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™A magazine from WEA Trust Member Benefits

P$YCH!A peek into the investor’s mind

2012-13 WINTER

your investmentsOur $1.9 billion strong partnership

your insurancePreparing for a teen driver

your kioskVacant properties pose problems

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thought it timely to share how we evaluate Prudential and reasons why we have confidence in our partnership.

Several insurance issues raised by participants are also addressed here, including the problems with insuring an unoccupied property and the impact of adding a teen driver to your policy.

As always, I am happy that you have chosen Member Benefits as your financial partner. Over the last 40 years, we’ve weathered the good times and bad times with our participants. We wish you a happy and prosperous 2013 and look forward to serving you.

3 YOUR ACCOUNT- 2013PrudentialGuaranteed

Investmentcreditedrateis...- QualifyforSaver’sTaxCredit?- WRScontributionsratesincrease.

4 YOUR MONEY- Psychologicalweaknessescan

messwithyourmoneydecisions.

6 YOUR INVESTMENTS- TakingacloserlookatPrudential

andthepartnershipbehindthePrudentialGuaranteedInvestment.

8 YOUR INSURANCE- Addingateendriver.Whatyouneed

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Our retirement and investment consultants talk with a lot of people every day. The phones were exceptionally busy after the market crashed in 2008. Participants were nervous and concerned about their savings. Many with

stock mutual fund investments saw their account balances drop drastically in a short time. Some just wanted to get out of stocks altogether. And, despite the counseling of our experienced staff, some did. Others stuck it out and recovered

most, if not all, of their investment. As much as we desire to leave that time

behind, we can learn from the experience. The insights of Dr. Sydnor (story on page 4) give us a peek at the psychology behind our financial decisions. It’s fascinating and gives all of us something to think about as we start a new year with renewed resolve to improve our personal finances.

Remember, our staff is here to help. If you are uncertain about your investment strategy, don’t hesitate to give us a call. We can help you evaluate your options in an objective (nonemotional) way.

In this issue you’ll also find information about our long-time partner Prudential. Along with announcing the 2013 rate, we

your$CONTENTS WINTER2012-13

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10 YOUR KIOSK- Unoccupiedpropertiesposean

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president’s letterDave Kijek, President/CEO,WEATrustMemberBenefits{

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© 2012 WEA Member Benefit Trust.All rights reserved.

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Looking back helps us move forward

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*Learn more on pages 6-7 or go to weabenefits.com.

IRA and 403(b) News2013 Prudential Guaranteed Investment is 4.05%WEA Trust Member Benefits™ is pleased to announce that the 2013 Prudential Guaranteed Investment credited annual rate of return for both the WEA TSA Trust and WEAC IRA programs will be 4.05%*. For more information about Prudential and the Guaranteed Investment, go to page 6.

Do you qualify for the Saver’s Tax Credit?You may be eligible for a tax credit for making contributions to an IRA or employer sponsored retirement plan. To qualify for the credit, you must be age 18 or older, not a full-time student, not claimed as a dependent on another person’s return, and have a 2012 adjusted gross income no greater than $29,500 (filing individually) or $59,000 (filing jointly).

403(b) and IRA contribution limits increase for 2013Contribution limits for 403(b) accounts will increase to $17,500 for 2013. Employees age 50 and older can contribute an additional $5,500 for a total of $23,000. If you have 15 years or more of service with your employer, you may have an additional “catch-up” opportunity. To increase your 403(b) contribution, you must fill out a new Salary Reduction Agreement with your district business office.

IRA contribution limits will increase to $5,500 for 2013. If you are age 50 or older, you may contribute an additional $1,000 to your IRA. To increase your IRA contribution, go to weabenefits.com and search on “IRA contribu-tion form.” If your contribution is payroll deducted (Trust Advantage) or automatically deducted from your bank account (SmartPlan), please fill out the appropriate modification form also found at weabenefits.com. Call us at 1-800-279-4030 if you have any questions.

SEP IRA saving option for self-employed family membersYour self-employed spouse—or other family member—may be eligible to save with us by opening a Simplified Employee Pension (SEP) IRA. Enroll-ing is easy with our step-by-step online application or call us at 1-800-279-4030 for assistance. Wisconsin residency required.

Fewer pay cycles? Adjust your IRA or 403(b) contributionsMany districts are reducing the number of pay cycles from 24 to 20 per year. If you have a set dollar amount deducted per paycheck for 403(b) or IRA contributions, you need to adjust that amount so you can continue to meet your retirement savings goal. If this affects you, contact your busi-ness office today and fill out a Salary Reduction Agreement to modify your contribution withholdings.

