THE FINANCIAL PLANNER S GUIDE TO. Becoming Ready For Retirement

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1 THE FINANCIAL PLANNER S GUIDE TO Becoming Ready For Retirement

2 Introduction Introduction Congratulations! By reading through this guide you have decided to take a more active role in managing your money and financial future. Between work and how busy our personal lives can become, taking time to manage your finances often gets pushed to the bottom of the to-do list. We work with clients helping prepare them for what we call the second act of their investing lives. The first act is what you did up to this point; investing and saving for your retirement. Now you will face some difficult financial decisions as you transition from working and saving into retirement and spending your savings. How can I be tax efficient when starting to withdraw money for retirement? When should I start collecting Social Security? Should I rollover my 401k? How can I make sure that my spouse and other beneficiaries are taken care of when I die? Can I retire? How will I be investing differently now that I need to start taking money out? Am I spending my money too fast for it to last the rest of my life? We hope you enjoy this guide!

3 Introduction To make sure your income plan will allow you to maintain your current lifestyle, look at your approximate monthly expenses. A good way to do this is to look at spending habits, about the last twelve months of total expenses. Expenses Go to your bank statements and figure out all the money that left the account. Don t change the numbers, these are your true spending habits.

4 Income Income Source Account Holder Monthly Amount Survivorship % Introduction Inventory Your Assets Amounts in Banks, Savings & Loans, Credit Unions (NON-IRA) Name of Bank Type of Account Maturity Date Interest Rate Approx. Balance IRA Accounts and Other Retirement Accounts Location of Account Type of Account Approx Account Value Account Holder

5 Stock and Bond Certificates Name of Stock/Bond Number of Shares Approx Market Value Account Holder Introduction Mutual Fund and/or Brokerage Accounts Name of Fund/Firm Market Value Account Holder Real Estate and Residence Property Address Original Cost Market Value Debt Owed

6 Family Business/Partnerships Name of Partnership Type of Investment Amount Invested Market Value Introduction Insured Long Term Care Monthly Benefit/Premium Amount Life Insurance Name of Company Insured Type of Insurance Cash Value Death Benefit

7 Introduction There are two phases in our investing life. The Accumulation phase and the withdrawal phase. Retirees can make a big investment mistake by using the same investment strategy for withdrawing their money as they used to accumulate it.

8 Minimizing the Impact of Withdrawals The bucket strategy: Introduction The first bucket is your income now bucket. The second bucket is your income later bucket. You should keep 1-2 years of cash flow in very liquid assets like, banks accounts, money markets or cash equivalents. You may have a pension available to you, or you can create your own pension utilizing an annuity. This may or may not be a good time to start your Social Security. You may have to plan around your Social Security strategy given your income strategy. You should keep an additional 2-3 years of cash flow in this bucket. These investments can be a little longer term and could include higher quality bonds, CD s, annuities, or short-term treasuries. In this bucket, all investments should mature within 5 years. You can also utilize an annuity during every bucket period to create a pension like income.

9 Minimizing the Impact of Withdrawals The bucket strategy: Introduction The third bucket is for your long term bucket. This is where you may have some growth based investments, depending on your risk tolerance, to keep up with inflation. These investments can be stock/equity, real estate investment trusts, or high yield bonds. Make sure the portfolio is diversified to help reduce risk. The last bucket is your legacy bucket. This bucket is not something everyone will have. If you concluded that you have more money that you will spend in your lifetime, you may want to invest some for your beneficiaries. This would probably be longer term investments. You could have in mind educational expenses for grandchildren, or for your children s retirement. These investments will be more centered around growth.

