Retirement Distribution Summary

Transcription

1 Retirement Distribution Summary PREPARED EXCLUSIVELY FOR School and Spouse Administrator Anytown, New York PREPARED BY: GREGORY RONNEBURGER September 18, 2015 Client Engagement Number:

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3 Table of Contents Introduction... 4 Assumptions... 5 Current... 6 Conclusion... 9 Appendix A Distribution Schedules Current Appendix B Plan Data Summary Important Terminology Important Information about this Report... 25

4 Introduction Planning and saving for retirement has been a priority for you. Now you have reached the next step towards retirement: retirement income distribution planning. At this stage, it is important to consider all of the factors that may come into play during your retirement to effectively manage your retirement income. The following analysis will provide you with insights and tactical ideas designed to help you achieve your retirement goals. The objective is to provide you with a clear plan to manage what should be a wonderful time in your life, one where you can enjoy the fruits of your labor and enjoy a lifestyle that reflects your priorities, goals, and dreams. As you approach and enter retirement, you need to be as diligent as ever in planning for how you will manage and spend your wealth, and avoid the risks that continue to be inherent in retirement. Specifically, you need to understand and manage the following: Plan Considerations Longevity Due to significant advances in health care, life expectancy today is longer than ever before. You must ensure that your retirement nest egg is sufficient to last a lifetime. Will your assets last throughout your retirement years? Inflation Inflation can be a subtle but significant adversary in your retirement. As the cost of most goods and services continues to rise each year, you have to be prepared to increase the amount you spend annually just to maintain your lifestyle. How much is enough and how much will you need? Overspending While it may seem that your nest egg is so large it will last indefinitely, you have to establish an annual spending budget to minimize the chances of running out of money. How much can I spend each year and do I have enough to cover my expenses? Market risk Everyone has to address how much risk they can tolerate in their portfolio. During retirement the tendency to take a very conservative approach to investing may or may not be the best course. How should your assets be invested today and how should that strategy change during your retirement? Health Health care costs can be a major expense in retirement, and few people plan for them adequately. Since we face more health issues in retirement and the costs of health care continues to rise, you should carefully identify how you will fund all the health care related expenses that you will assuredly incur. Can you sustain your retirement if your health care costs rise significantly? The following analysis is designed to help you answer each of the key questions regarding your retirement plan, as well as how you can manage each of these risks. This plan can become the core foundation for your overall income planning, and can guide you as you enjoy your retirement. Page 4 of 28

5 Assumptions The information below represents key assumptions that were used to produce the outcome of your current plan, including the retirement distribution that is expected from this plan. Assumptions made related to risks that should be recognized in your retirement plan (such as inflation, longevity, spending, and market risk) can significantly affect it. Strategies that have been used to combat the risks that these assumptions may introduce in your plan are discussed in the illustrations of the proposed plan. Current Asset Mix Inflation Rate 3.00% School's Retirement 60/2030 Spouse's Retirement 59/2030 School's Life Expectancy 90/2060 Spouse's Life Expectancy 90/2061 Current Asset Mix ROR 7.46% Current Asset Mix Standard Deviation 14.89% Current Asset Mix Asset Class (%) ($) Large Cap Value Stocks ,000 Core Bonds ,000 Total ,000 Note: The reallocation table above does not reflect the tax effects that may occur when reallocating your assets; these tax effects are accounted for at the end of the year. Planned Retirement Spending The following table shows the planned expenses in your retirement years. Expense Member Start Date End Date Annual Amount Index Rate Fixed Other Joint Jan Apr $60, % Y Retirement goal expense Joint May Dec $147, % Y The following table identifies the fixed expenses in the first year of retirement, the retirement years with the lowest and highest fixed needs as well as the average fixed needs throughout the retirement period. Fixed Needs in First Lowest Fixed Needs in Average Fixed Needs Highest Fixed Needs in Retirement Year (yr) Retirement (yr) Through Retirement Retirement (yr) $173,365 (2030) $173,365 (2030) $259,983 $371,632 (2060) Page 5 of 28

