The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624

May 2013Cost-of-Living Adjustments: What They Areand Why They Matter

Are You Prepared If a Natural DisasterStrikes?

Four Retirement Saving Myths

What are health Exchanges and do I have tobuy health insurance through them?

The Israelite Group Monthly Newsletter

Cost-of-Living Adjustments: What They Are and Why They Matter

See disclaimer on final page

In this month’s Newsletter we wouldlike to highlight myth number threewithin the article, “Four savingsretirement myths.” The idea of simplyinvesting in bonds as you age tolessen overall portfolio volatility is notalways the best solution. With interestrates at historically low levels,investing in fixed income has thepotential to be a drag on overallperformance without much upsidepotential.

Alternatives to fixed income willdepend upon your individualcircumstances. Each investment has adifferent risk / return profile sodetermining the right strategy will bebased on individual short and longterm financial needs.

Please give us a call any time todiscuss the right amount and type offixed income for your portfolio.

The Israelite Group

The rising costs of food, gas, electricity, andhealth care can strain anyone's budget. Thesituation is even worse if your living expensesincrease while your income stays the same,because your purchasing power will steadilydecline over time. That's why cost-of-livingadjustments, or COLAs, are especially valuableto retirees and others living on fixed incomes.

How COLAs workA COLA is an increase in regular income youreceive (such as a Social Security or pensionbenefit) that is meant to offset rising prices. It'simportant protection because price inflation hasoccurred almost every year in the last 40 years.

Data Source: Bureau of Labor Statistics

It's easy to think of a COLA as a "raise," but aCOLA is meant to help you maintain yourstandard of living, not improve it. For example,let's say you receive a $2,000 monthlyretirement benefit, and the overall cost of thethings you need to purchase increases by 3%during the year. The next year, you receive a3% COLA, or an extra $60 a month, to help youmanage rising prices.

That 3% COLA doesn't sound like much, butwithout a COLA, inflation can seriously erodeyour retirement income. Assuming a 3%inflation rate, in just 10 years, the purchasingpower of your $2,000 benefit would drop to$1,520, and in 25 years, the purchasing powerof your benefit would be only $963, less thanhalf of what you started with.

Who receives COLAs?Social Security is the major source (and insome cases the only source) ofinflation-protected retirement income for manyAmericans. Social Security COLAs areannounced each October, based on increasesin the average Consumer Price Index for UrbanWage Earners and Clerical Workers (CPI-W)from the third quarter of the last year a COLAwas payable to the third quarter of the currentyear. For example, because the CPI-W rose1.7% between August 2011 and August 2012,Social Security and SSI beneficiaries receiveda 1.7% COLA, beginning with December 2012benefits. However, if there is no rise in theCPI-W, then beneficiaries will not receive aCOLA.

COLAs are also commonly paid to retirees whoare covered by state or federal pensions.However, most private pensions do not offerCOLAs.

Less commonly, employers offer COLAincreases as part of compensation packages.You may also purchase riders to certaininsurance policies (such as disability incomeand long-term care policies) that ensure thatbenefits you receive keep pace with inflation.

Should you count on COLAs?As important as COLAs are, they are stillvulnerable to cutbacks. For example, pensionplans that are underfunded may view reducingCOLAs as a relatively simple way to cut costs,and some plans have attempted to eliminateCOLAs altogether, although there have beenlegal challenges. Changing the COLA formulathat the Social Security Administration uses hasalso been proposed as a way to save moneyand strengthen program reserves.

So while you should appreciate the value ofCOLAs, you should also take other measuresto account for the effect of long-term inflation.These include using realistic inflation andinvestment return assumptions when planningfor retirement, maintaining a diversified portfoliothat reflects your time horizon and tolerance forrisk, and considering investments that havehistorically held their own against inflation.

Page 1 of 4

Are You Prepared If a Natural Disaster Strikes?It seems as though there's always a hurricane,tornado, earthquake, flood, fire, blizzard, ormudslide happening somewhere in the UnitedStates. A storm or other natural disaster coulddestroy your home, business, or workplace andput you in financial straits, but there are thingsyou can do both before and after the event tohelp you recover quickly.

