Retirement. Mr. Sample and Mrs. Anna 401k Participant. Prepared for: November 19, (Main Scenario)

Transcription

1 Prepared for: Mr Sample and Mrs Anna 401k (Main Scenario) November 19, 2008

2 Mr Sample and Mrs Anna 401k Retirement Table of Contents Title Page 1 Table of Contents 2 Spending Goal 3 Current Funding 4 Additional Contributions 5 Summary 6 Annual Income During Retirement 7 Annual Income Present Value At Retirement 8 Data and Assumptions 9 Current Retirement Situation 10 Retirement Situation with Proposed Solution 11 Referral 12 Inflation 13 Federal Income Tax 14 Risk and Return 15 Dollar Cost Averaging 16 Disclosure 17 Notes 20 2 of 20

3 FYI The first step to reaching any financial goal is defining the goal Knowing what your retirement goals are, and where you are relative to achieving them, can help you know how to plan Retirement Spending Goal You indicated that you would like to have the equivalent of $45,000 to spend during retirement, which represents 12000% of your current after-tax household earned income of $37,500 Impact of Inflation on Retirement Spending Goal Mr Sample and Mrs Anna 401k At a 300% inflation rate, what $45,000 buys today will cost about $115,879 when you begin retirement and about $242,624 by the end of your retirement As a general rule, you will need about 75% of your after-tax pre-retirement income to maintain your standard of living during retirement However, this percentage may not be right for everyone The income you will need depends on your vision of retirement, including work, travel, hobbies, relocation expenses, and more Today 2008 $45,000 Beginning Retirement 2040 $115,879 Ending Retirement 2065 $242,624 As you plan, be aware that people are living longer and spending more time in retirement than a generation ago Your Retirement Information Sample Anna If you retire at age 65, you can expect to live an additional 20 years (male) to 23 years (female) Source: Society of Actuaries Annuity 2000 Mortality Table Date of birth Current age Years to retirement Desired retirement age 01/01/ /01/ Years during retirement Ending retirement age of 20

4 FYI Government programs include Social Security To receive an estimate of your Social Security benefits, contact the Social Security Administration at , or wwwssagov Retirement plans include current IRAs, 401(k)s, 403(b)s, defined contribution plans, and other plans dedicated to retirement funding Other assets & income include other assets specified for retirement funding Investment assets include non-cash financial assets Other income during retirement includes income from rentals or part-time employment Asset return has a significant impact on the balance of your assets over time Be sure to monitor your actual returns regularly Current Funding of Retirement Spending Goal Your projected retirement income sources may fund about 9441% of your retirement spending goal Retirement Spending Goal 4436% Government programs 5005% Retirement plans 000% Other assets & income 9441% Total Funding 559% Shortfall Mr Sample and Mrs Anna 401k To meet your retirement spending goal, you will need to accumulate an additional $120,451 over the next 32 years This is a hypothetical example that assumes the additional funding accumulates in a Taxable account Actual results will vary Present Value of Assets and Income Sources at Retirement Funding Present Value Government Programs Percentages at Retirement Social Security $955,187 Total Government Programs 4436% $955,187 Retirement Plans Sample's retirement plan $1,077,842 Anna's retirement plan $0 Total Retirement Plans 5005% $1,077,842 Other Assets and Income Investment assets $0 Other income during retirement $0 Total Other Assets and Income 000% $0 Total Funding 9441% $2,033,029 Retirement Spending Goal $2,153,479 (Shortfall)/Surplus 559% ($120,451) The present value at retirement amount is calculated by discounting the available annual after-tax funding (assuming a 000% asset preservation rate) at a 600% discount rate 4 of 20