6 6 3 %* Current The starting point for your personalized retirement income planning is to analyze your planned expenses and retirement incomes, both fixed and total, that exist during your retirement. Retirement Goal Progress The assessment of your Current Plan results in 63% coverage of your retirement needs. In order to fully achieve your retirement goal you should consider one of the following strategies: Saving an additional $3,095 /month in non-qualified investments (this may or may not be affordable). Investing a lump sum amount of $365,186 in non-qualified investments for your retirement goal. Delay retirement until School is 76, in the year 2046 and Spouse is 75, in the year * This value indicates the percentage of your total retirement needs that can be covered by your total retirement resources during your retirement time period. Fixed vs. Total Retirement Needs It is important to note that your expenses increase each year due to the effects of inflation. Fixed needs represent those expenses that are required for your basic retirement plans, while total needs also include expenses that are more discretionary, which you might be able to alter if needed. $400K $300K $200K $100K $0K Fixed Needs (incl. taxes) Average Fixed Needs (incl. taxes) $259,983 Total Needs (incl. taxes) Average Total Needs (incl. taxes) $259,983 Page 6 of 28

7 Fixed Income vs. Retirement Needs This graph compares your retirement expenses with the fixed incomes you are scheduled to receive. A shortfall will be apparent in this graph when your fixed needs are greater than your fixed incomes. When an income shortfall is apparent between your fixed incomes and your fixed needs you can adopt various strategies: consider another approach to managing your retirement needs, consider ways to increase your fixed incomes to match your fixed needs, or use other variable income sources to fund your planned retirement spending. Review the Total Income vs. Retirement Needs graph to assess what income sources are available to implement one of these strategies. $400K $300K $200K $100K $0K Fixed Income Fixed Needs (incl. taxes) Total Needs (incl. taxes) Net worth at start of retirement year $915,122 Net worth at plan end $790,821 Year capital exhausted 2039 Total Income vs. Retirement Needs This graph outlines your complete retirement income and needs situation by comparing your retirement needs with all available income sources to fund them. A shortfall in your total retirement income situation will exist when the total spending levels exceed the total cash inflows that are available. $400K $300K $200K $100K $0K Social Security Pension Income Earned Income Additional Qualified Proceeds Non-Qualified Proceeds Shortfall Fixed Needs (incl. taxes) Total Needs (incl. taxes) % Fixed Needs Covered by Total Resources 63% Goal Coverage* 63% *This value indicates the percentage of your total retirement needs that can be covered by your total retirement resources during your retirement time period. Page 7 of 28

8 Addressing Retirement Risks As you consider the strategies that can optimize your retirement plan, ensure that the risks that retirees face in retirement have been addressed using suitable planning strategies. Addressing the risk of outliving your incomes and assets requires planning for a realistic retirement duration based on your personal life expectancy. Average life expectancies are best derived from general population statistics as well as your family history. The life expectancy assumed in your current retirement plan is 90 for School and 90 for Spouse. The inflation rate that you assume in your retirement plan should be reasonable, as this value may affect the amount of assets and income required to fully fund your retirement needs. If inflation is overstated or understated, it can drastically affect the planning that you ve undertaken in your retirement plan. The inflation rate assumed in your current retirement plan is 3.00%. Have you considered the amount of risk and variability you can tolerate in your retirement portfolio? Does the inherent investment of your retirement assets suit the needs you have not only leading up to retirement but also when you require income from those assets during retirement? Your current retirement plan has a rate of return on your asset mix for retirement of 7.46%. Consider that retirement goals are different for you than for your neighbor. It is important to ensure that your retirement incomes are going to sustain the amount of fixed and discretionary spending that you have accounted for in your retirement plan. If shortfalls between the available income and the needs you have defined exist, it is important to revisit first the discretionary and then the fixed expenses in your retirement plan. Have you adequately accounted for rising healthcare costs throughout your retirement plan? Page 8 of 28

9 Conclusion Congratulations! You have taken a significant step in planning for what is an amazing transition in your overall financial life building and saving for a comfortable retirement to enjoying the fruits of your efforts. Your customized plan also addresses and highlights some of the key risks that face all individuals during their retirement years. At this point, you should be able to do the following: Review the plan in detail with your advisor. Discuss how this analysis affects your current planning, and how you will address your retirement income needs. Define with your advisor the specific, tactical action steps you will take to enhance your savings and income planning situation. Just as with any strategy or plan, you must be diligent about updating the plan. Working with your advisor, you should review your overall strategy each year. Included in this review should be discussions on any changes in your overall financial situation, health, or other changes that affect your overall spending. The changes can be factored into the plan to help you continually update your strategy. Page 9 of 28