10 Rebalancing Introduction All dividends and interest should go into the Income Now bucket to keep it full. Rebalance annually. You should never let your Income Now bucket go below 1 year of cash-flow. Keep in mind what you might be receiving from Social Security, Pension, and annuity income. When rebalancing, refill your Income Now bucket first, then Income Later. The main goal is to always keep the Income Now bucket full. This is done by having all the dividends and interest go into it. When we rebalance all the accounts, we will make sure that the Income Now bucket has at least 2 years of cash-flow. That will be financed by the maturing assets in your Income Later bucket (#2). And, if we have to, we will refill bucket two with assets from bucket three. You need to make sure that your first bucket (Income Now) doesn t get lower than 1 year s cashflow. If it falls below that, you should rebalance immediately. Basically, we want to replenish cash first, then short term bonds. That way we will minimize the risk of having to sell long term investments when the market is down.

11 More things to consider: Taxes and Inflation Introduction Taxes: Don t forget that any money coming out of retirement accounts like IRA s or 401k s will be subject to ordinary income taxes. Example: If you re in a combined federal and state income tax bracket of 25% and you take a withdrawal of $10,000 from a retirement account, your net check you receive after taxes will only be $7,500. Here s a formula that will help you figure out how much you need to take out to receive the exact amount you want, after taxes. Amount of desired distribution / (1-tax rate) = Gross withdrawal required Inflation: We all probably notice that things get more expensive every year. When you re working that isn t a big deal. With raises and promotions, you don t have to pay as much attention to inflation while working. But, once you retire, most of your income will be fixed so inflation will become more of a concern. How Will Inflation Effect You? Multiply your current expenses by 1.5 to estimate how much you will need in 10 years to maintain a similar lifestyle due to inflation. Total Expenses x 1.5 =

12 of Retirement Accounts Introduction Taking Your Money Out If you are planning to retire prior to age 59 ½, you might need to give some thought on how you are going to fund your retirement until you reach age 59 ½. Here are some options on how to access your money early, without paying a penalty. Age 55 If you separate from service with your company when you are 55 or older, you can access your money in your company retirement plan without paying the normal 10% penalty that would apply to early distributions. You will still have to pay ordinary income tax on it, but the 10% penalty would be waived. You can take a partial withdrawal from your retirement plan, without the penalty, and roll the rest over to an IRA. Some company plans may limit the number of times you can take a partial withdrawal. Once you roll your retirement account to an IRA you no longer have this option. Regulation 72t 72t refers to the IRS tax code section that allows for systematic penalty free withdrawals from IRA s. Rules: The withdrawals must be substantially equal payments There are 3 distinct methods to calculate the payments The payments must continue until you turn 59 ½ or for 5 years, whichever occurs later IRA s can be separated to allow some flexibility with the payments

13 Introduction Take a loan You may have the option to take a loan from your 401k. The loan amount is usually 50% of the account value currently or $50,000, whichever is greater. You don t have to pay taxes on the loan amount, but you will lose the growth on that amount since it will not be growing with the account. You will need to check with your plan provider to see if you are able to keep the loan open after you retire. You will also need to be sure to keep up on your payments. Otherwise, the outstanding balance of the loan will become taxable, and you may be subject to penalties if you are under age 59 ½. After Tax Distributions Some plans also contain after tax contributions. Since you already paid taxes on this money, you ll want to make sure you don t pay taxes again when you take the money out. Your after tax account consists of 2 components: your contributions (which have already been taxed) and your earnings from those contributions (which have not been taxed). IRS rules will allow you to roll the entire account over to your IRA. If you roll over your after tax-tax contributions, you are required to keep track of what portion of every IRA withdrawal is taxable and what part is nontaxable. This is not recommended. The easiest method is rolling over all of your pretax money to an IRA account and taking a check for the portion of your account that has already been taxed. This keeps the pretax and posttax money separate so you don t have to keep track of which portion of your withdrawals are taxable.