5 FYI Shortfall Solutions Put more aside One solution for reaching your retirement spending goal is to develop a habit of investing regularly Systematic investing can be a simple method of helping you accumulate more and reach your goals Increase returns You may be able to increase your investment returns by changing your portfolio allocation While a number of factors may affect your rate of return, as a rule, you may improve returns by: - Accepting higher investment risk - Using tax-deferred investments (eg, 403(b)s, 401(k)s, 457s, IRAs, deferred annuities) Ultimately, your risk tolerance, investment objectives, financial resources, current investment mix, and life event planning will define the strategy most suitable for you To get the most out of your retirement plan, implement a program today Impact of Additional Contribution on Retirement Goal You have committed to contribute an additional $0* per month for 32 years to help meet your retirement spending goal By doing this, you may fund an additional 000% of your goal, bringing your total funding to 9441% Value at Retirement Additional accumulation needed $120, % Additional committed contribution $ % (Shortfall)/Surplus ($120,451) Required After-Tax Contributions required in different Monthly Adjusted account types to fully fund your goal: Contribution Comparison Taxed investments (eg, regular investment) $78 $78 OR Tax-deferred investments (eg, 403(b), 401(k))* $58 $43 OR Tax-free investments (eg, Roth IRA)* (Assumed not to be subjected to federal or state taxes during accumulation or at distribution) $43 $43 These amounts do not include the additional $0 contribution illustrated at the top of the page Cost of Waiting Mr Sample and Mrs Anna 401k Start now Waiting even one year can make achieving your retirement spending goal significantly more costly Required Total Additional Monthly Out-of-pocket Contribution** Funding Required*** If you begin now: $78 $0 If you wait: 1 Year $84 $1,440 2 Years $91 $2,922 3 Years $98 $4,448 4 Years $107 $6,020 5 Years $116 $7,638 *Contributions of new money to qualified accounts can be limited according to your age, AGI, and other factors If the dollar amount exceeds these limits, other investment alternatives may need to be explored **Assumes the required contribution earns a before-tax rate of return of 800%, will increase at 300% annually, and will be in a Taxable asset This is a hypothetical example Actual results will vary *** This is the total additional amount you will have to accumulate between now and retirement if you don't begin additional contributions now 5 of 20

6 FYI Annual reviews are an important part of reaching your retirement goals Be sure to review your retirement plans regularly and make adjustments when needed Working Toward Your Goal Time is one of your most important allies in reaching your retirement spending goal Waiting to invest for retirement can result in a loss of thousands of dollars of retirement income Summary You defined a retirement spending goal of $45,000 per year, in today's dollars Your current resources may provide about 9441% of this amount Your additional contribution may fund another 000% of your goal, bringing your total annual funding to 9441%, or $42,483 Proposed Solution (Additional Contributions) Mr Sample and Mrs Anna 401k 4436% Government programs $19, % Retirement plans $22, % Other assets & income $0 000% Additional contributions $0 9441% Total Funding $42,483 Retirement Spending Goal $45, % Surplus/(Shortfall): ($2,517) You have committed to put aside an additional $0 a month in a taxable account for 32 years to help fund retirement To fully fund your retirement spending goal, you will need to put aside a total of about $78 a month This example assumes the additional monthly funding receives an 800% annual rate of return and increases at 300% annually When You Reach Your Goal As circumstances change, so should your retirement plan It is important to review your plan when your personal situation changes or when general economic conditions change 6 of 20

7 Mr Sample and Mrs Anna 401k Retirement Resources - Annual Income During Retirement The income and spending information shown below represent projected values for each year of the retirement period This means that the values shown are the projected future dollar amounts you may spend or receive during a given year Government programs Retirement plans Other assets and income Additional accumulation Prior year surplus used Shortfall Government Retirement Other Assets Additional Prior Year Spending (Shortfall)/ Year Age Programs Plans and Income Accumulation Surplus Used Goal* Surplus /64 $35,637 $59,562 $0 $0 $0 $115,879 ($20,679) /65 $54,353 $61,349 $0 $0 $0 $119,355 ($3,653) /66 $55,984 $63,190 $0 $0 $0 $122,936 ($3,762) /67 $57,664 $65,085 $0 $0 $0 $126,624 ($3,875) /68 $59,393 $67,038 $0 $0 $0 $130,423 ($3,991) /69 $61,175 $69,049 $0 $0 $0 $134,335 ($4,111) /70 $63,011 $71,120 $0 $0 $0 $138,365 ($4,234) /71 $64,901 $73,254 $0 $0 $0 $142,516 ($4,361) /72 $66,848 $75,452 $0 $0 $0 $146,792 ($4,492) /73 $68,853 $77,715 $0 $0 $0 $151,195 ($4,627) /74 $70,919 $80,047 $0 $0 $0 $155,731 ($4,766) /75 $73,046 $82,448 $0 $0 $0 $160,403 ($4,909) /76 $75,238 $84,922 $0 $0 $0 $165,215 ($5,056) /77 $77,495 $87,469 $0 $0 $0 $170,172 ($5,208) /78 $79,820 $90,093 $0 $0 $0 $175,277 ($5,364) /79 $82,214 $92,796 $0 $0 $0 $180,535 ($5,525) /80 $84,681 $95,580 $0 $0 $0 $185,951 ($5,691) /81 $87,221 $98,447 $0 $0 $0 $191,530 ($5,861) /82 $89,838 $101,401 $0 $0 $0 $197,276 ($6,037) /83 $92,533 $104,443 $0 $0 $0 $203,194 ($6,218) /84 $95,309 $107,576 $0 $0 $0 $209,290 ($6,405) /85 $98,168 $110,803 $0 $0 $0 $215,569 ($6,597) /86 $101,113 $114,127 $0 $0 $0 $222,036 ($6,795) /87 $104,147 $117,551 $0 $0 $0 $228,697 ($6,999) /88 $107,271 $121,078 $0 $0 $0 $235,558 ($7,209) /89 $74,616 $0 $0 $0 $0 $242,624 ($168,008) Note: Assets are annuitized and depleted equally over the length of retirement Surpluses are assumed to be saved to help fund any future year shortfalls * Your desired retirement spending goal grows until retirement and then grows each year during retirement at an inflation rate of 300% All numbers are approximate and are based on information you provided Past performance is no guarantee of future results The results illustrated in this analysis may vary over time depending on the assumptions used Report assumptions include account values, income needs, savings, income sources and hypothetical rates of returns Projected income levels shown on these graphs are derived from the simulation analysis of this tool This analysis is done based upon information provided by you as well as other information such as inflation, tax rates, and growth assumptions 7 of 20

