Oppenheimer & Co. Inc.The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624dan.israelite@opco.com

February 2018

Deducting 2017 Property Losses from Your Taxes

Don't Wait to Ask Aging Parents These ImportantQuestions

Why is it important to factor inflation into retirementplanning?

Is a nursing home the only option for long-termcare?

The Israelite Group Monthly NewsletterWhat's Your Money Script?

See disclaimer on final page

Hopefully you are still on target tomeet your New Year’s Resolutions.One resolution we would like tomake sure you keep in 2018 is tocreate or update your wealth plan.Having a wealth plan can help youanswer questions such as:

Do we have enough money to retire?

Will we outlive our money?

How much can we spend onretirement housing and healthcare?

If you want to feel confident aboutyour financial future please call usany time to start the personalizedplanning process.

The Israelite Group

Money is power. Afool and his moneyare soon parted. Apenny saved is apenny earned.Money is the root ofall evil.

Do any of theseexpressions ringtrue for you?

As it turns out, the money beliefs our familiesespoused while we were growing up may havea profound effect on how we behave financiallytoday — and may even influence our financialsuccess.

Beliefs drive behaviorsIn 2011, The Journal of Financial Therapypublished a study by financial psychologistBrad Klontz et al., that gauged the reactions of422 individuals to 72 money-relatedstatements.1 Examples of such statementsinclude:

• There is virtue in living with less money• Things will get better if I have more money• Poor people are lazy• It is not polite to talk about money

Based on the findings, Klontz was able toidentify four "money belief patterns," alsoknown as "money scripts," that influence howpeople view money. Klontz has described thesescripts as "typically unconscious,trans-generational beliefs about money" thatare "developed in childhood and drive adultfinancial behaviors."2 The four categories are:

1. Money avoidance: People who fall into thiscategory believe that money is bad and is oftena source of anxiety or disgust. This may resultin a hostile attitude toward the wealthy.Paradoxically, these people might also feel thatall their problems would be solved if they onlyhad more money. For this reason, they mayunconsciously sabotage their own financialefforts while working extra hours just to makeends meet.

2. Money worship: Money worshippers believethat money is the route to true happiness, andone can never have enough. They feel that theywill never be able to afford everything theywant. These people may shop compulsively,hoard their belongings, and put work ahead ofrelationships in the ongoing quest for wealth.

3. Money status: Similar to moneyworshippers, these people equate net worthwith self-worth, believing that money is the keyto both happiness and power. They may livelavishly in an attempt to keep up with or evenbeat the Joneses, incurring heavy debt in theprocess. They are also more likely than those inother categories to be compulsive gamblers orto lie to their spouses about money.

4. Money vigilance: Money vigilants arecautious and sometimes overly anxious aboutmoney, but they also live within their means,pay off their credit cards every month, and savefor the future. However, they risk carrying alevel of anxiety so high that they cannot enjoythe fruits of their labor or ever feel a sense offinancial security.

Awareness is the first stepAccording to Klontz's research, the first threemoney scripts typically lead to destructivefinancial behaviors, while the fourth is the oneto which most people would want to aspire. Ifyou believe you may fit in one of theself-limiting money script categories, considerhow experiences in your childhood or thebeliefs of your parents or grandparents mayhave influenced this thinking. Then do somereality-checking about the positive ways to buildand manage wealth. As in other areas ofbehavioral finance and psychology in general,awareness is often the first step towardaddressing the problem.1 "Money Beliefs and Financial Behaviors," TheJournal of Financial Therapy, Volume 2, Issue 1

2 Financial Planning Association, accessed October24, 2017

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Deducting 2017 Property Losses from Your TaxesHurricanes, wildfires, tornadoes, floods,earthquakes, winter storms, and other eventsoften cause widespread damage to homes andother types of property. If you've sufferedproperty loss as the result of a natural orman-made disaster in 2017, you may be able toclaim a casualty loss deduction on your federalincome tax return.

