Copyright © Integrated Concepts 2011. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated businessentity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a completeanalysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party as-sumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

FEBRUARY 2011

The Pleasant Burden of Living Longer

It’s the proverbial good news, badnews story: Americans are living

longer. The good news is not onlythat we’re living longer but thatwe’re staying healthier longer, too,so we’re able to enjoy those longeryears. But the bad news is that un-less we’ve planned well enough toavoid running out of money, wemight have trouble financing thoseextra years.

First, here are the facts. Accord-ing to the latest federal statistics, av-erage longevity for U.S. men andwomen is at an all-time high: 75.3years for men and 80.4 years forwomen. But, if you make it to age55, you can expect to live untilyou’re 79 if you’re a man and 83 ifyou’re a woman; and if you’re 65,you can count on making it to 82(male) or 84 (female). Odds are thatthis trend is going to increase. Somelife scientists are forecasting thatwithin another two generations, lifeexpectancies in the industrializednations of the world could reach100.

Think of what this means. Ifyou retire at age 55, you could al-ready spend almost the same num-ber of years in retirement as you didearning a living.

Meanwhile, there’s pressure onthe retirement-income end of theequation. Stock market values have

declined in the past few years, inter-est rates are near historic lowsputting the squeeze on fixed in-comes, fewer and fewer employersoffer pension plans, and demo-graphics are working against thehealth of the Social Security system.

In 1950, when Social Securityhad been around for less than 20years, there were 16 people workingfor every retiree (Source: Social Se-curity Administration, 2010). Today,that number has dropped to 3.3workers per retiree; and by 2025, itwill reach — and remain at — abouttwo workers per retiree. Thatmeans there’s a chance that benefits

will have to be reduced, unless taxesincrease.

The bottom line is that whetheryou are still working or already re-tired, you need more than ever tohave a sound financial plan to coveryour retirement income needs. Hereare the considerations:

If you haven’t yet retired:• Can you retire as young as you

previously planned or hoped, orshould you postpone it by work-ing full-time? And should youconsider easing into full retire-ment by several more years earn-ing income part-time?

Continued on page 2

A Dream Is Not a Plan

Year after year, funding retire-ment consistently comes up in

surveys as the most worrisome financial concern on people’s minds.Yet, most people spend more timeplanning a vacation than they doplanning for retirement. Here aresome of the vacation questions ev-erybody asks themselves: • Where are we going and when?• How will we get there?• How long will we stay?• How much is it going to cost us,

and where will we get themoney?

But if people planned their

FR2010-1019-0160

Financial Briefs

vacations like most plan for retire-ment, here’s what it might soundlike:

Okay, honey, it’s time for our dreamvacation. Pack the bags; bring somecash and the credit cards. We’ll goto an airport and take the first planewe can catch. We’ll stay in the besthotel we can find, eat at the bestrestaurants, and stay until themoney runs out.

The difference between thesetwo approaches is that one way in-volves setting a goal and managingmoney to reach it. The other is an

Continued on page 3

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(405) 842-3443 • (800) 725-4530

Investment Advisory Services offered through Investment Advisory Representatives

of Retirement Investment Advisors, Inc., a Registered Investment Advisor.

The Pleasant Burden Making Sure There’s One,

and Only One, You• How many years do you need toplan for? A conservative planwould cover you at least untilyou reach the age of 85.

• Are you saving enough everyyear? Remember that onceyou’re older than 50, the federalgovernment increases the limitson how much you can contributeto tax-deferred retirement plans.

• Which is better for you: a tradi-tional tax-deferred retirementplan that requires you to paytaxes on your withdrawals, or aRoth IRA/401(k) that you fundwith after-tax income but pay notaxes at all when you make with-drawals?

• What asset allocation strategywill achieve the growth rate youwill need to reach your nest-egggoal?

• What provisions should youmake for long-term health care?

If you’re already retired:• If you’re able, should you find a

source of part-time income?• Do you need to pursue higher in-

terest rates on your bond portfo-lio? If so, how much risk shouldyou take to get them?

• Should you increase your port -folio exposure to stocks to poten-tially raise your long-termgrowth rate?

• Should you consider making ad-justments to your lifestyle, partic-ularly for discretionary spendingon such items as vacations, clubmemberships, dining out, andentertainment?

We may or may not have passedthe bottom of the current economicand stock market cycle, in whichcase market and fixed-income re-turns will or won’t go up from here.Whatever the case, our increasinglongevity means you need to changeyour assumptions about how bigyour nest egg has to be and howyou manage it to meet your long-term goals.

Please call if you’d like helpwith this analysis. zxxx

Continued from page 1

2

By now, you’ve probably heardplenty of the horror stories:

people’s bank accounts emptied,loans taken out for which they’venever applied, bills unpaid, andcredit ratings ruined. The cause:identity theft.