8 Mr Sample and Mrs Anna 401k Retirement Resources - Annual Income Present Value At Retirement The income and spending amounts on this page are shown in present value dollars at retirement "Present value at retirement" means that yearly amounts have been adjusted at a 800% rate to reflect values on the first day of retirement This information is used to determine your retirement funding rates and required additional funding amounts Present Value at Retirement 4436% Government programs $955, % Retirement plans $1,077, % Other assets & income $0 000% Additional accumulation $0 9441% Total Funding $2,033,029 Retirement Spending Goal $2,153, % Surplus/(Shortfall): ($120,451) Government Retirement Other Assets Additional Spending (Shortfall)/ Year Age Programs Plans and Income Accumulation Goal Surplus /64 $35,637 $59,562 $0 $0 $115,879 ($20,679) /65 $51,277 $57,877 $0 $0 $112,599 ($3,446) /66 $49,826 $56,238 $0 $0 $109,412 ($3,348) /67 $48,415 $54,647 $0 $0 $106,316 ($3,254) /68 $47,045 $53,100 $0 $0 $103,307 ($3,161) /69 $45,714 $51,597 $0 $0 $100,383 ($3,072) /70 $44,420 $50,137 $0 $0 $97,542 ($2,985) /71 $43,163 $48,718 $0 $0 $94,781 ($2,901) /72 $41,941 $47,339 $0 $0 $92,099 ($2,818) /73 $40,754 $46,000 $0 $0 $89,492 ($2,739) /74 $39,601 $44,698 $0 $0 $86,960 ($2,661) /75 $38,480 $43,433 $0 $0 $84,498 ($2,586) /76 $37,391 $42,203 $0 $0 $82,107 ($2,513) /77 $36,333 $41,009 $0 $0 $79,783 ($2,442) /78 $35,304 $39,848 $0 $0 $77,525 ($2,372) /79 $34,305 $38,721 $0 $0 $75,331 ($2,305) /80 $33,334 $37,625 $0 $0 $73,199 ($2,240) /81 $32,391 $36,560 $0 $0 $71,127 ($2,177) /82 $31,474 $35,525 $0 $0 $69,114 ($2,115) /83 $30,583 $34,520 $0 $0 $67,158 ($2,055) /84 $29,718 $33,543 $0 $0 $65,258 ($1,997) /85 $28,877 $32,593 $0 $0 $63,411 ($1,941) /86 $28,059 $31,671 $0 $0 $61,616 ($1,886) /87 $27,265 $30,775 $0 $0 $59,872 ($1,832) /88 $26,494 $29,904 $0 $0 $58,178 ($1,780) /89 $17,385 $0 $0 $0 $56,531 ($39,146) Totals $955,187 $1,077,842 $0 $0 $2,153,479 ($120,451) All numbers are approximate and are based on information you provided Past performance is no guarantee of future results Failure to review and adjust your situation in the future can result in an outcome dramatically different from that portrayed here 8 of 20