14 So, what are my options for my 401k, 403b, 457? Introduction Do Nothing Check with your plan sponsor to see if leaving your account there is an option. If you like your current plan you may be able to just leave it as is. Roll it over to an IRA This is the most common choice. You will have to be sure to have the check made payable to the financial institution you are transferring it to. They should write it F.B.O. (for the benefit of) you. Take a Check This is probably the least popular option. 20% will be withheld from your check for tax withholding. Besides the 20%, you could end up owing more depending upon your tax bracket and any penalties that would apply. You can put it into an IRA within 60 days. However, you will have to make up the 20% that was withheld out of your own pocket. You will get it back as a tax refund when you file your taxes the next year. Roll it into your new 401k (if you are changing jobs) You will have to check with the new employer s plan to make sure that they accept rollovers. You should make sure that you like the investment options and terms of the new plan because once you roll it over you can t move it until you turn 59 ½ or separate from service with the new company. Even if you like the plan right now, the company could change it at any time by adding or removing funds. Usually it makes sense to roll into a new 401k if your account is smaller. If it is larger you should think about rolling it into an IRA.

15 Reasons you may want to roll your 401k to a Self-Directed IRA Access to more investment options More control over beneficiary designations Advice from a Financial Professional Reasons you may want to leave your 401k where it is You like the investment options in the plan Could have lower costs

16 Other options for your your 401k, 403b, 457 Delay the payment to the IRS for as long as possible Take the money out at a lower rate Introduction One way to do this is through Net Unrealized Appreciation (NUA) Stock. If you have company stock in your 401k that is highly appreciated, you might be able to withdraw all or some of your stock and pay only ordinary income taxes on the original cost basis at the time of your withdrawal. When the stock is sold, you will pay long term capital gains on the difference between the basis and the sale value. The rule that you have to hold stock for at least a year to qualify for long term capital gain tax rate does not apply to NUA stock. Ordinary income tax rate has a max of 35%, and long term capital gains rate only has a max of 15% Pay the tax off early with a Roth Conversion If you plan on leaving accounts to your children or grandchildren, and you don t plan on spending some or all of your retirement assets for at least 10 years, then a Roth Conversion may make sense for you. By converting to a Roth IRA, you would pay taxes at the time of the conversion and then you never have to pay taxes again on that money. Stretch your IRA for your beneficiaries If you aren t planning on spending all of your retirement assets before you die, you may want to take advantage of this. A Stretch IRA is set up so that it can continue its tax deferral for your non-spouse beneficiaries. The most important part of this strategy is to name a beneficiary, preferably a person. If you name an estate, it is the equivalent of not having a beneficiary designation, so it cannot be stretched. If you name a trust as a beneficiary, it must meet 5 conditions for the IRS to look through the trust and use the beneficiaries life expectancies.

17 Introduction In Service Withdrawals In some employer sponsored retirement plans, like 401k s, they allow for In Service Withdrawals. This permits you to take a withdrawal or rollover even if you aren t retired or separated from service with the company. 59 ½ Even if you are still working, when you turn 59 ½, some company retirement plans allow you to rollover your whole 401k to an IRA, without penalties. If you do this, you can still continue to do your regular payroll deduction. Vested Match If your company matched any of your contributions to your retirement plan, you may be able to roll over your vested balance into an IRA without any penalties. You can do this at any time, any age, even while you are still working for the company. Usually vesting takes 5 years, but it may vary by company. After-tax contributions If you made any after tax contributions to your retirement account, you might be able to withdraw that money. The earning on the contributions have not been taxed, so that part needs to stay in the account. The contributions will be sent to you in check form and it is a non-taxable event since you have already paid taxes on it.

18 Introduction Required Minimum Distribution Unfortunately, the IRS doesn t let you defer taxes forever on your retirement accounts. When you reach age 70 ½ you have to begin taking withdrawals from your retirement accounts. You have until April 1st of the year following the year you turn 70 ½ to take your first distribution. These distributions are called Required Minimum Distributions (RMD) and the amount you are required to take is based on your age. RMD s are not required from Roth IRA s. If you don t take enough, or miss a distribution there is a 50% penalty on the difference. Pensions Options 100% surviving spouse If you die, your spouse will continue getting the same amount you were getting while alive. Selecting this option usually gives you the lowest payout of all the options % surviving spouse If you select this option, your payout will be slightly higher than the 100% option. If you die, your spouse will get a percentage of the amount you were getting while alive.

