Financial Goal Plan. Jane and John Doe. Prepared by: Alex Schmitz, CFP Director of Financial Planning

Transcription

1 Financial Goal Plan Jane and John Doe Prepared by: Alex Schmitz, CFP Director of Financial Planning March 07, 2018

2 Table Of Contents Table of Contents Section Title IMPORTANT DISCLOSURE INFORMATION 1-5 Summary of Goals and Resources Personal Information and Summary of Financial Goals 6-7 Current Financial Goals Graph 8 Life Expectancy Table and Graph 9 Resources Summary 10 Net Worth Summary - All Resources 11 Current Portfolio Allocation Tax and Inflation Assumptions 14 Risk and Portfolio Information Risk Assessment 15 Portfolio Table 16 Worksheet Detail - Allocation Comparison 17 Worksheet Detail - Portfolio Changes 18 Results Results - Current and Recommended Worksheet Detail - Inside the Numbers Final Result 22 Worksheet Detail - Bear Market Test 23 Worksheet Detail - Combined Details Glossary 36-39

3 Table of Contents Section Title

4 IMPORTANT DISCLOSURE INFORMATION IMPORTANT: The projections or other information generated by MoneyGuidePro regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The return assumptions in MoneyGuidePro are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used in MoneyGuidePro. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment. MoneyGuidePro results may vary with each use and over time. MoneyGuidePro Assumptions and Limitations Information Provided by You Information that you provided about your assets, financial goals, and personal situation are key assumptions for the calculations and projections in this Report. Please review the Report sections titled "Personal Information and Summary of Financial Goals", "Current Portfolio Allocation", and "Tax and Inflation Options" to verify the accuracy of these assumptions. If any of the assumptions are incorrect, you should notify your financial advisor. Even small changes in assumptions can have a substantial impact on the results shown in this Report. The information provided by you should be reviewed periodically and updated when either the information or your circumstances change. All asset and net worth information included in this Report was provided by you or your designated agents, and is not a substitute for the information contained in the official account statements provided to you by custodians. The current asset data and values contained in those account statements should be used to update the asset information included in this Report, as necessary. Assumptions and Limitations MoneyGuidePro offers several methods of calculating results, each of which provides one outcome from a wide range of possible outcomes. All results in this Report are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. All results use simplifying assumptions that do not completely or accurately reflect your specific circumstances. No Plan or Report has the ability to accurately predict the future. As investment returns, inflation, taxes, and other economic conditions vary from the MoneyGuidePro assumptions, your actual results will vary (perhaps significantly) from those presented in this Report. All MoneyGuidePro calculations use asset class returns, not returns of actual investments. The projected return assumptions used in this Report are estimates based on average annual returns for each asset class. The portfolio returns are calculated by weighting individual return assumptions for each asset class according to your portfolio allocation. The portfolio returns may have been modified by including adjustments to the total return and the inflation rate. The portfolio returns assume reinvestment of interest and dividends at net asset value without taxes, and also assume that the portfolio has been rebalanced to reflect the initial recommendation. No portfolio rebalancing costs, including taxes, if applicable, are deducted from the portfolio value. No portfolio allocation eliminates risk or guarantees investment results. MoneyGuidePro does not provide recommendations for any products or securities. Page 1 of 39

5 IMPORTANT DISCLOSURE INFORMATION Asset Class Name Projected Return Assumption Projected Standard Deviation Cash & Cash Alternatives 2.29% 0.90% Cash & Cash Alternatives 1.00% 0.90% (Tax-Free) Short Term Bonds 2.59% 2.25% Short Term Bonds (Tax-Free) 2.00% 2.25% Intermediate Term Bonds 3.00% 3.75% Intermediate Term Bonds 2.50% 3.75% (Tax-Free) Long Term Bonds 3.70% 11.40% Long Term Bonds (Tax-Free) 3.00% 11.40% Large Cap Value Stocks 7.25% 17.95% Large Cap Growth Stocks 7.25% 17.95% Mid Cap Stocks 7.55% 22.75% Small Cap Stocks 7.55% 22.75% International Developed Stocks 7.25% 20.05% Emerging Market Stocks 7.60% 27.85% Commodities 2.75% 18.50% Global Real Estate 6.00% 16.45% Equity Long/Short 5.25% 9.30% Page 2 of 39