9 Mr Sample and Mrs Anna 401k Data and Assumptions Personal Information First name Sample Anna Middle name Last name 401k 401k Birth date 01/01/ /01/1976 Gender Male Female Annual earned income (before tax) $50,000 $0 Earned income growth rate 300% 300% Marital status Married General Assumptions Sample Anna Desired retirement age Life expectancy Annual inflation rate 300% Effective income tax rate (state and federal) - pre-retirement 2500% Effective income tax rate (state and federal) - post retirement 2500% Retirement spending goal (annual after-tax amount) $45,000 Pre-retirement annual rate of return (before tax) 800% Post-retirement annual rate of return (before tax) 800% Percent of non-retired working spouse's income available for retirement 7000% Social Security Sample Anna Covered by Social Security Yes Yes Benefit begin age Portion of Social Security subject to taxation 8500% Rate Social Security retirement payment will index with inflation 10000% Retirement Plans Annual Annual Annual Rate Current Personal Employer Contribution of Return Description Owner Balance Contribution Contribution Increase Rate Plan Type (Before Tax) Holdings Sample $30,000 $5,000 $1, % 401(k) 800% Total $30,000 $5,000 $1,250 Investment Assets No investment assets have been entered Other Income During Retirement No other income during retirement has been entered Additional Accumulation Assumptions Monthly amount $0 Tax treatment Taxed Rate amount increases annually 300% Annual rate of return (before tax) 800% 9 of 20

10 Mr Sample and Mrs Anna 401k Current Retirement Situation The first step to reaching any financial goal is defining the goal Knowing what your retirement goals are, and where you are relative to achieving them, can help you know how to plan You indicated that you would like to have the equivalent of $45,000 to spend during retirement, which represents 12000% of your current after-tax household earned income of $37,500 Your Retirement Information Sample Anna Date of birth 01/01/ /01/1976 Current age Years to retirement Desired retirement age Years during retirement Ending retirement age* Current Funding of Retirement Spending Goal Your projected retirement income sources may fund about 9441% of your retirement spending goal Retirement Spending Goal 4436% Government programs 5005% Retirement plans 000% Other assets & income 9441% Total Funding 559% Shortfall To meet your retirement spending goal, you will need to accumulate an additional $120,451 over the next 32 years This is a hypothetical example that assumes the additional funding accumulates in a Taxable account Actual results will vary *As you plan, be aware that people are living longer and spending more time in retirement than a generation agoif you retire at age 65, you can expect to live an additional 20 years (male) to 23 years (female) Source: Society of Actuaries Annuity 2000 Mortality Table 10 of 20

11 Mr Sample and Mrs Anna 401k Retirement Situation with Proposed Solution You defined a retirement spending goal of $45,000 per year, in today's dollars Your current resources may provide about 9441% of this amount Your additional contribution may fund another 000% of your goal, bringing your total annual funding to 9441%, or $42,483 Retirement Spending Goal 4436% Government programs 5005% Retirement plans 000% Other assets & income 000% Additional Contributions 9441% Total Funding 559% Surplus/(Shortfall) Proposed Solution (Additional Contributions) You have committed to put aside an additional $0 a month in a taxable account for 32 years to help fund retirement To fully fund your retirement spending goal, you will need to put aside a total of about $78 a month This example assumes the additional monthly funding receives an 800% annual rate of return and increases at 300% annually Retirement Goal and Total Funding Goal Total Funding 11 of 20

12 Mr Sample and Mrs Anna 401k Do You Know Someone Else Who Could Benefit From This Service? Name Relationship Phone 12 of 20

13 Mr Sample and Mrs Anna 401k Inflation The inflation rate you assume in your analysis will have a significant impact on your planning results Inflation rates have varied from year to year in the past and will likely continue to vary in the future Remember that historical rates are not a guarantee of future rates The chart to the right illustrates the average historical inflation rates for last year, the last 10 years, the last 20 years, and the last 40 years Historical Average Inflation Rates The average inflation rate for the last 40 years was 467% This means that $100 worth of goods purchased at the beginning of 1968 would cost $620 at the end of 2007 Inflation Examples Average Annual Products/Services Increase Stamp $010 $041 41% Candy Bar $010 $075 59% Hamburger $025 $350 78% Movie Ticket $200 $925 45% Haircut $250 $ % Doctor's Visit $800 $ % Athletic Shoes $900 $ % New Outfit $1500 $ % New Car $3,00000 $28, % Year(s) To illustrate the effects of inflation, the table to the left compares the average prices of nine products and services in 1972 and 2007 Source: US Bureau of Labor Statistics "Average Retail Prices of Select Commodities and Services 1972" 2007 amounts are general estimates Historical Inflation Rates Source: Historical rates - US Department of Labor, Bureau of Labor Statistics, Washington, DC, of 20

