Your Financial Plan. John Smith PREPARED BY: PREPARED FOR: Mark and Lynda Rogers May 05, 2017

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1 Your Financial Plan PREPARED FOR: Mark and Lynda Rogers May 05, 2017 PREPARED BY: John Smith Financial Planner Pruco Securities, LLC, doing business as Prudential Financial Planning Services Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities

2 Important Information This report is based on the data and assumptions you have provided or instructed us to make. Consequently the outcome of the analysis is based upon the accuracy of your data and the reasonableness of your assumptions. Inaccurate or unreasonable assumptions would materially impact the results of the analysis. Please note that your personal financial information obtained in the preparation of this document will not be automatically transferred to any Prudential Financial affiliated product or service you may otherwise own or purchase. Included in this financial analysis is a demonstration of how a hypothetical steady annual performance rate of return for a portfolio could affect your goals over an extended period of time. The value of an actual portfolio will fluctuate up and down, based on the performance of the investments in the portfolio. Actual investment results will be more or less than those shown and will depend on a number of factors, including the choice and investment performance of the investment options. Because the actual portfolio returns differ from those that have been assumed on an average or individual year basis, the values for your portfolio will be different from those shown. Investments that seek to achieve a high rate of return generally have a higher volatility and involve a higher risk to principal. Withdrawals and contributions will affect the value of the portfolio. This report should not be deemed a projection or prediction of future rates of return. Life insurance and annuities are issued by The Prudential Insurance Company of America and its affiliates. Disability income insurance underwritten by insurers not affiliated with Prudential. Securities products and services offered by Pruco Securities, LLC. Offering financial planning and investment advisory services through Pruco Securities, LLC (Pruco), doing business as Prudential Financial Planning Services (PFPS), pursuant to separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. Each is a Prudential Financial company located in Newark, NJ that is solely responsible for its financial condition and contractual obligations. Our policies contain exclusions, limitations, reduction of benefits and terms for keeping them in force. Your sales professional can provide you with costs and complete details. Availability of products and coverage varies by carrier and state. The Prudential Insurance Company of America, its affiliates, and its financial professionals do not render tax advice. You should consult with your legal and tax professionals for advice concerning your particular situation. Prepared by John Smith Page 2 of 127

3 Tax Considerations On January 1, 2013, the U.S. Congress adopted the American Taxpayer Relief Act of 2012 (ATRA, The Act ). The Act allowed the Bush-era tax rates to sunset after 2012 for individuals with incomes over certain amounts. The legislation permanently patched the alternative minimum tax (AMT), revived many expired tax extenders, including the American Opportunity Tax Credit, and changed the estate tax rate and exemption amount. ATRA made the estate tax permanent and set the exemption amount equal to $5,000,000 for 2010 subject to inflation for future years. As a result, the exemption has been increased to $5,490,000 for 2017 per person (subject to future inflation), or $10,980,000 per couple. The portability of an unused spousal exclusion was also made permanent by the Act. The top tax rate bracket was increased from 35% to 40%, and a few additional brackets have been added to the unified credit table. Estate and gift taxes continue to be unified, as part of the permanent part of the Act. ATRA provided for a top dividend and capital gains rate of 20% in 2013 and subsequent years, higher than the top rate of 15% in 2012, but below ordinary income rates. This preferential rate still only applies to long-term capital gains, and not to short-term gains. These provisions have also been made permanent, without any sunset option. The Protecting Americans from Tax Hikes (PATH) Act of 2015 made the American Opportunity Tax Credit permanent. Prepared by John Smith Page 3 of 127

4 Table of Contents Your Financial Plan Important Information Tax Considerations Table of Contents Net Worth Net Worth Statement - Current Plan Net Worth Statement - Proposed Plan Net Worth Outlook - Current Plan Asset Accumulation & Depletion - Current Plan Net Worth Outlook - Proposed Plan Asset Accumulation & Depletion - Proposed Plan Cash Flow The Impact & History of Inflation Current Year Cash Flow - Current Plan Current Year Cash Flow - Proposed Plan Cash Flow Outlook - Current Plan Cash Flow Surplus/(Deficit) - Current Plan Cash Inflows - Current Plan Cash Outflows - Current Plan Cash Flow Outlook - Proposed Plan Cash Flow Surplus/(Deficit) - Proposed Plan Cash Inflows - Proposed Plan Cash Outflows - Proposed Plan Income Tax Planning to reduce your tax burden Income Sources & Total Tax Overview Financial Snapshot

5 Asset Allocation Asset Allocation: Managing Your Portfolio for Success Current Asset Mix Asset Allocation Portfolio Comparison - Suggested - Proposed Plan Retirement Strategies to Achieve Financial Success in Retirement Retirement Goal Coverage Retirement Needs vs. Abilities Retirement Asset Allocation Comparison - Suggested - Proposed Plan Retirement Goal Coverage - Current Plan What Are My Retirement Goal Options? - Current Plan Retirement Needs vs. Abilities - Current Plan Retirement Capital - Current Plan Retirement Income & Expenses - Current Plan Retirement Asset Accumulation & Depletion - Current Plan Retirement Need & Investable Assets - Current Plan Retirement Goal Coverage - Proposed Plan What Are My Retirement Goal Options? - Proposed Plan Retirement Needs vs. Abilities - Proposed Plan Retirement Capital - Proposed Plan Retirement Income & Expenses - Proposed Plan Retirement Asset Accumulation & Depletion - Proposed Plan Retirement Need & Investable Assets - Proposed Plan Education The Cost of Education Achieving Your Educational Goals Education Goal Coverage - College Education (Jo) Education Needs vs. Abilities - College Education (Jo) Education Asset Allocation Comparison - Suggested - Proposed Plan - College Education (Jo) Education Goal Coverage - Current Plan - College Education (Jo)

6 What Are My Education Goal Options? - Current Plan - College Education (Jo) Education Goal Coverage - Proposed Plan - College Education (Jo) What Are My Education Goal Options? - Proposed Plan - College Education (Jo) Education Funding Details - Current Plan - College Education (Jo) Education Funding Details - Proposed Plan - College Education (Jo) Disability Insurance Disability Insurance - A Risk Discussion Disability Scenarios How Much Disability Insurance is Needed? - Mark becomes disabled Disability Needs vs. Abilities - Mark becomes disabled Disability Cash Inflows vs. Outflows - Mark becomes disabled How Much Disability Insurance is Needed? - Current Plan - Mark becomes disabled How Much Disability Insurance is Needed? - Proposed Plan - Mark becomes disabled How Much Disability Insurance is Needed? - Lynda becomes disabled Disability Needs vs. Abilities - Lynda becomes disabled Disability Cash Inflows vs. Outflows - Lynda becomes disabled How Much Disability Insurance is Needed? - Current Plan - Lynda becomes disabled How Much Disability Insurance is Needed? - Proposed Plan - Lynda becomes disabled Life Insurance How Much Life Insurance Is Needed? - Mark passes away Immediate Needs vs. Available Resources - Mark passes away Insurance Needs In Survivorship - Mark passes away How Much Life Insurance Is Needed? - Current Plan - Mark passes away How Much Life Insurance Is Needed? - Proposed Plan - Mark passes away How Much Life Insurance Is Needed? - Lynda passes away Immediate Needs vs. Available Resources - Lynda passes away Insurance Needs In Survivorship - Lynda passes away How Much Life Insurance Is Needed? - Current Plan - Lynda passes away How Much Life Insurance Is Needed? - Proposed Plan - Lynda passes away How Much Life Insurance Is Needed? - Both pass away Immediate Needs vs. Available Resources - Both pass away