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11 Appendix A Distribution Schedules Current Page 11 of 28

12 Retirement Income and Expenses The following report shows the annual sources of income that are used to cover your needs throughout retirement in your current retirement plan. Required Minimum Distributions Additional Qualified Proceeds Fixed Total Needs (incl. Needs taxes) (incl. taxes) Shortfall Year Age Social Security Pension Income Annuity Payments Earned Income Non-Qualified Proceeds Other Inflows 2030 *60/59* 0 43, , , , , / , , , , /61 19,437 65, , , , /62 40,007 65, , , , /63 46,345 65, , , , /64 47,736 65, , , , /65 49,168 65, , , , /66 50,643 65, , , , /67 52,162 65, , , , /68 53,727 65, , , ,913 75, /69 55,339 65, , ,979 93, /70 56,999 65, , ,846 97, /71 58,709 65, , , , /72 60,470 65, , , , /73 62,284 65, , , , /74 64,153 65, , , , /75 66,077 65, , , , /76 68,059 65, , , , /77 70,101 65, , , , /78 72,204 65, , , , /79 74,370 65, , , , /80 76,601 65, , , , /81 78,900 65, , , , /82 81,267 65, , , , /83 83,705 65, , , , /84 86,216 65, , , , /85 88,802 65, , , , /86 91,466 65, , , , /87 94,210 65, , , , /88 97,036 65, , , , /89 99,948 65, , , , /90 68, , , ,140 0 * = Year of retirement investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include Page 12 of 28

13 Required Minimum Distributions The following report illustrates the activity in your qualified accounts throughout your retirement period in your current retirement plan. Required minimum distributions and additional qualified distributions provide income that is used to cover your retirement needs. Qualified Distributions SOY Qualified Client s Minimum Co-Client s Minimum Additional Qualified Contributions for Qualified Reinvested Income for Qualified EOY Qualified Year Age(s) Market Value Distributions Distributions Distributions Assets Qualified Assets Growth Market Value 2030 *60/59* 649, ,519 2,467 38,172 10, , /60 638, , ,376 10, , /61 559, , ,763 8, , /62 489, , ,670 7, , /63 430, , ,195 6, , /64 367, , ,499 5, , /65 295, , ,294 4, , /66 214, , ,538 3, , /67 121, , ,136 1,953 17, /68 17, , , / / / / / / / / / / / / / / / / / / / / / / * = Year of retirement Distributions consist of capital withdrawals as well as any investment income that has not been reinvested. investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include Page 13 of 28

14 Net Worth During Retirement The following report shows the outlook of major net worth components throughout retirement in your current retirement plan. Year Age(s) Non-Qualified Assets Qualified Assets Total Lifestyle Assets Total Liabilities Total Net Worth 2030 *60/59* 0 638, , , / , , , / , , , / , , , / , , , / , , , / , , , / , , , / , , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , / , , /89 300, , , / , ,206 * = Year of retirement investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include Page 14 of 28

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17 Appendix B Plan Data Summary Page 17 of 28

18 Plan Data Summary This report summarizes the data that was entered in your current plan. General Information Detail School Spouse Birth Date May May Proposed Retirement Date May 2030 May 2030 Life Expectancy Dec 2060 Dec 2061 Pre-Retirement Income Tax Rates State Tax Rate 5.00% 5.00% Average Federal Tax Rate 19.44% 19.44% Marginal Federal Tax Rate 25.00% 25.00% Long-Term Capital Gains Tax Rate 15.00% 15.00% Retirement Income Tax Rates State Tax Rate 5.00% 5.00% Average Federal Tax Rate 19.44% 19.44% Marginal Federal Tax Rate 25.00% 25.00% Long-Term Capital Gains Tax Rate 15.00% 15.00% Year of Death Income Tax Rates State Tax Rate 5.00% 5.00% Average Federal Tax Rate 19.44% 19.44% Marginal Federal Tax Rate 25.00% 25.00% Long-Term Capital Gains Tax Rate 15.00% 15.00% Assumptions Detail Income Tax Method Average Tax Inflation Rate 3.00% Tax Filing Status - School Married Filing Jointly Tax Filing Status - Spouse Married Filing Jointly Family Information Client Name School Administrator Date of Birth May Gender Male Address Anytown, New York United States Citizenship United States Name Spouse Administrator Date of Birth May Gender Female Address Anytown, New York United States Citizenship United States Professional Advisors Type Name Business Phone # Cell Phone # Advisor Gregory Ronneburger (315) Page 18 of 28