6 IMPORTANT DISCLOSURE INFORMATION Risks Inherent in Investing Investing in fixed income securities involves interest rate risk, credit risk, and inflation risk. Interest rate risk is the possibility that bond prices will decrease because of an interest rate increase. When interest rates rise, bond prices and the values of fixed income securities fall. When interest rates fall, bond prices and the values of fixed income securities rise. Credit risk is the risk that a company will not be able to pay its debts, including the interest on its bonds. Inflation risk is the possibility that the interest paid on an investment in bonds will be lower than the inflation rate, decreasing purchasing power. Cash alternatives typically include money market securities and U.S. treasury bills. Investing in such cash alternatives involves inflation risk. In addition, investments in money market securities may involve credit risk and a risk of principal loss. Because money market securities are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency, there is no guarantee the value of your investment will be maintained at $1.00 per share, and your shares, when sold, may be worth more or less than what you originally paid for them. U.S. Treasury bills are subject to market risk if sold prior to maturity. Market risk is the possibility that the value, when sold, might be less than the purchase price. Investing in stock securities involves volatility risk, market risk, business risk, and industry risk. The prices of most stocks fluctuate. Volatility risk is the chance that the value of a stock will fall. Market risk is chance that the prices of all stocks will fall due to conditions in the economic environment. Business risk is the chance that a specific company s stock will fall because of issues affecting it. Industry risk is the chance that a set of factors particular to an industry group will adversely affect stock prices within the industry. (See Asset Class Stocks in the Glossary section of this Important Disclosure Information for a summary of the relative potential volatility of different types of stocks.) International investing involves additional risks including, but not limited to, changes in currency exchange rates, differences in accounting and taxation policies, and political or economic instabilities that can increase or decrease returns. Report Is a Snapshot and Does Not Provide Legal, Tax, or Accounting Advice This Report provides a snapshot of your current financial position and can help you to focus on your financial resources and goals, and to create a plan of action. Because the results are calculated over many years, small changes can create large differences in future results. You should use this Report to help you focus on the factors that are most important to you. This Report does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. MoneyGuidePro Methodology MoneyGuidePro offers several methods of calculating results, each of which provides one outcome from a wide range of possible outcomes. The methods used are: Average Returns, Historical Test, Historical Rolling Periods, Bad Timing, Class Sensitivity, and Monte Carlo Simulations. When using historical returns, the methodologies available are Average Returns, Historical Test, Historical Rolling Periods, Bad Timing, and Monte Carlo Simulations. When using projected returns, the methodologies available are Average Returns, Bad Timing, Class Sensitivity, and Monte Carlo Simulations. Results Using Average Returns The Results Using Average Returns are calculated using one average return for your pre-retirement period and one average return for your post-retirement period. Average Returns are a simplifying assumption. In the real world, investment returns can (and often do) vary widely from year to year and vary widely from a long-term average return. Results Using Historical Test The Results Using Historical Test are calculated by using the actual historical returns and inflation rates, in sequence, from a starting year to the present, and assumes that you would receive those returns and inflation rates, in sequence, from this year through the end of your Plan. If the historical sequence is shorter than your Plan, the average return for the historical period is used for the balance of the Plan. The historical returns used are those of the broad-based asset class indices listed in this Important Disclosure Information. Results Using Historical Rolling Periods The Results Using Historical Rolling Periods is a series of Historical Tests, each of which uses the actual historical returns and inflations rates, in sequence, from a starting year to an ending year, and assumes that you would receive those returns and inflation rates, in sequence, from this year through the end of your Plan. If the historical sequence is shorter than your Plan, the average return for the historical period is used for the balance of the Plan. Indices in Results Using Historical Rolling Periods may be different from indices used in other MoneyGuidePro calculations. Rolling Period Results are calculated using only three asset classes -- Cash, Bonds, and Stocks. The indices used as proxies for these asset classes when calculating Results Using Historical Rolling Periods are: Cash - Ibbotson U.S. 30-day Treasury Bills ( ) Bonds - Ibbotson Intermediate-Term Government Bonds - Total Return ( ) Stocks - Ibbotson Large Company Stocks - Total Return ( ) Page 3 of 39

7 IMPORTANT DISCLOSURE INFORMATION Results with Bad Timing Results with Bad Timing are calculated by using low returns in one or two years, and average returns for all remaining years of the Plan. For most Plans, the worst time for low returns is when you begin taking substantial withdrawals from your portfolio. The Results with Bad Timing assume that you earn a low return in the year(s) you select and then an Adjusted Average Return in all other years. This Adjusted Average Return is calculated so that the average return of the Results with Bad Timing is equal to the return(s) used in calculating the Results Using Average Returns. This allows you to compare two results with the same overall average return, where one (the Results with Bad Timing) has low returns in one or two years. When using historical returns, the default for one year of low returns is the lowest annual return in the historical period you are using, and the default for two years of low returns is the lowest two-year sequence of returns in the historical period. When using projected returns, the default for the first year of low returns is two standard deviations less than the average return, and the default for the second year is one standard deviation less than the average return. Results Using Class Sensitivity The Results Using Class Sensitivity are calculated by using different return assumptions for one or more asset classes during the years you select. These results show how your Plan would be affected if the annual returns for one or more asset classes were different than the average returns for a specified period in your Plan. Results Using Monte Carlo Simulations Monte Carlo simulations are used to show how variations in rates of return each year can affect your results. A Monte Carlo simulation calculates the results of your Plan by running it many times, each time using a different sequence of returns. Some sequences of returns will give you better results, and some will give you worse results. These multiple trials provide a range of possible results, some successful (you would have met all your goals) and some unsuccessful (you would not have met all your goals). The percentage of trials that were successful is the probability that your Plan, with all its underlying assumptions, could be successful. In MoneyGuidePro, this is the Probability of Success. Analogously, the percentage of trials that were unsuccessful is the Probability of Failure. The Results Using Monte Carlo Simulations indicate the likelihood that an event may occur as well as the likelihood that it may not occur. In analyzing this information, please note that the analysis does not take into account actual market conditions, which may severely affect the outcome of your goals over the long-term. MoneyGuidePro Presentation of Results The Results Using Average Returns, Historical Test, Historical Rolling Periods, Bad Timing, and Class Sensitivity display the results using an Estimated % of Goal Funded and a Safety Margin. Estimated % of Goal Funded For each Goal, the Estimated % of Goal Funded is the sum of the assets used to fund the Goal divided by the sum of the Goal s expenses. All values are in current dollars. A result of 100% or more does not guarantee that you will reach a Goal, nor does a result under 100% guarantee that you will not. Rather, this information is meant to identify possible shortfalls in this Plan, and is not a guarantee that a certain percentage of your Goals will be funded. The percentage reflects a projection of the total cost of the Goal that was actually funded based upon all the assumptions that are included in this Plan, and assumes that you execute all aspects of the Plan as you have indicated. Safety Margin The Safety Margin is the estimated value of your assets at the end of this Plan, based on all the assumptions included in this Report. Only you can determine if that Safety Margin is sufficient for your needs. Bear Market Loss and Bear Market Test The Bear Market Loss shows how a portfolio would have been impacted during the worst bear market since the Great Depression. Depending on the composition of the portfolio, the worst bear market is either the "Great Recession" or the "Bond Bear Market." The Great Recession, from November 2007 through February 2009, was the worst bear market for stocks since the Great Depression. In MoneyGuidePro, the Great Recession Return is the rate of return, during the Great Recession, for a portfolio comprised of cash, bonds, stocks, and alternatives, with an asset mix equivalent to the portfolio referenced. Page 4 of 39