14 Mr Sample and Mrs Anna 401k Federal Income Tax Average tax rates are used in this analysis to estimate future taxes payable on income from assets and other sources By taxing future income, the future after-tax amount available to spend can be more correctly estimated The chart to the right illustrates the average federal tax rates for Single, Married Filing Jointly, Married Filing Separately, and Head of Household filing status Married Filing Jointly Married Filing Separately Single Head of Household Federal Taxable Income Historical Federal Income Tax Brackets Federal tax rates have varied widely in the past It is important to take this into consideration as you select an assumed effective income tax rate for planning purposes that may span several years See the graph below to review past variations in the highest and lowest federal income tax brackets The graph below illustrates historical high and low federal income tax rates Exemptions, deductions, and state and local taxes are not taken into account when illustrating marginal rates Your actual tax rates may vary from those shown on the graph Remember that historical rates are not a guarantee of future rates Highest Tax Bracket Lowest Tax Bracket Sources: Historical Federal Tax Rates 2007 US Department of Treasury, Internal Revenue Service, Statistics of Income, Individual Income Tax Returns (2007) 14 of 20

15 Mr Sample and Mrs Anna 401k Risk and Return Retirement The rates of return that are used to project your assets will have a significant impact on your planning results Remember loss of principal is a risk with any investment and that historical return rates are not a guarantee of future performance The chart to the right illustrates the range of return rates for four different investment types (T-Bills, Bonds, Hybrid and Large Cap Stocks) over the last 20 years Actual Return Rates for Last 20 Years ( ) Above average Below average Risk of Loss of Principal The greater the potential return on an investment, the greater the risk of loss of principal US government obligations, which are backed by the full faith and credit of the US government as to the timely payment of principal and interest, are generally the safest investment because the purchaser should receive the entire principal plus interest when the bonds are bought at issue and held to maturity Therefore, US government obligations are a benchmark for investment risk Examples of US government obligations are: Treasury Notes, T-bonds, T-bills, and US Savings Bonds While US government obligations offer credit safety, higher returns have historically been realized from other investments, including corporate bonds and equities, which also have been more volatile than US government obligations The above information illustrates this point Keep in mind, past performance is not a guarantee of future results Historical Returns: Unpredictability of Future Performance Risk of loss of principal must be considered along with other risks such as: inflationary risk (loss of purchasing power due to an investment's return being lower than the rate of inflation), timing risk (selling at the wrong time), market risk (price fluctuations due to price volatility in overall market), credit risk (risk of default of bond issue), liquidity risk (inability to liquidate or readily sell a security), etc An investor should evaluate the level of risk of each investment and his/her level of comfort with such risks Definitions and Sources Treasury Bills: performance data is based on the average yield of a one year T-Bill as published in the Federal Reserve Bulletin, years , and in Frontier Analytics' FactMaster, CITI 1 yr Treasury Benchmark, Long-Term Corporate Bonds: performance is calculated from the yield and price index from bonds with maturities of ten years or more as published in the Federal Reserve Bulletin, years , and in Frontier Analytics' FactMaster, CITI Corp 10+ yr, Hybrid is composed of 50 percent Long-Term Corporate Bond and 50 percent Large Company Stock Large Company Stocks: performance is calculated based on the S&P 500 Stock Index and yield as published in the Federal Reserve Bulletin, years , and in Frontier Analytics' FactMaster, S&P 500 Composite, The S&P 500 is an unmanaged index generally considered representative of the large-cap US stock market The example illustrated is hypothetical and does not represent a specific investment An investment cannot be made directly into an index The performance of any index is not indicative of the performance of a particular investment and does not take into account the effects of inflation, taxes or the fees and expenses associated with investing This example reflects reinvestment of all dividends and income Actual investor results will vary 15 of 20