19 Regular Income Income Source Member Applicable Amount Indexed Salary School Jan to Apr $7,917/mo Inflation Salary Spouse Jan to Apr $2,917/mo Inflation Defined Benefit Pension Plans - Estimate Benefit Description: NYS Pension Annual Benefit: $65,000 Plan Owner: School Indexed By: 0.00% Pct. Payable to Survivor: 0.00% Social Security Benefits Start Date/Age (retirement benefits) Full Retirement (monthly) Surviving Spouse at Full Retirement (monthly) Survivor with Eligible Children - Benefit for Family (monthly) Eligible for Spousal Benefits Disability Member (monthly) School May / 62.1 $2, $0.00 $0.00 $0.00 Yes Spouse May / 62.1 $1, $0.00 $0.00 $0.00 Yes Regular Expenses Expense Member Applicable Amount Indexed Fixed Expense Other Joint Jan to Apr $5,000/mo Inflation Yes Retirement goal expense Joint May to Dec $7,873/mo Inflation Yes Lifestyle Assets Purchase Purchase Market Value Market Growth Standard Asset Name Date Amount Date Value Rate 1 Deviation Residence (Joint/Lifestyle) Dec $200,000 Sep $200, % 0.00% 1 The growth rate is a pre-tax amount Portfolio Assets Market Cap. Tax Def. Std. Annual Value Market Int. Div. Gain Free Growth Dev. Total Fee Income Asset Name Goal Date Value Basis (%) (%) (%) (%) (%) (%) (%) (%) Reinvested Life Insurance Proceeds (Joint/Non-Qualified) Retirement Jan $0 $ Yes 401(k) (Spouse) Retirement Sep $30,000 $ Yes 403(b) Plan (School) Retirement Sep 18 $150,000 $ Yes 2015 The Portfolio Assets section includes your major investment assets. It supplies the market value and cost basis of these assets. Cost basis for non-qualified assets is equal to the amount you paid to acquire the assets, plus income reinvestments, less any amounts you received income tax-free. Your total pretax growth rate is broken down into specific return rate types, as some of these items currently receive special tax treatment. At present interest is taxed as ordinary income at the marginal tax rates. Capital gains are either long-term or short-term. For non-qualified assets, income from the deferred growth component is not subject to tax until the asset is sold and is usually subject to the capital gains tax rules. For qualified assets, income from the deferred growth component is usually subject to tax as ordinary income at the average tax rates. Tax-free returns are not subject to regular income tax, but may be subject to the Alternative Minimum Tax. The actual total return rates that you will receive will depend on many factors, including inflation, type of investment, market conditions and investment performance. Page 19 of 28

20 Life Insurance Policies Description: Life Insurance Policy Type: Term 20 Life Owner: School Insured: School Death Benefit: $300,000 Beneficiary: Spouse Cash Surrender Value (CSV): $0 Premium Payer: School Premiums Cease On: Never Annual Premium $1,800 Payments: CSV Payable With Death Benefit: No Coverage Ceases On: Never Disability Waiver: Yes Description: Life Insurance Policy Type: Term 10 Life Owner: Spouse Insured: Spouse Death Benefit: $150,000 Beneficiary: School Cash Surrender Value (CSV): $0 Premium Payer: Spouse Premiums Cease On: Never Annual Premium $720 Payments: CSV Payable With Death Benefit: No Coverage Ceases On: Never Disability Waiver: Yes Liabilities Current Liability Name Principal Int. Rate Payment Linked to Asset Mortgage $50, % $1,200 N/A Regular Investment Strategies Asset Name Applicable Amount Indexed 403(b) Plan (School) Jan to Apr Employee Pre-Tax Contribution (5.00% of $396/month N/A 1 Salary) Employee Post-Tax Contribution (0.00% of $0/month N/A 1 Salary) Employer Contribution (0.00% of Salary) $0/month N/A 1 1 Indexing occurs if the salaries used in the calculations have been indexed. The table above includes all your periodic (annual or monthly) investment contributions. Transfer Strategies Source Asset Destination Asset Amount When Life Insurance Life Insurance Proceeds 100% Upon Death Transfers specify a plan for moving your investments from one type of asset to another on specific dates or events such as retirement. Also, transfers will be desirable in some cases to move from one type of investment to another type at a certain point in time. Refer to your Action Plan to view the amounts to be transferred for the next three years. Deficit Coverage Strategies Asset Name Applicable Life Insurance Proceeds While Retired (Joint/Non-Qualified) 403(b) Plan (School) May to Dec Page 20 of 28

