next six months could decide to bail from stocks and put the assets into short-term Treasuries and money market accounts. Would it be worth it? Maybe not. According to Bankrate.com, 6-month Treasuries were yielding 0.14% as of April 27 and money market accounts were yielding 0.46%. Throw in brokerage charges and taxes you might incur from selling, and getting in and out of equities may look less attractive.

Once you’re out, when do you get back in? What if mid-October brings a rally? Do you jump in and buy? What if the bears show up at the start of November? How long do you wait for what might be the market low?

Moreover … who’s to say that U.S. economic indicators (or even global ones) might be better than expected this summer? What if the EU arranges a manageable fix for Spain’s debt dilemma? What if the real estate market shows signs of heating up in the coming quarters? What if the Fed opts for more easing?

If the “sell in May” strategy sounds more like market timing to you than anything else, it does have some history supporting it – history worth considering. The fact remains, however, that history is no barometer of future stock market performance.

KEY CONSUMER SENTIMENT SURVEY TOPS ESTIMATES
The final April Reuters/University of Michigan consumer sentiment survey came in at 76.4, 0.7% higher than the prior 75.7 reading. Economists polled by Briefing.com thought there would be no advance. March’s final survey had a 76.2 reading.

MORE HOME SALES CONTRACTS INKED IN MARCH
Pending home sales improved by 4.1% in March to reach their highest level since April 2010, according to a report from the National Association of Realtors. Another bit of good news was unexpected: February’s S&P/Case-Shiller Home Price Index showed prices rising 0.2% overall, the first advance recorded in ten months. Last week, Zillow said the median U.S. home value had increased 0.5% in March, the best monthly gain in six years. The sour note in last week’s real estate roundup was new home sales. The Census Bureau said they were down 7.1% in March. However, the median sale price was up 6.3% year-over-year.

NASDAQ HAS BEST WEEK IN NEARLY 3 MONTHS
The tech-heavy index rose 2.29% across April 23-27 to settle at 3,069.20 Friday. The Dow gained 1.53% across the same stretch to finish the week at 13,228.31, while the S&P 500 advanced 1.80% last week to 1,403.36 at Friday’s close. With one market day to go in April, only the Dow is in positive territory for the month.

RETAIL SALES UP 0.8% IN MARCH
This follows a 1.0% gain in the category in February. Did gas prices account for much of the increase? No. Minus gas and car sales, the March gain was 0.7%, and core retail sales (minus autos, gas, and home supplies) rose 0.5% last month.

LEADING INDICATORS BACK TO MID-2008 LEVELS
The Conference Board’s index of leading indicators reached 95.7 in March, getting closer to the 100 mark that would imply a healthy economy. The index rose 0.3% for the month with seven of ten indicators positive; interest rate spreads, building permits, stock gains and credit availability were the biggest influences.

DOW BREAKS LOSING STREAK, GOLD PULLS BACK
Across April 16-20, the Dow gained 1.40% to 13,029.26 (its first weekly advance in three weeks), the NASDAQ lost 0.36% to 3,000.45 and the S&P 500 gained 0.60% to 1,378.53. Gold futures fell $17.00 (1.02%) on the week, settling Friday at $1,642.10; oil ended the week at $103.05 after a 0.21% gain across five trading days.

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.

CONSUMER SENTIMENT WAVERS
April’s initial Reuters/University of Michigan consumer sentiment survey came in at 75.7, slightly below the Briefing.com consensus projection of 76.1 and down from the final March number of 76.2. Frustration over gas prices may have had an effect.

BEIGE BOOK: RECOVERY PROCEEDING NICELY
The Federal Reserve’s latest snapshot of a dozen U.S. economic regions reported “modest to moderate” economic growth overall, with all 12 Fed districts anecdotally noting expansion. For the record, the Fed has described the recovery using the “modest to moderate” phrase in three consecutive Beige Books.

OIL & GAS PRICES FALL; Gold RISES
Friday, AAA’s Daily Fuel Gauge Report had regular unleaded averaging $3.90 a gallon, down $0.035 from last week. On the NYMEX, oil lost 0.46% on the week to settle at $102.83 Friday; gold settled at $1,660.20 after a 1.85% weekly gain.