8 IMPORTANT DISCLOSURE INFORMATION The Bond Bear Market, from July 1979 through February 1980, was the worst bear market for bonds since the Great Depression. In MoneyGuidePro, the Bond Bear Market Return is the rate of return, for the Bond Bear Market period, for a portfolio comprised of cash, bonds, stocks, and alternatives, with an asset mix equivalent to the portfolio referenced. The Bear Market Loss shows: 1) either the Great Recession Return or the Bond Bear Market Return, whichever is lower, and 2) the potential loss, if you had been invested in this cash-bond-stock-alternative portfolio during the period with the lower return. In general, most portfolios with a stock allocation of 20% or more have a lower Great Recession Return, and most portfolios with a combined cash and bond allocation of 80% or more have a lower Bond Bear Market Return. The Bear Market Test, included in the Stress Tests, examines the impact on your Plan results if an identical Great Recession or Bond Bear Market, whichever would be worse, occurred this year. The Bear Market Test shows the likelihood that you could fund your Needs, Wants and Wishes after experiencing such an event. Regardless of whether you are using historical or projected returns for all other MoneyGuidePro results, the Bear Market Loss and Bear Market Test use returns calculated from historical indices. If you are using historical returns, the indices in the Bear Market Loss and the Bear Market Test may be different from indices used in other calculations. These results are calculated using only four asset classes Cash, Bonds, Stocks, and Alternatives. The indices and the resulting returns for the Great Recession and the Bond Bear Market are: Asset Class Index Great Recession Return 11/ /2009 Cash Bond Ibbotson U.S. 30-day Treasury Bills Ibbotson Intermediate-Term Government Bonds Total Return Bond Bear Market Return 07/ / % 7.08% 15.61% -8.89% Stock S&P Total Return % 14.61% Alternative HFRI FOF: Diversified* S&P GSCI Commodity - Total Return** % N/A N/A 23.21% Because the Bear Market Loss and Bear Market Test use the returns from asset class indices rather than the returns of actual investments, they do not represent the performance for any specific portfolio, and are not a guarantee of minimum or maximum levels of losses or gains for any portfolio. The actual performance of your portfolio may differ substantially from those shown in the Great Recession Return, the Bond Bear Market Return, the Bear Market Loss, and the Bear Market Test. MoneyGuidePro Risk Assessment The MoneyGuidePro Risk Assessment highlights some but not all of the trade-offs you might consider when deciding how to invest your money. This approach does not provide a comprehensive, psychometrically-based, or scientifically-validated profile of your risk tolerance, loss tolerance, or risk capacity, and is provided for informational purposes only. Based on your specific circumstances, you must decide the appropriate balance between potential risks and potential returns. MoneyGuidePro does not and cannot adequately understand or assess the appropriate risk/return balance for you. MoneyGuidePro requires you to select a risk score. Once selected, three important pieces of information are available to help you determine the appropriateness of your score: an appropriate portfolio for your score, the impact of a Bear Market Loss (either the Great Recession or the Bond Bear Market, whichever is lower) on this portfolio, and a compare button to show how your score compares to the risk score of others in your age group. MoneyGuidePro uses your risk score to select a risk-based portfolio on the Portfolio Table page. This risk-based portfolio selection is provided for informational purposes only, and you should consider it to be a starting point for conversations with your advisor. It is your responsibility to select the Target Portfolio you want MoneyGuidePro to use. The selection of your Target Portfolio, and other investment decisions, should be made by you, after discussions with your advisor and, if needed, other financial and/or legal professionals. *Hedge Fund Research Indices Fund of Funds **S&P GSCI was formerly the Goldman Sachs Commodity Index Page 5 of 39

9 Summary of Goals and Resources

10 Personal Information and Summary of Financial Goals Jane and John Doe Needs 10 Retirement - Basic Living Expense Jane (2037) John (2037) Both Retired ( ) $100,000 Base Inflation Rate (2.25%) 10 Health Care Both Medicare ( ) $12,987 Base Inflation Rate plus 4.25% (6.50%) Wants 7 College - John JR 4 years starting in 2028 Attending College - Private (4 years) $49,320 Base Inflation Rate plus 3.75% (6.00%) 7 Home Improvement In 2023 $300,000 Base Inflation Rate (2.25%) Wishes 3 Travel In 2037 Recurring every year until end of Jane's plan $10,000 Base Inflation Rate (2.25%) Page 6 of 39

