Archives for July, 2013

11 Jul 2013
0

Quarterly Economic Update, 2nd Quarter, 2013

THE QUARTER IN BRIEF
Stocks advanced for the third quarter out of the last four: the S&P 500 rose 2.36% in three months and climbed to a new record close of 1,669.16 on May 21. While the Federal Reserve threatened to let the air out of the rally as the quarter wound down, key indicators largely showed improvement even as the effects of the sequester cuts presumably trickled down to Main Street. The dollar strengthened and gold was hit hard, though oil pushed toward $100 a barrel. The housing recovery continued undeterred.1,2

DOMESTIC ECONOMIC HEALTH
When Federal Reserve chairman Ben Bernanke mentioned on June 19 that the central bank might reduce its easing effort later this year and end QE3 altogether in mid-2014, global markets tumbled and the S&P 500 ended up having its first losing month in several (-1.50%). While this was the major event affecting investors in Q2, there were many other consequential economic developments.1,3

Non-farm payrolls expanded by (a revised) 199,000 in April and 195,000 in May, the Labor Department noted. The jobless rate was at 7.6% by May, with the long-term unemployed numbering 4.3 million (1 million fewer than a year before). Consumer spending staged a rebound – it declined 0.3% in April, but then rose 0.3% in May. Consumer incomes rose 0.5% in May (the biggest gain in three months) after a 0.1% rise in April. As for consumer inflation, it was certainly mild: the Consumer Price Index rose 0.1% in May to bring America’s annualized inflation rate to 1.4%. Perhaps as a reflection of the increase in personal spending and low inflation, retail sales were up 0.1% in April and 0.6% in May. While the Commerce Department revised Q1 GDP down to 1.8% in June (from an initial 2.4% estimate), the hope was that the Q2 figure might show solid improvement.4,5,6,7,8

Consumer sentiment improved. April’s Conference Board consumer confidence index was at 69.0; by May it was at 74.3 and in June it reached 81.4. The University of Michigan’s survey also logged an ascent, rising from 76.4 in April to 84.5 in May, then settling at 84.1 in June.9,10

The Institute for Supply Management’s manufacturing PMI had its ups and downs in the quarter. It wound up at 50.9 in June after coming in at 50.7 in April and 49.0 in May. ISM’s non-manufacturing index rose to 53.7 in May from a 53.1 mark a month earlier – and then it declined in June to 52.2. The Producer Price Index showed similar ups and downs, dropping 0.7% for April and rebounding 0.5% in May. Overall durable goods orders rolled in at a consistent pace: up 3.6% in May.11,12,13,14

When the Supreme Court repealed Section 3 of the Defense of Marriage Act (DOMA) in June, it brought federal recognition of same-sex marriages. Financially, that allowed married gay and lesbian couples to file joint tax returns with the IRS and tap into partner health insurance benefits; it also made surviving spouses in such marriages eligible for Social Security survivorship benefits. College students watched interest rates on Stafford loans double to 6.8% due to congressional inaction as June ended, though Capitol Hill lawmakers talked of a fix this summer. Finally, Standard & Poor’s upgraded America’s credit outlook to “stable” from “negative” in June.15,16,17

GLOBAL ECONOMIC HEALTH
China’s economy showed distinct signs of cooling off in the quarter. Markit’s monthly PMI showed the nation’s manufacturing sector contracting in May (49.2) and June (48.2), and fears emerged that China might fall short of its 7.5% GDP target for the year. The PRC’s leaders were increasingly focused on rooting the country’s economy in personal consumption rather than exporting and investing. In an effort to clamp down on shadow banking, the People’s Bank of China attempted to curb funding in the interbank lending market, resulting in skyrocketing short-term interest rates. Chinese stocks fell 5.3% in the wake of that move. By the end of the quarter, manufacturing PMIs were at 50.3 in India, 51.0 in Indonesia, 49.5 in Taiwan and 49.4 in South Korea.18,19,20

The good news from Europe: by June, eurozone inflation had declined 0.8% in a year. The bad news: it had risen 0.4% since April to 1.6%. Unemployment for the euro area reached 12.2% in May, up 0.1% from April and up 0.9% in 12 months; at the quarter’s end, jobless rates among EU members ranged from 4.7% (Austria) to 26.9% (Spain). In June, the European Central Bank cut its 2013 GDP projection for the eurozone to -0.6%. It did forecast 1.1% growth in 2014.21,22,23