7 Insurance Needs In Survivorship - Both pass away How Much Life Insurance Is Needed? - Current Plan - Both pass away How Much Life Insurance Is Needed? - Proposed Plan - Both pass away Plan Data Summary Plan Analysis Synopsis Important Terminology

8 Net Worth

9 Net Worth Statement Current Plan This report displays a comprehensive list of your assets and liabilities as of April 25, Use this report to better understand your net worth situation. Note: Term life insurance policies and annuitized annuities do not appear on this report as they have no cash value. Assets Mark Lynda Joint Total Non-Qualified Assets savings $8,900 $8,900 checking $1,500 $1,500 Total $10,400 $10,400 Qualified Assets Mark qualified $219,100 $219, Plan $24,200 $24,200 Lyndia qualified $21,500 $21,500 Total $243,300 $21,500 $264,800 Lifestyle Assets Residence $484,500 $484,500 Cars $38,300 $38,300 Other Personal Assets $18,700 $18,700 Total $541,500 $541,500 Liabilities Mark Lynda Joint Total Car Loans 2 $1,198 $1,198 Mortgage $225,108 $225,108 Car Loans $9,460 $9,460 Total $235,766 $235,766 Total Net Worth $243,300 $21,500 $316,134 $580,934 Prepared by John Smith Page 9 of 127

10 Net Worth Statement Proposed Plan This report displays a comprehensive list of your assets and liabilities as of April 25, Use this report to better understand your net worth situation. Note: Term life insurance policies and annuitized annuities do not appear on this report as they have no cash value. Assets Mark Lynda Joint Total Non-Qualified Assets savings $8,900 $8,900 checking $1,500 $1,500 Total $10,400 $10,400 Qualified Assets Mark qualified $219,100 $219, Plan $24,200 $24,200 Lyndia qualified $21,500 $21,500 Total $243,300 $21,500 $264,800 Lifestyle Assets Residence $484,500 $484,500 Cars $38,300 $38,300 Other Personal Assets $18,700 $18,700 Total $541,500 $541,500 Liabilities Mark Lynda Joint Total Car Loans 2 $1,198 $1,198 Mortgage $225,108 $225,108 Car Loans $9,460 $9,460 Total $235,766 $235,766 Total Net Worth $243,300 $21,500 $316,134 $580,934 Prepared by John Smith Page 10 of 127

11 Net Worth Outlook Current Plan This report shows changes in your net worth over time. These projected end-of-year values begin with the analysis year and end with death of the last surviving client. Furthermore, assets included in this report are categorized to show how changes in net worth occur. Use this report to assess your total net worth by asset category through the duration of the analysis. Year & Age Non-Qualified Assets Qualified Assets Lifestyle Assets Total Liabilities Total Net Worth 2017 (48/45) $10,407 $298,515 $545,895 $225,470 $629, (49/46) $10,416 $346,258 $552,188 $212,876 $695, (50/47) $10,426 $397,449 $559,031 $202,374 $764, (51/48) $10,435 $452,312 $566,394 $193,303 $835, (52/49) $10,444 $511,081 $574,249 $183,768 $912, (53/50) $10,453 $574,008 $582,571 $173,745 $993, (54/51) $10,463 $641,358 $591,338 $163,209 $1,079, (55/52) $10,472 $713,414 $600,531 $152,133 $1,172, (56/53) $10,481 $727,227 $610,134 0,492 $1,207, (57/54) $10,491 $798,558 $620,133 $128,254 $1,300, (58/55) $10,500 $879,675 $630,515 $115,391 $1,405, (59/56) $10,510 $966,400 $641,269 $101,869 $1,516, (60/57) $10,519 $1,059,092 $652,386 $87,656 $1,634, (61/58) $10,528 $1,158,128 $663,859 $72,716 $1,759, (62/59) $10,538 $1,263,914 $675,681 $57,011 $1,893, (63/60) $10,547 $1,376,878 $687,849 $40,502 $2,034, (64/61) $10,557 $1,497,475 $700,356 $23,149 $2,185, (65/62) $10,566 $1,626,190 $713,202 $4,909 $2,345, (66/63) $10,576 $1,763,535 $726,383 $2,500, (*67/64*) $10,585 $1,852,158 $739,898 $2,602, (68/65) $10,596 $1,781,084 $753,748 $2,545, (69/66) $10,605 $1,700,112 $767,932 $2,478, (70/67) $10,615 $1,624,577 $782,451 $2,417, (71/68) $10,624 $1,547,311 $797,308 $2,355, (72/69) $10,634 $1,458,202 $812,503 $2,281,339 * = year of retirement Prepared by John Smith Page 11 of 127

12 Year & Age Non-Qualified Assets Qualified Assets Lifestyle Assets Total Liabilities Total Net Worth 2042 (73/70) $10,643 $1,356,263 $828,040 $2,194, (74/71) $10,653 $1,240,433 $843,922 $2,095, (75/72) $10,662 $1,109,552 $860,151 $1,980, (76/73) $10,672 $962,383 $876,733 $1,849, (77/74) $10,681 $804,172 $893,671 $1,708, (78/75) $10,691 $647,152 $910,971 $1,568, (79/76) $10,702 $472,156 $928,636 $1,411, (80/77) $10,713 $277,746 $946,672 $1,235, (81/78) $10,724 $62,428 $965,086 $1,038, (82/79) $10,735 $983,882 $994, (83/80) $10,747 $1,003,067 $1,013, (84/81) $10,761 $1,022,648 $1,033, (85/82) $10,775 $1,042,632 $1,053, (86/83) $10,789 $1,063,024 $1,073, (87/84) $10,803 $1,083,833 $1,094, (88/85) $10,817 $1,105,066 $1,115, (89/86) $10,831 $1,126,730 $1,137, (90/87) $208,934 $1,148,834 $1,357, (-/88) $10,859 $1,171,386 $1,182, (-/89) $10,873 $1,194,394 $1,205, (-/90) $1,217,867 $1,217,867 * = year of retirement Prepared by John Smith Page 12 of 127