While we typically believethat identity theft is strictly ahigh-tech enterprise, the truth isthat in addition to computer hack-ing and Internet scams, there are anumber of low-tech ways of steal-ing someone’s identity. Here are10 ways to guard against identitytheft:• Never give anyone you don’t

know or trust your Social Secu-rity number, in person, throughthe mail, over the telephone, orvia the Internet.

• Buy a shredder and shredevery document or item thathas vital identity or financialinformation before tossing itinto the garbage — especiallyyour expired credit and debitcards.

• Don’t fall for e-mail inquiriesthat ask for your passwords orany other high-stakes personalinformation. Typical attemptsinclude requests from “banks”to verify information, notifica-tions that you’ve won a sweep-stake prize, or requests from astranger who needs help mov-ing a gigantic sum of money.These are typically phishingschemes. Phishing involvesconvincing consumers to di-vulge personal financial infor-mation on fraudulent websites.For example, a consumer mightreceive an e-mail message froma phisher asking the recipientto click on a link in the e-mailto confirm account informa-tion. The website the con-sumer is directed to is a fake orcopy of the real website. Whenthe consumer enters the finan-

cial information, the phisher ac-quires all information needed toaccess the consumer’s bank ac-count or commit other forms ofidentity theft.

• Cut down on the number of cred-it and debit cards you carry inyour wallet. Purse and walletthefts are one of the most com-mon forms of low-tech identitythievery.

• Report the loss of your walletwithin 24 hours to assure thatyou’ll be protected against anyunauthorized charges on yourcredit cards. Keep a list or photo-copy of all of your credit cards ina safe place inside your home, soyou can quickly notify every is-suer if they’re lost or stolen.

• Never leave a restaurant with asigned credit or debit card bill sit-ting on the table. Make sure youhand it to your server or thecashier.

• Never permit your credit cardnumber to be written on one ofyour personal checks.

• Always take your credit card re-ceipts with you. Never throwthem away in a public trash bin.

• Order a copy of your credit re-ports once a year. By federal law,credit bureaus are required toprovide you with one copy a yearfree of charge.

• Place a “freeze” on your credit reports, which means you pre-vent them from providing any information without your express permission. This pre-vents thieves from taking outloans, opening new credit cards,or charging accounts in yourname without your knowledge.

Security experts will tell you it’simpossible to protect everyone fromidentity theft. But by taking these 10precautions, you can significantlyreduce the chances that the next

victim will be you. zxxx

FR2010-1019-0160

A Dream Is Not a Plan

impulse based on dreams, wishes,and hope.

To be more than a dream, an investment goal includes the following:• Time horizon: When will you

need it?• Amount: How much money will

you need?• Term:  For how long will you

need it?• Resources: How much do you

already have put aside, and howmuch more can you put asideevery year?

• Rate of Return: What rate of re-turn will you need?

Now, let’s see what’s involvedin answering these questions.When Do You Want to Retire?

Start here with your dream.There’s no point in starting withyour sense of when it’s practical foryou to retire, because sooner or later,you’re going to want to know whatthe earliest date is that you can af-ford to retire. If you would reallylike to retire when you turn 55, runthe numbers and see what happens. How Much Annual IncomeDo You Want?

If you don’t know what yourlifestyle is going to cost you 20 or 30years from now, relax. Simple rulesof thumb indicate anywhere from60% to over 100% of your currentannual household budget; if youcan’t decide, start with 80%. How Long Will You Need It?

Nobody knows how longthey’re going to live, but Americansare living longer than ever. If youreach the age of 65, the odds aregood that you’ll live at least to age85, so use that age for your calcula-tions. If you’re older than 65, add 20years to your time horizon.How Much Savings Do You HaveAlready, and How Much Will YouHave When You Retire?

Here, you need to start withhow much you’ve already accumu-lated in retirement assets, and howmuch they will total by the time youretire, given how much you put

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FR2010-1019-0160

Keeping Score of

Your Financial Progress

Keeping score is important in fi-nances. You only know if

you’re making progress towardyour goals if you’ve created a planthat tells you where you need to beand when.

Essentially, there are two num-bers to focus on: your total networth and your liquid net worth.The distinction comes chiefly fromthe fact that most of the averageAmerican’s net worth rests in theirhome, and everybody needs aplace to live. If you own it, undernormal circumstances, you can’treadily sell it to raise money for liv-ing expenses.

Liquid net worth, on the otherhand, refers to the assets ownedthat can readily be converted intocash to meet expenses. These arethe kinds of assets people normallydraw upon to meet their monthlyexpenses, both anticipated and sur-prise, in retirement.