19 10-year Period Certain This option can usually be added to one of the above options, or you can select it as a standalone benefit. If you select it as a stand-alone option, you are guaranteed payments for a minimum of 10 years, or your lifetime, whichever is longer. The benefit will also be paid to your spouse or any beneficiary regardless of their age, once you have passed. If you select it in addition to one of the spousal continuation options your spouse will continue to get the full pension for the remainder of the 10-year period. After the 10 years, the benefit amount will reduce to whichever spousal option you selected. Non-spousal beneficiaries will get your full pension for the remainder of the 10-year period after you have passed. Lump Sum Pension Option: Some pensions allow you to take a lump sum instead of a monthly pension. You need to do some careful planning if you choose this option. There is no going back once you choose it. If you take the lump sum, you have control of the money. If the pension goes bankrupt and goes to the PBGC (Pension Benefit Guarantee Corporation), you don t have to worry about it because you will already have your money. Keeping the Monthly Pension: You know the exact amount you are going to get for each month and don t have to worry about what s happening in the market. However, if you die prematurely the pension keeps all the money after the survivor benefits are paid.

20 What happens if your pension is taken over by the Pension Benefit Guarantee Corporation (PBGC)? Introduction PBGC guarantees basic benefits earned before your plan s termination date. These include: pension benefits at normal retirement age, most early retirement benefits, annuity benefits for survivors of plan participants, disability benefits (if your disability occurred before the plan s termination date). PBGC does not guarantee the following: Health and welfare benefits Vacation pay Severance benefits Lump-sum death benefits for a death that occurred after the plan ended Disability benefits for a disability that occurred after the plan ended Legal Limits on PBGC s guarantees PBGC does not generally guarantee a monthly pension amount that is higher than the monthly benefit your plan would have provided if you had retired at your normal retirement age. The maximum amount that the PBGC guarantees each year is set under the provisions of ERISA. People who met their plan s requirements for a disability pension before the plan s termination date may have higher limits. They may not be able to fully guarantee your benefits if your plan was created or amended to increase benefits within five years before its termination date. For more information, see the General FAQs About PBGC. General FAQs About PBGC (PBGC. gov).

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22 Example: Doug s age 66 full retirement benefit is $2,850. If he decides to collect early at 62, his benefit will be reduced by 25% to $2,138. Year of Birth Annual Increase % % % 1943 or later 8% Increase your benefits by delaying past FRA to as late as age 70 You can delay your benefits beyond your Full Retirement Age to age 70 and they will continue to grow. The increase is in addition to any cost of living adjustment (COLA). Benefits stop increasing at age 70.

23 Example Doug s age 55 full retirement benefit is $2,850. If he delay s his benefit, he will get an 8% increase for each year that he delays, up to age 70. If he waits the 4 years until he is 70, his benefit would increase to $3,876. Factors to consider - when should I start taking Social Security? Do you need the money? Are you actually retiring? Health of you and your spouse? Age of your spouse Whose benefit will your spouse collect? Working while collecting benefits Working while collecting benefits If you have not reached your FRA and are still working, you may lose some or all of your Social Security. Once you reach your Full Retirement Age you won t lose any benefits. Before FRA you can earn up to $15,720 without reducing your benefit. Once you earn above the limit, your benefit will be reduced by $1 for every $2 you earn above the limit. This limit changes periodically, this is the limit for In the year you reach your Full Retirement Age you can earn up to $41,880 with no reduction in your benefits. Your benefit will be reduced by $1 for every $3 above the limit that you earn in the months before you reach your FRA.