13 Asset Accumulation & Depletion Current Plan This report shows changes in the value of capital over time. These projected end-of-year values begin with the analysis year and end with death of the last surviving client. Use this report to assess your ability to cover spending needs through the duration of the analysis. Year & Age SOY Assets 1 Growth & Reinvestments Contributions Withdrawals EOY Assets (48/45) $816,700 $10,057 $28,060 $854, (49/46) $854,817 $25,471 $28,573 $908, (50/47) $908,861 $28,948 $29,097 $966, (51/48) $966,906 $32,604 $29,631 $1,029, (52/49) $1,029,141 $36,458 $30,175 $1,095, (53/50) $1,095,774 $40,527 $30,731 $1,167, (54/51) $1,167,032 $44,829 $31,297 $1,243, (55/52) $1,243,158 $49,384 $31,875 $1,324, (56/53) $1,324,418 $50,659 $31,865 $59,098 $1,347, (57/54) $1,347,843 $55,187 $30,666 $4,514 $1,429, (58/55) $1,429,182 $60,229 $31,279 $1,520, (59/56) $1,520,690 $65,584 $31,905 $1,618, (60/57) $1,618,179 $71,275 $32,543 $1,721, (61/58) $1,721,996 $77,325 $33,194 $1,832, (62/59) $1,832,516 $83,760 $33,858 $1,950, (63/60) $1,950,134 $90,605 $34,535 $2,075, (64/61) $2,075,274 $97,889 $35,226 $2,208, (65/62) $2,208,388 $105,639 $35,930 $2,349, (66/63) $2,349,957 $113,887 $36,649 $2,500, (*67/64*) $2,500,493 $122,529 $26,070 $46,451 $2,602, (68/65) $2,602,641 $127,569 $184,783 $2,545, (69/66) $2,545,428 $124,835 $191,614 $2,478, (70/67) $2,478,649 $121,126 $182,132 $2,417, (71/68) $2,417,643 $114,671 $177,071 $2,355, (72/69) $2,355,243 $110,195 $184,098 $2,281, (73/70) $2,281,339 $104,996 $191,390 $2,194,946 1 SOY denotes start of year. Values are Market Value at that time. 2 EOY denotes End of Year. * = year of retirement Prepared by John Smith Page 13 of 127

14 Year & Age SOY Assets 1 Growth & Reinvestments Contributions Withdrawals EOY Assets (74/71) $2,194,946 $99,018 $198,956 $2,095, (75/72) $2,095,008 $92,198 $206,840 $1,980, (76/73) $1,980,366 $84,469 $215,047 $1,849, (77/74) $1,849,788 $75,767 $217,031 $1,708, (78/75) $1,708,525 $66,402 $206,113 $1,568, (79/76) $1,568,814 $57,140 $214,459 $1,411, (80/77) $1,411,494 $46,805 $223,168 $1,235, (81/78) $1,235,132 $35,319 $232,213 $1,038, (82/79) $1,038,238 $22,599 $66,220 $994, (83/80) $994,617 $19,198 $1,013, (84/81) $1,013,815 $19,595 $1,033, (85/82) $1,033,409 $19,997 $1,053, (86/83) $1,053,407 $20,406 $1,073, (87/84) $1,073,813 $20,823 $1,094, (88/85) $1,094,636 $21,247 $1,115, (89/86) $1,115,883 $21,678 $1,137, (90/87) $1,137,561 $22,118 $198,090 $1,357, (-/88) $1,357,769 $22,566 $198,090 $1,182, (-/89) $1,182,245 $23,022 $1,205, (-/90) $1,205,267 $23,487 $10,887 $1,217,867 1 SOY denotes start of year. Values are Market Value at that time. 2 EOY denotes End of Year. * = year of retirement Prepared by John Smith Page 14 of 127

15 Net Worth Outlook Proposed Plan This report shows changes in your net worth over time. These projected end-of-year values begin with the analysis year and end with death of the last surviving client. Furthermore, assets included in this report are categorized to show how changes in net worth occur. Use this report to assess your total net worth by asset category through the duration of the analysis. Year & Age Non-Qualified Assets Qualified Assets Lifestyle Assets Total Liabilities Total Net Worth 2017 (48/45) $10,407 $298,345 $545,895 $225,470 $629, (49/46) $10,416 $345,826 $552,188 $212,876 $695, (50/47) $10,426 $396,711 $559,031 $202,374 $763, (51/48) $10,435 $451,214 $566,394 $193,303 $834, (52/49) $10,444 $509,565 $574,249 $183,768 $910, (53/50) $10,453 $572,007 $582,571 $173,745 $991, (54/51) $10,463 $638,799 $591,338 $163,209 $1,077, (55/52) $10,472 $710,213 $600,531 $152,133 $1,169, (56/53) $10,481 $723,274 $610,134 0,492 $1,203, (57/54) $10,491 $793,625 $620,133 $128,254 $1,295, (58/55) $10,500 $873,758 $630,515 $115,391 $1,399, (59/56) $10,510 $959,367 $641,269 $101,869 $1,509, (60/57) $10,519 $1,050,795 $652,386 $87,656 $1,626, (61/58) $10,528 $1,148,407 $663,859 $72,716 $1,750, (62/59) $10,538 $1,252,589 $675,681 $57,011 $1,881, (63/60) $10,547 $1,363,750 $687,849 $40,502 $2,021, (64/61) $10,557 $1,482,325 $700,356 $23,149 $2,170, (65/62) $10,566 $1,608,775 $713,202 $4,909 $2,327, (66/63) $10,576 $1,743,590 $726,383 $2,480, (*67/64*) $10,585 $1,829,376 $739,898 $2,579, (68/65) $10,596 $1,754,874 $753,748 $2,519, (69/66) $10,605 $1,669,049 $767,932 $2,447, (70/67) $10,615 $1,587,532 $782,451 $2,380, (71/68) $10,624 $1,504,226 $797,308 $2,312, (72/69) $10,634 $1,408,907 $812,503 $2,232,044 * = year of retirement Prepared by John Smith Page 15 of 127