BULLS BATTLE BEARS
April 9-13 was a volatile stretch for the market. For the week, the DJIA went -1.61% to 12,849.59, the S&P 500 -1.99% to 1,370.26 and the NASDAQ -2.25% to 3,011.33. All S&P 500 sectors lost ground on the week as concerns about Spain’s debt and U.S. corporate earnings affected investor outlooks.

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.

Saratoga Springs, NY. – March 8, 2012 – With the impending April 17^th deadline approaching for filing taxes, many Americans are already thinking of ways to spend their tax refunds. Bill Losey, author and retirement expert and advisor, recently wrote a blog offering several ideas for spending your tax refund wisely. With this blog, found on his website http://www.BillLosey.com, titled “15 Ways to Spend Your Tax Refund”, Bill gives 15 such examples.

“In the past two years, federal tax refunds have averaged about $3,000. That’s a nice chunk of change – and it could be used to bring some positive change to your financial life and the lives of others,” writes Losey.

Some of the fifteen ways to spend your tax refund include paying down your debt, starting an emergency fund, contributing to your IRA, improve your home with energy-saving appliances, writing a proper will and establish a financial strategy, among others.

To read the entire blog, please visit http://www.billlosey.com/blog/15-ways-to-spend-your-tax-refund.php

Bill Losey 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.

Other recent blogs written by Bill Losey include “Could Gas Prices Harm the Economy?”, “How Much Retirement Income Will You REALLY Need?”, and “The Facebook Frenzy Is Building. Should You Care?,” among others.

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 publishes Retirement 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.

ONE PMI TOPS EXPECTATIONS; ANOTHER DOESN’T
The start of each month brings the latest surveys of purchasing managers from the Institute for Supply Management. ISM’s March service sector PMI came in at 56.0 and its March manufacturing PMI came in at 53.4. Economists polled by Briefing.com thought the manufacturing PMI would reach 53.0 and the service sector PMI would reach 56.7.

A GREAT MARCH FOR AUTOMAKERS
Warm weather fostered greater car and truck buying. The following firms reported the following monthly sales increases last week: General Motors, 12%; Chrysler Group, 34%, Toyota, 15%; Ford, 5%; Volkswagen, 35%; Nissan, 12.5%.

OIL ADVANCES, GOLD SLIPS
Oil prices rose 0.28% last week to settle at $103.31 a barrel on the NYMEX, while retail unleaded gas prices averaged $3.94 a gallon nationally on Friday. Gold futures fell 2.50% on the COMEX to wrap up last week at $1,630.10 an ounce.

STOCKS RETREAT IN SHORT TRADING WEEK
Across four market days, the Dow lost 1.15% to 13,060.14, the S&P 500 fell 0.74% to 1,398.08 and the NASDAQ dipped 0.36% to 3,080.50. So the worst week for stocks so far in 2012 wasn’t that bad. A contributing factor: the minutes from the March 13 FOMC meeting signaled that the Federal Reserve might not attempt further stimulus efforts. However, the March jobs report could help to alter the Fed’s outlook.

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.

HOW IS THE CONSUMER FEELING?
The final March University of Michigan consumer sentiment survey hints that morale may be rising on Main Street. It came in at 76.2, well above the 74.3 consensus of economists polled by Briefing.com. On the other hand, the March consumer confidence poll from the Conference Board fell to 70.2 from Februarys 71.6 mark, which was in line with the expectations of those economists.

MORTGAGE RATES DIP BACK UNDER 4%
Freddie Macs March 29 survey found the average interest rate for a 30-year fixed-rate home loan at 3.99% with an average 0.7 point. Rates on 15-year FRMs averaged 3.23% with an average 0.8 point last week. A sour note: the S&P/Case-Shiller Home Price Index fell 3.8% in January to a low unseen since the end of 2002.