16 Mr Sample and Mrs Anna 401k Dollar Cost Averaging Dollar cost averaging is an investment strategy that requires you to invest a set amount in the same investments on a regular basis Doing this means you will buy more shares when stock values are low and fewer shares when stock values are high In short, dollar cost averaging: Encourages discipline - You are able to easily budget for your investment because of the set timing and amount invested Eliminates the need to decide when to invest - You invest when it's time to do so, regardless of market conditions Removes the temptation to time the market - Some investors cannot resist the urge to try to invest at a market low and take their profits at a market high They usually fail because the task is virtually impossible, even for experts Dollar Cost Averaging Example Steady Growth Market Volatile Market The table below compares what could happen if you invested $100 a month in a steady growth market and in a volatile market for one year Steady Growth Market Volatile Market Monthly Share Shares Monthly Share Shares Price Purchased Price Purchased January $ $ February $ $ March $ $ April $ $ May $ $ June $ $ July $ $ August $ $ September $ $ October $ $ November $ $ December $ $ Average Share Price: $2174 $ Share Value at End: $ $ Ending Value: $1,30415 $ Total Return:* 868% 1700% * Total Return is calculated here as: (Account Ending Value - Total Investment)/Total Investment The above is for illustrative purposes only and is not meant to illustrate any specific investment Dollar cost averaging does not assure a profit nor does it protect against loss in declining markets To be effective, there must be a continuous investment regardless of price fluctuations Investors should consider their financial ability to continue to make purchases through periods of low price levels 16 of 20

17 Mr Sample and Mrs Anna 401k Disclosure IMPORTANT:The projections or other information generated by Sungard PlanningStation regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results Furthermore, they do not guarantee or imply success in the actual attainment of any goal This report is strictly a hypothetical illustration that was prepared by your financial advisor based on information you have provided, including but not necessarily limited to your personal goals, risk tolerance, your personal financial information and data from sources we believe but cannot guarantee to be accurate and reliable No guarantees, either expressed or implied can be made regarding the accuracy or completeness of this information The inflation rate, tax rates and rates of return included in this analysis are for financial analysis purposes only The actual rates you experience may vary significantly from these illustrated rates based on future economic conditions and personal circumstances This analysis does not guarantee the future performance of your assets The results of this analysis and any hypothetical rate of return assigned and illustrated in this document to any account, asset or asset class may vary with each use and over time, particularly for long-term investments Past performance of any investment, investment strategy and/or asset class does not in any way guarantee or imply future performance of that investment, investment strategy and/or asset class Any investment offering or illustrating the potential (no guarantee) for higher rates of return also involves a higher degree of risk to your principal A higher degree of risk to your principal will result in a greater probability of loss to your principal The present mix that may be illustrated in this report represents the asset allocation based on the current investments you have in your portfolio The proposed mix that may be illustrated in this report represents the recommended asset allocation for your portfolio Key Assumption: This illustration may be based in part, on the concepts of Modern Portfolio Theory A key assumption of Modern Portfolio Theory (MPT) is that through diversification, you may be able to minimize the effects of investment risks and that potential gains in one investment class may help offset losses in another Limitations: A major limitation is that there is no guarantee that the diversification strategy resulting from Modern Portfolio Theory, security and/or asset class selection and/or portfolio optimization will ever occur Diversification will not imply, predict or guarantee any gains or prevent any losses to your portfolio All analyses in this report are dependent upon various assumptions A change in one assumption may have a significant impact, either positive or negative on the results of this hypothetical analysis Criteria & Methodology Used: Asset mixes that may be presented throughout this analysis are derived using available historical information (risk and return statistics) for each asset class based on the selected index for that class They are meant only to illustrate the relative experience between asset classes and portfolios Other asset classes and indices may have characteristics similar or superior to those being analyzed here Your actual investment results may vary significantly with each use and over time Past performance of any individual security, asset class, financial index, index proxy or any investment strategy does not imply or guarantee future performance The Sharpe Ratio is a measure of incremental assumed return (in inflation dollars) provided by an asset class or asset mix for taking on additional risk Higher values of the Sharpe Ratio are desirable Measured as excess return (expected return less the risk-free return) divided by risk (standard deviation) Standard deviation is a risk statistic used to measure the amount of volatility of the return observations around the portfolio's average return Any specific security recommendations that may be contained in this report were not determined by the software used to produce this report Specific securities recommendations are made by your financial advisor The universe of securities from which any specific securities recommendations may be made includes all publicly traded debt and equity securities Certain securities such as mutual funds, unit investment trusts, etc are sold by prospectus onlyinvestors should consider the investment objectives, risks, and charges and expenses of these investment companies carefully before investing The prospectus contains this and other information about these investment companies The prospectus is available from your financial advisor and should be read carefully before investing There may be material differences among the recommended investment products that may be included in this report including, but not limited to objectives, risks and expenses Please discuss these material differences very carefully with your financial advisor 17 of 20