WORLD MARKETS
It was a down quarter for many benchmarks. Some Asia Pacific indices logged gains – the Nikkei 225 (+10.32%), the Sensex (+2.97%), the KSE 100 in Pakistan (+17.04%), the TAIEX in Taiwan (+1.81%). Others didn’t – the Shanghai Composite went -11.51%, the Jakarta Composite -2.47% and Australia’s ASX -3.30%. In the west, the TSX Composite went -4.87%, the Bovespa -15.78% and Mexico’s IPC All-Share -7.84%. While the DAX (+2.10%) and CAC 40 (0.20%) managed small Q2 advances, quarterly losses were more common in Europe – including descents for the RTSI (-12.64%), IBEX (-1.99%) and FTSE 100 (-3.06%). Among regional and multi-country indices, the Global Dow lost only 0.03%,  the DJ STOXX 50 3.46%, the Asia Dow 3.30%, the MSCI World Index just 0.07% and the MSCI Emerging Markets Index 9.14%.24,25

COMMODITIES MARKETS
With hints of waning demand in China, U.S. stocks hitting new all-time highs and the dollar growing stronger, there was plenty of selling. The quarter was a disaster for gold, which dropped 23.3% to settle at $1,223.70 on the COMEX on June 28. (In the first half of 2013, gold futures declined $452.10.) Silver’s quarter was even worse: it dropped 31.3%. Platinum futures sank 14.9% in Q2, palladium futures 14.0%. For some other commodities, it was a different story: the first half of 2013 ended with oil up 2.4% YTD, natural gas up 3.9% YTD and cotton up 10.0%. The U.S. Dollar Index went +0.19% in the quarter.26,27,28

REAL ESTATE
A steady stream of positive news arrived from this sector. The April Case-Shiller Home Price Index came out in June, and it showed home prices across 20 cities rising 12.1% in 12 months. The Case-Shiller hadn’t seen a yearly gain that large since March 2006. By May, the National Association of Realtors reported a 12.9% annual gain in existing home sales with a 15.4% increase in the median price of a residential resale; NAR also noted a 12.1% annual improvement in pending home sales. Housing starts and building permits were respectively up 28.6% and 20.8% above year-ago levels by May, and the Census Bureau also noted a 29.0% annualized gain in new home sales.14,29,30,31,32

This might have been the last quarter for rock-bottom mortgage rates. In Freddie Mac’s June 27 Primary Mortgage Market Survey, the average interest rate for the 30-year FRM had risen to 4.46%. (Compare that to 3.57% on March 28.) Other mortgage types also grew more expensive: 15-year FRM, 2.76% to 3.50%; 5/1-year ARM, 2.68% to 3.08%; 1-year ARM, 2.62% to 2.66%.33

LOOKING BACK…LOOKING FORWARD
Q2 2013 was not as spectacular for U.S. equities as its predecessor. Still, all three major U.S. indices advanced. At the close on June 28, the Dow settled at 14,909.60, the S&P at 1,606.28 and the NASDAQ at 3,403.25. In addition, the Russell 2000 gained 2.73% for the quarter, closing at 977.48 on June 28. Fear increased, at least as measured by the CBOE VIX. The VIX soared 32.26% in the quarter.1

% CHANGE

Q2 CHG

Q1 CHG

1-YR CHG

10-YR AVG

DJIA

+2.27

+11.25

+18.31

+6.59

NASDAQ

+4.15

+8.21

+19.43

+10.94

S&P 500

+2.36

+10.03

+20.86

+6.45

REAL YIELD

6/28 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.53%

-0.48%

1.48%

1.90%

 

Sources: cnbc.com, bigcharts.com, treasury.gov – 6/28/131,34,35,36

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

Gloom invaded Wall Street late in the quarter when Ben Bernanke spoke of tapering QE3. Intellectually, investors knew the Fed couldn’t ease forever – but the market sure had a hard time swallowing the pill. The market dip was far from a correction, though, and subsequent economic indicators lightened the mood on the Street. The coming quarter presents the market with strong challenges: few analysts see great things ahead for this next earnings season, there is fear that the jump in mortgage rates may slow the housing comeback, and investors are keeping wary eyes on economic and political developments in China, Europe and the Middle East.  If the housing, hiring and personal spending numbers measure up to expectations in the coming months, stocks may move a little higher in Q3 while Wall Street waits for fall. 

