Personal Retirement Plan. John and Mary Sample

Transcription

1 Personal Retirement Plan For January 31, 2016 Prepared by Carolyn B. Settzo Certified Financial Planner You can't predict but you can prepare This presentation provides a general overview of some aspects of your personal financial position. It is designed to provide educational and / or general information and is not intended to provide specific legal, accounting, investment, tax or other professional advice. For specific advice on these aspects of your overall financial plan, consult with your professional advisors. Asset or portfolio earnings and / or returns shown, or used in the presentation, are not intended to predict nor guarantee the actual results of any investment products or particular investment style. IMPORTANT: The projections or other information generated by Money Tree's Silver regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Additionally, it is important to note that information in this report is based upon financial figures input on the date above; results provided may vary with subsequent uses and over time.

2 Net Worth Statement January 31, 2016 ASSETS Savings And Investments Money Market Accounts/Funds $20,000 Annuities 30,000 Municipal Bonds and Funds 10,000 Stock Mutual Funds 5,000 Retirement Accounts Qualified Plans-John $100,000 IRA Assets-Mary 14,000 Roth Assets-John 2,000 Roth Assets-Mary 2,000 Other Assets Residence $200,000 Personal Property 20,000 Auto 30,000 LIABILITIES $65,000 $118,000 $250,000 TOTAL ASSETS $433,000 Residence Mortgage $120,000 Credit Card Debt 5,000 Auto Loans 15,000 $140,000 Net Worth (Assets less Liabilities) $293,000 Note: Potential taxes due on unrealized gains or assets in tax-deferred retirement plans are not accounted for in this Net Worth Statement. This asset information is based upon information you provided and sources believed to be reliable. The asset listing herein is not an account statement and does not necessarily include current or complete balances, holdings, and returns. Please review this information for accuracy.

3 Description Current Amount Asset Worksheet Annual Additions* Addition Period Asset Class Account Taxation Asset Type Cash 20,000 Cash Taxable (J) Money Market Municipal Bond Fund 10,000 Income Tax-Free (J) Muni Bonds & Funds Stock Mutual Funds 5,000 3, Inc./Gro. Taxable (J) Mutual Funds (Stock) IRA 14,000 Income IRA (2) Stocks 401k 20,000 1, Income Tax-Deferred (1) Bond Mutual Funds 401k 80,000 8, Inc./Gro. Tax-Deferred (1) Mutual Funds (Stock) Annuity 30,000 Inc./Gro. Annuity (1) Annuities Roth IRA 2,000 2, Cash Roth IRA (1) Money Market Roth IRA 2,000 2, Cash Roth IRA (2) Money Market Totals: $183,000 $16,000 *Annual IRA addition amounts used in the analysis are limited to the maximums allowed by law. Note: This asset information is based upon information you provided and sources believed to be reliable. The asset listing herein is not an account statement and does not necessarily include current or complete balances, holdings, and returns. Please review this information for accuracy.

4 Resources Available for Retirement Funds to meet your goals can come from several sources: Personal Investing, Retirement Plans, Defined Benefit Pensions, Social Security, and Other Income. Here is a summary of your situation. Total Investment Assets $183,000 See Asset Worksheet for detailed annual savings information. Social Security Full Benefit Age Benefit (After-tax) John 62 $23,928 Pension Plans John Pension Amount $5,400* Pension Starting Age 62 Increase Rate Pre-Retirement 0.0% Increase Rate in Retirement 2.0% Survivor Percentage 0% *Annual amount, after taxes. Personal Investments Current Balances Money Market Accounts/Funds $20,000 Annuities 30,000 Municipal Bonds and Funds 10,000 Stock Mutual Funds 5,000 $65,000 Retirement Plans Qualified Plans-John $100,000 IRA Assets-Mary 14,000 Roth IRA/401k Assets-John 2,000 Roth IRA/401k Assets-Mary 2,000 $118,000 Mary 62 $12,432 Mary N/A