11 Personal Information and Summary of Financial Goals Personal Information Jane Female - born 01/10/1970, age 48 Employed - $250,000 Participant Name Date of Birth Age Relationship John JR 01/10/ Child John Male - born 01/10/1972, age 46 Employed - $15,000 Married, US Citizens living in CA This section lists the Personal and Financial Goal information you provided, which will be used to create your Report. It is important that it is accurate and complete. Page 7 of 39

12 Current Financial Goals Graph This graph shows the annual costs for your Financial Goals, as you have specified. Because these costs will be used to create your Plan, it is important that they are accurate and complete. All amounts are in after-tax, future dollars. Page 8 of 39

13 Life Expectancy Table and Graph How long might you live? Jane Live to Age John Live to Age Either Live to Age Chance you will live to age shown Non-Smoker Smoker Non-Smoker Smoker Non-Smoker Smoker Both Live to Age Non-Smoker 50% % % % % Smoker All calculations based on 2012 IAM Basic Tables. Page 9 of 39

14 Resources Summary Investment Assets Description Owner Current Value Manually Entered Additions Assign to Goal Taxable Joint Survivorship $1,000,000 $50,000 Fund All Goals Traditional IRA Jane $400,000 Fund All Goals Traditional IRA John $350,000 Fund All Goals Total Investment Assets : $1,750,000 Other Assets Description Owner Current Value Future Value Assign to Goal Manually Entered Home Joint Survivorship $1,500,000 Not Funding Goals Total of Other Assets : $1,500,000 Social Security Description Value Assign to Goal Social Security Jane will file a normal application at age 67. She will receive $36,133 in retirement benefits at age 67. Social Security John will file a normal application at age 67. He will receive $10,717 in retirement benefits and $7,349 in spousal benefits at age 67. Fund All Goals Fund All Goals Liabilities Type Manually Entered Description Owner Outstanding Balance Interest Rate 1st Mortgage Mortgage Jane $750, % Monthly Payment Total Outstanding Balance : $750,000 Page 10 of 39

15 Net Worth Summary - All Resources This is your Net Worth Summary as of. Your Net Worth is the difference between what you own (your Assets) and what you owe (your Liabilities). To get an accurate Net Worth statement, make certain all of your Assets and Liabilities are entered. Description Total Investment Assets Individual Retirement Accounts $750,000 Taxable and/or Tax-Free Accounts $1,000,000 Total Investment Assets: $1,750,000 Other Assets Home and Personal Assets $1,500,000 Total Other Assets: $1,500,000 Liabilities Personal Real Estate Loan: $750,000 Total Liabilities: $750,000 Net Worth: $2,500,000 Investment Assets $1,750,000 Other Assets Total Assets + $1,500,000 $3,250,000 Total Liabilities - $750,000 Net Worth $2,500,000 Page 11 of 39

16 Current Portfolio Allocation This page shows how your Investment Assets are currently allocated among the different Asset Classes. It includes only those Assets you have identified to fund Goals in this Plan. Total Stock 60% Projected Returns Total Return 5.55% Base Inflation Rate 2.25% Real Return 3.30% Standard Deviation 10.59% Bear Market Returns Great Recession November 2007 thru February % Bond Bear Market July 1979 thru February % Asset Class Cash & Cash Alternatives Short Term Bonds Intermediate Term Bonds Long Term Bonds Large Cap Value Stocks Large Cap Growth Stocks Mid Cap Stocks Small Cap Stocks International Developed Stocks Emerging Market Stocks Commodities Global Real Estate Equity Long/Short Unclassified Rate of Return 2.29% 2.59% 3.00% 3.70% 7.25% 7.25% 7.55% 7.55% 7.25% 7.60% 2.75% 6.00% 5.25% 0.00% Investment Portfolio Value % of Total $0 0% $0 0% $700,000 40% $0 0% $525,000 30% $525,000 30% $0 0% $0 0% $0 0% $0 0% $0 0% $0 0% $0 0% $0 0% Total : $1,750, % Page 12 of 39

17 Current Portfolio Allocation Tax-Free Rates of Return Cash & Cash Alternatives Short Term Bonds Intermediate Term Bonds Long Term Bonds 1.00% 2.00% 2.50% 3.00% Page 13 of 39

18 Tax and Inflation Assumptions Base Inflation Rate Inflation rate : 2.25% Social Security Inflation rate : 2.25% Tax Assumption Inflation rate : 2.25% Marginal Tax Rates Before Retirement Tax Penalty Include penalties in Plan? : Tax Free Earnings - Options Use Tax-Free returns by Asset Class, Marginal Tax Rate to use during Retirement is 40.00% Yes Federal Tax Rates : 24.00% Untaxed Gain on Taxable Earnings - Before Retirement What portion of your Annual Taxable Investment Earnings will not be taxed until withdrawn? Long Term Capital Gains (LTCG) - Before Retirement State 9.30% 0.00% Local 0.00% What portion of your Taxable Investment Earnings will be taxed at the LTCG rate? 20.00% Long Term Capital Gains rate : 15.00% Tax Rates During Retirement Let the Program calculate taxes each year Local rate : 0.00% Deduction estimate : Untaxed Gain on Taxable Earnings - During Retirement Use standard deductions What portion of your Annual Taxable Investment Earnings will not be taxed until withdrawn? 0.00% Long Term Capital Gains (LTCG) - During Retirement What portion of your Taxable Investment Earnings will be taxed at the LTCG rate? Long Term Capital Gains rate : 20.00% Use Program estimate Taxation of Social Security What portion of Social Security will be taxed? 85.00% Page 14 of 39