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«Renita M. Owens, CPA, PFS Disclosure»

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The Karachi Stock Exchange (KSE) is Pakistan’s largest and one of the oldest stock exchanges in South Asia by market capitalization.  The TWSE, or TAIEX, Index is capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.  The SSE Composite Index is an index of all stocks (A and B shares) that are traded at the Shanghai Stock Exchange.  The Jakarta Stock Price Index is a modified capitalization-weighted index of all stocks listed on the regular board of the Indonesia Stock Exchange. The Australian Securities Exchange (ASX) is Australia’s primary securities exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization.  The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The Mexican IPC index (Indice de Precios y Cotizaciones) is a capitalization-weighted index of the leading stocks traded on the Mexican Stock Exchange. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The RTS Index (abbreviated: RTSI, Russian: Индекс РТС) is a free-float capitalization-weighted index of 50 Russian stocks traded on the Moscow Exchange in Moscow, Russia. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange.  The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. The Global Dow (GDOW) is a 150-stock index of corporations from around the world, created by Dow Jones & Company. The Dow Jones STOXX 50 is a stock index representing 50 of the largest companies in Europe based on market capitalization. The stock universe used for selection is an aggregate of the 18 Dow Jones STOXX 600 Supersector indexes, which together capture about 95% of the capitalization of the major stock exchanges in 18 European countries. The Asia Dow is an equal-weighted, 30-stock index that measures 30 of the leading blue-chip stocks traded in the Asia/Pacific region, The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

 

Citations.

1 – cnbc.com/id/100852152 [6/28/13]

2 – startribune.com/business/212566211.html [6/21/13]

3 – usatoday.com/story/money/markets/2013/06/19/stocks-wednesday/2437101/ [6/19/13]

4 – bls.gov/news.release/empsit.nr0.htm [6/7/13]

5 – foxbusiness.com/economy/2013/06/27/consumer-spending-income-rise-in-may/ [6/27/13]

6 – sltrib.com/sltrib/money/56476928-79/percent-prices-inflation-fed.html.csp [6/19/13]

7 – cnbc.com/id/100812875 [6/13/13]

8 – reuters.com/article/2013/06/26/us-usa-economy-gdp-idUSBRE95P0NE20130626 [6/26/13]

9 – tradingeconomics.com/united-states/consumer-confidence [7/2/13]

10 – briefing.com/investor/calendars/economic/releases/mich.htm [3/29/13]

11 – briefing.com/Investor/Calendars/Economic/Releases/napm.htm [7/1/13]

12 – briefing.com/Investor/Calendars/Economic/Releases/napmserv.htm [7/3/13]

13 – bls.gov/news.release/ppi.nr0.htm [6/14/13]

14 – cnbc.com/id/100842287 [6/25/13]

15 – bankrate.com/financing/banking/doma-decision-to-have-big-impact/ [6/26/13]

16 – businessweek.com/ap/2013-07-01/student-loan-rates-double-without-congress-action [7/1/13]

17 – reuters.com/article/2013/06/10/us-usa-rating-sp-idUSBRE9590K820130610 [6/10/13]

18 – washingtonpost.com/business/economy/chinese-officials-tamp-down-economic-expectations/2013/07/02/78362dea-e222-11e2-aef3-339619eab080_story.html [6/28/13]

19 – online.wsj.com/article/SB10001424127887324637504578563570021019506.html [6/24/13]

20 – finfacts.ie/irishfinancenews/article_1026211.shtml [7/2/13]

21 – epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-01072013-AP/EN/2-01072013-AP-EN.PDF [7/1/13]

22 – epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-01072013-BP/EN/3-01072013-BP-EN.PDF [7/2/13]

23 – mercurynews.com/breaking-news/ci_23400791/ecb-expected-hold-rates-economy-lags [6/6/13]

24 – online.wsj.com/mdc/public/page/2_3024-m_globalstockindexes.html?mg=inert-wsj [4/2/13]

25 – mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [6/28/13]

26 – coinnews.net/2013/06/29/gold-silver-fall-in-2nd-quarter-us-bullion-coins-slow-in-june/[6/29/13]

27 –  commodityhq.com/2013/three-commodities-looking-to-turn-it-around-in-2013/ [7/3/13]

28 – online.wsj.com/mdc/public/npage/2_3050.html?mod=mdc_curr_dtabnk&symb=DXY [7/3/13]

29 –  marketwatch.com/story/existing-home-sales-rise-42-in-may-2013-06-20 [6/20/13]

30 – online.wsj.com/article/SB10001424127887323873904578571392167325444.html [6/27/13]

31 – census.gov/construction/nrc/pdf/newresconst.pdf [6/18/13]