Watch for your 1099RIf you took a reportable distribution from your WEA TSA Trust 403(b) and/or WEAC IRA account(s) during 2012, we will send you a 1099R to the address on file on or before January 31, 2013.

The Trustee for the WEAC IRA program is First Business Trust & Investments. The 403(b) retirement pro-gram is offered by the WEA TSA Trust. TSA program registered representatives are licensed through WEA Investment Services, Inc., member FINRA.

Content in this magazine is for informational purposes only and not intended to be legal or tax advice. Consult your tax advisor or attorney before taking any action.

WRS contribution rates up for 2013

The Wisconsin Department of Employee Trust Funds (ETF) announced that the Wisconsin Retirement System (WRS) contribution rate will increase from 11.8% to 13.3% in 2013. Employers and employees split the cost equally, so each will contribute 6.65% (up from 5.9% in 2012) of payroll toward the employee’s pension—an increase of 0.75% over last year.

What do you need to do?Increases start in January, so be

prepared. Generally, the adjustment will not have a significant impact on your take-home pay. For example, if a person makes $36,000 per year, the additional WRS reduction for the year would be about $216 ($18 per month). However, because your situation may be different, it’s a good idea to calculate the impact based on your salary and make budget adjustments as needed.

WEA Trust Member Benefits is available if you would like to talk to someone about what your adjusted WRS withholding will be or how much you need to save for retirement. Call Member Benefits at 1-800-279-4030.

For more information about WRS, go to the ETF web site at etf.wi.gov.

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Enter behavioral economicsOver the years, psychology has been

used to study many aspects of our society. Relatively new is its application to economics, now called behavioral economics or behavioral finance. Experts in this field have a lot to offer in terms of understanding why people make financial decisions that are contrary to their own interests. Justin Sydnor, PhD., is an assistant professor at the UW School of Business and an “applied micro economist specializing in behavioral economics.” He is part of a community that researches issues surrounding financial decisions.

“There has been quite a bit of work done recently regarding how early life experiences shape risk attitudes throughout peoples’ lives,” Sydnor says. One study out of UC Berkeley, he explains, shows that people who were young adults during the depression were less likely to invest in stocks throughout their entire lives. As they aged, stock markets improved, but

It’s been said that investing is driven by two emotions: greed and fear. Billionaire Warren Buffet, widely considered the most successful investor of the 20th century, quips, “Investors should remember that

excitement and expenses are their enemies. And if they insist on trying to time their participation in equities [stocks], they should try to be fearful when others are greedy and greedy only when others are fearful.”

Although too simplistic to be construed as Buffet’s recommended investment strategy, his point is well founded. It’s all too common for investors to chase returns when things are going well and bolt when things go poorly. Think of all the people who wanted in on a “sure thing” during the tech bubble in the late 1990s. Unfortunately, many decided to invest when prices were at their peak and then BOOM. The bubble burst. Greed got them into the market, fear took them out.

They bought high, sold low and lost their shirt—not a sound strategy for the long-term investor.

Failing to recognize the dangers of letting your emotions drive investing decisions can be disastrous when your life savings are at stake. Emotions may be the top contributing factor to why the American investors’ distaste for risk is at an all time high and seems to have staying power. And, why there is $9.43 trillion sitting in low yielding money market mutual funds, bank savings, and CDs despite the fact that the market has doubled in value since March of 2009 and showed gains around 14% for 2012 through the end of October.

Buffet also said that successful investing requires “the ability to identify and overcome one’s own psychological weaknesses.”

What are these psychological weaknesses and is it possible to overcome them? And, if we can overcome them, will our financial decisions and outcomes be improved as Buffet suggests?

{ your money

P$YCH!Emotions can wreak havoc on our financial decision making and financial future. Behavioral economist Justin Sydnor sheds light on the psychological influences that cause people to make financial decisions that may be contrary to their own interests.

5weabenefits.com 5continued on page 9

interpret information. According to Sydnor, research also suggests that the way we live and the choices we make are based on moments of happiness and sadness. “These moments are not driven by objective facts like I have more money or less money, but by the emotional reactions we have to changes in our situation. For instance, studies indicate that we are psychologically hardwired to respond more strongly to negative changes than to positive changes of similar magnitude,” he says. This has a direct impact on how we feel about gaining or losing money which then influences our tolerance for risk.