DURABLE GOODS ORDERS UP 2.2% FOR FEBRUARY
This reverses some of the 3.6% retreat from January. However, economists polled by Briefing.com had expected a 2.8% gain for the month.

A TREMENDOUS QUARTER WRAPS UP
The best first quarter for stocks in 14 years ended with another solid week: DJIA, +1.00% to 13,212.04; S&P 500, +0.81% to 1,408.47; NASDAQ, +0.77% to 3,091.57. Look at these Q1 performances: NASDAQ, +18.67% (its best quarter in 21 years); Dow, +8.14%; S&P 500, +12.00%. Gold futures climbed $9.50 for the week, settling Friday at $1,671.90 an ounce. Gold gained 6.71% for the quarter. NYMEX crude fell $3.85 last week, but still ended March at $103.02 with a 4.24% quarterly gain.

• Start (or add to) an emergency fund. Many people don’t have a dedicated rainy day fund, only the presumption that they might have enough cash in case of a financial tight spot.

• Invest in yourself. You could put the money toward education, career training, personal improvement, or some sort of personal experience with the potential to enhance your life.

• Put it into an IRA or workplace retirement account. If you haven’t maxed out your IRA this year or have a chance to get an employer match, why not?

• Help your child open up a Roth IRA. Has your under-18 son or daughter worked and earned money this year? He or she can open a Roth IRA. Your child’s contribution limit is $5,000 or the amount of his or her earned income for 2012 (whichever is lower). You can actually make this Roth IRA contribution with your own money if your child has spent his or her earnings.

• Pay down debt. Always a smart choice.

• Establish a financial strategy. Some financial advisors work on a fee-only basis. They can perform a review of your current financial situation and give you pointers for the future for roughly $1,000 with no further obligation.

• Pay for that trip in advance. Instead of racking up a bigger credit card bill, consider pre-paying some costs or taking an all-inclusive trip (some are not as pricey as you might think).

• Get your home ready for the market. A four-figure refund may give you the cash to spruce up the yard and/or exterior of your residence. Or, it could help you pay a professional who can assist you with staging it.

• Improve your home with energy-saving appliances. Or windows, or weatherstripping, or solar panels – just to name a few options.

• Create your own food bank. What if a hurricane or an earthquake hits? Where would your food and water come from? Worth thinking about.

• Write a proper will. Your refund could pay the attorney fee, and the will you create might end up more ironclad.

• See a doctor, optometrist, dentist or physical therapist. If you haven’t been able to see these professionals due to your insurance situation or your personal cash flow, the refund might provide a way.

• Give yourself a de facto raise. Adjust your withholding to boost your take-home pay.

• Pick up some more insurance coverage for cheap. The typical flood insurance policy in a low-to-medium risk area costs less than $1,000 (and sometimes less than $500). A $1 million personal liability umbrella policy can usually be bought for $400 or less.

• Pay it forward. Your refund could turn into a charitable contribution (deductible on your 2012 federal tax return if you itemize deductions).

In the past two years, federal tax refunds have averaged about $3,000. That’s a nice chunk of change – and it could be used to bring some positive change to your financial life and the lives of others.

INITIAL CLAIMS HIT A NEW 4-YEAR LOW
According to the Labor Department, claims fell by 5,000 to a seasonally adjusted 348,000 for the week ending March 17. This is the smallest amount since March 2008.

LEADING INDICATORS MOVE NORTH AGAIN
The Conference Board’s monthly index rose 0.7% for February, with reduced jobless claims and the interest rate spread exerting the most influence. Eight of the index’s ten indicators were up for the month.

BULLS PRESS PAUSE BUTTON
Stocks pulled back for the week as anxieties over subpar foreign manufacturing indices inspired some profit-taking. A new concern surfaced Friday: Reuters said Iran’s oil exports had dropped 14% this month. The S&P 500 retreated 0.50% last week to 1,397.11 Friday. The DJIA lost 1.15% on the week to settle Friday at 13,080.73, while the NASDAQ advanced 0.41% in five days to wrap up Friday at 3,067.92. Gold ended the week at $1,662.40 an ounce, oil at $106.87 a barrel. Unleaded gasoline averaged $3.89 a gallon nationally in AAA’s newest price survey.