16 Year & Age Non-Qualified Assets Qualified Assets Lifestyle Assets Total Liabilities Total Net Worth 2042 (73/70) $10,643 $1,300,607 $828,040 $2,139, (74/71) $10,653 $1,178,289 $843,922 $2,032, (75/72) $10,662 $1,040,817 $860,151 $1,911, (76/73) $10,672 $886,984 $876,733 $1,774, (77/74) $10,681 $722,071 $893,671 $1,626, (78/75) $10,691 $558,337 $910,971 $1,479, (79/76) $10,702 $376,611 $928,636 $1,315, (80/77) $10,713 $175,495 $946,672 $1,132, (81/78) $10,724 $965,086 $975, (82/79) $10,735 $983,882 $994, (83/80) $10,749 $1,003,067 $1,013, (84/81) $10,763 $1,022,648 $1,033, (85/82) $10,777 $1,042,632 $1,053, (86/83) $10,791 $1,063,024 $1,073, (87/84) $10,805 $1,083,833 $1,094, (88/85) $10,819 $1,105,066 $1,115, (89/86) $10,833 $1,126,730 $1,137, (90/87) $208,936 $1,148,834 $1,357, (-/88) $10,861 $1,171,386 $1,182, (-/89) $10,875 $1,194,394 $1,205, (-/90) $1,217,867 $1,217,867 * = year of retirement Prepared by John Smith Page 16 of 127

17 Asset Accumulation & Depletion Proposed Plan This report shows changes in the value of capital over time. These projected end-of-year values begin with the analysis year and end with death of the last surviving client. Use this report to assess your ability to cover spending needs through the duration of the analysis. Year & Age SOY Assets 1 Growth & Reinvestments Contributions Withdrawals EOY Assets (48/45) $816,700 $9,886 $28,060 $854, (49/46) $854,646 $25,211 $28,573 $908, (50/47) $908,430 $28,641 $29,097 $966, (51/48) $966,168 $32,245 $29,631 $1,028, (52/49) $1,028,043 $36,040 $30,175 $1,094, (53/50) $1,094,258 $40,042 $30,731 $1,165, (54/51) $1,165,031 $44,270 $31,297 $1,240, (55/52) $1,240,599 $48,742 $31,875 $1,321, (56/53) $1,321,216 $49,907 $31,865 $59,098 $1,343, (57/54) $1,343,890 $54,321 $30,666 $4,628 $1,424, (58/55) $1,424,249 $59,244 $31,279 $1,514, (59/56) $1,514,773 $64,467 $31,905 $1,611, (60/57) $1,611,145 $70,012 $32,543 $1,713, (61/58) $1,713,700 $75,900 $33,194 $1,822, (62/59) $1,822,794 $82,156 $33,858 $1,938, (63/60) $1,938,808 $88,803 $34,535 $2,062, (64/61) $2,062,145 $95,867 $35,226 $2,193, (65/62) $2,193,237 $103,375 $35,930 $2,332, (66/63) $2,332,543 $111,357 $36,649 $2,480, (*67/64*) $2,480,548 $119,692 $26,070 $46,451 $2,579, (68/65) $2,579,860 $124,141 $184,783 $2,519, (69/66) $2,519,218 $119,983 $191,614 $2,447, (70/67) $2,447,586 $115,144 $182,132 $2,380, (71/68) $2,380,598 $108,631 $177,071 $2,312, (72/69) $2,312,158 $103,985 $184,098 $2,232, (73/70) $2,232,044 $98,636 $191,390 $2,139,291 1 SOY denotes start of year. Values are Market Value at that time. 2 EOY denotes End of Year. * = year of retirement Prepared by John Smith Page 17 of 127

18 Year & Age SOY Assets 1 Growth & Reinvestments Contributions Withdrawals EOY Assets (74/71) $2,139,291 $92,529 $198,956 $2,032, (75/72) $2,032,864 $85,607 $206,840 $1,911, (76/73) $1,911,631 $77,806 $215,047 $1,774, (77/74) $1,774,389 $69,065 $217,031 $1,626, (78/75) $1,626,424 $59,688 $206,113 $1,479, (79/76) $1,479,999 $50,409 $214,459 $1,315, (80/77) $1,315,948 $40,100 $223,168 $1,132, (81/78) $1,132,881 $28,687 $185,758 $975, (82/79) $975,810 $18,808 $994, (83/80) $994,617 $19,199 $1,013, (84/81) $1,013,817 $19,595 $1,033, (85/82) $1,033,411 $19,997 $1,053, (86/83) $1,053,408 $20,406 $1,073, (87/84) $1,073,815 $20,823 $1,094, (88/85) $1,094,638 $21,247 $1,115, (89/86) $1,115,884 $21,678 $1,137, (90/87) $1,137,563 $22,118 $198,090 $1,357, (-/88) $1,357,771 $22,566 $198,090 $1,182, (-/89) $1,182,247 $23,022 $1,205, (-/90) $1,205,269 $23,487 $10,889 $1,217,867 1 SOY denotes start of year. Values are Market Value at that time. 2 EOY denotes End of Year. * = year of retirement Prepared by John Smith Page 18 of 127

19 Cash Flow

20 The Impact & History of Inflation Impact Inflation decreases the buying power of money slowly and consistently over time. As seen in the purchasing power of a dollar chart, $1 in 1914 would be able to purchase roughly $.03 worth of goods or services today. While our timeframes are generally shorter, the impact of inflation can still be highly detrimental over the course of even 30 years, which is shorter than the time period most individuals save for retirement. For example, take a family with a household income of $75,000 in today s dollars. Assuming 3.0% inflation, the family s household income would need to increase to nearly $177, years from now to maintain the same buying power. This is why investing and earning a strong rate of return are critical in saving for retirement. Real Rate of Return When we usually talk about return on investment, we are speaking about gross (also known as nominal) return. For instance, if you invest $100 in a stock today and that same stock is worth $110 in a year, you ve received a 10% gross return. In reality, your return is generally much less. Without even taking into account the impact of trading fees, other investment expenses, and the substantial hit that taxes can take The Purchasing Power of a Dollar $ Annual Household Income Starting year 1 with $75,000 and 3% inflation $180,000 $150,000 $120,000 $90,000 $60,000 $30, on a portfolio, inflation can dramatically reduce the buying power of that return. The inflation-adjusted gross return is known as the real rate of return. In this particular example, if there is inflation of 3%, our actual real rate of return is not 10% but 7%. Similarly, if we hold cash and do not invest it, there is in fact a real loss of 3% on this cash. Prepared by John Smith Page 20 of 127

21 The Impact & History of Inflation Continued Annual Inflation for the Past 30 Years 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Time Period (previous 100 years) (previous 50 years) (previous 20 years) (previous 10 years) Annual Average CPI* 3.32% 4.16% 2.24% 1.95% Sometimes referred to as "headline inflation," Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. Changes in CPI are used to assess price changes associated with the cost of living. History It is important to consider the impact inflation can have on your financial goals. As we can see in the attached table, inflation for the past 100 years is right around 3.3%. Therefore it may seem reasonable to use the standard 3% rate of inflation for future projections. However, we have seen inflation come down considerably in recent history, as annual inflation over the past 20 years is under 2.5%. Depending on your time horizon and preferences, you may want to stay with the standard 3% rate or alter it to demonstrate the effects that you prefer. A higher rate of inflation will be more conservative but may not be an accurate forecast of future inflation. Prepared by John Smith Page 21 of 127