19 Risk and Portfolio Information

20 Risk Assessment You chose a Risk Score of 73. Appropriate Portfolio: 70/30 Equity/Fixed Income Percentage Stock: 59% Average Return: 5.71% Great Recession Return Loss for this Portfolio If this loss would cause you to sell your investments, you should select a lower score. Don't go past your Breaking Point. During the Great Recession Return (November February 2009) this portfolio had a loss of: -28% If you invest $1,750,000 in this portfolio and the same loss occurred again, you would lose: -$484,684 Page 15 of 39

21 Portfolio Table The Risk-Based Portfolio was selected from this list of Portfolios, based upon the risk assessment. The Target Band is comprised of the portfolio(s) that could be appropriate for you, based upon the Risk-Based Portfolio indicated. The Target Portfolio was selected by you. The Average Real Return is equal to the Average Total Return minus the inflation rate of 2.25%. Refer to the Standard Deviation column in the chart below to compare the relative risk of your Current Portfolio to the Target Portfolio. Current Risk Based Target Band Name Cash Bond Stock Alternative Average Return Total Real Standard Deviation 20/80 Equity/Fixed Income 1% 79% 12% 8% 3.62% 1.37% 3.72% 30/70 Equity/Fixed Income 1% 69% 20% 10% 4.00% 1.75% 4.60% 40/60 Equity Fixed Income 1% 59% 30% 10% 4.43% 2.18% 6.13% 50/50 Equity/Fixed Income 1% 49% 40% 10% 4.87% 2.62% 7.90% 60/40 Equity/Fixed Income 1% 39% 49% 11% 5.28% 3.03% 9.48% Current 0% 40% 60% 0% 5.55% 3.30% 10.59% 70/30 Equity/Fixed Income 1% 29% 59% 11% 5.71% 3.46% 11.37% 80/20 Equity/Fixed Income 1% 19% 68% 12% 6.10% 3.85% 13.06% 100% Equity 1% 5% 85% 9% 6.84% 4.59% 16.53% Efficient Frontier Graph When deciding how to invest your money, you must determine the amount of risk you are willing to assume to pursue a desired return. The Efficient Frontier Graph reflects a set of portfolios that assume a low relative level of risk for each level of return, or conversely an optimal return for the degree of investment risk taken. The graph also shows the position of the Current, Target, Risk-Based, and Custom Portfolios, if applicable. The positioning of these portfolios illustrates how their respective risks and returns compare to each other as well as the optimized level of risk and return represented by the Portfolios. This graph shows the relationship of return and risk for each Portfolio in the chart above. Page 16 of 39

22 Worksheet Detail - Allocation Comparison Scenario: What If Scenario 1 These charts compare your Current Portfolio with the Target Portfolio you selected and show the allocation changes for you to consider. Current Portfolio Projected Returns 5.55% Total Return 5.71% 2.25% Base Inflation Rate 2.25% 3.30% Real Return 3.46% 10.59% Standard Deviation 11.37% Bear Market Returns -24% Great Recession -28% 5% Bond Bear Market 9% Target Portfolio 70/30 Equity/Fixed Income Portfolio Comparison with Allocation Changes Current Amount % of Total Asset Class % of Total Target Amount Increase / Decrease $0 0% Cash & Cash Alternatives 1% $17,500 $17,500 $0 0% Short Term Bonds 0% $0 $0 $700,000 40% Intermediate Term Bonds 29% $507,500 -$192,500 $0 0% Long Term Bonds 0% $0 $0 $525,000 30% Large Cap Value Stocks 20% $350,000 -$175,000 $525,000 30% Large Cap Growth Stocks 13% $227,500 -$297,500 $0 0% Mid Cap Stocks 5% $87,500 $87,500 $0 0% Small Cap Stocks 7% $122,500 $122,500 $0 0% International Developed Stocks 9% $157,500 $157,500 $0 0% Emerging Market Stocks 5% $87,500 $87,500 $0 0% Commodities 4% $70,000 $70,000 $0 0% Global Real Estate 2% $35,000 $35,000 $0 0% Equity Long/Short 5% $87,500 $87,500 $0 0% Unclassified 0% $0 $0 $1,750,000 $1,750,000 $0 Page 17 of 39

23 Worksheet Detail - Portfolio Changes Scenario: What If Scenario 1 Asset Class Group Current Portfolio Target Portfolio $ % $ % Difference Cash $17,500 1% $17,500 1% Bond $700,000 40% $507,500 29% -$192,500-11% Stock $1,050,000 60% $1,032,500 59% -$17,500-1% Alternative $192,500 11% $192,500 11% Unclassified $0 0% Total: $1,750, % $1,750, % $ % Page 18 of 39

24 Results

25 Results - Current and Recommended Results Current Scenario Recommended Scenario Average Return Bad Timing Average Return Bad Timing Estimated % of Goals Funded Likelihood of Funding All Goals 100% 100% 100% 100% Your Confidence Zone: 70% - 90% Current Scenario What If Scenario 1 Changes In Value Retirement Retirement Age Jane John Planning Age Jane John 67 in in in in in in in in 2063 Goals Needs Retirement - Basic Living Expense Both Retired Health Care Both Medicare $100,000 $12,987 $100,000 $12,987 Page 19 of 39