21 Asset Name Applicable 401(k) (Spouse) May to Dec The assets listed are available for redemption to meet cash flow needs. The Applicable column indicates the period of time these assets are available. Typically, qualified assets are not available during your working years. Liquidation Order for Retirement Asset Name Account Type Owner 401(k) 401(k) Spouse 403(b) Plan 403(b) School At retirement the liquidation of accounts will be based on the following order: Non-Qualified - Roth - Qualified accounts. No assets have been set aside to cover the emergency expense. Estate Distribution The Simple Will option has been selected. Page 21 of 28

22 Important Terminology Current plan The current plan consists of information provided and reviewed by you and serves as the basis for some of the assumptions used in the proposed plan. Proposed plan The proposed plan is a system-generated plan that is calculated based on achieving your stated goals by applying the additional assumptions contained within the proposed scenarios. Scenarios A scenario is a modification of assumptions based on the current plan. A proposed scenario is incorporated into the proposed plan. Rate of return (Current - Not Rebalanced) Current - Not Rebalanced does not rebalance the accounts linked to a goal. Each account linked to a goal maintains a separate rate of return. Rate of return (Current - Rebalanced) Current - Rebalanced rebalances the accounts linked to a goal and uses the weighted average rate of return of the linked assets. Rate of return (suggested asset mix) The rate of return that is calculated based on the investment profile. Rate of return (proposed plan) The dollar-weighted average rate of return of the assets that are used in the assumed/suggested asset mix. This rate of return is the same as the Rate of return (Assumed/Suggested Asset Mix). Standard deviation Standard deviation is a statistical measure of the volatility of an asset or account. It measures the degree to which the rate of return in any one year varies from the historical average rate of return for that investment; the greater the standard deviation, the riskier the investment. Unlinked accounts Unlinked accounts represent all non-qualified accounts that are not linked to a goal. (Qualified accounts are automatically linked to the retirement goal.) Unlinked accounts are assumed to be allocated to the estate. Investment profile The investment profile is the result of an analysis of an individual s investment objectives, time horizon, and risk tolerance in reference to investing. Portfolio The combination of assets a client owns and that are considered in this plan to fund the client s goal. Time horizon The length of time desired to achieve a financial goal. A longer time horizon usually allows an individual to withstand more volatility, whereas a shorter time horizon typically requires less volatility and more liquidity. Page 22 of 28