What is a casualty loss?A casualty is the destruction, damage, or lossof property caused by an unusual, sudden, orunexpected event. Casualty losses may resultfrom natural disasters or from other eventssuch as fires, accidents, thefts, or vandalism.You probably don't have a deductible casualtyloss, however, if your property is damaged asthe result of gradual deterioration (e.g., along-term termite infestation).

How do you calculate the amount ofyour loss?To calculate a casualty loss on personal-useproperty, like your home, that's been damagedor destroyed, you first need two importantpieces of data:

• The decrease in the fair market value (FMV)of the property; that's the difference betweenthe FMV of the property immediately beforeand after the casualty

• Your adjusted basis in the property before thecasualty; your adjusted basis is usually yourcost if you bought the property (different rulesapply if you inherited the property or receivedit as a gift), increased for things likepermanent improvements and decreased foritems such as depreciation

Starting with the lower of the two amountsabove, subtract any insurance or otherreimbursement that you have received or thatyou expect to receive. The result is generallythe amount of your loss. If you receiveinsurance payments or other reimbursementthat is more than your adjusted basis in thedestroyed or damaged property, you mayactually have a gain. There are special rules forreporting such gain, postponing the gain,excluding gain on a main home, andpurchasing replacement property.

After you determine your casualty loss onpersonal-use property, you have to reduce theloss by $100. The $100 reduction applies percasualty, not per individual item of property.Two or more events that are closely relatedmay be considered a single casualty. Forexample, wind and flood damage from thesame storm would typically be considered asingle casualty event, subject to only one $100reduction. If both your home and automobile

were damaged by the storm, the damage isalso considered part of a single casualty event —you do not have to subtract $100 for each pieceof property.

You must also reduce the total of all yourcasualty and theft losses on personal propertyby 10% of your adjusted gross income (AGI)after each loss is reduced by the $100 rule,above.

Keep in mind that special rules apply for thoseaffected by Hurricanes Harvey, Irma, andMaria. The Disaster Tax Relief Act of 2017increased the threshold for claiming a casualtyloss deduction to $500, waived the requirementthat the loss is deductible only to the extent itexceeds 10% of AGI, and allowed a deductioneven for those who do not itemize.

Also note that the rules for calculating loss canbe different for business property or propertythat's used to produce income, such as rentalproperty.

When can you deduct a casualty loss?Generally, you report and deduct the loss in theyear in which the casualty occurred. Specialrules, however, apply for casualty lossesresulting from an event that's declared a federaldisaster area by the president.

If you have a casualty loss from a federallydeclared disaster area, you can choose toreport and deduct the loss in the tax year inwhich the loss occurred, or in the tax yearimmediately preceding the tax year in which thedisaster happened. If you elect to report in thepreceding year, the loss is treated as if itoccurred in the preceding tax year. Reportingthe loss in the preceding year may reduce thetax for that year, producing a refund. Yougenerally have to make a decision to report theloss in the preceding year by the federalincome tax return due date (without anyextension) for the year in which the disasteractually occurred.

Casualty losses are reported on IRS Form4684, Casualties and Thefts. Any lossesrelating to personal-use property are carriedover to Form 1040, Schedule A, ItemizedDeductions.

Where can you get more information?The rules relating to casualty losses can becomplicated. Additional information can befound in the instructions to Form 4684 and inIRS Publication 547, Casualties, Disasters, andThefts. If you have suffered a casualty loss,though, you should consider discussing yourindividual circumstances with a taxprofessional.

New rules for 2018 andbeyond

Recent tax reform legislationeliminates deductions forcasualty losses that occur in2018 through 2025, except forlosses in federally declareddisaster areas.

The legislation also makeschanges that applyretroactively to 2016 and 2017for net disaster losses arisingfrom 2016 federally declareddisaster areas.