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.

In February, energy costs rose 6% for the American consumer. Gasoline prices accounted for 100% of that gain. In fact, gasoline prices were behind 80% of the overall 0.4% rise in the Consumer Price Index for February, meaning that last month brought the most consumer inflation of any month since April.

Weve seen $4 gas. What if $5 gas becomes common? If that happens during the summer driving season, the Federal Reserve may find itself weighing which move to make. Higher energy costs could hurt the broad economy, and if that happened, you would almost certainly hear clamor for some kind of stimulus. On the other hand, if Wall Street and Main Street both fret that inflation is rising, the Fed would hardly want to ease.

How does these price hikes affect consumer psychology? One possible consequence of all this is that Main Street may be projecting greater inflationary pressures than really exist. In the University of Michigans mid-March consumer sentiment survey, the consensus one-year inflation expectation among respondents was 4.0%. Yet in February, actual yearly consumer inflation was just 2.9%.

Consumer expectations can have powerful influence. If consumers think inflation is rising, they may be inclined to ask employers for raises. The stores where they shop may try to take advantage of their perception by subtly raising prices. The assumption of inflation can actually have the power to foster inflation.

The Fed thinks the increase is temporary. If prices get too high, a point will come when demand for gas will lessen and correspondingly, prices could decrease. On March 16, a gallon of regular unleaded was averaging $3.83 nationally prices had risen $.08 in a week and about 9% in a month. Still, the Federal Reserve sees this wave of $4 retail gas as another short-term price fluctuation, ultimately unsustainable when drivers throw in the towel regardless of lingering worries over Irans budding nuclear program and oil supply concerns.

AN ILLUMINATING STATESIDE STRESS TEST
Applying a hypothetical doomsday scenario of the Dow losing half of its value, joblessness at 13% and home prices at 1996 levels, the Federal Reserve put 19 major U.S. banks through its annual stress test last week and found that 15 passed: American Express, Bank of America, Bank of New York Mellon, BB&T, CapitalOne, Fifth Third, Goldman Sachs, JP Morgan Chase, Keycorp, Morgan Stanley, PNC, Regions, State Street, U.S. Bancorp and Wells Fargo. Four lenders did not pass the Fed concluded that Citigroup, SunTrust, Ally and MetLife would lose enough assets under the stress test scenario to pose systemic risk.

CONSUMERS BUY MORE, SHOW LESS CONFIDENCE
The Census Bureau noted a 1.1% rise in retail sales for February and revised the January gain north to 0.6%. Elsewhere, the initial University of Michigan consumer sentiment survey for March showed a slight dip to 74.3 from 75.3 in late February.

BEST WEEK FOR U.S. EQUITIES SINCE DECEMBER
The NASDAQ? It went +2.24% on the week to settle Friday at 3,055.26. The Dow? Up 2.40% in five days to end the week at 13,232.62. The S&P 500? +2.43% to 1,404.17 at Fridays close. More good news: the CBOE VIX settled below 15 Friday after touching a 5-year low. Crude oil was down 0.32% for the week to $107.06, gold down 3.25% last week to $1,655.80.

SERVICE SECTOR GROWS IN February
The Institute for Supply Management’s service sector PMI climbed to 57.3 for February, seeing a half-percent gain. A 3.1% jump in business activity/production and a 1.8% rise in new orders were nice highlights.

OIL, GOLD END WEEK WITH MODERATE GAINS
From Wednesday to Friday, gold futures rose $39.50 and oil futures $2.70. For the week, gains were actually modest: oil advanced but $0.70 on the NYMEX to $107.40 a barrel, while gold racked up a $2.10 gain to end Friday’s COMEX session at $1,710.90 per ounce. The price of unleaded gas was $3.76 a gallon nationally on Friday per AAA’s survey.