23 Asset mix The combination of asset classes within an investment portfolio. It can also represent a further division within an asset class such as a mix of small, medium, and large company stock assets. Current Asset Mix The combination of asset classes assigned to the assets included in the current plan. Entire portfolio The entire portfolio for the current plan represents the asset mix of all accounts in the plan. The entire portfolio for the proposed plan is the combination of the suggested asset mix and the assumed asset mix associated with all of the goals included in the plan. Blended mix For the entire portfolio, a blended mix of investment profiles indicates that the investment profile has been defined differently for each goal. For the retirement goal, a blended mix of investment profiles indicates that the investment profile has been defined differently for each type of account (qualified retirement accounts, non-qualified retirement accounts, or non-qualified annuity retirement accounts). Average tax rate The assumed average tax rate that is applied against salary, self-employed income, Social Security, defined benefits, pensions, and other taxable income. The assumed average tax rate is typically less than the marginal tax rate based on the assumption that income is spread over multiple tax brackets. Community property In states with community property laws, any property acquired by a married couple residing in a community property state is considered to be equally owned by both parties. Annuitize The transition of an annuity contract from the accumulation phase into the income distribution phase. In the income distribution phase the accumulated value of the annuity is distributed via a computed stream of income payments over a duration of time or through varying withdrawals from the annuity. Inflation rate/index rate The rate at which dollar values are discounted over time. The rate is measured by an index that indicates the change in the cost of various goods and services as a percentage. Marginal tax rate The marginal tax rate is derived from the federal income tax brackets. It is the amount of tax that would be paid on any additional dollars of income. It is applied against interest, dividend, royalty, alimony, and capital gains income. Required minimum distribution (RMD) The amount required by the IRS to be withdrawn each year from traditional IRAs and employer-sponsored retirement plans, starting on the required beginning date, which generally (but not always) occurs in the year following the year in which the owner turns 70½. Fixed expenses Fixed expenses include ongoing expenses that you have determined cannot be easily changed or eliminated, such as basic living expenses or retirement living expenses. Page 23 of 28

24 Fixed needs Fixed needs include all your fixed expenses, plus other expenses that have been calculated based on your financial information. These expenses include liability payments, insurance premiums, property taxes, and income taxes. Total needs The definition of total needs includes all fixed needs, all other expenses that are not considered in the fixed needs definition, and total taxes. The total needs in the plan will account, in part, for expenses that are more discretionary in nature. Fixed incomes The definition of fixed incomes includes the pre-tax income from the following income sources: Benefit Formula and Estimate Benefit pensions, income entered with the type Pension, Social Security income of the client and co-client (retirement, survivor, and disability benefits), income entered with the type Salary, and annuity income (excluding income from annuities with the income option of Withdrawals as Needed). Asset class A category of investments grouped according to common characteristics such as relative liquidity, income characteristics, tax status, and growth characteristics. Important acronyms SOY Start of year EOY End of year RMD Required minimum distribution ROR Rate of return Page 24 of 28

25 Important Information about this Report Please read this disclosure carefully. It contains important information about your analysis. The Purpose of the Analysis This analysis is designed to help you better understand your current financial position, identify your financial goals and needs, and begin to develop general strategies to accumulate and manage your assets to meet those goals and needs. Please note that this analysis is not comprehensive. This is not a Financial Plan. This analysis is not intended to be investment advice under the Investment Advisors Act of It is not a comprehensive review, and it does not contain the material elements of financial planning. Any references to a plan refer to the analysis process, and are not meant to imply an investment advisory or financial planning relationship. Any investment advice is solely incidental to AXA Advisors business as a broker-dealer. Please review the analysis carefully to make sure it accurately reflects your information. You are not obligated to implement the proposed NaviPlan generated strategy through a financial professional, AXA Advisors, LLC or any third party. You are also not obligated to update this analysis. This analysis is not a solicitation to buy any specific investment product. A Few Words About Assumptions None of us can know what the future will bring. The quality of this analysis is dependent on numerous assumptions about the future, many of which you have supplied. Please understand, it is highly unlikely that all of the assumptions in your analysis will turn out to be correct regardless of how they are selected or where they appear. That is why this analysis comes with no guarantees. Even small changes in actual results compared to what the analysis assumes can have significant consequences, particularly over long periods of time. As a result, there is no assurance that you will attain any of the results illustrated in this Analysis, or even if you do, that you will meet the objectives you have identified. Accuracy of Information This analysis is based primarily on information you have provided to us. We have not independently verified such information. Calculations, Illustrations, and Estimates Your analysis contains numerous calculations, illustrations and estimates. These include, among other things, hypothetical illustrations of potential income or expenses; estimates of asset accumulation or growth; estimates of benefits under government programs (e.g., Social Security), pensions or insurance or other contracts, etc. These, too, are merely guesses about what may or may not happen in the future. They are not predictions nor are they guarantees. For example, no one knows what the future of Social Security will be or whether a company that is obligated to pay a benefit will have the financial ability to do so when the time comes. In addition, whether and to what extent you will actually realize any of the benefits that are illustrated in the analysis typically depends on whether you satisfy eligibility and other requirements. If you don t - and there are many reasons why you might not - there will likely be a gap in your analysis. Again, the illustration of any asset or benefit in this Analysis provides no assurance or indication that it will be realized or that you will meet any eligibility requirements. Also, we have not analyzed any insurance or other contract, pension or other benefit plan, asset or investment, and any such analysis is beyond the scope of this analysis. Accordingly, nothing in this Analysis is intended to be an express or implied endorsement of the adequacy or quality of any such contract, plan, asset or investment, or of the financial strength of the issuer or any other party. Please note that the results of each projection may vary with each use and over time. Page 25 of 28

