Robert and Margaret Reynolds

Transcription

1 Robert Margaret Reynolds Presented by: John Q. Advisor W. th St. Suite 2 Charlotte, NC 2823 Phone: (74) Mobile Phone: (74) Fax: (74) johnqadvisor@ .com

2 Disclosure WFG Financial Dream Map is a suitability needs analysis developed to define your current financial situation to identify products services offered through World Financial Group s affiliates. This analysis provides only broad, general guidelines, which may be helpful in shaping your thinking about your financial needs. It can serve as a guide for discussions with your insurance agent or registered representative. The quality of this analysis is dependent upon the accuracy of data provided by you. Calculations contained in this analysis are estimates only. This is not nor is it intended to be a financial plan. Actual results may vary substantially from the figures shown. All rates of return are hypothetical are not a guarantee of future performance of any asset, including insurance or other financial products. All inflation rates rates of return on current financial holdings are estimates provided by you. This analysis contains very specific computations concerning the value of your assets today. These computations are based on assumptions you provided concerning the value of your assets today the rate at which the assets will appreciate. These assumptions must be carefully reviewed for their reasonableness. These assumptions are only a "best guess". The actual values rates of growth may be significantly different from those illustrated. No guarantee can be made regarding values taxes when actual appreciation rates tax rates cannot be known at this time. Any assumptions are for illustrative purposes not to be considered as legal advice; only your legal counsel should provide such advice. No legal, accounting or tax advice is being rendered either by this report or through any other oral or written communications. Please discuss legal, accounting or tax matters directly with your counselors in each of those areas. Because your financial concerns goals may change in the future, periodically monitoring actual results making appropriate adjustments are essential components of your program. Annual updating allows a year of estimated values to be replaced with actual results can be very helpful in your determining whether your analyses are on your desired course. Strategies may be proposed, including the acquisition of insurance other financial products. When this occurs, additional information about the specific product (including a prospectus, if required) will be provided for your review. IMPORTANT: The projections or other information generated by this financial analysis tool (WFG Financial Dream Map ) regarding the likelihood of various financial product outcomes are hypothetical in nature, do not reflect actual results are not guarantees of future results. (WFG) is a financial services marketing company whose affiliates offer life insurance a broad array of financial products services. Securities offered through World Group Securities, Inc. (WGS), Member FINRA/SIPC. Insurance products offered through World Financial Group Insurance Agency, Inc. (WFGIA) or its subsidiaries. Investment advisory services offered through Investment Advisors International (IAI). In Ohio, Texas Alabama such services are provided under the assumed name of IAI Advisors International, Inc. WFG, WGS, WFGIA IAI are affiliated companies. Headquarters: 3 Johns Creek Parkway, Duluth, GA 397-7, PO Box 3, Duluth, GA Phone: WorldFinancialGroup.com IRS CIRCULAR 23 NOTICE: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any U.S. federal tax advice contained in this presentation is not intended or written to be used, cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this presentation. Version.2. c.... February 26, 29 2 of 4

3 Confirmation of Facts Robert Reynolds Margaret Reynolds Age: 42 Male Born: Jan., 967 Age: 42 Female Born: Jan., 967 Robert Margaret are married. Home Phone: (23) Business Phone: (23) Mailing Address 6 Magnolia Way Charlotte, NC, 2822 Children Dependents Name Date of Birth Gender Relationship Dependent of Stephen Mary Jan., 998 Jan., 22 Male Female Child Child Robert, Margaret Robert, Margaret Salaries Employer Employee Current Salary Frequency Inflation Rate ABC, Inc. Margaret's Smoothie Bar (Salary) Robert Margaret $7, $3, Monthly Monthly 3.% 3.% Current Balance Balance As Of Interest Rate Checking, Savings, CDs Account Name Owner Checking Account Robert, Margaret $6, Feb. 23, 29.% Savings/CDs Robert, Margaret $8, Feb. 23, 29 3.% This asset is the Cash Account Mutual Funds Name/ Symbol Investment Account Account Balance Owner Robert, Margaret Balance As Of Qual. Div. Basis Rates Cap. Gains App. $2,.%.% 6.% $2, Feb. 23, 29 Retirement Plans Name Owner Current Balance Balance As Of Growth Rate Owner Contrib. Robert's 4(k) Robert $89, Feb. 23, 29 7.% $ Name Owner Current Balance Balance As Of Growth Rate Type Margaret's Roth IRA Margaret $28, Feb. 23, 29 7.% Roth Employer Contrib. n/a IRAs Business Property Margaret's Smoothie Bar (Business) Owner Current Value Balance As Of Cost Basis Appreciation Rate Margaret $8, Feb. 23, 29 $, 6.% Dividends are assumed to be reinvested in similar investments. February 26, 29 3 of 4