Pre-disasterCreate a financial emergency kit. Puttogether a kit that contains some cash andchecks, a list of important contacts (e.g., yourinsurance agent), and copies of importantdocuments, including identification cards, birthand marriage certificates, insurance policiesand inventories, wills, trusts, and deeds. Makesure your kit is stored in a safe, secure place inyour home, is easy to reach and carry, and isboth waterproof and fireproof. You'll want tostash enough cash (or a credit card) to pay forimmediate expenses such as gas, food, andlodging.

Tip: While you're at it, you might also want tokeep your most precious items in the kit, suchas your special photos and family heirlooms.

Protect your assets. Take somecommonsense precautions to safeguard yourhome, business, car, boat, and similar assetsagainst damage from wind, water, fire, or otherrisks. For example, install an emergencygenerator and paperless drywall, keep looseobjects (e.g., grills and patio furniture) secure,cut down overhanging tree limbs, park your carin a garage, and invest in storm windows,doors, and shutters.

Take inventory. Create and maintain aninventory of your valuables, includingappliances, electronics, furniture, clothing,jewelry, and artwork. Record models and serialnumbers, and take pictures or a video of theitems. This will help when it comes time to fileinsurance claims and purchase replacements.

Check your insurance coverage. Make sureyour insurance policies (e.g., homeowners,auto) include all the coverage you need, andunderstand that damage caused by naturaldisasters may not be covered under generaltypes of policies. You may need to considerbuying separate coverage for hurricanes,floods, earthquakes, or other disasters. Consultyour insurance agent to determine whether youhave adequate coverage given the likelihood ofsuch events occurring in your area.

Post-disasterIn the immediate aftermath, proceed withcaution. While the disaster may have passed,health and safety hazards still may exist. Be

aware that any building you're in, including yourhome, may not be structurally sound, socarefully look for any apparent damage. Also,report contamination from spills of oil, gas,chemicals, or any hazardous substance.

Assess your property for damage. Takepictures of damaged areas both inside andoutside your home, including trees,landscaping, and yard structures such assheds.

File insurance claims immediately. Contactyour insurance agent and file claims as soon aspossible. The quicker you do so, the sooneryou can get back on your feet.

Protect your income. If you end up out ofwork, take advantage of any employeeassistance programs that your employer mayoffer. Seek unemployment compensation fromyour state and ask about special jobconsiderations for disaster victims. Find out ifspecial unemployment benefits are availablethrough the Department of Labor.

Get help from emergency sources. If youneed immediate financial help, disaster relieffunds and special programs (for example,housing assistance) may be available throughthe Federal Emergency Management Agency(FEMA) or your state and local governments,as well as the American Red Cross, UnitedWay, Salvation Army, social services, and localchurches.

Consider available tax breaks. Tax law allowstaxpayers to deduct certain unreimbursedcasualty losses in the year in which they areincurred, subject to certain limitations. In certainpresidentially declared disaster areas,individuals can claim the loss (again, subject tocertain limitations) in the prior tax year by filingan amended return. Moreover, special relief (forexample, bonus depreciation for businessproperty) may be granted in the case of specificdisaster events. Be sure to consult your taxprofessional about any tax relief that may beavailable to you.

Get legal help, if necessary. If you experiencelegal difficulties, you may want to considerhiring an attorney who specializes in thecomplex area of natural disaster law.

Don't ignore the stress. Surviving a naturaldisaster can be a very stressful situation. Don'thesitate to ask for help from family and friends.If you have young children, they may be upsetabout damage to their home and belongings.Be patient and try to explain what's happenedand how you're going to try to get back tonormal as soon as possible.

Handling a dispute withyour insurance company

Disagreements may arise withyour insurance company aboutthe amount the company paidon a claim, or the nonpaymentof a claim. Be aware that theinsurance industry is highlyregulated. Your state has lawsthat dictate what insurancecompanies can and cannot dowhen it comes to bill collecting,settling claims, and othermatters. The law may be calledthe Unfair Insurance PracticesAct, the Unfair ClaimsSettlement Practices Act, orsomething similar. To learnabout insurance laws in yourstate, call your state insurancedepartment or check itswebsite.

