With all the options available to you, the Medicare enrollment process can seem overwhelming, especially if you leave important decisions to the last minute. To help ensure that you make the best Medicare choices, here are some steps to take before you turn 65.

If you won't be enrolled in Medicare automatically when you turn 65, you'll need to keep these key dates in mind:

Look into how Medigap and Medicare Advantage plans work and decide if either type of plan would benefit you. Here's an overview:

Budgeting is always important, but the benefits you gain from budgeting have more of an effect on your finances in certain situations.

• If you've never created a budget before, budgeting has a high chance of being able to improve your finances. You will see things you never saw before regarding your spending. The little expenditures you may not notice on a day-to-day basis show up when you start to look at your spending in detail, and budgeting allows you to better control those money leaks.  
• If you don't know if you're getting richer each month, you have a budgeting problem. If you don't know if your net worth is increasing each month, you need to start tracking your finances. That's the purpose of the Naked With Cash series on Consumerism Commentary.  
• If you know you're not getting richer each month, you are spending more than you're earning. You'll need to find a way to increase your income, decrease your expenses, or a mixture of both, and budgeting helps you figure that out. Keep in mind that growing your bank accounts is not the only goal in life. In fact, it's not a real goal at all. But we are talking about growing your wealth, which should fit into a broader long-term strategy for your life.  
• If you are underpaid, you may be facing pressure to live a certain way that seems to be required within your community of peers, but you may not be able to afford that life as well as it appears others are affording it. If you work in an industry where image is important, you're going to need to make sacrifices, and budgeting is the only way you can get started.  
• If your income is unpredictable, you should assume a very conservative starting point for your budget. If you work on commission or if your job is tied tightly to the state of the market of your industry or the economy as a whole, your income may be more at risk than someone with a steady salary in a recession-proof (or recession-resistant) job. Budgeting will make sure you're setting aside money during the booms to help cover the lean times during the busts.  
• If you are going through a career change, you may be faced with a different income scenario. When I first started working out of college, I faced the problem of earning a salary for the first time. I didn't really know what to do with it, and I didn't really know how much I had for myself after taxes and required expenses. After I sold a business and could no longer count on the revenue, I faced a sharp reduction in my monthly cash flow. Both situations forced me to eventually evaluate or reevaluate my spending situations.  
• If you are going through a life change, you may have new concerns that require placement within your budget. If you're getting married, getting divorced, having children, or sending your children off to college, you'll be faced with new spending realities. You'll have more or fewer mouths to feed, and more or less income to help meet your obligations.

Read the entire article here.

 

* Not indicative of advisor's future performance. Your experience may vary.

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Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor's. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000� Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury's daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS.

Markets strong as real economy slows

April was another month of strong equity performance, with the S&P 500 Index notching an all-time high toward month-end and with both the Dow Jones Industrials Average and the Nasdaq showing strong gains as well. The S&P 500 was up 1.93 percent, trailed slightly by the Dow at 1.94 percent and the Nasdaq at 1.88 percent.

Although markets dipped twice during the month as a result of disappointing economic news, stronger-than-expected earnings reports drove the markets back up as the month closed. With more than half of companies reporting, operating earnings per share grew 2 percent, in line with expectations, and roughly 70 percent of companies beat earnings expectations.
 
Despite the healthy earnings, corporate revenues were less encouraging, as more than half of companies missed top-line revenue expectations. Should this trend continue, equity valuations could come under pressure. Technically, markets were robust, with all three indices well above their 50- and 200-day moving averages, and no resistance levels above.

International markets also had a good month. The MSCI EAFE Index was up 5.19 percent, slightly better than the U.S. indices, and the MSCI Emerging Markets Index gained 0.66 percent. Developed international markets were spurred higher in April as a result of good news from a variety of sources. After two months of uncertainty, Italian politicians came to a compromise, electing Enrico Letta as their prime minister. Letta is known as a centrist and supporter of the European Union; his ascent led investors to buy Italian bonds, pushing the Italian 10-year yield to its lowest level in 30 months. Shockingly, Italian yields are now lower than they were in 2007, before the global financial crisis began. Portugal also took steps to become more market-friendly, announcing a plan to reduce corporate taxes.