4 Confirmation of Facts Business Property (Continued) Business Form % of Total Bus. Value Income % n/a Sole Proprietorship Income Frequency Monthly Expenses Annual Expenses Inflation Rate n/a n/a n/a n/a Residences Primary Residence Owner Robert, Margaret Current Value Balance As Of Cost Basis Appreciation Rate $38, Feb. 23, 29 $3, 3.% Personal Loan Secured by this Asset Balance as of Mortgage Balance Payment Feb. 23, 29 $2, $,722 Frequency Interest Rate Monthly 6.% Essential Living Expenses Description Amount Property Taxes $8, Already started ending after the illustration. Business Expenses $2, Already started ending after the illustration. Family Living Expenses $3, Already started ending after the illustration. Tax Frequency Deductible Percent Continuing after First Death Percent Percent Continuing Continuing after First after First Disability Retirement Annual Yes % % % Monthly Yes % % % Monthly No % % % Education Expenses Description Amount Frequency Percent of Estimated Aid The University of North $4,36 Annual Carolina at Chapel Hill Starting when Stephen turns 8 ending after 4 years. North Carolina State University $2,49 Annual Starting when Mary turns 8 ending after 4 years. % % Debt Current Balance Balance As Of Interest Rate Robert, Margaret $2, Feb. 23, 29 6.% Robert, Margaret $3, Feb. 23, 29 2.% Liability Name Owner Loan for Primary Residence Credit Card Debt February 26, 29 4 of 4

5 Your Current Situation Your financial lifestyle is determined by (a) your financial goals desires (b) your saving spending habits. This analysis examines your current assets liabilities, reviews the cash flow necessary for you to maintain your lifestyle, then shows you the results or consequences of various scenarios. Below is a summary of your current financial situation. Robert Liquid Checking Account Savings/CDs Investment Account Retirement Plans Robert's 4(k) Margaret's Roth IRA Fixed Margaret's Smoothie Bar (Business) Residence Primary Residence Total Today Margaret Joint Total $6, $8, $2, $6, $8, $2, $89, $89, Liabilities Mortgages Loan for Primary Residence Credit Cards Credit Card Debt Total Liabilities Today $28, $89, $28, $8, $8, $3, $38, $46, $38, $68, $2, $2, $3, $268, $3, $268, Net Worth Your Less Your Liabilities $68, $268, Total Net Worth Today $34, February 26, 29 of 4

6 THE WFG FINANCIAL DREAM MAP,2 Charting a Course to Financial Independence Your journey to financial independence begins today. As you move through each of the areas highlighted, you ll evaluate your current financial situation, determining where you want to be what it will take to get you there. The result is your personalized WFG Financial Dream Map, complete with the action steps you need to take to achieve your dreams. 2 The WFG Financial Dream Map is a suitability needs analysis that is based upon information obtained from sources believed to be complete accurate. However, discuss any legal, tax or financial matter with the appropriate professional. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any specific security or financial service. All figures are for illustrative purposes only do not reflect an actual investment in any product, nor do they reflect the performance risks, expenses or charges associated with any actual investment. Past performance is not an indication of future performance. Actual results may vary substantially from the figures in the example. All rates of return are hypothetical are not a guarantee of future performance of any asset, including insurance or other financial products. Higher rates of return have been associated with higher volatility. All inflation rates rates of return on current financial holdings are estimates provided by the client. Examples including information on Variable Universal Life Variable Life insurance policies death benefit return of policy values are guarantees subject to the claims-paying ability of the issuing insurer. February 26, 29 6 of 4