LITTLE VOLATILITY AFTER GREEK BOND SWAP
On Wall Street, March 5-9 mirrored the week before: the Dow pulled back (-0.43% to 12,922.02) and the NASDAQ (+0.41% to 2,988.34) and S&P 500 (+0.09% to 1,370.87) advanced. The market was still wary of the debt deal out of the EU – last week, 86% of investors holding Greek bonds agreed to swap securities issued by the Greek government for replacement ones worth less, and collective action clauses will force about 10% more of these bondholders to do so. While this seemingly opens the door for a new €130 billion EU/IMF rescue package for Greece, it could be the last bailout Greece receives.

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).

Saratoga Springs, NY. – March 8, 2012 – Bill Losey, author and retirement expert and advisor, recently wrote a blog urging readers to carefully plan how much retirement income they will need match their lifestyle needs and goals. With this blog, found on his website http://www.BillLosey.com, titled “How Much Retirement Income Will You REALLY Need?” Bill touches on five important factors that can affect retirement income needs, including health, heredity, portfolio, spending habits and social security.

On spending habits Bill writes, “Do you only spend 70% of your salary? Probably not. If you’re like many Americans, you may spend as much as 90% or 95% of it. Will your spending habits change drastically once you retire? Again, probably not. Most people only change spending habits in response to economic necessity or in pursuit of new financial goals. People don’t want to ‘live on less’ once they have had ‘more’.”

On the subject of social security Bill remarks, “Will Social Security even exist by the time you’ve retired? A study from the Government Accounting Office brings this into sharp focus, stating that the long-lived program may start to run out of money by 2036 and may be broke by the end of that decade. Furthermore, the GAO suggests a 20% cut in benefits, due to increased longevity and lower employment. Even if SSI is still a going concern in 2040, it may be very slim pickings.”

To read the entire blog, please visit http://www.billlosey.com/blog/how-much-retirement-income-will-you-really-need-2.php

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.

He 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.

Other recent blogs written by Bill Losey include “The Facebook Frenzy Is Building. Should You Care?”, “Are People REALLY Retiring Later?”, and “Is Now The Time To Refinance Your Mortgage?,” among others.

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 publishes Retirement 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.

DURABLE GOODS ORDERS, ISM INDEX DECLINE
While the Institute for Supply Management’s manufacturing index spent its 31st consecutive month above 50, it did dip 1.7% in February to 52.4 – well below the 54.7 consensus forecast among economists polled by Briefing.com. Last week, the Commerce Department said that hard goods orders decreased 4.0% in January (the expiration of the 2011 tax break on capital investment was likely a factor).

HOME PRICES SLIP, BUT SALES CONTRACTS INCREASE
The good news: pending home sales increased 2.0% in January according to the National Association of Realtors. Economists polled by Briefing.com had forecast only half that gain. The not-so-good news: December’s S&P/Case-Shiller Home Price Index revealed a 3.8% monthly decline and a 4.0% annual retreat in existing home prices.

S&P & NASDAQ ADVANCE; DOW HAS A FLAT WEEK
Friday, the DJIA settled at 12,977.57, the NASDAQ at 2,976.19 and the S&P 500 at 1,369.13. The Dow lost 0.04% from Monday to Friday while the S&P and NASDAQ respectively gained 0.28% and 0.42%. Retail gasoline prices were averaging $3.74 a gallon nationally on Friday; oil futures lost 2.80% last week to settle at $106.70 per barrel. Gold retreated 3.75% on the COMEX for the week to settle at $1,709.80 an ounce Friday.

MORE HOMES MOVING ON THE MARKET
Existing home sales were up again in January – the National Association of Realtors reported a 4.3% monthly increase. Seasonally adjusted, sales have risen 8% since August. New home sales (a smaller portion of the residential real estate market) declined 0.9% in January, but largely as an effect of the Commerce Department revising December sales figures upward. Without those revisions, the indicator would have been strongly in the plus column. Last month, the new home inventory decreased to the lowest level since January 2006.

CONSUMER CONFIDENCE UP SLIGHTLY
The final Thomson Reuters/University of Michigan consumer sentiment survey for February came in at 75.3 last week – a 12-month peak, and just a bit north of the 75.0 reading at the end of January. Economists polled by Briefing.com had projected a final February mark of 73.0.