Losses loom larger than corresponding gains

Objective logic would insist that getting $10 should make you equally as happy as losing $10 makes you sad. However, research shows that not only are we more upset about losing $10, but we’re twice as upset. It turns out that you would need to get $20 to feel ok about losing $10. Researchers call this a loss aversion ratio of 2 to 1. It’s not rational, but it does affect how we handle money—our financial decisions and the outcomes.

“In many situations, the same outcomes can be framed as a gain or a loss,” explains. Sydnor. “Consider the decision about when to claim your Social Security benefit. Let’s say we have a person who has been told that it is natural to file for Social Security at 65, but we want them to consider waiting until age 67.”

Waiting means that there are two years they won’t get Social Security benefits, but forever after that they will receive payments that are higher. Sydnor suggests

relative to cohorts born a little later, they remained financially more conservative for their entire lives.

Now, think about what has happened in the last decade. We’ve experienced a pair of 50% stock market drops in the 2000s, a real estate crash, a severe recession that costs millions of Americans their jobs, and uncertainty in the global economy.

There is ample evidence that these events have taken their toll on investors across the board, but the youngest members of the workforce may be in for a tough time if the research applies here. Reluctance to take on risk could hurt 20- and 30-somethings in the long run—preventing them from saving enough to adequately fund their retirement. This is of even greater concern considering they’ll likely need to save more than those who will retire before them because of increased longevity, the shift away from employer funded pensions, uncertainty about Social Security, and inflation.

Emotions drive decisionsIt’s not just about being afraid of risk.

It’s about how our brains process and

that by framing the information in two different ways, you can get two different results.

“Using 65 as the benchmark, we could say, ‘If you give up two years of payments right away, you are going to get a lifetime of higher payments.’

“Using 67 as the benchmark, we could say, ‘If you start benefits at 65, you gain two years of payments up front but you will lose some money on every paycheck thereafter for the rest of your life.’

These two statements describe the same trade off, but the latter makes waiting until 67 sound much more attractive than claiming at 65 because it was framed as a loss.”

Economists are starting to experiment with the framing of information to help people make the best decision for them. They’re getting a late start. This type of research has been going on for decades by marketers looking for the most effective ways to get consumers to buy their products or services.

“Economists have been slow to think about it,” Sydnor says, “because from a purely economical vantage point, it doesn’t matter if you make the comparison starting at 65 or 67 … the outcomes are the same.”

Framing investment decisionsThe framing of gains and losses

contributes to the skewed mental accounting that investors may use to make trading decisions.

Sydnor gives the example of investing in the Standard & Poor’s 500, a stock market index based on the common stock

Justin Sydnor is an assistant professor in the Department of Actuarial Science, Risk Management, and Insurance at the Wisconsin School of Business.

He participates in a round table run by Russell Sage and Sloan Foundation which supports research that incorporates insights of psychology and other social sciences into the study of economic behavior.

His research interests include psychology and economics, applied microeconomics, insurance markets, and risk and decision making.

Sydnor is a Wisconsin native. He grew up in Racine where his father was a public school teacher. He earned his B.A. in economics and German from UW-Madison and his Ph.D. in economics from the University of California, Berkeley.

{ PROFILE: Justin Sydnor, PhD

Emotionally driven investment decisions often look a lot like market

chasing which rarely works out to the investor’s advantage.

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In 1978, the WEA TSA Trust rolled out a Guaranteed Investment account to Wisconsin public school employees as a 403(b) investment opportunity. Today, approximately 35,000 participants have nearly $1.9 billion worth of assets in this account that is held and managed by Prudential Retirement Insurance and Annuity Company (PRIAC).

Periodically, participants have questions about the guaranteed investment—how safe their money is and the financial strength of Prudential.

Monitoring the relationship“The goal of the investment was and

is to provide participants with the most competitive rate possible, at the lowest cost, and at the same time minimize their risk. Our partnership with Prudential is based on a mutual understanding and expectation to do that,” says Susan Winchester, Vice President of Retirement and Investment Services at Member Benefits. “Furthermore, Member Benefits monitors Prudential in their role as manager of the guaranteed account to

$1.9 billion strong Prudential Partnership is Sound

ensure the best interest of the participants are being served.”

Most recently, an independent consultant examined PRIAC products, fees, services, financial strength, financial position, and client management among other things, and compared them to those of other major stable value providers.

The evaluation concluded that PRIAC is “a financially sound organization maintaining a strong position in the retirement industry, and that the declared crediting rate is very competitive in the 403(b) plan market place.” The report also noted that in today’s environment, it would be “difficult to replicate the minimum interest rate guarantee and crediting rate available under the current investment contract” with PRIAC.