24 Introduction Taxation of Benefits About a third of people collecting Social Security benefits will have to pay taxes on them. If your Provisional Income exceeds the thresholds set forth by the IRS, you may have to pay taxes on some or up to 85% of your benefits. Provisional Income = ½ of Social Security Income + MAGI MAGI is Adjusted Gross Income Tax Exempt Interest Qualified US Savings bond interest that otherwise would be excluded Adoption Benefits Foreign earned income or housing Any allowable IRA deductions Provisional Income Limits Single or Head of Household Married filing jointly Base amount $25,000 = not taxed Base amount $32,000 = not taxed $25,000-$34,000 = up to 50% taxable $32,000-$44,000 = up to 50% taxable Above $34,000 = up to 85% taxable Above $44,000 = up to 85% taxable

25 Spousal Benefits As a spouse you have two options, you can collect benefits based off of your work record, or you can collect a benefit equal to ½ of your spouse s Primary Insurance Amount (PIA). Introduction You can collect as early as age 62 for a reduced amount. If you collect a spousal benefit at age 62 your benefit will be 35% of your spouse s primary insurance amount. Deferring past your Full Retirement Age will not increase the benefit. Because of new rule changes that came at the end of 2015, if you are 62 or older by the end of 2015, then you still have spousal benefits available to you. One spouse has to be collecting benefits for the other spouse to collect spousal benefits. These rules can get tricky and complicated. Make sure to speak with someone that knows Social Security well to help you out with this. Example John Sue Spousal Year of Birth FRA Monthly Benefit at 62 $1,800 $200 $630 Monthly Benefit at FRA $2,400 $266 $1,200 Monthly Benefit at 70 $3,200 $362 $1,200 If Sue starts collecting a spousal benefit at age 62 she will only be getting 35% of John s benefit at age 62. If they both wait until their Full Retirement Age; they can get $3,600 combined. $2,430 more than they would get if they both took their benefit early at age 62.

26 Deciding When to Take Social Security Introduction Social Security is a significant part of most people s retirement income strategy. For a lot of people, it is the largest source of steady monthly income in their retirement. Unfortunately, Social Security can be hard to understand. We offer a whole guide on Social Security and you can ask to receive it on our website. Your Social Security is primarily based on two things: How much you contributed to Social Security while you were working What age you begin collecting benefits 3 basic options for determining when to collect: Collect full benefits at your Full Retirement Age (FRA) Collect reduced benefits as early as age 62 Increase your benefits by delaying past FRA to as late as age 70 Bill and Pam are both age 62 Bill Pam Age FRA Monthly Benefit at 62 $1,800 $900 Monthly Benefit at FRA $2,400 $1,300 Monthly Benefit at 70 $3,200 $1,800

27 They both take reduced benefits at age 62 They both take reduced benefits at age 62. Bill collects $1,800 per month at age 62 Pam collects $900 per month at age 62 Survivor monthly benefit is $1,800 They both take full benefits at their FRA They both take full benefits at their FRA Bill collects $2,400 per month at age 66 Pam collects $1,300 per month at age 66 Survivor monthly benefit is $2,400 Let Bill s benefit grow to age 70 to maximize the survivor benefit Let Bill s benefit grow to age 70 to maximize the survivor benefit. Bill collects $3,200 per month at age 70 Pam collects $1,300 per month at age 66 Survivor monthly benefit is $3,200 Hybrid approach Pam takes unreduced spousal benefits at age 66 for $1,200 a month. She lets her own benefit grow until age 70. Bill collects benefits at his FRA for $2,400 a month. Pam switches to her own benefit at age 70 for $1,800 a month Survivor benefit is $2,400 a month

28 Collect full benefits at your Full Retirement Age (FRA) Introduction When Social Security was originally set up you began collecting benefits at 65. As life expectancies have increased, Social Security began increasing the full retirement age (FRA). Find your FRA in the table below Year Born 1937 or earlier months for every year after 1937 until months for every year after 1954 until & later 67 FRA