STOCKS & GOLD POST FURTHER GAINS
The Dow ended the week at 12,982.95, the NASDAQ at 2,963.78 and the S&P 500 at 1,365.74. That was the S&P’s highest close since June 5, 2008. It also represented a 102% rise from its March 2009 bottom. On the week, the S&P gained 0.33%, the DJIA 0.26% and the NASDAQ 0.41%. Gold wrapped up the week at $1,776.40 on the COMEX after advancing 2.93% in five days.

You won’t learn how much retirement income you’ll need by reading this article. You’ll want to meet with a qualified retirement planner who can help you plan to estimate your lifestyle needs and short-term and long-term expenses.

With that in mind, there are some factors which affect retirement income needs; too often, they go unconsidered.

Health. Most of us will face a major health problem at some point in our lives; perhaps even multiple or chronic health problems. We don’t want to think about that reality. But if you’re a new retiree, think for a moment about the costs of prescription medicines, and recurring treatment for chronic ailments. These minor and major costs can really take a bite out of retirement income, even with a great health care plan. While generics have demonstrably slowed the advance of prescription drug costs in the past, one estimate found that 65-year-old couple who retired in 2011 would pay $230,000 for health care costs, excluding insurance and Medicare, as well as the costs for nursing home care.

Heredity. If you come from a family where people frequently live into their 80s and 90s, you may live as long or longer. Imagine retiring at 55 and living to 95 or 100. You would need 40-45 years of steady retirement income.

Portfolio. Many people retire with investment portfolios they haven’t reviewed in years, with asset allocations that may no longer be appropriate. New retirees sometimes carry too much risk in their portfolios, with the result being that the retirement income from their investments fluctuates wildly with the vagaries of the market. Other retirees are super-conservative investors: their portfolios are so risk-averse that they can’t earn enough to keep up with even moderate inflation, and over time, they find they have less and less purchasing power.

Spending habits. Do you only spend 70% of your salary? Probably not. If you’re like many Americans, you may spend as much as 90% or 95% of it. Will your spending habits change drastically once you retire? Again, probably not. Most people only change spending habits in response to economic necessity or in pursuit of new financial goals. People don’t want to “live on less” once they have had “more”.

Social Security (or lack thereof). Will Social Security even exist by the time you’ve retired? A study from the Government Accounting Office brings this into sharp focus, stating that the long-lived program may start to run out of money by 2036 and may be broke by the end of that decade. Furthermore, the GAO suggests a 20% cut in benefits, due to increased longevity and lower employment. Even if SSI is still a going concern in 2040, it may be very slim pickings.

So will you have enough? When it comes to retirement income, a casual assumption may prove to be woefully inaccurate. Meet with a qualified retirement planner while you are still working to discuss these factors and estimate how much you will really need.

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.

RETAIL SALES FALL SHORT OF (HIGH) EXPECTATIONS
The Census Bureau reported a healthy 0.4% rise in U.S. retail purchases for January. However, economists polled by Dow Jones Newswires thought they would rise 0.9% for the month. Subtract a 1.1% decline in auto sales from the data, and retail sales were up 0.7% for January.

LEADING INDICATORS Hit 3½-YEAR PEAK
The Conference Board’s Leading Indicator Index rose 0.4% in January, with seven of ten indicators improving. (The most notable positive detected: a widening in the spread between short-term and long-term interest rates.) The index advanced for a fourth consecutive month.

NASDAQ 3,000? DOW 13,000?
Both indices approached those psychological landmarks on Friday. The Dow went +1.16% for the week, the NASDAQ +1.65% and the S&P 500 +1.38%. At week’s end, the Dow was at 12,949.87, the NASDAQ at 2,951.78 and the S&P at 1,361.23. Oil futures soared 4.63% last week on the NYMEX to settle at $103.24 a barrel Friday. Gold had a flat week, settling at $1,724.50 Friday on the COMEX following a 0.07% five-day advance.