Equally important is the fact that PRIAC is highly rated, broadly diversified, and has strong risk controls in place. It’s also noteworthy that PRIAC was not among the financial organizations receiving government bailout money (also referred to as TARP) after the 2008 financial crash. “Prudential’s balanced mix of businesses

Why we like PRIACPrudential Retirement®, a business of Prudential Financial, is a U.S.-based company that:• Serves nearly 3.7 million active

workers and retirees.

• Is entrusted with retirement assets of almost $240 billion.

• Is the industry leader in providing pension plan services for over 85 years. In any given year, it disburses benefit payments of about $10 billion.

• Ranks: #1 in stable value sales. #2 in defined benefit annuity assets.

• Has been offering stable value solutions to the marketplace for more than 30 years.

• Did not receive government bailout money after 2008 financial crisis.

• Has more than $98 billion in stable value assets under management.

{ your investment

FOCUSING ON YOUAt Prudential, we understand the unprecedented obstacles and complex challenges facing today’s retirees. Throughout our long history, our foremost objective has been—and continues to be—helping hard-working people like you achieve financial security and peace of mind.

We have been meeting financial challenges for over 135 years, assisting nearly 50 million individual and institutional customers worldwide. As a partner to millions of people and thousands of organizations, we have the vision and leadership to solve the greatest financial challenges.

PRUDENTIAL FINANCIAL, INC.Prudential Financial, Inc. is a U.S.-based company providing the financial solutions that empower individuals and institutions to reach their financial goals. Our expertise and strength help distinguish us as an admired financial services leader, trusted partner and provider of innovative strategies. Our balanced mix of businesses and risks helps to mitigate our exposure to market developments.

Prudential Financial:• Servesapproximately50millioncustomers1,includingindividuals,advisors,andinstitutionsinover36countries2

• Has$961billioninassetsundermanagement2

• Ranks#1inFORTUNE®magazine’s2012World’sMostAdmiredCompaniesrankinginthelifeandhealthinsurancecategory3

• Ranks#55inthe2012FORTUNE500®ListofAmerica’sLargestCorporations4

At Prudential Financial, Inc., our strong franchise, diversification of businesses and sound financial fundamentals enable us to help provide better outcomes for you.

THE STRENGTH OF THE ROCK

KEEPING PROmISES FOR OvER 135 YEARS

1877 ThecompanychangeditsnametoThePrudentialInsuranceCompanyofAmerica.

Influenza Epidemic FromSeptember26toOctober19,1918,Prudentialpaid$1millionininfluenzadeathclaims.

1875 1880 1910 1920 1930 19401890 1900

1896 TheRockofGibraltarwasusedasacompanysymbolforthefirsttimeinanadvertisementinLeslie’sWeeklythatread,“ThePrudentialhasthestrengthofGibraltar.”

1875 ThePrudentialFriendlySociety,foundedbyJohnFairfieldDryden,openedforbusiness.ItwasthefirstcompanyintheUnitedStatestomakelifeinsuranceavailabletoworking-classpeople.

1885 Amilliondollarsandamillionpolicies:Asitsassetstopped$1million,PrudentialissueditsmillionthpolicytoJohnDryden.

The Great Depression Prudential’sinnateconservatismprotectedthecompanyfromtheharsherravagesoftheGreatDepression.

WWI Prudentialpaidclaimsofnearly$7millionon23,000policiesheldbyservicemenwhodiedinWorldWarI.

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Interest is compounded daily to produce the current annual yield prior to the deduction of administrative fees of the WEA TSA Trust and the WEAC IRA programs. Principal and net credited interest are fully guaranteed by Prudential Retirement Insurance and Annuity Company (PRIAC). Such guarantees are based solely upon the financial strength and claims-paying ability of PRIAC.

The Prudential Guaranteed Investment is a group annuity product issued by PRIAC. Amounts contributed to the contract are deposited in PRIAC’s general account. Payment obligations and the fulfillment of any guarantees specified in the group annuity contract are insurance claims supported by the full faith and credit of PRIAC. PRIAC periodically resets the interest rate credited on contract balances, subject to a minimum rate specified in the group annuity contract and subject to change. Past interest rates are not indicative of future rates.

PRIAC is compensated in connection with this product by deducting an amount for investment expenses and risk from the investment experience of certain assets held in PRIAC’s general account. PRIAC uses a portion of its aggregate revenue to reimburse WEA TSA Trust and WEA Member Benefit Trust for record-keeping expenses incurred in connection with the WEA TSA Trust and WEAC IRA programs.