26 Results - Current and Recommended Current Scenario What If Scenario 1 Changes In Value Wants College - John JR Years of School Start Year Home Improvement Starting Wishes Travel Starting Years between occurrences Ending $49, $300, $10, End of Jane's plan $49, $300, $10, End of Jane's plan Total Spending for Life of Plan $3,817,930 $3,817,930 Savings Qualified $0 $11,000 Increased $11,000 Taxable $50,000 $50,000 Total Savings This Year $50,000 $61,000 Increased $11,000 Portfolios Allocation Before Retirement Current 70/30 Equity/Fixed Income 1% Less Stock Percent Stock 60% 59% Total Return 5.55% 5.71% Standard Deviation 10.59% 11.37% Great Recession Return 11/07-2/09-24% -28% Bond Bear Market Return 7/79-2/80 5% 9% Allocation During Retirement Current 70/30 Equity/Fixed Income 1% Less Stock Page 20 of 39

27 Results - Current and Recommended Current Scenario What If Scenario 1 Changes In Value Percent Stock Total Return Standard Deviation Great Recession Return 11/07-2/09 Bond Bear Market Return 7/79-2/80 Inflation 60% 5.55% 10.59% -24% 5% 2.25% 59% 5.71% 11.37% -28% 9% 2.25% Investments Total Investment Portfolio $1,750,000 $1,750,000 Social Security Social Security Strategy Jane Filing Method Age to File Application Age Retirement Benefits Begin First Year Benefit John Filing Method Age to File Application Age Retirement Benefits Begin First Year Benefit At FRA Normal $36,133 Normal $18,067 Jane begins at age 70 and John begins at FRA Normal $44,805 Normal $10,717 Page 21 of 39

28 Worksheet Detail - Inside the Numbers Final Result Inside the Numbers - Final Result For What If Scenario 1 The graph below shows the results for all 1000 Monte Carlo Trials. The Probability of Success meter displays the percentage of trials that were successful in funding all of your goals. We identify the Confidence Zone as a probability of Success between 70% and 90%. (70% - 90%) In the table below, the 99th, 75th, 50th, 25th and 1st percentile trials are shown based on the End of Plan Value. For each trial displayed, the corresponding portfolio value is illustrated for specific years of the plan. These trials serve as checkpoints to illustrate how the portfolio might perform over the life of the plan. Although the graph and table help illustrate a general range of results you may expect, neither of them reflect the Final Result, your Probability of Success. Trials Year 5 Year 10 Year 15 Year 20 Year 25 End of Plan Year Money Goes to $0 10 $2,893,450 $3,896,109 $4,667,399 $9,705,327 $12,636,012 $46,505, $2,632,767 $4,272,315 $6,970,646 $6,483,776 $8,382,621 $13,410, $1,640,847 $1,852,675 $1,916,453 $3,053,733 $2,642,860 $6,244, $1,549,278 $2,161,154 $3,218,508 $4,749,257 $5,456,516 $1,602, $2,655,023 $2,445,111 $1,719,851 $1,802,572 $1,299,945 $ Page 22 of 39

29 Worksheet Detail - Bear Market Test Bear Market Test for What If Scenario 1 Likelihood of Reaching Goals After Loss of 28% - Using All Assets to Fund Goals by Importance Needs Only Needs & Wants Only Needs, Wants, & Wishes Needs 10 - Retirement - Basic Living Expense 10 - Health Care Wants 7 - College - John JR 7 - Home Improvement Wishes 3 - Travel Goals This test assumes your investment allocation matches the 70/30 Equity/Fixed Income portfolio. If your investments suffered a loss of 28% this year, your portfolio value would be reduced by $490,000. This is the approximate loss sustained by a portfolio with a similar percentage of stocks, bonds, cash, and alternative during the Great Recession, which lasted from November 2007 through February These results show the likelihood you would be able to fund your Needs, Wants and Wishes after experiencing this loss. Page 23 of 39

30 Worksheet Detail - Combined Details Scenario : Current Scenario using Average Returns These pages provide a picture of how your Investment Portfolio may hypothetically perform over the life of this Plan. The graph shows the effect on the value of your Investment Portfolio for each year. The chart shows the detailed activities that increase and decrease your Investment Portfolio value each year including the funds needed to pay for each of your Goals. Shortfalls that occur in a particular year are denoted with an 'X' under the Goal column. Total Portfolio Value Graph x - denotes shortfall Page 24 of 39

31 Worksheet Detail - Combined Details Scenario : Current Scenario using Average Returns Event or Ages Year Beginning Portfolio Value Earmarked Fund All Goals Additions To Assets Other Additions Post Investment Retirement Earnings Income Taxes Funds Used All Goals Ending Portfolio Value 48 / ,750,000 50, ,900 18, ,881, / ,881,543 50, ,201 19, ,018, / ,018,815 50, ,819 21, ,162, / ,162,074 50, ,770 23, ,311, / ,311,590 50, ,068 25, ,467, / ,467,646 50, ,120 20, ,303 2,282, / ,282,487 50, ,453 22, ,439, / ,439,293 50, ,156 24, ,603, / ,603,067 50, ,245 26, ,774, / ,774,129 50, ,739 28, ,952, / ,952,815 50, ,754 28,449 88,325 3,047, / ,047,796 50, ,732 28,768 93,624 3,142, / ,142,135 50, ,656 29,001 99,242 3,235, / ,235,548 50, ,510 29, ,196 3,327, / ,327,723 50, ,464 31, ,534, / ,534,066 50, ,916 33, ,749, / ,749,804 50, ,889 35, ,975, / ,975,380 50, ,409 37, ,211, / ,211,259 50, ,500 39, ,457,928 Jane & John ,457, , ,715 20, ,847 4,520,760 Retire 68 / ,520, , ,905 18, ,418 4,582, / ,582, , ,483 26, ,254 4,665, / ,665, , ,347 40, ,371 4,732, / ,732, , ,724 40, ,783 4,796, / ,796, , ,469 56, ,505 4,843, / ,843, , ,628 57, ,554 4,884, / ,884, , ,475 59, ,946 4,919, / ,919, , ,974 60, ,700 4,947, / ,947, , ,085 62, ,835 4,968,912 x - denotes shortfall Page 25 of 39