22 Current Year Cash Flow Current Plan This report displays detailed cash flow information over a single year for the selected scenario. Cash inflows and outflows are divided into categories to explain their source. Use this report to understand whether a cash flow surplus or deficit exists for the current year for the selected scenario. $164,013 7,249 $16,764 Inflows Outflows Surplus/(Deficit) Current Year Cash Flow Mark Lynda Total Inflows Earned Income $128,000 $36,000 $164,000 Non-Qualified Proceeds $7 $7 $13 Total $128,007 $36,007 $164,013 Outflows Lifestyle & Medical Expenses $34,353 $34,353 $68,706 Qualified Contributions $20,100 $2,160 $22,260 Non-Qualified Contributions $5 $5 $10 Other Outflows $9,768 $9,600 $19,368 Taxes $25,213 $7,501 $32,714 Surplus Outflows $4,191 $4,191 Total $93,630 $53,619 7,249 Surplus/(Deficit) $34,376 ($17,613) $16,764 Prepared by John Smith Page 22 of 127

23 Current Year Cash Flow Proposed Plan This report displays detailed cash flow information over a single year for the selected scenario. Cash inflows and outflows are divided into categories to explain their source. Use this report to understand whether a cash flow surplus or deficit exists for the current year for the selected scenario. $164,013 7,249 $16,764 Inflows Outflows Surplus/(Deficit) Current Year Cash Flow Mark Lynda Total Inflows Earned Income $128,000 $36,000 $164,000 Non-Qualified Proceeds $7 $7 $13 Total $128,007 $36,007 $164,013 Outflows Lifestyle & Medical Expenses $34,353 $34,353 $68,706 Qualified Contributions $20,100 $2,160 $22,260 Non-Qualified Contributions $5 $5 $10 Other Outflows $9,768 $9,600 $19,368 Taxes $25,213 $7,501 $32,714 Surplus Outflows $4,191 $4,191 Total $93,630 $53,619 7,249 Surplus/(Deficit) $34,376 ($17,613) $16,764 Prepared by John Smith Page 23 of 127

24 Cash Flow Outlook Current Plan This report projects detailed cash flow information over the next five years. Cash inflows and outflows are categorized by source and summarized as aggregate totals. This provides an overview of your cash flow projections. Year Age Mark/Lynda / / / / /49 Cash Inflows Earned Income Salary $118,000 $120,360 $122,767 $125,223 $127,727 Salary $36,000 $36,720 $37,454 $38,203 $38,968 Bonus $10,000 $10,200 $10,404 $10,612 $10,824 Total $164,000 $167,280 $170,626 $174,038 $177,519 Investment Income *Accrued Income - Interest $1 *Accrued Income - Short Term... *Accrued Income - Interest $1 *Accrued Income - Short Term... savings $10 $13 $13 $13 $13 Total $13 $13 $13 $13 $13 Total Cash Inflows $164,013 $167,293 $170,639 $174,052 $177,532 Cash Outflows Lifestyle Expenses Food,400,832 $15,277 $15,735 $16,207 Transportation $4,800 $4,944 $5,092 $5,245 $5,402 Entertainment $7,200 $7,416 $7,638 $7,868 $8,104 Personal $3,600 $3,708 $3,819 $3,934 $4,052 Other Basic $13,200 $13,596,004,424,857 Mortgage $18,984 $18,984 $18,984 $18,984 $18,984 Car Loans $4,512 $4,512 $1,886 Car Loans 2 $2,010 Total $68,706 $67,992 $66,701 $66,190 $67,606 Qualified Contributions Mark qualified $17,700 $18,054 $18,415 $18,783 $19,159 Prepared by John Smith Page 24 of 127

25 Year Age Mark/Lynda / / / / /49 Lyndia qualified 529 Plan Total Non-Qualified Reinvestments *Income already represented in... *Income already represented in... savings Total Miscellaneous Expenses Real Estate & Property Taxes Residence Individual Term Total Taxes Federal Income Tax State Income Tax $2,160 $2,400 $22,260 $2 $2 $7 $10 $9,600 $9,600 $168 $19,368 $15,774 $4,444 $2,203 $2,400 $22,657 $9 $9 $9,888 $9,888 $168 $19,944 $16,064 $4,603 Social Security Tax - Employment $10,118 $10,330 Medicare Tax $2,378 $2,426 Total Surplus Outflows Surplus Expense Total Total Cash Outflows $32,714 $4,191 $4,191 7,249 $33,423 $4,654 $4,654 8,679 Surplus/(Deficit) $16,764 $18,614 $2,247 $2,400 $23,062 $9 $9 $10,185 $10,185 $168 $20,537 $16,358 $4,765 $2,292 $2,400 $23,476 $9 $9 $10,490 $10,490 $168 $21,148 $16,656 $4,931 $2,338 $2,400 $23,897 $9 $9 $10,805 $10,805 $168 $21,778 $16,958 $5,100 $10,579 $10,790 $11,006 $2,474 $2,524 $2,574 $34,176 $5,231 $5,231 9,716 $34,901 $5,665 $5,665 $151,390 $35,639 $5,721 $5,721 $154,649 $20,923 $22,662 $22,883 Prepared by John Smith Page 25 of 127

26 Cash Flow Surplus/(Deficit) Current Plan This report displays the total cash amount remaining after covering all expenses by projecting annual end-ofyear cash flow surplus or deficit through the duration of the analysis. Year Age Total Inflows Total Outflows Surplus/(Deficit) /45 $164,013 7,249 $16, /46 $167,293 8,679 $18, /47 $170,639 9,716 $20, /48 $174,052 $151,390 $22, /49 $177,532 $154,649 $22, /50 $181,083 $157,990 $23, /51 $184,704 $161,412 $23, /52 $188,398 $164,929 $23, /53 $251,264 $227,158 $24, /54 $200,523 $232,334 ($31,811) /55 $199,929 $239,228 ($39,299) /56 $203,927 $246,371 ($42,444) /57 $208,005 $183,190 $24, /58 $212,165 $187,306 $24, /59 $216,408 $191,525 $24, /60 $220,736 $195,850 $24, /61 $225,150 $200,257 $24, /62 $229,653 $204,590 $25, /63 $234,246 $197,799 $36, *67/64* $215,254 $215, /65 $232,605 $232, /66 $240,392 $240, /67 $246,644 $246, /68 $253,626 $253, /69 $262,183 $262, /70 $271,036 $271, /71 $280,195 $280, /72 $289,704 $289, /73 $299,568 $299,568 Prepared by John Smith Page 26 of 127