The 403(b) retirement program is offered by the WEA TSA Trust. TSA program registered representatives are licensed through WEA Investment Services, Inc., member FINRA. The Trustee for the WEAC IRA program is First Business Trust & Investments.

PRUDENTIAL RETIREmENTPrudential Retirement®, a business of Prudential Financial, serves nearly 3.7 million active workers and retirees and is entrusted with retirement assets of almost $240 billion6.

Prudential Retirement has been an industry leader in providing pension plan services for over 85 years. In any given year, Prudential Retirement disburses approximately eight million payments representing benefit payments of about $10 billion7.

We rank:

#1instablevaluesales8#2indefinedbenefitannuityassets9

#6indefinedcontributionrecordkeepingassets10

Prudential Retirement has been offering stable value solutions to the marketplace for more than 30 years. With more than $98 billion in stable value assets under management2, we remain committed to providing products and services to the marketplace that can help Americans successfully reach their Day One of retirement and all the days that follow.

FINANCIAL STRENGTHPrudential Financial companies include The Prudential Retirement Insurance and Annuity Company (PRIAC), one of the nation’s leading insurance and financial services companies.

The Prudential Retirement Insurance and Annuity Company:• Highlyrated

• Broadlydiversified

• Strongriskcontrols

The financial strength ratings of PRIAC indicate that our position is solid, and that we have ample capital and liquidity to meet our obligations5.

Independent rating agencies issue separate ratings for our parent company, Prudential Financial, and its businesses, based on each one’s individual financial strength.

The Prudential Retirement Insurance and Annuity Company is strength-rated by the major independent ratings agencies for its ability to meet financial obligations.

A.m. Best Company

A+(2ndcategoryof15)Superiorabilitytomeetongoingobligationstopolicyholders

Fitch Ratings

A+(5thcategoryof21)Strongcapacitytomeetpolicyholderandcontractobligations

Standard & Poor’s

AA-(4thcategoryof21) Verystrongfinancialsecuritycharacteristics

moody’s

A2(6thcategoryof21) Goodfinancialsecurity

KEEPING PROmISES FOR OvER 135 YEARS

1984 Prudentialdonated120,000acresofprimewetlandstotheU.S.FishandWildlifeServiceforanaturereserve.

2004 PrudentialacquiresCIGNA’sretirementbusiness

1950 1960 1970 1980 1990 2000 2010

WWII Claimsofmorethan$70millionwerepaidonnearly100,000policiesasaresultofcasualtiesduringWorldWarII.

1970 “GetaPieceoftheRock.”Oneofthemostmemorableslogansinadvertisinghistorydebuts.

2001 Prudentialgoespublic.

1991 InthewakeofHurricaneAndrew,Prudentialpaidout$1.5billioninclaims.

2009 PrudentialdeclinedtoparticipateintheU.S.DepartmentofTreasury’sTroubledAssetReliefProgram(TARP)intheaftermathofthe2008financialcrisis

2012 Prudentialhasmorethan$98billioninstablevalueassetsundermanagement(asof6/30/12)

The financial strength ratings of PRIAC indicate that their position is solid, and that they have ample capital and liquidity to meet their obligations. PRIAC is strength-rated by the major independent ratings agencies for its ability to meet financial obligations.

A.M. Best CompanyA+ (2nd category of 15)Superior ability to meet ongoing obligations to policyholders

Fitch RatingsA+ (5th category of 21)Strong capacity to meet policyholder and contract obligations

Standard & Poor’sAA- (4th category of 21)Very strong financial security characteristics

Moody’sA2 (6th category of 21)Good financial security

All ratings are as of 1/8/2012.

and risks helps to mitigate their exposure, and that of our participants, to market developments,” adds Winchester.

The 2013 rateThe rate of return for 2013 is 4.05%. “It’s

a great rate in this economy and reflects our long-term relationship with Prudential and the structure of the contract which benefits from experience rated investment returns,” says Winchester.

The advantage of an experience rated investment return, she explains, is that the rate does not react to dramatic changes (volatility) in the market. This, in addition to the conservative investment objectives make it suitable for long-term investors looking for a fixed-income or bond investment in their allocation mix.

How the guarantee worksThe guarantee is on the participant’s

principal and net credited interest. In other words, you will never receive less than what you have contributed and the accumulated interest credited on those contributions.