In both cases, the basic formulais the same:

Net Worth = Assets minus Liabilities

Assets are what you own, andliabilities are what you owe — es-sentially, debt of any and all kinds.The reason people keep track oftheir total net worth is usually forestate planning reasons (i.e., whowill be the beneficiary of whatitems after you pass on). Again,your liquid net worth is a more ac-curate measure of how much youcan spend without altering your

lifestyle, especially in retirement.A sound financial plan defines

several important data points.These include the date you needto fund a future expense or ex-penses, how much money youwill need to generate cash to meetthem, and by how much your cur-rent resources need to grow eachyear to meet that principal value.It’s from this information that youcan generate a series of annual in-terim goals for that principalvalue. These are the scores thatyou need to meet or beat to bewinning the contest toward meet-ing your goals.

In order to do this annual re-view properly, you need to deter-mine the current value of your assets. In some cases, such as thevalue of your savings and invest-ment accounts and cash value lifeinsurance policies, this is relative-ly easy to do. In the case of lessliquid assets (and sometimes thiscan even refer to some assets inyour investment accounts), estab-lishing the current market valuecan be difficult. Things like col-lectibles, a business you intend tosell, or vacant land fall into thiscategory. To the extent that youare relying on these to meet yourlong-term goals, it’s worth secur-ing professional appraisals everyfew years, and then more fre-quently as you approach the dateyou’ll need to convert them into

cash. zxxx

away and the rate at which it’sgrowing. You also need to estimateany other sources of annual incomeyou may have, including Social Se-curity, a pension, and rent or royal-ties, plus the value of the sale of anyassets, like investment property or abusiness. What Annual Rate of Return DoYou Need?

Notice that the rate of return

comes last in this sequence of ques-tions, because it can’t be answeredby itself. It has to be derived fromthe answers to the preceding ques-tions. The investment choices youmake and the investment returnsyou earn will be heavily dependenton your answers to the precedingquestions.

Please call if you’d like helpwith this analysis. zxxx

4

News and AnnouncementsFrom the Alexander Household

Books are my weakness. I try to borrow books

from the library rather than buy them, since they

seem to multiply in our home. We run out of space

on the bookshelves periodically, and I have to give

some books away. I am grateful that we have

access to an amazing library system, and I love

requesting books through the online catalog

(http://cybermars.metrolibrary.org); but I digress.

Despite my best attempts to use the library, in

cleaning the house, I found books that I have not

yet read stashed everywhere. Some were gifts;

some weren’t. I collected all of the books I want to

read this year and put them on the coffee table. I

was surprised to find that there were more than 60.

I sorted them into topical areas like financial plan-

ning and spiritual and then prioritized each pile.

I’m excited about the year ahead, because there are

so many terrific books that I can’t wait to read. I’ve

made it halfway through two of the books this

weekend and look forward to getting back to them

— after I meet this newsletter deadline. Getting

organized and working toward a goal is rewarding

for me. What are you looking forward to accom-

plishing in 2011?

Carol Ringrose Alexander, CFP®, AIF®, CDFATM

From the Flinton Household

“Nothing I’ve ever done has given me more joy

and rewards than being a father to my children.”

(Bill Cosby) I have been the recipient of many

blessing this past year, none greater than the birth

of my first child, Samantha Grace Flinton. Having a

Type A personality, I read all the books, watched all

the videos, and attended every class they would let

me attend…and then Samantha arrived. For all the

parents who read this, I encourage you to remem-

ber the joy you experienced upon first becoming a

parent. There truly is no greater feeling in the

world. It is sobering at times to recognize how little

we know, yet liberating to reach out and accept help

when it is offered. My first months of being a

father has helped me further reflect on the person I

want to be, not only for myself, but for all those

with whom I come into contact. It is too infrequent

that we reflect on whom we might be influencing in

our daily lives through our routine activities, but

we are influencing, nonetheless. Realize today that

our actions and choices will have an effect on our

lives, yet a lasting impact on the lives of others. Let

us make it for good, because somewhere there is a

child among us watching.

Make it a wonderful year,

Andrew FlintonFrom the Atwood Household

The new year is in full swing, and things

around the Atwood household are calming down

once again. Holidays are great, but they are hectic.

The normal routine of the kids back in school is

much easier on Mom (sorry guys)! Chase

attended his first formal with his girlfriend, Izzy.

They were a very good-looking couple, and it

actually made me cry to see how grown-up they

looked. Chase will be 18 this month, and he is a

kind, good young man, but there is still a little room

for maturity improvement. All of a sudden, Savan-

nah, at 14, looks like she is 16. It’s good she has a

protective older brother. Apparently, Chase heard

through the grapevine that she has a new

boyfriend. He was very surprised, as I, not to get

this information directly from her. I’m sure she

remembers the inquisition her brother endured

when the girlfriend process first arose for him. I

tend to remember little sister could really dish out

the teasing. I’m feeling a little payback is around

the corner for Miss Savannah. It makes me feel

proud and happy to see that they really watch out

for one another. They are great sources of informa-

tion for the other and willful chaperones. Best

Wishes!

Tracy Atwood