29 Collect Reduced Benefits as Early as Age 62 Starting at age 62 you can collect benefits at a reduced amount. Reductions are 5/9 of 1% for every month you collect early for the first 3 years, and 5/12 of 1% for subsequent months. If you decide to start collecting early it is a permanent decision. You will not receive an increase when you reach your Full Retirement Age. This decision will also lower the amount your spouse would receive as a survivor benefit. The table below shows the reduction percentage if you start collecting at age 62. FRA % Reduction

30 Introduction Survivor Benefits Survivor benefits are based on the actual amount your spouse was collecting. If it s greater than their own benefit, the surviving spouse will receive 100% of the primary workers benefits at their FRA. You can begin collecting survivor benefits at age 60, with a 28.5% reduction. Recent Changes: In 2015, the Bipartisan Budget Act was passed and created some change to certain Social Security claiming tactics: the restricted-application and the file-and-suspend strategies. If you are married this is how the change in the law may affect you: People born on or before May 1, 1950 You have access to voluntary suspension that allows auxiliary beneficiaries (the spouse or children of a retired worker) to claim as long as the request for the suspension occurs on or before April 30, 2016, and you can file a restricted application at any time between ages 66 and 70. Restricted Application: An individual who is eligible for both their own benefit and a spousal benefit could choose to take their spousal benefit at full retirement age and let their own benefit grow and then switch to their own, higher, benefit. This was phased out with the Bipartisan Budget Act. Voluntary Suspension: The higher wage earner could file for their benefits and then request for an immediate suspension of their benefit. This would allow their benefit to continue to grow at 8% a year and allow the lower wage earner to collect the spousal benefit. With the new law, only those who suspended their benefits in the past or within the 180 days after the passing of the new bill will be covered under the previous rules, until they reach age 70 or un-suspend their benefits.

31 Introduction People born on or after May 2, 1950 but before January 2, 1954 You can still do a restricted application. But, voluntary suspension will also suspend the benefits of other auxiliary beneficiaries, and the new law says the spouse benefiting can t receive spousal excess when a voluntary suspension is in effect. Spousal excess is the difference between half of the higher wage earner s full retirement benefit and the lower wage earners spouse s full retirement benefit. People born on or after January 2, 1954 There is no option for a restricted application. Voluntary suspension suspends the benefits of the spouse and children, and the lower wage earners can t receive spousal excess. If you are divorced this is how the change in the law may affect you: If you were born before January 2, 1954 you still have access to the restricted application and if you were born after that date you do not. If you are single this is how the change in the law may affect you: People born on or before May 1, 1950 can still file and suspend as long as they do so by April 30, Reminders You can apply for retirement benefits as early as age 61 and 9 months. You should apply for benefits no more than four months before you want them to start. If you are already 62, you may be able to start your benefits in the month you apply Social Security does not mail statements anymore; you need to go to the website to get your benefits information. To withdraw your application, you must do it within 12 months of receiving your first check.

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33 Applying for Benefits You can apply: Online by visiting By Phone In person. Call to make an appointment at your local Social Security office. If you don t live in the U.S. or one of its territories, contact the nearest U.S. Social Security office, U.S. Embassy or consulate, or the Veterans Affairs Regional Office (VARO) in the Philippines. Planning for your Heirs When you pass away, chances are you will still have money in your retirement accounts. How you set up your beneficiary designations will establish who gets the money and how/when it will be taxed. For retirement accounts, such as IRAs, it is important to name a beneficiary so they can stretch the account. There are two options for naming beneficiaries: Per Capita- If a primary beneficiary dies before you, their share is terminated and any remaining beneficiaries shares are increased equally. Per Stirpes- If a primary beneficiary dies before you, their share is passed on to their heirs The main goals when naming beneficiaries are to make sure the people you want to get your account actually get it and to give your beneficiaries the best option to stretch out and delay the payment of taxes for as long as possible, if they want.