18 Mr Sample and Mrs Anna 401k before deciding to make any investment For any specific securities contained in this report, Raymond James Financial and/or any of its affiliates, subsidiaries or correspondents may make a market in, have an investment banking or other relationship with, provide research on (either through Raymond James or a firm with which Raymond James has a relationship) and/or engage in transactions for the purchase and/or sale of securities for its (Raymond James) own accounts The fact that these relationships might not currently exist regarding the securities listed in this report or that could have been listed in this report at the time of your receipt of this report does not imply that these relationships will not exist in the future Further information is available from your financial advisor International and emerging market investments involve additional risks including but not limited to currency fluctuations, differing financial accounting standards and possible political and economic instability These risks are magnified in emerging markets Small-cap and mid-cap stocks generally involve greater risks than larger, more established companies High yield bonds involve greater risks and are not appropriate for all investors Futures/Commodities and Venture Capital/L P (Limited Partnerships) also involve greater risks and are not appropriate for all investors Any hypothetical illustration of back tested performance is not indicative of the actual performance of a financial index, account, portfolio, individual security or strategy Back testing illustrations may not take into account the potential impacts of local, national and/or world economic and market events, the timing of investment purchases and sales or personal circumstances that might affect investment decisions No implication is made that the back tested results that may be illustrated in this report could have been achieved by any investor utilizing any illustrated/recommended asset mix or any financial index/index proxy The back tested results may be reflective of the reinvestment of dividends and other earnings and may not be reflective of transaction (advisory fees, commissions, etc) and any associated expenses Any illustration of past performance does not in any way imply or guarantee future performance This analysis is intended to be used as a presentation of some options and/or strategies that may be available for your consideration The estimated inflation rate, tax rates and any other information required by the software to produce its output are for illustrative purposes only Any depicted rates of return, whether illustrated at the asset class, account or specific security level, are hypothetical are for illustration purposes only, may vary with each use and over time and are not representative of the actual rate of return that you will experience with any particular insurance or financial product or asset class The actual rates you experience may vary significantly from these hypothetical rates based, in part, on future economic conditions, financial conditions specific to any individual company or investment product, your personal financial circumstances, etc This analysis does not in any way imply or guarantee the future performance of your assets Investments offering the potential for higher rates of return also involve a higher degree of risk to your principal Securities products are not insured by the FDIC are not deposits or other obligations of any financial institution are not guaranteed by any financial institution and are subject to investment risks, including possible loss of the principal invested Transactions that result from this analysis may be subject to commissions, fees or other charges that are not reflected within this material Transactions may also result in tax consequences Raymond James does not provide tax and/or legal advice and none is contained or implied in this report Any tax assumptions in this report are hypothetical estimates and may not be reflective of your actual and specific tax situation This report may not be based on any consideration of the possible effects of the Alternative Minimum Tax (AMT) or any current or future changes to existing local, state or federal tax law Please consult with a qualified tax and/or legal professional for advice in these areas There is no certainty that any investment or strategy will be profitable or successful in achieving your specific investment objectives or personal financial goals While this report may contain certain specific dollar amounts required to meet the estimated costs associated with your stated goals, these figures are strictly hypothetical in nature and are the result of mathematical calculations designed to solve for a given mathematical variable It is impossible to achieve a fixed and predictable return with any investment over any period of time with total certainty No such implication, suggestion or guarantee regarding your ability to attain any goal simply by investing the hypothetical amount at the 18 of 20

19 Mr Sample and Mrs Anna 401k hypothetical returns for the estimated time periods contained in this report is intended or implied The illustrations shown should not be considered as a prediction of any investment result Principal values of your investments will fluctuate and when redeemed, may be worth more or less than your original investment Asset management, commission, transaction and other costs will also affect your overall investment results Asset allocation does not ensure a profit or protect against losses in a declining (or any type of) market You should meet periodically with your financial advisor to update this analysis 19 of 20

20 Notes Retirement Mr Sample and Mrs Anna 401k 20 of 20