Page 2 of 4, see disclaimer on final page

Four Retirement Saving MythsNo matter how many years you are fromretirement, it's essential to have some kind ofgame plan in place for financing it. With today'slonger life expectancies, retirement can last 25years or more, and counting on Social Securityor a company pension to cover all yourretirement income needs isn't a strategy youreally want to rely on. As you put a plantogether, watch out for these common myths.

Myth No. 1: I can postpone saving nowand make it up laterReality: This is very hard to do. If you waituntil--fill in the blank--you buy a new car, thekids are in college, you've paid off your ownstudent loans, your business is off the ground,or you've remodeled your kitchen, you mightnever have the money to save for retirement.Bottom line--at every stage of your life, therewill be competing financial needs. Don't makethe mistake of thinking it will be easier to savefor retirement in just a few years. It won't.

Consider this: A 25 year old who saves $400per month for retirement until age 65 in atax-deferred account earning 4% a year wouldhave $472,785 by age 65. By comparison, a 35year old would have $277,620 by age 65, a 45year old would have $146,710, and a 55 yearold would have $58,900.

Note: This is a hypothetical example and is notintended to reflect the actual performance ofany specific investment.

Why such a difference? Compounding.Compounding is the process by which earningsare reinvested back into a portfolio, and thoseearnings may themselves earn returns, thenthose returns may earn returns, and so on. Thekey is to allow enough time for compounding togo to work--thus the importance of starting tosave early.

Now, is it likely that a 25 year old will be able tosave for retirement month after month for 40straight years? Probably not. There are timeswhen saving for retirement will likely need totake a back seat--for example, if you'rebetween jobs, at home caring for children, oramassing funds for a down payment on ahome. However, by starting to save forretirement early, not only do you put yourself inthe best possible position to take advantage ofcompounding, but you get into the retirementmindset, which hopefully makes you more likelyto resume contributions as soon as you can.

Myth No. 2: A retirement target datefund puts me on investment autopilotReality: Not necessarily. Retirement target datemutual funds--funds that automatically adjust to

a more conservative asset mix as you approachretirement and the fund's target date--areappealing to retirement investors because thefund assumes the job of reallocating the assetmix over time. But these funds can vary quite abit. Even funds with the same target date canvary in their exposure to stocks.

If you decide to invest in a retirement targetdate fund, make sure you understand the fund's"glide path," which refers to how the assetallocation will change over time, including whenit turns the most conservative. You should alsocompare fees among similar target date funds.

Myth No. 3: I should invest primarily inbonds rather than stocks as I get olderReality: Not necessarily. A common guideline isto subtract your age from 100 to determine thepercentage of stocks you should have in yourportfolio, with the remainder in bonds and cashalternatives. But this strategy may need someupdating for two reasons. One, with moreretirements lasting 25 years or longer, yoursavings could be threatened by years ofinflation. Though inflation is relatively low rightnow, it's possible that it may get worse incoming years, and historically, stocks have hada better chance than bonds of beating inflationover the long term (though keep in mind thatpast performance is no guarantee of futureresults). And two, because interest rates arebound to rise eventually, bond prices could bethreatened since they tend to move in theopposite direction from interest rates.

Myth No. 4: I will need much lessincome in retirementReality: Maybe, but it might be a mistake tocount on it. In fact, in the early years ofretirement, you may find that you spend just asmuch money, or maybe more, than when youwere working, especially if you are still paying amortgage and possibly other loans like auto orcollege-related loans.

Even if you pay off your mortgage and otherloans, you'll still be on the hook for utilities,property maintenance and insurance, propertytaxes, federal (and maybe state) income taxes,and other insurance costs, along with food,transportation, and miscellaneous personalitems. Wild card expenses duringretirement--meaning they can vary dramaticallyfrom person to person--include travel/leisurecosts, health-care costs, financial help for adultchildren, and expenses related tograndchildren. Because spending habits inretirement can vary widely, it's a good idea asyou approach retirement to analyze whatexpenses you expect to have when you retire.

At every stage of your life,there will be competingfinancial needs. Don't makethe mistake of thinking itwill be easier to save forretirement in just a fewyears. It won't.

Before investing in a mutualfund, consider itsinvestment objectives, risks,charges, and expenses,which can be found in theprospectus available fromthe fund. Read it carefullybefore investing.