5 Developing A Retirement Plan Retirement Profile Developing a retirement plan means understanding your current situation, deciding among alternatives, and taking appropriate action today. This report will help you define your current retirement goals, identify your current planning, and estimate the results for your review. Your Current Retirement Goals Age: Retirement Age: Years until Retirement: Years of Retirement: Annual Retirement Spending (After-tax): John $57,500 Mary (expressed in today's dollars) Additional Objectives Please see the attached Education Funding Illustration. Other Expenses European vacation: Replace Roof: Redo Kitchen: Assumptions ($20,000)/year starting 2014, increase rate of 3%, for 1 year. ($8,000)/year starting 2016, increase rate of 3%, for 1 year. ($12,000)/year starting 2012, increase rate of 3%, for 1 year. Inflation Rate: Income Tax Rate (Average): Return on Investments (Average): Pre-Retirement 3.0% 25.0% 6.9% Retirement 3.0% 20.0% 6.1% Current residence(s) will be maintained. Related debt will be paid per existing mortgage(s).

6 Retirement Summary Retirement Capital Illustration The analysis begins at your current age and extends through your life expectancy. It includes all assets, both tax advantaged and taxable, all expenses, including education funding if applicable, other income and expense estimates, defined benefit pensions, and Social Security benefits. The graph illustrates the growth and depletion of capital assets as seen in Retirement Capital Analysis. General Assumptions: Rates of Return Before and After Retirement Used in Illustration: Taxable RORs: Tax Def. RORs: Tax Free RORs: Annuity RORs: 7% 6% 7% 6% 5% 5% 7% 7% Retirement Spending Needs* Survivor Spending Needs* Retirement Age Retirement Age Inflation - Current Inflation - Retirement Tax Rate - Current Tax Rate - Retirement $57,500 $50,000 John - 64 Mary % 3% 25% 20% * Spending needs are stated in today's after tax-dollars. See Assumptions page for complete listing of assumptions. Actual future returns, taxes, expenses, and benefits are unknown. This illustration uses representative estimates and assumptions for educational and discussion purposes only. Do not rely on this report for investment analysis. Retirement Capital Illustration Results: It appears you may run out of money before the last life expectancy of age 90. The range of possible options you might consider to improve your situation include the following: Increase the rate of return on your investments. Increase your annual savings by $4,600/year ($383 month). Reduce your retirement spending needs by $4,700 to $52,800/year ($4,401/month). Defer your retirement by about 2 years. Combine any of the above and lower the requirements for each.

7 Ages* Retirement Spending Needs Retirement Capital Analysis Indv. 1 Sources of Annual Income ** Social Security Pension Income Indv. 2 Indv. 1 Indv. 2 Education & Other Inc/Exp*** Net Surplus or (Shortage) Annual Additions To Assets Retirement Capital $183, (8,000) (8,000) 16, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,400 5,400 24, , ,508 5,508 24,926 1,053, R 62 R (92,263) 23,928 12,432 5,993 (49,911) 1,064, (95,030) 24,466 12,711 6,113 (51,740) 1,074, (97,880) 25,017 12,997 6,235 (53,631) 1,084, (100,816) 25,580 13,290 6,360 (55,587) 1,084, (103,840) 26,155 13,589 6,487 (57,609) 1,081, (106,955) 26,744 13,895 6,616 (59,700) 1,071, (110,163) 27,345 14,207 6,749 (61,861) 1,055, (113,467) 27,961 14,527 6,884 (64,096) 1,036, (116,871) 28,590 14,854 7,021 (66,406) 1,013, (120,377) 29,233 15,188 7,162 (68,794) 985, (123,988) 29,891 15,530 7,305 (71,262) 952, (127,707) 30,563 15,879 7,451 (73,813) 915, (131,538) 31,251 16,237 7,600 (76,450) 871, (135,484) 31,954 16,602 7,752 (79,176) 821, (139,548) 32,673 16,975 7,907 (81,992) 765, (143,734) 33,408 17,357 8,065 (84,903) 702, (148,046) 34,160 17,748 8,227 (87,911) 631, (152,487) 34,929 18,147 8,391 (91,020) 551, (157,061) 35,715 18,556 8,559 (94,232) 463, (161,772) 36,518 18,973 8,730 (97,551) 389, (166,625) 37,340 19,400 8,905 (100,981) 309, L 83 (171,623) 38,180 19,836 9,083 (104,524) 220, (153,709) 46,010 (107,699) 122, (158,320) 47,045 (111,275) 15, (163,069) 48,104 (114,965) 87 (167,961) 49,186 (118,775) 88 (172,999) 50,293 (122,706) 89 (178,188) 51,425 (126,763) 90 L (183,533) 52,582 (130,951) *R=Retirement age, L=Life expectancy.** Pensions & 85% of S.S. reduced 20.00% for income taxes. *** Includes life insurance and education costs. Note: This report is based upon assumed inflation rates of 3.00% and 3.00% (before and after retirement). Actual future inflation rates are unknown.