Page 2 of 4, see disclaimer on final page

Don't Wait to Ask Aging Parents These Important QuestionsIt's human nature to put off complicated oremotionally heavy tasks. Talking with agingparents about their finances, health, and overallwell-being might fall in this category. Manyadult children would rather avoid this task, as itcan create feelings of fear and loss on bothsides. But this conversation — what could be thefirst of many — is too important to put off for long.The best time to start is when your parents arerelatively healthy. Otherwise, you may findyourself making critical decisions on their behalfin the midst of a crisis without a roadmap.

Here are some questions to ask them thatmight help you get started.

Finances• What institutions hold your financial assets?

Ask your parents to create a list of their bank,brokerage, and retirement accounts, includingaccount numbers, name(s) on accounts, andonline user names and passwords, if any.You should also know where to find theirinsurance policies (life, home, auto, disability,long-term care), Social Security cards, titlesto their house and vehicles, outstanding loandocuments, and past tax returns. If yourparents have a safe-deposit box or homesafe, make sure you can access the key orcombination.

• Do you need help paying monthly bills orreviewing items like credit card statements,medical receipts, or property tax bills? Do youuse online bill pay for any accounts?

• Do you currently work with any financial,legal, or tax professionals? If so, ask yourparents if they want to share contactinformation and whether they would find ithelpful if you attended meetings with them.

• Do you have a durable power of attorney? Adurable power of attorney is a legal documentthat allows a named individual (such as anadult child) to manage all aspects of aparent's financial life if the parent becomesdisabled or incompetent.

• Do you have a will? If so, find out where it isand who is named as executor. If the will ismore than five years old, your parents maywant to review it to make sure their currentwishes are represented. Ask if they have anyspecific personal property dispositionrequests that they want to discuss now.

• Are your beneficiary designations up-to-date?Beneficiary designations on your parents'insurance policies, pensions, IRAs, andinvestment accounts will trump anyinstructions in their will.

• Do you have an overall estate plan? A trust?A living trust can be used to help manage an

estate while your parents are still living. Ifyou'd like to learn more, consult an estateplanning attorney.

Health• What doctors do you currently see? Are you

happy with the care you're getting? If yourparents begin to need multiple medicalspecialists and/or home health services, youmight consider hiring a geriatric caremanager, especially if you don't live close by.

• What medications are you currently taking?Are you able to manage various dosageinstructions? Do you have any notable sideeffects? At what pharmacy do you get yourprescriptions filled?

• What health insurance do you have? Inaddition to Medicare, which starts at age 65,find out if your parents have or shouldconsider Medigap insurance — a private policythat covers many costs not covered byMedicare. You may also want to discuss theneed for long-term care insurance, whichhelps pay for extended custodial or nursinghome care.

• Do you have an advance medical directive?This document expresses your parents'wishes regarding life-support measures, ifneeded, and designates someone who willcommunicate with health-care professionalson their behalf. If your parents do not wantheroic life-saving measures to be undertakenfor them, this document is a must.

Living situation• Do you plan to stay in your current home for

the foreseeable future, or are you consideringdownsizing?

• Is there anything I can do now to make yourhome more comfortable and safe? This mightinclude smaller projects such as installinghand rails and night lights in the bathroom, tolarger projects such as moving the washingmachine out of the basement, installing astair lift, or moving a bedroom to the firstfloor.

• Could you benefit from a weekly or monthlycleaning service?

• Do you employ certain people or companiesfor home maintenance projects (e.g., heatingcontractor, plumber, electrician, fall cleanup)?

Memorial wishes• Do you want to be buried or cremated? Do

you have a burial plot picked out?• Do you have any specific requests or wishes

for your memorial service?

The best time to start aconversation with yourparents about their futureneeds and wishes is whenthey are still relativelyhealthy. Otherwise, you mayfind yourself making criticaldecisions on their behalfwithout a roadmap.

Note: There are costs andongoing expensesassociated with the creationof trusts.