Page 3 of 4, see disclaimer on final page

The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013

This newsletter should not beconstrued as an offer to sell or thesolicitation of an offer to buy anysecurity. The information enclosedherewith has been obtained fromoutside sources and is not theproduct of Oppenheimer & Co. Inc.("Oppenheimer") or its affiliates.Oppenheimer has not verified theinformation and does notguarantee its accuracy orcompleteness. Additionalinformation is available uponrequest. Oppenheimer, nor any ofits employee or affiliates, does notprovide legal or tax advice.However, your OppenheimerFinancial Advisor will work withclients, their attorneys and their taxprofessionals to help ensure all oftheir needs are met and properlyexecuted. Oppenheimer & Co. Inc.Transacts Business on all PrincipalExchanges and is a member ofSIPC.

I already have health insurance. Will I have to changemy plan because of the new health-care reform law?For the most part, no. ThePatient Protection andAffordable Care Act (ACA)does not require you to

change insurance plans, as long as your plan,whether issued privately or through youremployer, meets certain minimumrequirements. In fact, the ACA may addbenefits to your existing plan that you have nothad before.

Your present insurance plan may beconsidered a grandfathered plan under theACA if your plan has been continually inexistence since March 23, 2010 (the date ofenactment of the ACA), and has notsignificantly cut or reduced benefits, raisedco-insurance charges, significantly raisedco-payments or deductibles, and your employercontribution toward the cost of the plan hasn'tsignificantly decreased. However, if agrandfathered plan significantly reduces yourbenefits, decreases the annual dollar limit ofcoverage, or increases your out-of-pocketspending above what it was on March 23, 2010,then the plan will lose its grandfathered status.

Some provisions of the ACA apply to all plans,

including grandfathered plans. Theseprovisions include:

• No lifetime limits on the dollar cost ofcoverage provided by the plan

• Coverage can't be rescinded or cancelled dueto illness or medical condition

• Coverage must be extended to adultdependents up to age 26

The ACA doesn't apply to all types ofinsurance. For example, the law doesn't applyto property and casualty insurance such asautomobile insurance, homeowners insurance,and umbrella liability coverage. The ACA alsodoesn't affect life, accident, disability, andworkers' compensation insurance. Nor does thelaw apply to long-term care insurance, nursinghome insurance, and home health-care plans,as long as they're sold as stand-alone plansand are not part of a health plan. Medicaresupplement insurance (Medigap) is generallynot covered by the ACA if it's sold as aseparate plan and not as part of a healthinsurance policy.

What are health Exchanges and do I have to buy healthinsurance through them?A health insurance Exchangeis essentially a one-stop healthinsurance marketplace.Exchanges are not issuers of

health insurance. Rather, they contract withinsurance companies who then make theirinsurance coverage available for examinationand purchase through the Exchange. Inessence, Exchanges are designed to bringbuyers and sellers of health insurance together,with the goal of increasing access to affordablecoverage.

The Patient Protection and Affordable Care Actdoes not require that anyone buy coveragethrough an Exchange. However, beginning in2014, each state will have one Exchange forindividuals and one for small businesses (orthey may combine them). States have theoption of running their own state-basedExchange or partnering with the federalgovernment to operate a federally facilitatedExchange. States not making a choice defaultto a federally run Exchange.

Through an Exchange, you can compareprivate health plans based on coverageoptions, deductibles, and cost; get direct

answers to questions about coverage optionsand eligibility for tax credits, cost-sharingreductions, or subsidies; and obtain informationon a provider's claims payment policies andpractices, denied claims history, and paymentpolicy for out-of-network benefits.

Policies sold through an Exchange must meetcertain requirements. Exchange policies can'timpose lifetime limits on the dollar value ofcoverage, nor may plans place annual limits onthe dollar value of coverage. Insurance mustalso be "guaranteed renewable" and can onlybe cancelled in cases of fraud. And Exchangescan only offer qualified health plans that coveressential benefits.

In order to be eligible to participate in anindividual Exchange:

• You must be a U.S. citizen, national, ornoncitizen lawfully present in the UnitedStates

• You cannot be incarcerated• You must meet applicable state residency

standards

Page 4 of 4