26 Valuation of Assets The values shown in the analysis for your assets are based on information supplied by you. We have made no independent effort to validate these values and nothing in the analysis should be construed as evidencing any opinion or guarantee of the reasonableness of any such values. Note that some assets can be particularly difficult to value. Typically these include assets for which there is no ready and active market. Some examples of such assets are closely held businesses, interests in partnerships or other non-publicly-traded securities, many collectibles, some stock option contracts, etc. The absence of a ready and active market may also make these assets difficult to liquidate (and/or reduce the amount that you might realize) in the case of an emergency or other need. Also, it can be particularly difficult to estimate what these assets might be worth in the future since historical data may be unavailable or even less reliable than for publicly traded stocks or bonds. While you are free to include such assets in your analysis (and we will use a growth rate you specify to estimate their future value), we urge you to be particularly cautious about relying on assets for which there is no ready and active market to meet future needs. Life Expectancy Assumptions Advances in medicine and increasing health consciousness are helping people live longer. More people are living into their nineties and beyond than ever before, and experts in the field are predicting that life expectancies will continue to increase for the foreseeable future. While no financial analysis can guarantee that you won t outlive your money, the life expectancy assumptions that you make, should take into account demographic trends. In general, the longer the life expectancy you select, the more assets your analysis will show you will need to accumulate in order to maintain a given standard of living in retirement. Your Asset Allocation Analysis Your analysis may include an asset allocation analysis, which is intended to provide general guidance in determining an appropriate asset allocation strategy or strategies. Each asset allocation strategy is based on the objectives you have identified and your attitudes about risk as measured by your responses to our risk tolerance questionnaire. Like the analysis, the quality of the asset allocation analysis is dependent upon the accuracy and reliability of the information you have provided. Also like the analysis, it comes with no guarantees. The suggested asset mixes illustrated in the analysis are based on the concepts of Modern Portfolio Theory, which applies the use of strategic asset allocation which seeks to construct an optimal portfolio taking into consideration the degree of risk appropriate for you. Properly allocating your investment dollars among various asset classes can potentially reduce the variability in returns associated with single investment types and may smooth out returns over time. Diversification does not guarantee a profit or protect against loss in a declining market. The asset allocation analysis identifies the current diversification of your portfolio by asset class. The actual risk / return profile of your assets may be different than what we have assumed. Your analysis also provides a proposed reallocation which illustrates an asset allocation model that statistical models suggest will better align potential portfolio risk and potential return, in light of your risk tolerance. The asset allocation methodology used is provided by Ibbotson. Ibbotson developed the inputs for broad asset classes (expected returns, standard deviations and correlation coefficients) using historical data, current market information and capital market expectations. The asset class inputs are then used to develop model portfolios through the statistical techniques of Mean-Variance-Optimization and Re-sampling. The Ibbotson models tend to overweight domestic value equities over growth equities reflecting domestic value equities superior historical risk adjusted returns. Domestic value equities represent publicly traded stocks that are generally considered to have lower price to book (P/B) and price to earnings (P/E) ratios and a higher dividend ratio than growth equities. Keep in mind, other investments not considered may have characteristics similar or superior to those being analyzed. Please see the Important Terminology page for more information. Page 26 of 28