7 The first step in developing your financial strategy is to evaluate your cash flow the money that comes in goes out every month. Money comes to you from both income sources (such as salary) asset sources (such as cash dividends or withdrawals). This money is used for outgoing payments (such as taxes, debt payments or lifestyle expenses). After all outgoing payments have been met each month, the portion of the money left over is known as discretionary income. Each month, you choose to spend this money on unspecified expenses, or you choose to save it. If outgoing payments exceed incoming cash flows, the difference between them is known as a shortfall. Your Net Worth Changes with Your Cash Flow Your net worth is a financial "snapshot", a balance sheet of your finances at a particular moment in time. You receive incoming cash make outgoing payments. Any excess produces more assets any shortage results in a decrease in assets. Of course, the value of your assets may grow. If you borrowed to provide needed cash flow, your liabilities increased. Cash flow affects your assets your liabilities; therefore net worth changes with cash flow. What Your Cash Flow Objectives Should Be: Pay all lifestyle expenses outgoing payments After applying education funds, pay any remaining education costs Make payments on all loans Let s take a look at your cash flow, how you can increase it to help achieve your financial goals. February 26, 29 7 of 4

8 A key to charting your WFG Financial Dream Map is to ensure that you have proper protection to replace your income your assets. This can be achieved by having the proper amount of life insurance. The Principle of Building Equity The Principle of Building Equity illustrates the need to protect you your family in the event you die too soon or live too long. When you are young, you want to make certain your family s source of income is protected in the event of death or disability. When you are older, you need to protect the retirement assets you have accumulated so you can provide for yourself your loved ones as you age. Types of Life Insurance Policies Term Life Insurance This is used to provide death benefit protection for a set period of time at an affordable premium. Whole Life Insurance Whole life insurance policies provide permanent death benefit protection for a fixed premium remain in force as long as premium payments are made. Whole life policies accumulate guaranteed cash values often pay dividends as well. Universal Life Insurance Universal Life policies are also known as "Flexible Premium" policies. These flexible policies have an adjustable benefit accumulate account value. Universal Life Insurance is used to provide death benefit protection with flexibility to adjust to your future insurance needs. Indexed Universal Life Insurance Index Universal Life is similar to conventional Universal Life Insurance. It provides a death benefit, the policy has a cash value that can grow over time. Variable Universal Life Insurance Variable Universal Life is a life insurance policy that blends the premium payment flexibility benefits of universal life insurance with the invested portfolio upside market potential of variable life. In addition to the different types of insurance policies, there are also two different policy categories: Fixed policies These offer a predetermined death benefit rate of return on policy values that are guaranteed through the policy contract. Variable policies These are designed to provide death benefit protection, but may not offer the guarantees that fixed policies do. The rate of return on your policy values, as well as the death benefit, may fluctuate up down depending on your investment choices performance. Variable policies are subject to market risk therefore require the delivery of a prospectus. Securities offered through World Group Securities, Inc. (WGS), member FINRA/SIPC. WFG WGS are affiliated companies. Insurance products are offered through World Financial Group Insurance Agency, Inc. (WFGIA) or its subsidiaries. February 26, 29 8 of 4

9 Income Needs at Robert's Death If Robert was to die today, how would your loved ones pay the bills that will continue to come in? This analysis considers whether your survivors' income sources assets will be able to support their cash flow needs after your death. Survivor Income Needs Final expenses of $ to pay final medical bills, provide funeral arrangements, pay any final taxes. Continuing lifestyle expenses to pay everyday expenses such as food, bills, insurance, mortgages other debts, taxes, etc. Often it may take some time for the survivors' expenses to "adjust" to a new lifestyle after a death. This period of time is called the adjustment period. This analysis assumes an adjustment period of 24 months. Margaret's Income Sources Salary Other Income Estimated Social Security Retirement Plans Used Shortfall Value of Shortfall Today.% 9.% 6.% 4.% 9.% $,4,26 Social Security Benefits Social Security benefits are available to those who fulfill work requirements in positions covered by Social Security. If you die, benefits are payable to your spouse children under 8 years of age, subject to a family maximum benefit. The monthly benefit is based on your earnings record at the date of your death. Survivor benefits each year may increase to reflect changes in the cost of living. In addition, there is a one-time lump sum death benefit of $2. The estimated initial monthly Social Security survivor benefit is $2,934. Life Insurance on Robert Life insurance on Robert's life will be paid to the designated beneficiary. The beneficiary designation is very important as it determines if the proceeds will be available to provide the income needs. Replacing Your Income for Your Survivors Additional income is necessary to maintain your family's lifestyle. This income can be provided by increasing spouse's earnings, added withdrawals, possible liquidation of existing assets, or through a fund provided by life insurance death proceeds. Life insurance death proceeds can provide the monthly income needed to maintain your family's lifestyle provide cash to pay immediate expenses at your death. This is an estimate of the monthly benefit available based on information provided by the client. Actual survivor benefits may be greater or less than the amount shown. February 26, 29 9 of 4