8 Monte Carlo Retirement Simulation Results from 10,000 Monte Carlo Simulation Trials * The bold line is the estimated retirement capital value over time using fixed rates. This Monte Carlo Retirement Simulation illustrates possible variations in growth and/or depletion of retirement capital under unpredictable future conditions. The simulation introduces uncertainty by fluctuating annual rates of return on assets. The graph and related calculations do not presuppose or analyze any particular investment or investment strategy. This long-term hypothetical model is used to help show potential effects of broad market volatility and the possible impact on your financial plans. This is not a projection, but an illustration of uncertainty. The simulations begin in the current year and model potential asset level changes over time. Included are all capital assets, both tax advantaged and taxable, all expenses, including education funding if applicable, pension benefits, and Social Security benefits. Observing results from this large number of simulations may offer insight into the shape, trends, and potential range of future retirement plan outcomes under volatile market conditions. Retirement Capital Analysis Results, at Life Expectancy, of 10,000 Monte Carlo Simulations: Percent with funds at last life expectancy 17% Retirement Capital Estimate $0 Percent with funds at age 83 80% Minimum (Worst Case) result $0 Percent with funds at age 73 > 95% Average Monte Carlo result $103,812 Percent with funds at age 64 > 95% Maximum Monte Carlo result $5,628,810 Life insurance proceeds are not included in the final year balances of these calculations. Illustration based on random rates of return which average 6.4%, with a std. dev. of 6.3% (95% of values fall between -6.2% and 19%). IMPORTANT: The projections or other information generated in this report regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each report and over time. Results of this simulation are neither guarantees nor projections of future performance. Information is for illustrative purposes only. Do not rely upon the results of this report to predict actual future performance of any investment or investment strategy.

9 Cash Flow Summary The bars in the above graph represent the amounts available from: Earned income (wages and self-employment) Social Security Qualified plan additions and distributions Investment additions and distributions Misc - (inheritances, sale of residence, retirement account minimum distributions, life insurance) The line illustrates the annual expenses including: Personal living expenses Planned debt expenses Specified special expenses Planned deposits to investment and retirement accounts Miscellaneous expense items Taxes Note: The Cash Flow report provides the actual numbers that create the preceding Cash Flow Summary graph.