27 Year Age Total Inflows Total Outflows Surplus/(Deficit) /74 $303,241 $303, /75 $294,048 $294, /76 $304,153 $304, /77 $314,654 $314, /78 $325,529 $325, /79 $161,402 $301,114 ($139,712) /80 $97,086 $310,471 ($213,385) /81 $99,027 $321,071 ($222,044) /82 $101,007 $332,052 ($231,045) /83 $103,027 $343,430 ($240,403) /84 $105,088 $355,220 ($250,133) /85 $107,189 $367,439 ($260,250) /86 $109,333 $380,103 ($270,770) /87 $361,519 $643,229 ($281,710) /88 $292,340 $359,515 ($67,175) /89 $96,135 $371,263 ($275,128) /90 $108,944 $615,974 ($507,029) * = year of retirement Prepared by John Smith Page 27 of 127

28 Cash Inflows Current Plan This report displays aggregate totals of your cash inflows by source through the duration of the analysis. Year & Age Earned Income Pension & Social Security Income Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Inflows 2017 (48/45) $164,000 $13 $164, (49/46) $167,280 $13 $167, (50/47) $170,626 $13 $170, (51/48) $174,038 $13 $174, (52/49) $177,519 $13 $177, (53/50) $181,069 $13 $181, (54/51) $184,691 $13 $184, (55/52) $188,384 $13 $188, (56/53) $192,152 $59,098 $13 $251, (57/54) $195,995 $4,514 $13 $200, (58/55) $199,915 $13 $199, (59/56) $203,913 $203, (60/57) $207,992 $208, (61/58) $212,151 $212, (62/59) $216,395 $216, (63/60) $220,722 $220, (64/61) $225,137 $225, (65/62) $229,640 $229, (66/63) $234,232 $234, (*67/64*) $160,978 $7,812 $46,451 $215, (68/65) $47,808 $184,783 $232, (69/66) $48,765 $191,614 $240, (70/67) $64,498 $182,132 $246, (71/68) $76,540 $177,071 $253, (72/69) $78,071 $184,098 $262, (73/70) $79,633 $191,390 $271, (74/71) $81,225 $198,956 $280, (75/72) $82,850 $206,840 $289, (76/73) $84,507 $215,047 $299,568 Prepared by John Smith Page 28 of 127

29 Year & Age Earned Income Pension & Social Security Income Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Inflows 2046 (77/74) $86,197 $217,031 $303, (78/75) $87,921 $206,113 $294, (79/76) $89,679 $214,459 $304, (80/77) $91,473 $223,168 $314, (81/78) $93,302 $232,213 $325, (82/79) $95,168 $66,220 $161, (83/80) $97,072 $97, (84/81) $99,013 $99, (85/82) $100,994 $101, (86/83) $103,013 $103, (87/84) $105,074 $105, (88/85) $107,175 $107, (89/86) $109,319 $109, (90/87) $111,505 $250,000 $361, (-/88) $94,236 $198,104 $292, (-/89) $96,121 $96, (-/90) $98,044 $10,901 $108,944 * = year of retirement Prepared by John Smith Page 29 of 127

30 Cash Outflows Current Plan This report displays aggregate totals of your cash outflows by source through the duration of the analysis. Year & Age Lifestyle & Medical Expenses Qualified Contributions Non-Qualified Contributions Other Outflows Taxes Surplus Outflows Total Outflows 2017 (48/45) $68,706 $22,260 $10 $19,368 $32,714 $4,191 7, (49/46) $67,992 $22,657 $9 $19,944 $33,423 $4,654 8, (50/47) $66,701 $23,062 $9 $20,537 $34,176 $5,231 9, (51/48) $66,190 $23,476 $9 $21,148 $34,901 $5,665 $151, (52/49) $67,606 $23,897 $9 $21,778 $35,639 $5,721 $154, (53/50) $69,065 $24,327 $9 $22,426 $36,389 $5,773 $157, (54/51) $70,567 $24,766 $9 $23,094 $37,153 $5,823 $161, (55/52) $72,115 $25,213 $9 $23,782 $37,944 $5,867 $164, (56/53) $132,807 $25,069 $9 $24,490 $38,756 $6,027 $227, (57/54) $137,403 $23,735 $9 $25,220 $39,535 $6,432 $232, (58/55) 2,197 $24,209 $9 $25,971 $40,377 $6,464 $239, (59/56) 7,196 $24,693 $9 $26,745 $41,234 $6,492 $246, (60/57) $80,577 $25,187 $9 $27,543 $43,670 $6,204 $183, (61/58) $82,425 $25,691 $9 $28,364 $44,603 $6,215 $187, (62/59) $84,328 $26,205 $9 $29,210 $45,553 $6,221 $191, (63/60) $86,288 $26,729 $9 $30,081 $46,521 $6,222 $195, (64/61) $88,307 $27,264 $9 $30,978 $47,476 $6,223 $200, (65/62) $90,387 $27,809 $9 $31,903 $48,216 $6,266 $204, (66/63) $78,496 $28,365 $9 $32,855 $48,961 $9,112 $197, (*67/64*) $122,396 $20,388 $9 $33,835 $38,625 $215, (68/65) $167,364 $11 $34,845 $30,384 $232, (69/66) $173,006 $9 $35,886 $31,492 $240, (70/67) $178,847 $9 $36,957 $30,830 $246, (71/68) $184,897 $9 $38,061 $30,659 $253, (72/69) $191,162 $10 $39,198 $31,814 $262, (73/70) $197,651 $10 $40,369 $33,007 $271, (74/71) $204,372 $10 $41,575 $34,239 $280, (75/72) $211,334 $10 $42,817 $35,543 $289, (76/73) $218,547 $10 $44,096 $36,915 $299,568 Prepared by John Smith Page 30 of 127

31 Year & Age Lifestyle & Medical Expenses Qualified Contributions Non-Qualified Contributions Other Outflows Taxes Surplus Outflows Total Outflows 2046 (77/74) $221,602 $10 $45,414 $36,216 $303, (78/75) $215,956 $10 $46,771 $31,310 $294, (79/76) $223,446 $11 $48,170 $32,526 $304, (80/77) $231,210 $11 $49,610 $33,824 $314, (81/78) $239,260 $11 $51,093 $35,165 $325, (82/79) $247,608 $11 $52,621 $874 $301, (83/80) $256,265 $12 $54,194 $310, (84/81) $265,242 $55,815 $321, (85/82) $274,554 $57,484 $332, (86/83) $284,212 $59,204 $343, (87/84) $294,232 $60,975 $355, (88/85) $304,626 $62,799 $367, (89/86) $315,411 $64,678 $380, (90/87) $378,512 $66,613 $198,090 $643, (-/88) $291,063 $68,439 $359, (-/89) $300,757 $70,492 $371, (-/90) $518,778 $97,182 $615,974 * = year of retirement Prepared by John Smith Page 31 of 127