32 Worksheet Detail - Combined Details Scenario : Current Scenario using Average Returns Event or Ages Year Beginning Portfolio Value Earmarked Fund All Goals Additions To Assets Other Additions Post Investment Retirement Earnings Income Taxes Funds Used All Goals Ending Portfolio Value 77 / ,968, , ,770 63, ,373 4,982, / ,982, , ,978 65, ,334 4,986, / ,986, , ,670 66, ,743 4,980, / ,980, , ,788 68, ,622 4,964, / ,964, , ,283 69, ,000 4,935, / ,935, , ,095 70, ,902 4,894, / ,894, , ,162 72, ,359 4,839, / ,839, , ,415 73, ,402 4,768, / ,768, , ,792 74, ,063 4,681, / ,681, , ,217 75, ,377 4,576, / ,576, , ,622 75, ,383 4,452, / ,452, , ,921 75, ,119 4,307, / ,307, , ,027 75, ,627 4,139, / ,139, , ,862 75, ,952 3,948, / ,948, , ,328 74, ,141 3,730, / ,730, , ,340 73, ,245 3,486,143 Jane's Plan Ends & John's Plan Ends ,486, , ,791 71, ,317 3,212,097 x - denotes shortfall Page 26 of 39

33 Worksheet Detail - Combined Details Scenario : Current Scenario using Average Returns Event or Ages Year Funds Used Retirement Health Care College - John JR Home Improveme nt Travel Ending Portfolio Value 48 / ,881, / ,018, / ,162, / ,311, / ,467, / , ,282, / ,439, / ,603, / ,774, / ,952, / , ,047, / , ,142, / , ,235, / , ,327, / ,534, / ,749, / ,975, / ,211, / ,457,928 Jane & John ,617 42, ,262 4,520,760 Retire 68 / ,051 45, ,605 4,582, / ,562 48, ,956 4,665, / ,152 51, ,315 4,732, / ,823 55, ,682 4,796, / ,577 58, ,058 4,843, / ,415 62, ,441 4,884, / ,339 66, ,834 4,919, / ,352 71, ,235 4,947,753 x - denotes shortfall Page 27 of 39

34 Worksheet Detail - Combined Details Scenario : Current Scenario using Average Returns Event or Ages Year Funds Used Retirement Health Care College - John JR Home Improveme nt Travel Ending Portfolio Value 76 / ,454 75, ,645 4,968, / ,650 80, ,065 4,982, / ,939 85, ,494 4,986, / ,325 91, ,933 4,980, / ,810 97, ,381 4,964, / , , ,840 4,935, / , , ,308 4,894, / , , ,788 4,839, / , , ,278 4,768, / , , ,779 4,681, / , , ,292 4,576, / , , ,816 4,452, / , , ,352 4,307, / , , ,900 4,139, / , , ,460 3,948, / , , ,033 3,730, / , , ,619 3,486,143 Jane's Plan Ends & John's Plan Ends , , ,218 3,212,097 x - denotes shortfall Page 28 of 39

35 Worksheet Detail - Combined Details Notes Calculations are based on a Rolling Year rather than a Calendar Year. The current date begins the 365-day Rolling Year. Additions and withdrawals occur at the beginning of the year. Other Additions come from items entered in the Other Assets section and any applicable proceeds from insurance policies. Stock Options and Restricted Stock values are after-tax. Strategy Income is based on the particulars of the Goal Strategies selected. Strategy Income from immediate annuities, 72(t) distributions, and variable annuities with a guaranteed minimum withdrawal benefit (GMWB) is pre-tax. Strategy Income from Net Unrealized Appreciation (NUA) is after-tax. Post Retirement Income includes the following: Social Security, pension, annuity, rental property, royalty, alimony, part-time employment, trust, and any other retirement income as entered in the Plan. When married, if either Social Security Program Estimate or Use a Better Estimate of Annual Benefits is selected for a participant, the program will default to the greater of the selected benefit or the age adjusted spousal benefit, which is based on the other participant's benefit. Investment Earnings are calculated on all assets after any withdrawals for 'Goal Expense', 'Taxes on Withdrawals' and 'Tax Penalties' are subtracted. The taxes column is a sum of (1) taxes on retirement income, (2) taxes on strategy income, (3) taxes on withdrawals from qualified assets for Required Minimum Distributions, (4) taxes on withdrawals from taxable assets' untaxed gain used to fund Goals in that year, (5) taxes on withdrawals from tax-deferred or qualified assets used to fund goals in that year, and (6) taxes on the investment earnings of taxable assets. Tax rates used are detailed in the Tax and Inflation Options page. (Please note, the Taxes column does not include any taxes owed from the exercise of Stock Options or the vesting of Restricted Stock.) Tax Penalties can occur when Qualified and Tax-Deferred Assets are used prior to age 59½. If there is a value in this column, it illustrates that you are using your assets in this Plan in a manner that may incur tax penalties. Generally, it is better to avoid tax penalties whenever possible. These calculations do not incorporate penalties associated with use of 529 Plan withdrawals for non-qualified expenses. Funds for each Goal Expense are first used from Earmarked Assets. If sufficient funds are not available from Earmarked Assets, Fund All Goals Assets will be used to fund the remaining portion of the Goal Expense, if available in that year. All funds needed for a Goal must be available in the year the Goal occurs. Funds from Earmarked Assets that become available after the goal year(s) have passed are not included in the funding of that Goal, and accumulate until the end of the Plan. When married, ownership of qualified assets is assumed to roll over to the surviving co-client at the death of the original owner. It is also assumed the surviving co-client inherits all assets of the original owner. The Retirement Cash Reserve is the total funding amount for the Cash Reserve at the beginning of each year. The Retirement Cash Reserve is funded from the Earmarked and Fund All Goals columns, and the Cash Reserve amount is included in both the Beginning and Ending Portfolio Values. x - denotes shortfall Page 29 of 39