34 Introduction Naming a trust as Beneficiary If you name a trust as beneficiary, you will need to make sure your trust follows the 5 rules set by the IRS for the trust to look through to allow beneficiaries to stretch out the account over their lifetime. Double check this with your estate planning attorney if you are not sure if your trust fits. Inheriting a Spouses IRA If you are inheriting an IRA from your spouse you can either roll it into your own IRA or set it up as an inherited IRA. Usually, it makes sense for spouses to roll the account into their own IRA. The exception would be if the spouse inheriting the account was significantly younger than 59 ½, by setting it up as an inherited IRA they would have access to the money without penalty. If they rolled it into their own, they would have to wait until they turned 59 ½ to take a withdrawal or pay a 10% penalty for early withdrawals.

35 Setting up an inherited IRA Set up beneficiary IRAs for each beneficiary, using their social security number, to accept the transfer. Transfer the assets into each of the beneficiary IRA accounts. Preferably, you should submit the paperwork for all the beneficiaries at the same time. They assets have to transfer directly from one custodian to the other. If you take a check and split it up, you will have to pay taxes on it all. If it was your own IRA, you could take the money out and redeposit it within 60 days, but this is not true of an inherited IRA. If the decedent was over 70 ½ and required to take a RMD, you should check with the custodian to see if they have taken it for the year. If they haven t, the beneficiaries are required to take it before December 31st of the year of death. The 50% penalty for failing to take a required minimum distribution also applies to inherited IRAs. You will also need to take your own required minimum distribution (RMD) by December 31st of the year following the original account owners passing and every year after that.

36 Estate Planning Checklist Introduction For Non-Retirement Accounts Put non-retirement accounts under the name of a trust if you have one. If you don t have a trust, set up your non-retirement accounts with a transfer on death (T.O.D.) beneficiary designation. Have an up-to-date power of attorney (P.O.A.) on file with each financial institution you work with. For Retirement Accounts: Review your beneficiary designations on all retirement accounts Be sure to review and set up either per stripes or per capita beneficiaries. Get an up to date beneficiary designation form for all of your retirement accounts to show who the beneficiary is on each account. Communicate with your successors your objective for how you planned to stretch out the tax advantages of your accounts.

37 It might be a good idea to create an estate planning binder with the following copies of items: Introduction Wills Durable Power(s) of Attorney Medical Power(s) of Attorney Trusts Beneficiary designations for all Retirement Accounts and TOD Accounts Be sure to let a family member or someone close know where it is and what is in it. Set up a system for your retirement Use one primary checking account to act as the core of your retirement income plan. Set up all of your monthly income on direct deposit. Social Security, pension income, rental income, and any investment income you have. Set up any monthly bills that can t be billed to your rewards credit card. You should try to write the least amount of checks possible. Find a good rewards credit card Find a credit card from a respectable company that has a good rewards program. Make sure to watch for fees, most reward credit cards have an annual fee. You also want to be sure that it has a high enough limit to handle your spending. Set up any of your monthly bills you can so they charge the card directly. Use the card to get reward points for travel or entertainment, but pay off your entire balance every month!

38 Choosing a Financial Planner As you start your retirement voyage, one of your large decisions will be whether to hire a financial professional or do it on your own. Be sure to calculate all expenses, including account fees and trading fees. Be well-informed; the more you learn the better questions you can ask. When you are presented with new ideas or concepts, ask lots of questions and do your homework before acting on the idea. When choosing a financial professional to work with, the most essential considerations are how well you get along and how well they understand your goals and what you are trying to achieve with your money. If you are in or nearing retirement, you will want to make sure you find an advisor who specializes in retirement distribution strategies.