10 Cash Flow Ages Cash Flow Sources Less Living Shortage Indv. Earned Retire/Roth Investment Pension/ Other Total Expense or 1 2 Income Accounts* Accounts* Soc Sec. Income Sources & Taxes Surplus $120,000 ($13,000) $5,000 ($8,000) $104,000 ($97,750) $6, ,600 (13,390) (1,372) 108,838 (100,682) 8, ,308 (13,790) (1,211) 112,307 (103,703) 8, ,126 (14,205) (1,035) 115,886 (106,813) 9, ,060 (14,632) (842) 119,586 (110,018) 9, ,112 (15,069) (632) 123,411 (113,318) 10, ,285 (15,522) (403) 127,360 (116,718) 10, ,584 (15,987) (155) 131,442 (120,219) 11, ,012 (16,467) ,660 (123,826) 11, ,572 (16,961) ,018 (127,541) 12, ,269 (17,469) ,523 (131,367) 13, ,108 (17,994) 1, ,178 (135,308) 13, ,090 (18,534) 1, ,989 (139,367) 14, ,224 (19,091) 1, ,963 (143,549) 15, ,510 (19,663) 2,399 5, ,646 (147,855) 21, ,956 (20,252) 3,152 5, ,364 (152,291) 23, R 62 R 49,911 42,352 92,263 (92,263) ,740 43,290 95,030 (95,030) ,631 44,249 97,880 (97,880) ,380 21,682 45, ,291 (109,292) ,599 46, ,830 (112,830) ,536 47, ,791 (119,792) ,326 48, ,628 (125,628) ,119 49, ,491 (129,490) ,007 50, ,472 (133,472) ,992 51, ,575 (137,575) ,077 52, ,803 (141,803) ,266 53, ,160 (146,160) ,562 55, ,650 (150,650) ,969 56, ,277 (155,277) ,490 57, ,046 (160,046) ,128 58, ,959 (164,959) ,889 60, ,024 (170,023) ,774 61, ,241 (175,241) ,789 62, ,618 (180,618) ,840 64, ,061 (163,062) ,980 65, ,624 (166,625) 85 L ,523 67, ,622 (171,623) ,698 46, ,708 (153,709) ,274 47, ,319 (158,320) 86 15,503 48,104 63,607 (163,069) (99,462) 87 49,186 49,186 (167,961) (118,775) 88 50,293 50,293 (172,999) (122,706) 89 51,425 51,425 (178,188) (126,763) 90 L 52,582 52,582 (183,533) (130,951) *Scheduled distributions, interest, or cash dividends or amounts taken to meet the IRS minimum distribution requirements. Note: Earned Income is reduced by qualified retirement account contributions in calculating the effect of income taxes. Pension, Social Security, and Other Income cash flow items are net of income taxes. The tax rate used is the average tax rate entered in the input.

11 Ages 1 & 2 Taxable Savings & Investment Accounts Account Additions Annual Growth Income Tax On Account* From Tax-Advantaged Assets Distributions Income Tax Paid out or received for cash flow Account Balance** $25, ,000 1,575 (394) (8,000) 21, ,090 1,591 (398) 25, ,183 1,894 (473) 30, ,278 2,219 (555) 35, ,377 2,569 (642) 40, ,478 2,944 (736) 45, ,582 3,345 (836) 52, ,690 3,775 (944) 58, ,800 4,236 (1,059) 65, ,914 4,728 (1,182) 73, ,032 5,254 (1,314) 81, ,153 5,816 (1,454) 89, ,277 6,417 (1,604) 98, ,406 7,058 (1,764) 108, ,538 7,930 (1,983) 5, , ,674 9,050 (2,263) 5, , R 62 R 6,973 (1,395) (49,911) 96, ,258 (852) (51,740) 48, ,421 (284) 3,991 (53,631) ,063 (8,476) (55,587) ,599 (8,990) (57,609) ,537 (12,837) (59,700) ,327 (15,465) (61,861) ,119 (16,024) (64,096) ,007 (16,601) (66,406) ,993 (17,199) (68,794) ,078 (17,816) (71,262) ,267 (18,453) (73,813) ,563 (19,113) (76,450) ,970 (19,794) (79,176) ,490 (20,498) (81,992) ,129 (21,226) (84,903) ,889 (21,978) (87,911) ,775 (22,755) (91,020) ,790 (23,558) (94,232) ,841 (1,290) (97,551) ,981 (100,981) 85 L ,524 (104,524) ,699 (107,699) ,275 (111,275) 86 15,504 (114,965) 87 (118,775) 88 (122,706) 89 (126,763) 90 L (130,951) * Estimated taxes include tax due on income and on sales of assets. Starting cost basis is estimated at %. ** This report is based on assumed growth rates of 7.00% and 6.00%, and inflation rates of 3.00% and 3.00% (before and after retirement). Account additions are calculated to increase at 3.00% per year for each individual.