Note: A complete statementof long-term care insurancecoverage, includingexclusions, exceptions, andlimitations, is found only inthe long-term care insurancepolicy. It should be notedthat carriers have thediscretion to raise theirrates and remove theirproducts from themarketplace.

Page 3 of 4, see disclaimer on final page

Oppenheimer & Co. Inc.The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624dan.israelite@opco.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018

The content herein 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 employees 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.

Is a nursing home the only option for long-term care?If you or a loved one needslong-term care, other choicesbesides nursing home caremay be available. Here aresome of the other options.

Home care

Most people would prefer to stay in their homesas long as possible. Depending on your needs,you may only need help with some commondaily living activities such as laundry, shopping,cooking, and cleaning. First, talk to your familyto see if they can help with your needs. Thereare probably home health-care agencies thatcan assist you with some of these chores.

Accessory dwelling units

If you or a loved one owns a single-familyhome, adding an accessory dwelling unit (ADU)to that home may help you keep yourindependence while getting some help withyour daily activities. An ADU, or "in-lawapartment," usually provides a separate livingspace with a sleeping area, a place to cook,and a bathroom. Check with your local zoningoffice to be sure ADUs are allowed in yourarea. Also, the cost of adding an ADU can varywidely, depending on the size of the unit and

the cost for materials and labor.

Subsidized senior housing

There are federal and state programs that helppay for housing for some older people with lowto moderate incomes. Some of these housingprograms also offer help with meals and otheractivities like housekeeping, shopping, andlaundry. Residents usually live in their ownapartments in the complex. Rent payments areusually a percentage of your income.

Assisted-living facilities

These facilities generally provide more servicesthan offered in subsidized senior housing. Youmay receive help with bathing, dressing, usingthe bathroom, taking your medications, andgetting to appointments. Residents often live inan apartment and may share meals in acommon dining room. Social and recreationalactivities are usually provided. Some of thesefacilities have health services on site.

A nursing home may not be your only choice.Discharge planners and social workers inhospitals and home health agencies canexplain your options and help arrange yourcare.

Why is it important to factor inflation into retirementplanning?Inflation is one of the keyfactors you will need toconsider when planning forretirement. Not only will the

cost of living rise while you're accumulatingassets for retirement, but it will continue to riseduring your retirement, which could last 25years or longer. This, combined with the factthat you will not likely earn a paycheck duringretirement, is the main reason your portfolioneeds to maintain at least some growthpotential for the duration of your retirement.

Consider this: If inflation runs at 3% (which isapproximately its long-term average, asmeasured by the Consumer Price Index), thepurchasing power of a given sum of moneywould be cut in half in 23 years. If it averages4%, your purchasing power would be cut in halfin 18 years.

A simple example illustrates the impact ofinflation on retirement income. Assuming aconsistent annual inflation rate of 3%, if$50,000 satisfies your retirement income needsthis year, you'll need $51,500 of income nextyear to meet the same income needs. In 10years, you'll need about $67,195 to equal the

purchasing power of $50,000 this year. And in25 years, you'd need nearly $105,000 just tomaintain that purchasing power!1

Keep in mind that even a 3% long-term averageinflation rate conceals periods of skyrocketingprices, such as in the late 1970s and early 80s,when inflation reached double digits. Althoughconsumer prices have been relatively stable inmore recent decades, there's always thechance that unexpected shocks could causeprices to spike again.

So how do you strive for the returns you'll needto outpace inflation by a wide enough marginboth before and during retirement? The key isto consider investing at least some of yourportfolio in growth-oriented investments, suchas stocks.2

1 This hypothetical example of mathematicalprinciples is used for illustrative purposes only anddoes not represent the performance of any specificinvestment. Note that these figures exclude theeffects of taxes, fees, expenses, and investmentreturns in general.

2 All investing involves risk, including the possibleloss of principal, and there is no guarantee that anyinvestment strategy will be successful.

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