32 Cash Flow Outlook Proposed Plan This report projects detailed cash flow information over the next five years. Cash inflows and outflows are categorized by source and summarized as aggregate totals. This provides an overview of your cash flow projections. Year Age Mark/Lynda / / / / /49 Cash Inflows Earned Income Salary $118,000 $120,360 $122,767 $125,223 $127,727 Salary $36,000 $36,720 $37,454 $38,203 $38,968 Bonus $10,000 $10,200 $10,404 $10,612 $10,824 Total $164,000 $167,280 $170,626 $174,038 $177,519 Investment Income *Accrued Income - Interest $1 *Accrued Income - Short Term... *Accrued Income - Interest $1 *Accrued Income - Short Term... savings $10 $13 $13 $13 $13 Total $13 $13 $13 $13 $13 Total Cash Inflows $164,013 $167,293 $170,639 $174,052 $177,532 Cash Outflows Lifestyle Expenses Food,400,832 $15,277 $15,735 $16,207 Transportation $4,800 $4,944 $5,092 $5,245 $5,402 Entertainment $7,200 $7,416 $7,638 $7,868 $8,104 Personal $3,600 $3,708 $3,819 $3,934 $4,052 Other Basic $13,200 $13,596,004,424,857 Mortgage $18,984 $18,984 $18,984 $18,984 $18,984 Car Loans $4,512 $4,512 $1,886 Car Loans 2 $2,010 Total $68,706 $67,992 $66,701 $66,190 $67,606 Qualified Contributions Mark qualified $17,700 $18,054 $18,415 $18,783 $19,159 Prepared by John Smith Page 32 of 127

33 Year Age Mark/Lynda / / / / /49 Lyndia qualified 529 Plan Total Non-Qualified Reinvestments *Income already represented in... *Income already represented in... savings Total Miscellaneous Expenses Real Estate & Property Taxes Residence Individual Term Total Taxes Federal Income Tax State Income Tax $2,160 $2,400 $22,260 $2 $2 $7 $10 $9,600 $9,600 $168 $19,368 $15,774 $4,444 $2,203 $2,400 $22,657 $9 $9 $9,888 $9,888 $168 $19,944 $16,064 $4,603 Social Security Tax - Employment $10,118 $10,330 Medicare Tax $2,378 $2,426 Total Surplus Outflows Surplus Expense Total Total Cash Outflows $32,714 $4,191 $4,191 7,249 $33,423 $4,654 $4,654 8,679 Surplus/(Deficit) $16,764 $18,614 $2,247 $2,400 $23,062 $9 $9 $10,185 $10,185 $168 $20,537 $16,358 $4,765 $2,292 $2,400 $23,476 $9 $9 $10,490 $10,490 $168 $21,148 $16,656 $4,931 $2,338 $2,400 $23,897 $9 $9 $10,805 $10,805 $168 $21,778 $16,958 $5,100 $10,579 $10,790 $11,006 $2,474 $2,524 $2,574 $34,176 $5,231 $5,231 9,716 $34,901 $5,665 $5,665 $151,390 $35,639 $5,721 $5,721 $154,649 $20,923 $22,662 $22,883 Prepared by John Smith Page 33 of 127

34 Cash Flow Surplus/(Deficit) Proposed Plan This report displays the total cash amount remaining after covering all expenses by projecting annual end-ofyear cash flow surplus or deficit through the duration of the analysis. Year Age Total Inflows Total Outflows Surplus/(Deficit) /45 $164,013 7,249 $16, /46 $167,293 8,679 $18, /47 $170,639 9,716 $20, /48 $174,052 $151,390 $22, /49 $177,532 $154,649 $22, /50 $181,083 $157,990 $23, /51 $184,704 $161,412 $23, /52 $188,398 $164,929 $23, /53 $251,264 $227,158 $24, /54 $200,637 $232,334 ($31,697) /55 $199,929 $239,228 ($39,299) /56 $203,927 $246,371 ($42,444) /57 $208,005 $183,190 $24, /58 $212,165 $187,306 $24, /59 $216,408 $191,525 $24, /60 $220,736 $195,850 $24, /61 $225,150 $200,257 $24, /62 $229,653 $204,590 $25, /63 $234,246 $197,799 $36, *67/64* $215,254 $215, /65 $232,605 $232, /66 $240,392 $240, /67 $246,644 $246, /68 $253,626 $253, /69 $262,183 $262, /70 $271,036 $271, /71 $280,195 $280, /72 $289,704 $289, /73 $299,568 $299,568 Prepared by John Smith Page 34 of 127

35 Year Age Total Inflows Total Outflows Surplus/(Deficit) /74 $303,241 $303, /75 $294,048 $294, /76 $304,153 $304, /77 $314,654 $314, /78 $279,074 $315,130 ($36,056) /79 $95,182 $300,240 ($205,058) /80 $97,086 $310,473 ($213,387) /81 $99,027 $321,071 ($222,044) /82 $101,007 $332,052 ($231,045) /83 $103,027 $343,430 ($240,403) /84 $105,088 $355,220 ($250,133) /85 $107,189 $367,439 ($260,250) /86 $109,333 $380,103 ($270,770) /87 $361,519 $643,229 ($281,710) /88 $292,340 $359,515 ($67,175) /89 $96,135 $371,263 ($275,128) /90 $108,946 $615,974 ($507,028) * = year of retirement Prepared by John Smith Page 35 of 127

36 Cash Inflows Proposed Plan This report displays aggregate totals of your cash inflows by source through the duration of the analysis. Year & Age Earned Income Pension & Social Security Income Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Inflows 2017 (48/45) $164,000 $13 $164, (49/46) $167,280 $13 $167, (50/47) $170,626 $13 $170, (51/48) $174,038 $13 $174, (52/49) $177,519 $13 $177, (53/50) $181,069 $13 $181, (54/51) $184,691 $13 $184, (55/52) $188,384 $13 $188, (56/53) $192,152 $59,098 $13 $251, (57/54) $195,995 $4,628 $13 $200, (58/55) $199,915 $13 $199, (59/56) $203,913 $203, (60/57) $207,992 $208, (61/58) $212,151 $212, (62/59) $216,395 $216, (63/60) $220,722 $220, (64/61) $225,137 $225, (65/62) $229,640 $229, (66/63) $234,232 $234, (*67/64*) $160,978 $7,812 $46,451 $215, (68/65) $47,808 $184,783 $232, (69/66) $48,765 $191,614 $240, (70/67) $64,498 $182,132 $246, (71/68) $76,540 $177,071 $253, (72/69) $78,071 $184,098 $262, (73/70) $79,633 $191,390 $271, (74/71) $81,225 $198,956 $280, (75/72) $82,850 $206,840 $289, (76/73) $84,507 $215,047 $299,568 Prepared by John Smith Page 36 of 127