While there is no insurance like the Federal Deposit Insurance Corporation (FDIC) which covers your bank deposits, the guarantee is supported and backed by the strength and stability of Prudential

Financial. Prudential is required to hold reserves equal to the assets in the Guaranteed Investment to ensure the safety of participant assets.

“At the end of the day, we want to work with a company that has similar core values to ours. A company that can help us achieve our goal of helping Wisconsin public school employees achieve financial security. We have confidence that Prudential is that company,” says Winchester.

“[PRIAC] is a financially sound organization maintaining a strong position in the retirement industry.”

Independent Consultant 4 RATINGS

FINANCIALSTRENGTH

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P&C#

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{ your insurance

W hen the time comes to start driving, most teens are pretty excited to get behind the wheel. However,

as a parent, you may not share their enthusiasm. You may wonder where the time went and worry about the safety of your teen on the road. You may also have questions like: What insurance coverage is needed and when? How much will it cost? What else do I need to know to prepare for having a teen driver?

Here are answers to some commonly asked questions.

When do I need to add my teen to my policy?

If you have auto insurance with Member Benefits, your teen is covered under your current policy while they have their learners’ permit. Once they receive their regular license, you will need to add them to your policy. Contact us as soon as your teen passes their driver’s test to avoid a gap in coverage.

Other insurers may have different rules. Give them a call to find out how they handle coverage for teen drivers.

What will it cost?Adding a teen driver to your policy can

be pricey. That’s because young drivers are four times more likely to get into an accident than older folks. It’s impossible to give an exact cost because many things factor into the rate. However, there are some choices you can make to keep more money in your wallet.

Look for discounts. Many insurers offer discount incentives. At Member Benefits, we offer a WEAC member discount, a multiple car discount, a discount if you carry both your auto and home insurance with us, and a good student discount for full-time students (24 years of age or younger) with a GPA of 3.0 or higher.

Raise deductibles. We recommend a $250 deductible on your comprehensive coverage and $500 for collision. Raising those deductibles can reduce your premiums by 15% to 30%.

Choosing an older car. Older vehicles cost less to replace than a new one, so your premiums will be lower. If the car is at least eight years old, you may also save by removing the comprehensive and collision coverage. Ask your insurer what dropping these coverages will mean. Consider your financial situation and the value of the

vehicle when making your decision.Reduce your car to driver ratio. If you

have three vehicles and three drivers, your rates will be higher than if you have two vehicles and three drivers. Maybe your son or daughter does not need to have their own vehicle.

I’m divorced. Who should carry the insurance?

Insurance companies have different rules when it comes to divorce. Some companies require that both parents carry their child on each separate policy, which is expensive. At Member Benefits, your child only needs to be rated on one policy. You and your former spouse can decide whose policy that will be.

We do recommend that your child be listed on the other parent’s policy. If you’re with us, it won’t cost you anything but it will give all companies involved information on who to contact if needed.

Get more answersGo to weabenefits.com/teendriver

to find answers to more questions on this topic. As always, we are here to answer any questions you may have. Call us at 1-800-279-4010.

Adding a

Teen Driver

8

Safety firstIn Wisconsin, those between the ages of 15½ and 18 must follow the Graduated Driver License (GDL) process. The GDL was put into place to help young, inexperienced drivers make a safe transition into the driver seat. The GDL requires a child under age 18 to have 30 hours of driving experience (10 hours of which must be at night) before they receive their license. Track your teen’s time behind the wheel and make sure to expose them to a variety of driving situations. The more practice they get, the safer they’ll be. GDL also has other requirements, including some that apply during the first 9 months after obtaining a Probationary License, such as limiting the number of passengers and hours of operation. Familiarize yourself with GDL by going to www.dmv.org.Certain policy exclusions and limitations may apply. The terms and conditions of your coverage are exclusively controlled by your written policy. Please refer to your policy for details. Underwritten by WEA Property & Casualty Insurance Company.

weabenefits.com 9

prices of 500 top publicly traded American companies. “Historical data shows that there is roughly a 50% chance it will go up or go down on any given day. That same data also shows that over long periods of time, there is a slightly higher chance that it will go up and that it will grow and grow faster than a fixed interest rate account.

“Now, think about checking your portfolio every day and reacting to how it has changed. The more often you check it, the more often you will have psychological reactions to gains and losses. And, even though they are both equally as likely to happen, because losses are much more painful than gains are enjoyable, chances are it is going to feel really upsetting to you,” he says. This is called narrow bracketing phenomenon.