10 Income Needs at Robert's Death You provide for your family's lifestyle through your income. In the event of your death, your survivors will need to replace a portion of that income to maintain the lifestyle you have established. Social Security benefits may provide a portion of the needed income. Usually, this is only a part of the income needed. Withdrawals or liquidations of some of your assets may be necessary. $32, 28, 24, 2, 6, 2, 8, 4, Social Security Net Outgoing from Cash Flow Total Expected Income Lifestyle Shortfall for Year Remaining Needs Period With Children at Home Before Retirement During Retirement Start Year Through Year Amount Needed in Today's Dollars for Just this Period $489,939 $23,77 $,47 Lump Sum to Provide Total Amount Needed Today Amount Needed Today to Fund Through Period $489,939 $,3,79 $,4,26 $,4,26 Life insurance can protect income needs. February 26, 29 of 4

11 An Alternate Approach at Robert's Death Rather than supplementing your survivors' income needs on a continuing basis, an alternative approach would be to use life insurance to relieve your survivors of the major financial burdens they would face in order to provide them with a head start on managing their own continuing income needs. Objective Eliminate major financial burdens so that survivor income is less of a concern Use life insurance to provide cash immediately at death to pay the following expenses: Final Expenses $2,879 Estimated expenses associated with death include doctor bills, long hospital stays, expensive surgeries, funeral expenses, inheritance taxes, or estate taxes. Present Debts $268, It may not be necessary to pay off all of your acquired debts. Although by doing so, Margaret will not have to repay the loans plus the interest on these debts less income will be needed for your family. Emergency Funds $3, The best financial analyses can be ruined by unexpected emergencies. Adequate cash reserves can often protect the plans you put in place. Education Funds2 $8,32 Amount needed to fund education today. $49,9 Total Cash Needs at Robert's Death Immediate cash needs at death include debts, emergency funds, final expenses, taxes, education funds. Have - $ vs. Need - $49,9 Providing for these expenses at your death will reduce your survivor s income needs. 2 Emergency funds are estimated at the greater of % of all liquid assets or three months salary. The amount needed today to fund total costs of education. This does not consider education assets the portion that may be provided by other sources. February 26, 29 of 4

12 Income Needs at Robert's Death You provide for your family's lifestyle through your income. In the event of your death, your survivors will need to replace a portion of that income to maintain the lifestyle you have established. Social Security benefits may provide a portion of the needed income. Usually, this is only a part of the income needed. Withdrawals or liquidations of some of your assets may be necessary. Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses $,2 9,87,98 3, 6,8 $ $7,6,8 3,3 3,4 3,3 $4,,8,7 2,76 4,287 $29,337 3,74 36,8 36,64 37,8 $32,742 2,6 2,6 2,6 2,6 $6,96 36,677 37,69 38,768 39,92 $323,2 39,48 3,33 3,827 39, ,892 2,74 23,37 26,323 29,363 8,794 22,37 23,74 3,68 3,727 3,838 3,94 4,72,9 7,93 9,32 6, 62,933 37,488 37,86 9,299 9,476 2,6 2,6 2,6 2,6 2,6 2,6 4,28 42,49 7,269 8,48 87,96 37,267 36, , ,774 97, ,49 3,72 39,42 42,464 4,989 2,36 2,422 2,32 26,64 28,239 4,94 4,32 4,4 4,83 4,72 64,82 66,766 68,769 7,832 72,97 2,662 2,6 2,6 2,6 2,6 2,6 9,622 3,47,37 8,66 22,33 6,92 9,28 3,63-24,438-84, ,69 3,38 7,29 6,76 6,262 7,46 4,862,8,9,33,473 7,4 77,4 79,722 82,3 84,77 2,6 2,6 2,6 2,6 2,6 3,69 98,437,7 3,42,448-33,94-62,3-9,94-26,7-239, R ,47 73,8 78,27 82,868 87,6,637,86,98 2,894 87,4 89,728 92,49 43,4 7,363 37,64 39,97 2,6 2,6 2,6 2,6 2,6 7,927,48 3, - -26,3-28, ,74-37,29-39, ,264 76,847 82,23 87,34 92,84 4,34 46,882 7,36 77,39 3,8 42,922 44,2 4,36 46,92 48,39 2,6 2,6 2,6 2,6 2,6 8,747 38,292 42,376-2, ,69-78,77-794,98-882, , 24,326 2,327 26,7 222,872 49,78,2 2,789 4,372 6,3 2,6 2,6 2,6 2,6 2,6 46,83,9,378 9,97 64,79-972,8 -,64,4 -,7,742 -,22,837 -,349,677 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) 6 Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. R-Retirement assumed to begin in this year. 2 February 26, 29 2 of 4