37 Year & Age Earned Income Pension & Social Security Income Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Inflows 2046 (77/74) $86,197 $217,031 $303, (78/75) $87,921 $206,113 $294, (79/76) $89,679 $214,459 $304, (80/77) $91,473 $223,168 $314, (81/78) $93,302 $185,758 $279, (82/79) $95,168 $95, (83/80) $97,072 $97, (84/81) $99,013 $99, (85/82) $100,994 $101, (86/83) $103,013 $103, (87/84) $105,074 $105, (88/85) $107,175 $107, (89/86) $109,319 $109, (90/87) $111,505 $250,000 $361, (-/88) $94,236 $198,104 $292, (-/89) $96,121 $96, (-/90) $98,044 $10,903 $108,946 * = year of retirement Prepared by John Smith Page 37 of 127

38 Cash Outflows Proposed Plan This report displays aggregate totals of your cash outflows by source through the duration of the analysis. Year & Age Lifestyle & Medical Expenses Qualified Contributions Non-Qualified Contributions Other Outflows Taxes Surplus Outflows Total Outflows 2017 (48/45) $68,706 $22,260 $10 $19,368 $32,714 $4,191 7, (49/46) $67,992 $22,657 $9 $19,944 $33,423 $4,654 8, (50/47) $66,701 $23,062 $9 $20,537 $34,176 $5,231 9, (51/48) $66,190 $23,476 $9 $21,148 $34,901 $5,665 $151, (52/49) $67,606 $23,897 $9 $21,778 $35,639 $5,721 $154, (53/50) $69,065 $24,327 $9 $22,426 $36,389 $5,773 $157, (54/51) $70,567 $24,766 $9 $23,094 $37,153 $5,823 $161, (55/52) $72,115 $25,213 $9 $23,782 $37,944 $5,867 $164, (56/53) $132,807 $25,069 $9 $24,490 $38,756 $6,027 $227, (57/54) $137,403 $23,735 $9 $25,220 $39,535 $6,432 $232, (58/55) 2,197 $24,209 $9 $25,971 $40,377 $6,464 $239, (59/56) 7,196 $24,693 $9 $26,745 $41,234 $6,492 $246, (60/57) $80,577 $25,187 $9 $27,543 $43,670 $6,204 $183, (61/58) $82,425 $25,691 $9 $28,364 $44,603 $6,215 $187, (62/59) $84,328 $26,205 $9 $29,210 $45,553 $6,221 $191, (63/60) $86,288 $26,729 $9 $30,081 $46,521 $6,222 $195, (64/61) $88,307 $27,264 $9 $30,978 $47,476 $6,223 $200, (65/62) $90,387 $27,809 $9 $31,903 $48,216 $6,266 $204, (66/63) $78,496 $28,365 $9 $32,855 $48,961 $9,112 $197, (*67/64*) $122,396 $20,388 $9 $33,835 $38,625 $215, (68/65) $167,364 $11 $34,845 $30,384 $232, (69/66) $173,006 $9 $35,886 $31,492 $240, (70/67) $178,847 $9 $36,957 $30,830 $246, (71/68) $184,897 $9 $38,061 $30,659 $253, (72/69) $191,162 $10 $39,198 $31,814 $262, (73/70) $197,651 $10 $40,369 $33,007 $271, (74/71) $204,372 $10 $41,575 $34,239 $280, (75/72) $211,334 $10 $42,817 $35,543 $289, (76/73) $218,547 $10 $44,096 $36,915 $299,568 Prepared by John Smith Page 38 of 127

39 Year & Age Lifestyle & Medical Expenses Qualified Contributions Non-Qualified Contributions Other Outflows Taxes Surplus Outflows Total Outflows 2046 (77/74) $221,602 $10 $45,414 $36,216 $303, (78/75) $215,956 $10 $46,771 $31,310 $294, (79/76) $223,446 $11 $48,170 $32,526 $304, (80/77) $231,210 $11 $49,610 $33,824 $314, (81/78) $239,260 $11 $51,093 $24,766 $315, (82/79) $247,608 $11 $52,621 $300, (83/80) $256,265 $54,194 $310, (84/81) $265,242 $55,815 $321, (85/82) $274,554 $57,484 $332, (86/83) $284,212 $59,204 $343, (87/84) $294,232 $60,975 $355, (88/85) $304,626 $62,799 $367, (89/86) $315,411 $64,678 $380, (90/87) $378,512 $66,613 $198,090 $643, (-/88) $291,063 $68,439 $359, (-/89) $300,757 $70,492 $371, (-/90) $518,778 $97,182 $615,974 * = year of retirement Prepared by John Smith Page 39 of 127

40 Income Tax

41 AN INTRODUCTION Planning to Reduce Your Tax Burden Evasion vs. Planning By taking advantage of available legal methods to reduce overall tax liability, one can avoid paying unnecessary taxes with tax planning. This is not to be confused with tax evasion, which is the usage of illegal methods to avoid taxes. Reducing tax liability is not only available to the super rich. Middle class individuals can take advantage of legal methods to reduce taxes and improve their financial outlook. By finding these techniques and engaging in proper tax planning, you can maximize your financial potential. The effect of Taxes on Your Investment Portfolio Investment tax planning focuses on the tax implications of your investment selections. Understanding how taxes affect your investments should have an impact on your asset allocation decisions. For example, corporate and most government bonds generate ordinary income taxed at your marginal tax bracket. However, municipal bonds are generally exempt from Federal taxation. Nearly all of the largest and most established companies that are publicly traded pay dividends to their shareholders, which are generally eligible for a reduced income tax rate. The returns from high growth companies that do not pay dividends are more likely to come from capital gains, which also may be taxed at a rate lower than ordinary income if the stock has been held for more than a year (a longterm capital gain). However, for short-term gains, these returns will be taxed at ordinary gain rates. Tax-advantaged Accounts When saving for retirement, it may be preferable to invest in tax-advantaged vehicles such as a 401(k) through your employer, an IRA, or a Roth IRA. Which account you choose is based on a variety of details; but, in general, these accounts can help to reduce or delay payment of taxes. While investing in a 401(k) account does have tax advantages, it is primarily beneficial due to any matching provisions that your employer may offer. Focus on the Big Picture While the tax implications of your decisions should be taken into consideration, they should not be the sole characteristic that is considered. If your tax objective is to select taxfavorable investments, it should be consistent with your return rate expectations, risk tolerance, time horizon, and other constraints. Strategies like tax-harvesting can be helpful in reducing your tax burden, but you should not sell an asset merely because of tax considerations. You should review your goals comprehensively before significant transactions take place. Prepared by John Smith Page 41 of 127