27 A word of caution: The return and principal value of any investment in stocks will fluctuate with changes in market conditions. Bond investments are subject to interest rate risk so that when interest rates rise, the prices of bonds can decrease and the investor can lose principal value. High-yield debt securities have a greater risk of default and are more risky than investment-grade debt securities. High yield bonds are also subject to a high degree of credit and market risk. Stocks of small and mid-size companies may have less liquidity than those of larger companies and may be subject to greater price volatility than the overall stock market. Smaller company stocks involve greater risk than is customarily associated with more established companies. International securities carry additional risks, including currency exchange fluctuation and different government regulations, economic conditions and accounting standards. The value of a portfolio s investment in foreign securities may fall, due to adverse political and social developments abroad. These risks are generally greater for investments in emerging markets than in more developed countries. Focusing on one economic sector increases the vulnerability to any single, political, legislative or regulatory development. In addition to the general risks involved in real estate investing, REIT investing entails other risks such as credit and interest rate risks. Alternative investments can be illiquid, may disproportionately increase losses and may have a potentially large impact on portfolio s investments. The asset allocation analysis may not take into consideration all the potential costs of reallocating assets (including, among others, surrender or withdrawal charges, and commissions or fees to purchase new investments). These costs can be substantial and may outweigh the benefits of any reallocation - something that is beyond the scope of the analysis to identify. You should make sure that you understand all of the costs (which may require that you consult with your legal, accounting or tax advisors) before reallocating existing assets. The targeted return, risk, and other figures used in both the current and proposed asset allocation are based in part on the historical returns, risk and relationships of asset classes, as measured by various indices. Please note that using historical data has limitation and past performance does not guarantee future results. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in an index. Past performance is not indicative of future results. The projections utilize return data that do not include fees or operating expenses, are not available for investment, and are shown for illustrative purposes only. The current economic environment, interest rate and dividend yield, as well as various subjective factors, are also used to calculate the targeted return figures. Ibbotson uses the current interest rate, which is the coupon or interest from fixed income instruments as a percentage of the price paid for the respective instrument and the historical dividend yield, which is the dividend paid by various equity investments over a certain time period as a percentage of their market price to as inputs to calculate the targeted return figures. The targeted figures and the data used to develop them are based on broad asset classes and not on any particular investment, the performance of which can vary widely from that of an asset class. Of course, there is no guarantee that any of these targets will in fact be realized in the future on either the portfolio or any particular investment. Similarly, no asset allocation can protect against all risks and there is no risk assurance that if you reallocate your assets that you will increase your return or decrease your risk. Page 27 of 28

28 Rates of Return In order to estimate how your assets may grow over time, it is necessary to make assumptions about the average rates of return you may realize on your investments. The methodology used to develop return assumptions is a combination of historical rates of return on asset classes and a Capital Asset Pricing Model (CAPM). For purposes of the analysis, typically we have utilized the pre-tax targeted rate of return shown in the Plan Data Summary section for your current assets. In your Proposed or Recommended plan, the details are shown in the Asset Allocation section. Be aware that, regardless of the rate used in your analysis, it is likely that your actual rate of return will be different than the targeted return. There is no assurance that the targeted return will be met. If your actual return is higher than the rate we have used, you will likely accumulate more assets than the analysis estimates, all other things being equal. Conversely, if it is lower, you will probably accumulate less - meaning that you may have to save more or longer to meet your goals. We Do Not Provide Legal, Accounting or Tax Advice Please be advised that this document is not intended as legal or tax advice. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor. Company Disclosure Securities offered through AXA Advisors, LLC (NY, NY ), member FINRA, SIPC. Annuity and insurance products offered through AXA Network, LLC. AXA Network, LLC does business in California as AXA Network Insurance Agency of California, LLC and, in Utah, as AXA Network Insurance Agency of Utah, LLC. Investment advisory products and services are offered through AXA Advisors, LLC, an investment advisor registered with the SEC. AXA Advisors and its financial professionals are compensated differently for the sale of various products. Sponsors may provide additional compensation to AXA Advisors which may create an incentive for financial professionals to recommend one product over another. Please feel free to ask questions regarding our obligations to you and your rights, including any conflicts of interest. AXA Equitable variable life insurance and annuity products are issued by AXA Equitable Life Insurance Company (NY,NY) and co-distributed by AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable Life Insurance Company, AXA Advisors and AXA Distributors are affiliated companies located at 1290 Avenue of the Americas, NY, NY Investments: Are Not Deposits of Any Bank; Are Not FDIC Insured; Are Not Insured by Any Federal Government Agency; Are Not Bank Guaranteed. May Go Down In Value GE (09/14) (Exp 09/16) 1 Page 28 of 28