On the other side of the world, Japan's central bank announced an unprecedented plan to double that nation's monetary base in two years and put an end to the deflationary spiral that has plagued Japan for more than a decade. Meanwhile, the European Central Bank was poised to cut rates in early May, a move supportive of stocks and risky bonds.

April was also positive for fixed income investors. The Barclays Capital Aggregate Bond Index returned 1.01 percent for the month. Longer-duration bonds performed quite well, as the 10-year U.S. Treasury yield fell, from 1.84 percent to 1.673 percent. Weaker-than-anticipated economic releases, combined with continued low inflation, reassured investors that the Federal Reserve is unlikely to discontinue its easing program in the near future. International bonds performed particularly well, as foreign currencies bounced back against the dollar.

Financial markets diverge from real economy

Although performance for the financial markets was hearty in April, the real economy showed signs of a slowdown. Only 88,000 jobs were added in the U.S., well below the 268,000 new jobs reported for the month before. Weak durable goods orders also signaled a spring slowdown, and the reported gross domestic product (GDP) growth of 2.5 percent for the first quarter was somewhat below expectations. Consumer spending and business investment were the primary drivers of growth, but reduced government spending slowed the expansion.

Despite the disappointing jobs report, total labor demand stayed strong. According to the Ned Davis Research Group, the number of hours worked has increased at a level equivalent with having added 328,000 more jobs to the workforce. This suggests that overall demand is healthy, but that companies are reluctant to hire new workers. This is also consistent with the lower confidence reported by business surveys.

Consumer demand was vigorous early in the first quarter but slowed significantly toward quarter-end, with a decline in retail sales for March offsetting strong gains in previous months. In addition, although the University of Michigan Consumer Sentiment Index fell early in April, the Conference Board Consumer Confidence Index rose later in the month. This reflected the fickle nature of consumers, whose net worth has risen because of home and stock market values, but whose short-term purchasing power has been affected by taxes and gas prices.

Housing has been particularly positive for consumers. The S&P/Case-Shiller 20-City Home Price Index most recently reported a 9.32-percent gain year-over-year, as prices climbed and demand outstripped supply.
 
The decline in government spending continued in April-and indeed likely accelerated. In fact, during the first quarter, government spending decreased roughly 4.2 percent on an annualized basis-or 0.8 percent of GDP-according to Capital Economics. This figure was not inclusive of the sequester cuts, which came fully into effect at the beginning of April.

The economic impact of the sequester cuts is not yet known, as it will take time for them to trickle into the economy. So far, however, markets have not reacted negatively to budget downsizing. The positive side of this is that the decrease in government spending is narrowing the deficit, which is projected to come close to stabilizing in 2014. On that note, at the end of April, the U.S. Department of the Treasury announced that it actually expects to pay down federal government debt in the second quarter. If this were to pan out, it would be the first quarter during which federal debt has fallen in six years.

Risks around the world persist

A variety of possible risks surfaced in April. Notwithstanding the good news from Italy and Portugal, the European economy continued to stagnate, as Slovenia and other countries struggled to stabilize their banking systems. North Korea kept on rattling its cage, and several countries confirmed that Syria had used chemical weapons. If such use is deemed to have been widespread, this could spur an intervention by the U.S. and its allies. None of these risks appears to pose an imminent threat to markets, but they should be followed carefully.

Recovery moves along but at a slower pace

The U.S. economy continues its recovery, although the pace looks likely to slow into the second quarter. U.S. corporations also keep posting impressive profits, but growth may not be as significant going forward. Markets appear to be pricing in an optimistic future, but, if this scenario does not play out as expected, equity market revaluation could lower levels. In short, although there are many reasons for optimism, investors should keep in mind their personal risk tolerance and allocate capital prudently, with an eye toward long-term goals.

Authored by Brad McMillan, vice president, chief investment officer, and Sean Fullerton, investment research associate, at Commonwealth Financial Network.