On the other hand, Sydnor says, if you broaden the frame by looking at long range possibilities, you will be more comfortable with it. “There will be a lot of variations with fewer instances of something that looks like a loss.”

This matters a lot for investors—or those considering investing—who are very nervous. In an environment with a lot of turmoil, things change rapidly. The media bombards you with hyped reports and it conditions people to worry about their portfolios. “When you worry, you pay attention, you check your account and think too much,” he adds. This micromanaging approach increases the likelihood that you will make investment decisions that are emotionally based and not in your best interest.

The cost of doing a 180 during a volatile market environment is high

To understand what effect moving assets out of equities during a volatile market has on account returns, Fidelity analyzed participant actions between the crash of 2008 and 2011. They found: • Participants who changed their equity

allocations to 0% between October 1, 2008, and March 31, 2009 (the lowest months of the market downturn), and maintained this allocation through June 30, 2011, experienced an average increase in account balance of only 2%.

• Participants who stayed with the equity allocation strategy realized an average account balance increase of 50% during the same period.

continued from page 5 No magic pillUnfortunately, there is no pill you can

take to overcome psychological weaknesses that play into your financial decisions.

“We are hardwired this way. Most of these phenomena are ingrained in the essence of human psychology. It’s not all about a failure to understand. People legitimately feel differently about losses and gains,” Sydnor says.

However, recognizing that we are emotional beings and that, left unchecked,

our emotions can wreak havoc on our financial outcome can go a long way toward securing your future.

“Psychologically speaking it is better to have a strategy you believe in—one that you are convinced is right based on sound analysis. Then trust the strategy, ignore what is going on in the market day to day, and try not to let the psychological impact of market changes affect the choices you make.”

Seek balance—and sanity—in investingStocks have historically had the greatest risk and highest returns among the three major asset categories. Stocks are a portfolio’s “heavy hitter,” offering the greatest potential for growth. Stocks hit home runs but also strike out. The volatility of stocks makes them a risky investment in the short term. Large company stocks as a group, for example, have lost money on average about one out of every three years. And sometimes the losses have been quite dramatic. But investors who have been willing to ride out the volatile returns of stocks over long periods of time generally have been rewarded with strong positive returns. A long-term investment strategy offers a balanced approach to both risk and reward.

Best practices associated with long-term investment strategy often include the following:

Spread out your riskDiversifying, or putting your money in different types of investments, has long been recognized as an effective way to manage your risk. In theory, when certain types of investments are declining in value, other types are gaining value. A well diversified portfolio can lessen the impact of market volatility.

Save early and save moreContribute as much as you can to your savings plans as early as possible to get the full benefit of compound interest. Compounding happens when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested and so on.

Put investments on auto pilot“From a psychological standpoint, Target Retirement Funds are a good option,” Sydnor suggests. Target Retirement Funds are a one-decision investment designed to build assets with minimal personal oversight. These funds automatically identify and maintain an age-appropriate asset allocation throughout your investing years—so you won’t have to think about it until you’re ready to make withdrawals in retirement.

Target retirement funds invest in a mix of stock and bond funds that steadily become more conservative as they approach their target date. The principal value of a target retirement fund is not guaranteed and may gain or lose value now and after its target date.

Insuring an unoccupied property is not easy and may be impossible. Here’s why.

There are a number of reasons you might find yourself with a vacant property. Maybe you moved into a new home and haven’t had a chance to sell your current house or find a renter. Maybe you inherited a house that you don’t plan to live in, but you haven’t decided whether to sell it or rent it. It’s also fairly common to find yourself with an unoccupied home situation if aging parents move into assisted living.

Whatever the reason, insuring a property that is vacant is not easy and may be impossible. Most insurance companies will not insure an unoccupied home. This is because a vacant house can be a target for thieves, vandals, and vagrants who could damage the property and create liability issues. Homes that are unoccupied also are at increased risk for fire, plumbing leaks, and damaging pests.

Contact your insurerNotify your home insurer immediately

about your situation. Depending on your circumstances, your insurance company may give you a window of 30 or 60 days to find an occupant for your vacant house before cancelling your policy. If you do not inform your provider that the insured property is vacant, you could find yourself without coverage if you have a claim.

Rent it or list itIf the property will or could be vacant for

more than the time allotted by your insurer, your options are limited.

Rent it. Renting may be a good option if you are on the fence about what to do. Not only does it make the property insurable, but you will also earn rental income. The downside is that insurance generally costs more for rental properties; however, the premiums are a tax deductible business expense.

