Market Commentary
For the week of August 17, 2009

The Market
The major indexes ended a four-week streak of gains as investors absorbed news on the economy and
consumer spending. Markets fell early in the week in anticipation of the Federal Reserve meeting, but
gained on Wednesday after the Fed painted a slightly more positive view of the economy than it had in
the recent past. On Thursday, the Commerce Department reported an unexpected drop in retail sales,
indicating consumers may still be guarding spending in fear of potential job loss. On Friday, the
Reuters/University of Michigan consumer sentiment index fell significantly, leading the major markets
lower. For the week, the Dow lost 0.43 percent to end at 9,321.40. The S&P fell 0.56 percent to close at
1,004.09, and the NASDAQ dropped 0.74 percent to finish the week at 1,985.52.

Source: * Past performance is no guarantee of future results. Indexes are unmanaged and
cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.

Corporate Bonds Low interest rates nationwide have influenced U.S. corporations to issue $903
billion in bonds through the first six months of 2009, 65 percent more bonds year to date than from 2008
(Source: BondDesk Trading, BTN Research).  

Pay Down Debt Two out of every five Americans (40 percent) would pay off their home mortgage or
credit card debt if they received a $50,000 gift, as opposed to spending or saving the funds (Source:
MetLife, USA Today, BTN Research).  

The Value of Education The average net worth of American families headed by a person that
received a college degree is more than four times as large as the average net worth of American
families headed by a person that received only a high school diploma. This data is part of the 2007
Survey of Consumer Finances collected by the Federal Reserve and was released in June 2009
(Source: Federal Reserve, BTN Research).  

And In The Second Year The best “first year recovery” for the S&P 500 from a bear market low close
over the past 50 years took place in 1982-83 when the stock index bounced back with a 58.3 percent
gain from an Aug. 12, 1982, low close (i.e., change in the raw index not counting any reinvestment of
dividends). However, the ensuing 12 months that took place after achieving that 58.3 percent gain (i.e.,
months 13-24 after the bear market low close) produced only a 2.0 percent gain, the worst “second year
return” for the stock index following a bear market low close in the past 50 years (Source: BTN

WEEKLY FOCUS – Medicare Part B

The ability to pay for health care during retirement is a
growing concern for both retirees and adults still working.
The 2009 Retirement Confidence Survey from the
Employee Benefit Research Institute found that only 13
percent of workers feel very confident about having
sufficient retirement savings to cover medical expenses.
Of those already retired, only 25 percent feel very
confident about their ability to pay for health care
expenses. According to a report from the
TIAA-CREF Institution, about 99 percent of individuals
age 65 and over cover their
health care costs through
some form of health insurance, primarily Medicare
(95 percent). Just over a third of retirees (36 percent)
have private health care coverage through their former
employer, and 28 percent purchase coverage directly from an insurance carrier, in addition to

Medicare Part B provides supplemental health coverage for recipients of Medicare. Prior to 2006, the
premium portion paid by all recipients was just 25 percent of the plan’s total costs. Today, Medicare Part
B uses an income-based premium scale for individuals with over $85,000 in modified adjusted gross
income ($170,000 for joint filers). In May, the Social Security Administration announced that recipients
would not receive a cost-of-living adjustment (COLA) in 2010. For about 30 million Medicare
participants, that means no increase in their Part B premiums, thanks to a “hold harmless” provision that
prevents Medicare Part B premium increases when there is no Social Security COLA.

Unfortunately, because the law requires that Medicare Part B recover 25 percent of its projected
expenses through premiums, the burden of increased costs will fall on about 10 million participants who
are not protected by the hold harmless provision. These are participants who do not have their Part B
premiums withheld from their Social Security checks, who pay higher Part B premiums based on higher
income, or are newly enrolled in Part B and have no premium history. For these participants, premiums
are projected to rise 8 percent in 2010 and 13 percent in 2011. Even with higher premium increases for
this group, total Medicare Part B premiums are not expected to keep up with growing health care costs.
According to U.S. News & World Report, Medicare will use a short-term asset cushion to hold down
premium increases in 2010 – but that cushion will be depleted by 2011.

Clearly, medical costs will continue to increase as a percentage of retirees’ living expenses. Careful
planning before and during retirement can help you ensure you can continue to live comfortable and pay
for your health care needs. Contact our office for help in determining if your existing plan for your
retirement allows sufficient funds for health care.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of
the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-
chip stocks. 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 Morgan
Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized
benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all
dividends. Written by Securities America. SAI# 299624
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Returns through 8/14/09
1 Week  
Dow Jones Industrials  
NASDAQ Composite
S&P 500