32 – census.gov/construction/nrs/pdf/newressales.pdf  [6/25/13]

33 – freddiemac.com/pmms/ [7/3/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F28%2F12&x=0&y=0 [6/28/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F28%2F12&x=0&y=0 [6/28/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F28%2F12&x=0&y=0 [6/28/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F27%2F03&x=0&y=0 [6/28/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F27%2F03&x=0&y=0 [6/28/13]

34 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F27%2F03&x=0&y=0 [6/28/13]

35 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/1/13]

36 – www.cnbc.com/id/100600350 [3/28/13]

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11 Jul 2013
0

The Latest on Social Security

Benefits increase for 2013. Ideas for reform are numerous.

Provided by Renita M. Owens, CPA, PFS

Social Security benefits have increased 1.7% this year. This doesn’t come close to the 3.6% boost retirees got for 2012, but it does mark the second straight annual cost-of-living adjustment. (After a hefty 5.8% COLA for 2009, there were no COLAs for 2010 or 2011).1,2

So for 2013, the average monthly Social Security payment going to a single retiree is $1,261 ($21 larger than last year). The average retired couple gets $2,048 per month in 2013 (a $34 monthly increase). A single retiree claiming benefits at the full retirement age of 66 this year could get a maximum monthly Social Security payment of $2,533.2

Of course, COLAs have also occurred to Medicare premiums and the payroll tax ceiling for employees.

However, Medicare premiums are eating into that COLA. The good news for 2013 is that Part B premiums didn’t rise as much as some analysts expected. Medicare’s trustees, for example, anticipated a $9 monthly increase in these premiums. Instead, the increase was slightly more than $5. Part B premiums are now $104.90 per month, as opposed to $99.90 in 2012. (The annual Part B deductible is $7 greater for 2013 at $147, and the Part A deductible is $28 greater at $1,184.)2,3

So how much does the rise in Part B premiums reduce the 2013 Social Security COLA? If you receive S2,000 a month in Social Security benefits, your effective COLA for 2013 is 1.45% ($29 a month more). If you get $1,000 of Social Security benefits each month, your net COLA is actually 1.2% ($12 a month more).3

Few Social Security recipients have annual ordinary incomes in excess of $85,000 (single filers) or $170,000 (joint filers). Unfortunately, those that do will see their total Part B monthly premiums rise anywhere from $147-336 a month thanks to surcharges (and that isn’t counting surcharges paid on Part D prescription drug plans).3

Social Security’s retirement earnings test amounts have also risen. If you receive Social Security benefits and you will be younger than full retirement age at the end of 2013, $1 of your benefits will be withheld for every $2 that you earn above $15,120 (the 2012 limit was $14,640).4

If you receive Social Security benefits and reach full retirement age during 2013, $1 of your benefits will be withheld for every $3 that you earn above $40,080 – but that restriction applies only to earnings in the months prior to attaining full retirement age. (The applicable 2012 threshold was $38,880.) There is no limit on earnings starting the month an individual attains full retirement age.4

As always, part of your Social Security benefits may be taxed. This may happen if you exceed the program’s “combined income” threshold. (Combined income = adjusted gross income + non-taxable interest + 50% of Social Security benefits.)5

If you are a single filer with a combined income between $25,000-34,000, you may have to pay federal income tax on up to 50% of your Social Security benefits this year. That also goes for joint filers with combined incomes of $32,000-44,000.5

If you are a single filer with a combined income of more than $34,000, you may have to pay federal income tax on up to 85% of your 2013 Social Security benefits. Likewise for joint filers whose combined incomes top $44,000. 5

Those married and filing separately will “probably” have their Social Security benefits taxed in 2013, according to the program’s website.5

The Social Security wage base is 3.3% higher for 2013. In 2012, the federal government levied payroll tax on the first $110,100 of employee income. In 2013, individual wages up until $113,700 are subject to the tax. The payroll tax for employees is also back to 6.2% this year. So an individual worker could pay as much as $7,049.40 in Social Security taxes in 2013 as opposed to a maximum of $4,624.20 in 2012.2,4

How will the sequester cuts affect Social Security? Basically, they won’t. There will be no reduction in Social Security, Supplemental Security Income, Veterans Affairs or SNAP benefits under such circumstances. However, the Social Security Administration may suffer budget cuts that result in reduced hours (or closed doors) at its offices and an even longer wait to process disability claims. The sequester cuts will not affect Medicare or Medicaid benefits either, though Medicare payments to doctors face a 2% cut.6