36 Worksheet Detail - Combined Details Scenario : What If Scenario 1 using Average Returns These pages provide a picture of how your Investment Portfolio may hypothetically perform over the life of this Plan. The graph shows the effect on the value of your Investment Portfolio for each year. The chart shows the detailed activities that increase and decrease your Investment Portfolio value each year including the funds needed to pay for each of your Goals. Shortfalls that occur in a particular year are denoted with an 'X' under the Goal column. Total Portfolio Value Graph x - denotes shortfall Page 30 of 39

37 Worksheet Detail - Combined Details Scenario : What If Scenario 1 using Average Returns Event or Ages Year Beginning Portfolio Value Earmarked Fund All Goals Additions To Assets Other Additions Post Investment Retirement Earnings Income Taxes Funds Used All Goals Ending Portfolio Value 48 / ,750,000 61, ,408 18, ,895, / ,895,522 61, ,717 20, ,047, / ,047,716 61, ,408 22, ,206, / ,206,898 61, ,497 23, ,373, / ,373,400 61, ,004 25, ,547, / ,547,572 61, ,804 21, ,303 2,381, / ,381,361 61, ,459 23, ,558, / ,558,360 61, ,565 25, ,743, / ,743,649 61, ,145 27, ,937, / ,937,630 61, ,222 29, ,140, / ,140,725 61, ,775 29,576 88,325 3,261, / ,261,599 61, ,374 29,949 93,624 3,383, / ,383,401 61, ,009 30,234 99,242 3,505, / ,505,934 61, ,665 30, ,196 3,628, / ,628,979 61, ,698 32, ,868, / ,868,163 61, ,355 34, ,118, / ,118,834 61, ,669 36, ,381, / ,381,562 61, ,670 39, ,656, / ,656,948 61, ,395 41, ,945,622 Jane & John ,945, ,356 10, ,847 4,995,087 Retire 68 / ,995, ,805 8, ,418 5,041, / ,041, , ,044 10, ,254 5,099, / ,099, , ,948 47, ,371 5,207, / ,207, , ,730 47, ,783 5,314, / ,314, , ,627 67, ,505 5,401, / ,401, , ,166 69, ,554 5,484, / ,484, , ,483 72, ,946 5,563, / ,563, , ,541 74, ,700 5,638, / ,638, , ,301 77, ,835 5,707,609 x - denotes shortfall Page 31 of 39

38 Worksheet Detail - Combined Details Scenario : What If Scenario 1 using Average Returns Event or Ages Year Beginning Portfolio Value Earmarked Fund All Goals Additions To Assets Other Additions Post Investment Retirement Earnings Income Taxes Funds Used All Goals Ending Portfolio Value 77 / ,707, , ,727 80, ,373 5,770, / ,770, , ,767 83, ,334 5,826, / ,826, , ,384 86, ,743 5,874, / ,874, , ,520 89, ,622 5,913, / ,913, , ,122 92, ,000 5,942, / ,942, , ,130 95, ,902 5,960, / ,960, , ,481 98, ,359 5,966, / ,966, , , , ,402 5,959, / ,959, , , , ,063 5,937, / ,937, , , , ,377 5,899, / ,899, , , , ,383 5,844, / ,844, , , , ,119 5,770, / ,770, , , , ,627 5,676, / ,676, , , , ,952 5,561, / ,561, , , , ,141 5,422, / ,422, , , , ,245 5,258,442 Jane's Plan Ends & John's Plan Ends ,258, , , , ,317 5,067,910 x - denotes shortfall Page 32 of 39

39 Worksheet Detail - Combined Details Scenario : What If Scenario 1 using Average Returns Event or Ages Year Funds Used Retirement Health Care College - John JR Home Improveme nt Travel Ending Portfolio Value 48 / ,895, / ,047, / ,206, / ,373, / ,547, / , ,381, / ,558, / ,743, / ,937, / ,140, / , ,261, / , ,383, / , ,505, / , ,628, / ,868, / ,118, / ,381, / ,656, / ,945,622 Jane & John ,617 42, ,262 4,995,087 Retire 68 / ,051 45, ,605 5,041, / ,562 48, ,956 5,099, / ,152 51, ,315 5,207, / ,823 55, ,682 5,314, / ,577 58, ,058 5,401, / ,415 62, ,441 5,484, / ,339 66, ,834 5,563, / ,352 71, ,235 5,638,526 x - denotes shortfall Page 33 of 39