Sell it. Not up for playing landlord? Selling may be the answer. However, depending on the housing market in your area, it could take months to secure a buyer. Make sure to keep your insurer informed of the situation.

Make it look lived inRegardless of what your plans are for the

property, it is important that you make sure the house doesn’t look vacant. Pick up the mail, keep the lawn tidy, turn on lights, leave furniture inside, and park a car in the driveway, if possible.

If you have questions about insuring an unoccupied property, give us a call at 1-800-279-4010.

Certain policy exclusions and limitations may apply. The terms and conditions of your coverage are exclusively controlled by your written policy. Please refer to your policy for details. Underwritten by WEA Property & Casualty Insurance Company. 10

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Slippery sidewalks. Not funny.

Slips and falls may be hilarious when part of your favorite sitcom, but in real life it’s no laughing matter. A tumble on snow or ice can cause serious injuries.

You are responsible. As a homeowner, it’s your responsibility to keep your property safe. Removing snow and ice from your property as soon as possible will help prevent visitors from injuring themselves on slippery walkways, stairs, or entryways. If someone is injured, you may be held liable for their medical expenses, lost wages, and even pain and suffering. Your homeowners insurance offers protection against financial loss for claims, but preventing a claim in the first place is to your advantage. Many companies will raise rates or cancel policies depending on the situation.

What insurance covers. Standard home insurance includes two coverages to protect you if someone is injured.

Medical payment coverage included in your homeowners policy provides reimbursement of medical expenses to someone injured on your property regardless of fault. Coverage typically ranges from $1,000 to $10,000.

Liability protection pays if you are found negligent and your actions or lack of actions cause injury. Liability coverage pays the cost of the claim (up to the limits of your policy) as well as defense costs should you be sued. This coverage follows you wherever you go—not just at your residence.

Homeowners policies offer liability coverage starting at $100,000, but Member Benefits’ standard coverage is $500,000 to provide more protection.

Purchasing an umbrella policy would provide an additional one million dollars or more of liability protection.

Call us. If you have questions about homeowners or umbrella insurance coverage, call us at 1-800-279-4010.

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While Medicare is expanding its skilled nursing care services, benefits are still limited to 100 days and don’t cover unskilled custodial care to help with activities of daily living (ADL).

Does a recent Medicare settlement affect the need for long-term care insurance?

A recent ruling involving Medicare services has many members asking if the ruling affects long-term care (LTC). The federal case deals with the provision where Medicare would not approve skilled care services for individuals with chronic conditions like Alzheimer’s, strokes, multiple sclerosis, and Parkinson’s disease who had no prospects for improvement. Under the terms of the settlement, it will no longer matter whether or not a person is “making progress towards recovery” to qualify for skilled care benefits.

It’s important to understand that the settlement does not increase the number of days that skilled nursing care is provided after a three-day covered inpatient hospital stay. The limit of 100 days of skilled

nursing coverage in each annual benefit period has not changed. After 100 days, Medicare patients are responsible for 100% of skilled nursing care costs.

LTC remains uncoveredLong-term care services remain “not

covered” by Medicare. The Official U.S. Government Site for Medicare (www.Medicare.gov) includes detailed information on what services are covered. Long-term care (also called custodial care, which includes ADL such as bathing, dressing, feeding, etc.) is the first item on the “What’s not covered by Part A & Part B?” section. Medicare covers care in a certified skilled nursing facility only if it is medically necessary. Most nursing

home care, however, is custodial care, and Medicare does not cover custodial care.

Get your questions answeredWe invite you to contact us with

questions about Medicare or your own health insurance policy regarding how much long-term care you’ll qualify for under these policies. Understanding what coverage you have, as well as the type of care you may need, is important for planning for your future.

WEA Trust Member Benefits™ offers important coverage for extended care needs following an accident, illness, or frailty that often results from normal aging. Our specialists are available seven days a week to help you learn about LTC insurance. To schedule a personal phone/online appointment, call 888-247-5905 or visit wealtc.membersplan.org.

We also offer educational on-site and online seminars that explain what LTC insurance covers and why it is an essential component of comprehensive health insurance protection. More information and seminar registration is available at weabenefits.com/calendar.

Long-term care (LTC) insurance products are underwritten by multiple LTC insurers. Program administered by LTCi Marketing Administrators (LiMA).

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Certain policy exclusions and limitations may apply. The terms and conditions of your coverage are exclusively controlled by your written policy. Please refer to your policy for details. Property and casualty insurance programs are underwritten by WEA Property & Casualty Insurance Company.

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