39 Some questions and considerations you may want to find out about your advisor. Why or how did they get into the business? What is their procedure for managing client accounts? How do they choose the investments and products they recommend? How and when will they recommend changes for your portfolio? How often and how do they communicate with their clients? Do you have a set of clearly defined goals and objectives? Do they have a Communication Agreement? Is there a fit? What are their credentials? Have they gotten to know you and your specific needs before making investment recommendations? Are you receiving basic or comprehensive planning? Many advisors include financial planning for free as part of the management of your accounts, but some charge extra for it. Either way, you should know if you are getting comprehensive or basic financial planning.

40 Introduction Basic Planning First and foremost, focus on your investments Asset Allocation Basic retirement plans with simple assumptions Comprehensive Planning Complete cash flow analysis Required minimum distributions Income/distribution approaches Thorough asset allocation among all of your accounts Would you be able to still meet your goals if the market crashes? If you (or your spouse) dies prematurely, will the surviving spouse be okay? When you should start collecting Social Security Would a Roth conversion make sense? Precise planning must be done to give you the best possible chances for success. Your advisor should help you: Establish any gap or shortfall between your income and expenses, both what it could be in the future with inflation etc. and now. Create a specific plan for how you will meet these needs Plan a strategy to keep enough liquid money available to meet any immediate income needs FINRA-The financial industry regulatory authority. You can Google FINRA broker check to take you to their website where you can get a comprehensive report on your advisor, or an advisor you may be thinking of hiring. The report will tell you how long they have been licensed, what firms they have worked for and for how long, their education, and if there have been any complaints or disciplinary actions against them.

41 Areas to Focus Introduction If you have more than 5 years before retirement Concentrate on maximizing contributions Think about the Roth 401k option Create a plan to pay off your debts faster Review your life insurance annually Tax strategies Focus on some investments designed for growth over the long term Thoroughly review your investments at least annually Review your long-term financial plan to make sure you are on track with your goals If you have less than 5 years before retirement Start shifting your assets towards more conservative investments Reevaluate your future sources of retirement income Start shifting to your retirement income strategy Go over pension benefits with HR Visit the Social Security office and request your benefits for you and your spouse at ages 62, 67 and 70. Thoroughly review your investments at least annually Review your long-term financial plan to make sure you are on track with your goals

42 Introduction If you are already retired Concentrate on investments with a conservative asset allocation If you don t have one already, create an income plan Don t forget to plan to take your Required Minimum Distributions You need to sign up for Medicare at age 65. Start assessing your choices early. Disclosure The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. No strategy assures success or protects against loss. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All examples are hypothetical and for illustration purposes only. Your results will vary. The information provided is for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions and estimates are subject to change or correction without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. Investment advisory services offered through Assured Retirement Financial Group, Inc., a Registered Investment Advisor in the state of Minnesota. Insurance products and services are offered through Assured Retirement Group, Inc. Assured Retirement Financial Group, Inc. and Assured Retirement Group, Inc. are affiliated companies.

43 Introduction Vince Oldre is a Retirement Planning and Investment Advisor... Vince Oldre is a Retirement Planning and Investment Advisor with Assured Retirement Group, an independent advisory firm that offers prudent advice, exceptional service, and individualized retirement plans located in the Twin Cities area of Minneapolis / St. Paul. Vince is a Certified Financial Planner TM (CFP ) with almost a decade of specialized industry experience, working with many of the country s top financial advisors to design creative income and retirement plans to resolve complex financial challenges for his clients. Vince is a retirement coach guiding people through what can be an unsettling time in their financial lives. His goal is to help his clients at or near retirement age to create a reliable income stream while preserving and strengthening all of their retirement resources including Social Security, 401(k) plans, IRA s, Pension Plans and taxable investment savings. Vince is straightforward, practical, and trustworthy; he begins by looking at current assets and then structuring prudent investments around them. He takes the time to understand his clients goals and lifestyles in order to design strategies that will fill income gaps in a practical and tax efficient way and help ensure that they re able to live the life they want and provide for those they love.

44 To contact Vincent Oldre Phone: Website: Visit us