A&I Financial Services Periscope

A & I Financial Services LLC Newsletter

For the Week of
December 22, 2010
 
Greetings!         


Since 1950, life expectancy at birth has increased by 2 months every year. Life expectancy at birth of Americans has increased by 10 years in the last 60 years, reaching 78.3 years today.  (1)

On a related note, workers may be getting a 2% tax reduction, but retirees may feel a pinch. It used to be that Uncle Sam gave folks who started Social Security at the earliest possible age an interest-free loan. You once had the choice to pay back all of your received social security benefits, without interest, to buy-in to the higher payment you would receive at a later age.
 
For example, at age 62 assume Helen's benefit is $1,000 per month but if she waits until age 70, it might be $1,300 per month. Helen could take the early payment, invest for 8 years, pay back the principal, keep the interest and start an income of $1,300 per month! Alas, this benefit just disappeared. (2)
 
You Are Better Savers than Most Americans!

Americans (like you) who work with a financial professional (like us) tend to save more money - and feel more knowledgeable and confident about retirement - than those who do not.  Consider this:
  • On average, you saved twice as much for retirement as those who had not worked with a professional. Those who spent "a lot" of time with a financial professional saved three times as much. 
     
  • Working with a professional also tends to help you feel more knowledgeable about investments: 39% of those who spent some time with a pro (and 58% of those who spent a lot of time with one) think they know more about investments than their peers. 
     
  • Most (62%) of those who spent a lot of time with a professional said they are highly confident about retirement, whereas only 34% of those who spent no time with one feel the same way. (3)
Economic Briefs
OBAMA SIGNS TAX DEAL INTO LAW
President Obama signed the 2010 Tax Relief Act into law on December 17 after overwhelming passage in the House and Senate. The Bush-era tax cuts are thereby extended. Through 2012, the federal income tax tops out at 35% and taxes on dividends and capital gains top out at 15%. Next year, the estate tax returns at 35% with a $5 million dollar exemption, effectively permitting couples to pass estates as large as $10 million to heirs; tax-free charitable IRA donations also come back in 2011. Employee payroll taxes will drop from 6.2% to 4.2% next year. (4,5,6,7,8)

A POSITIVE SIGNAL FOR THE FUTURE
The Conference Board's leading economic indicators index (designed to be a gauge of economic momentum or lack thereof) jumped by 1.1% in November - the biggest gain in eight months. This follows a revised 0.4% advance in the index for October.(9)

PRODUCER PRICES OUTPACE CONSUMER PRICES
Consumer prices inched up 0.1% in November according to the Labor Department's Consumer Price Index. The core CPI rose 0.1%. The Producer Price Index, on the other hand, rose by 0.8% last month. Consensus polls of economists at Briefing.com had projected a 0.2% rise in the CPI and a 0.5% gain in wholesale prices. (10)

HOUSING STARTS TURN NORTH
They improved for the first time in three months. The Commerce Department said November's housing starts were up 3.9% from October levels. The 555,000 annual pace topped the 559,000 consensus projected in a Bloomberg News survey. (11)
Market Summary

% Change

Y-T-D

1Yr Chg

5-Year Avg

DJIA

+10.20

+11.48

+1.13

NASDAQ

+16.47

+21.23

+3.47

S&P 500

+11.55

+13.49

-0.37

(Source: cnbc.com, bigcharts.com, ustreas.com, bls.gov, 12/17/10)
Create a beautiful week!

Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070

Citations:

(1) - Center for Disease Control.  3/22/10 issue, # 13
(2) - http://finance.yahoo.com/focus-retirement/article/111550/social-security-
payback-option-eliminated?mod=fidelitymanagingwealth&cat=
fidelity_2010_managing_wealth
(3) - http://ing.us
(4) - edition.cnn.com/2010/POLITICS/12/17/tax.deal/ [12/17/10]
(5) - online.wsj.com/article/SB1000142405274870329660457600
5430598327972.html [12/7/10]
(6) - tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf [12/16/10]
(7) - businessweek.com/ap/financialnews/D9K5IEN81.htm [12/17/10]
(8) - npr.org/2010/12/10/131969824/some-worry-payroll-tax-cut-threatens-social-security [12/17/10]
(9) - bloomberg.com/news/2010-12-17/u-s-leading-indicators-index-gains-most-in-eight-months-in-recovery-sign.html [12/17/10]
(10) - thestreet.com/story/10947594/1/inflation-remains-subdued-in-november.html [12/15/10]
(11) - bloomberg.com/news/2010-12-16/u-s-futures-fluctuate-starbucks-bank-of-america-climb-freeport-slides.html [12/16/10]

This material has been prepared and is distributed solely for information purposes only. It is not a solicitation or an offer buy any securities or instrument or to participate in any trading strategy. There is no assurance that a particular trading strategy will achieve investment success.
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Words for Thought
"It is not the years in your life but the life in your years that counts."
 Adlai Stevenson
Happy Holidays on a Budget

Karl Frank & Cameron Morgan were recently featured in the Denver Post.  They talked about how to have a happy holiday while sticking to a budget. 

 

Click here to read the article.  

View our Money Makeovers 
Karl Frank, Certified Financial Planner, provided several Money Makeovers for families on CBS Channel 4. 
 
Learn more!
 
 
 Beating the Recession
View The Financial Planning Association Video

Karl Frank and many other Financial Planners  offered pro-bono advice to thousands at the first annual "FPA Financial Planning week." 

 

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FPA Week
Riddle of the Week
What 9-letter word begins and ends with the letter S and has only one vowel?
Last week's riddle:

You are to put five different letters into five addressed envelopes. If you do this completely at random, what are the chances that only four letters will end up in their correct envelopes?
 
Last week's riddle answer:
There is no chance of that happening. If four of the letters end up in the right envelopes, then the fifth must also be in the right envelope.