What about Social Security’s projected long-range shortfall? Social Security projects that it can tap its surplus of roughly $2.7 trillion to pay 100% of scheduled retirement benefits through 2032. Yet in 2010, it began paying out more than it took in, a condition that may last for decades thanks to the aging of the baby boomer demographic. Because of this reality, Social Security’s trustees have forecast a $623 billion deficit for 2033, expanding to $1 trillion by 2045 and almost $7 trillion by 2086.7

How does America fix that? The simple fix many legislators have suggested is to hike the full retirement age to 70 from 67. If that happened now, the Congressional Budget Office says the program could keep about 13% more money each year. Of course, the social and economic effects of this could be devastating for many retirees.8

The White House fiscal commission has proposed raising the FICA cap – that is, the payroll tax cap would gradually increase between now and 2050 so that 90% of wages earned in America would be subject to Social Security tax by the middle of the century. (This is how it used to be.) Under this plan, the taxable maximum would be $190,000 by 2020.9

Another fix that has been proposed is indexing Social Security COLAs to price growth instead of average wage growth – that is, to “chained” CPI rather than the Consumer Price Index. Rep. Paul Ryan (R-WI) mentioned the idea in his controversial “Path to Prosperity” plan (the so-called “Ryan roadmap”) late in the 2000s. The Business Roundtable, a coalition of 210 CEOs of major American companies, has also pitched the idea. Detractors note that linking COLAs to chained CPI means lower COLAs and a marked reduction in Social Security benefits especially affecting women.10

The conservative Heritage Foundation recently advanced the idea of cutting Social Security benefits for the richest 9% of retirees, offering a $10,000 tax exemption for seniors who work past Social Security’s full retirement age, and protecting all Social Security income from taxation.11

Other pundits want to see retirement planning left solely to individuals. They cite what Chile did in the early 1980s: it replaced its federal pension program with a system of privately managed personal retirement investment accounts, allowing participants to set their own contribution levels, risk tolerance and retirement date. The effort yielded better than a 9.2% compounded annual return across its first 30 years.12

Several fixes were suggested in a 2010 report issued by the U.S. Senate Special Committee on Aging, including: 1) a 3% cut in benefits, 2) raising the payroll tax to 7.3%, 3) hiking the full retirement age to 68 or older, 4) increasing the Social Security averaging period that determines SSI, 5) reducing the typical yearly COLA by 1% or .5%, 6) reducing spousal benefits, 7) investing some of Social Security’s trust funds in equities, 8) directing some estate tax revenues into Social Security’s trust fund.13

Perhaps a fix lies somewhere within these proposals; unmodified or altered, alone or in combination.

How much retirement income do you have these days? With Social Security’s future still a question mark, you may be thinking about where your retirement income will come from in the years ahead. A chat with the financial professional you know and trust may lead to some ideas.

Renita Owens may be reached at 864.233.4163 or renita@cpawork4u.com.

www.cpawork4u.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – www.ssa.gov/pressoffice/pr/2013cola-pr.html [10/16/12]

2 – www.forbes.com/sites/janetnovack/2012/10/16/social-security-benefits-to-rise-1-7-workers-face-up-to-2425-payroll-tax-hike/ [10/16/12]

3 – www.reuters.com/article/2012/11/16/column-miller-medicare-idUSL1E8MGBM420121116 [11/16/12]

4 – www.ssa.gov/pressoffice/factsheets/colafacts2013.htm [10/16/12]

5 – www.ssa.gov/planners/taxes.htm [1/14/13]

6 – www.aarp.org/politics-society/government-elections/info-02-2013/how-the-sequester-could-affect-social-security-and-medicare.html [2/19/13]

7 – www.csmonitor.com/Business/Latest-News-Wires/2012/0813/Social-Security-Surplus-dwindling-huge-shortfall-looms [8/13/12]

8 – www.bankrate.com/financing/retirement/social-security-fix-it-now/ [12/3/12]

9 – money.cnn.com/2011/10/19/pf/taxes/social_security_tax/ [10/19/11]

10 – www.bankrate.com/financing/retirement/bipolar-fixes-for-social-security/ [1/18/13]

11 – www.savingthedream.org/how-it-affects-you/retirees/ [10/21/11]

12 –www.investors.com/NewsAndAnalysis/Article/586464/201109291833/Cains-Chilean-Model.htm [10/12/11]

13 – money.usnews.com/money/blogs/planning-to-retire/2010/05/18/12-ways-to-fix-social-security [5/18/10]

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