12 Ages 1 & 2 Tax-Deferred Annuities Account Annual Account Balance* Cumulative Taxable Income Additions Growth Withdrawals $30,000 Growth Withdrawal Tax Due ,100 32,100 2, ,247 34,347 4, ,404 36,751 6, ,573 39,324 9, ,753 42,077 12, ,945 45,022 15, ,152 48,173 18, ,372 51,546 21, ,608 55,154 25, ,861 59,015 29, ,131 63,146 33, ,420 67,566 37, ,730 72,295 42, ,061 77,356 47, ,415 82,771 52, ,794 88,565 58, R 62 R 6,200 94,764 64, , ,398 71, , ,496 78, ,111 (42,381) 72,226 84,607 42,381 (8,476) ,725 (66,599) 8,352 44,951 44,951 (8,990) (8,634) (56) L L * This report is based on assumed growth rates of 7.00% and 7.00%, with inflation rates of 3.00% and 3.00% (before and after retirement). Starting Cost basis is %. Account additions are calculated to increase 3.00% per year.

13 Tax-Deferred Retirement Accounts Individual 1 Accounts Individual 2 Accounts Account Annual Withdrawals Balance* Account Annual With- Balance* Age Additions Growth $100,000 Age Additions Growth drawals $14, ,000 7, , , ,270 8, , ,049 16, ,548 9, , ,122 17, ,835 11, , ,201 18, ,130 12, , ,285 19, ,433 14, , ,375 21, ,746 15, , ,471 22, ,069 17, , ,574 24, ,401 19, , ,684 25, ,743 21, , ,802 27, ,095 24, , ,928 29, ,458 26, , ,063 31, ,832 29, , ,207 33, ,217 32, , ,362 36, ,613 35, , ,527 38, ,022 39, , ,704 41, R 36, , R 2,480 43, , , ,629 46, , , ,787 49, , , ,954 52, , , ,131 55, ,983 (63,903) 798, ,319 58, ,565 (77,327) 766, ,518 62, ,575 (80,119) 729, ,729 65, ,368 (80,603) 690, ,881 (2,404) 67, ,929 (83,451) 646, ,965 (2,542) 68, ,169 (86,391) 595, ,046 (2,687) 70, ,065 (89,427) 539, ,123 (2,840) 71, ,589 (92,562) 476, ,195 (3,001) 72, ,713 (95,799) 406, ,262 (3,171) 73, ,408 (99,140) 328, ,322 (3,350) 74, ,640 (102,606) 242, ,375 (3,523) 75, ,375 (106,168) 147, ,420 (3,721) 76, ,577 (109,866) 43, ,457 (3,909) 76, ,270 (44,859) 80 2,419 (72,931) 6, (6,452) L L * This report is based on assumed growth rates of 7.00% and 6.00%, and inflation rates of 3.00% and 3.00% (before and after retirement). Account deposits are calculated to increase 3.00% and 3.00% per year (Individual 1 and 2). Company contributions to Roth 401k accounts show as account additions to Tax Deferred accounts.

14 Indv 1 Tax-Free Accounts Combined ROTH IRA Accounts Other Tax Free Assets Age Indv 2 Additions Indv. 1 Additions Indv. 2 Annual Growth Withdrawals Balance* $4,000 Account Additions Annual Growth Withdrawals Balance* $10, ,000 2, , , ,060 2, , , ,121 2,121 1,078 18, , ,185 2,185 1,454 24, , ,251 2,251 1,867 30, , ,318 2,318 2,317 37, , ,388 2,388 2,809 45, , ,459 2,459 3,344 53, , ,533 2,533 3,928 62, , ,609 2,609 4,563 72, , ,687 2,687 5,253 82, , ,768 2,768 6,002 94, , ,851 2,851 6, , , ,937 2,937 7, , , ,025 3,025 8, , , ,115 3,115 9, ,222 1,039 21, R 62 R 9, ,294 1,091 22, , ,910 1,145 24, , ,104 1,103 (3,991) 21, , , (21,682) , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,679 (92,389) 389, ,358 (100,981) 309, L 83 15,415 (104,524) 220, ,973 (107,699) 122, ,002 (111,275) 15, (15,504) L * Roth growth rates: 7.00% and 6.00%, Tax-Free: 5.00% and 5.00%, inflation rates: 3.00% and 3.00% (before and after retirement). Account deposits are calculated to increase 3.00% and 3.00% per year (Individual 1 and 2).