13 Income Needs at Robert's Death (Continued) Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses , ,82 243,38 2,33 27,682 7,684 9,44 6,96 63,32 64,923 2,6 2,6 2,6 2,6 2,6 69,8 74,68 79,782 8, 9,99 -,448,24 -,48,4 -,6,7 -,74,24 -,89, , ,2 28,76 289,48 66,87 68,877 7,943 73,72 2,6 2,6 2,6 2,6 96,22 22,7 28,72 24,2 -,966,29-2,7,6-2,8,22-2,296,66 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. February 26, 29 3 of 4

14 Income Needs at Margaret's Death If Margaret was to die today, how would your loved ones pay the bills that will continue to come in? This analysis considers whether your survivors' income sources assets will be able to support their cash flow needs after your death. Survivor Income Needs Final expenses of $ to pay final medical bills, provide funeral arrangements, pay any final taxes. Continuing lifestyle expenses to pay everyday expenses such as food, bills, insurance, mortgages other debts, taxes, etc. Often it may take some time for the survivors' expenses to "adjust" to a new lifestyle after a death. This period of time is called the adjustment period. This analysis assumes an adjustment period of 24 months. Robert's Income Sources Salary Other Income Estimated Social Security Retirement Plans Used Shortfall Value of Shortfall Today 29.% 3.%.% 4.% 2.% $,4,473 Social Security Benefits Social Security benefits are available to those who fulfill work requirements in positions covered by Social Security. If you die, benefits are payable to your spouse children under 8 years of age, subject to a family maximum benefit. The monthly benefit is based on your earnings record at the date of your death. Survivor benefits each year may increase to reflect changes in the cost of living. In addition, there is a one-time lump sum death benefit of $2. The estimated initial monthly Social Security survivor benefit is $,98. Life Insurance on Margaret Life insurance on Margaret's life will be paid to the designated beneficiary. The beneficiary designation is very important as it determines if the proceeds will be available to provide the income needs. Replacing Your Income for Your Survivors Additional income is necessary to maintain your family's lifestyle. This income can be provided by increasing spouse's earnings, added withdrawals, possible liquidation of existing assets, or through a fund provided by life insurance death proceeds. Life insurance death proceeds can provide the monthly income needed to maintain your family's lifestyle provide cash to pay immediate expenses at your death. This is an estimate of the monthly benefit available based on information provided by the client. Actual survivor benefits may be greater or less than the amount shown. February 26, 29 4 of 4

15 Income Needs at Margaret's Death You provide for your family's lifestyle through your income. In the event of your death, your survivors will need to replace a portion of that income to maintain the lifestyle you have established. Social Security benefits may provide a portion of the needed income. Usually, this is only a part of the income needed. Withdrawals or liquidations of some of your assets may be necessary. $32, 28, 24, 2, 6, 2, 8, 4, Social Security Net Outgoing from Cash Flow Total Expected Income Lifestyle Shortfall for Year Remaining Needs Period With Children at Home Before Retirement During Retirement Start Year Through Year Amount Needed in Today's Dollars for Just this Period $278,99 $28,43 $8,839 Lump Sum to Provide Total Amount Needed Today Amount Needed Today to Fund Through Period $278,99 $8,63 $,4,473 $,4,473 Life insurance can protect income needs. February 26, 29 of 4

16 An Alternate Approach at Margaret's Death Rather than supplementing your survivors' income needs on a continuing basis, an alternative approach would be to use life insurance to relieve your survivors of the major financial burdens they would face in order to provide them with a head start on managing their own continuing income needs. Objective Eliminate major financial burdens so that survivor income is less of a concern Use life insurance to provide cash immediately at death to pay the following expenses: Final Expenses $6,9 Estimated expenses associated with death include doctor bills, long hospital stays, expensive surgeries, funeral expenses, inheritance taxes, or estate taxes. Present Debts $268, It may not be necessary to pay off all of your acquired debts. Although by doing so, Robert will not have to repay the loans plus the interest on these debts less income will be needed for your family. Emergency Funds $3, The best financial analyses can be ruined by unexpected emergencies. Adequate cash reserves can often protect the plans you put in place. Education Funds2 $8,32 Amount needed to fund education today. $42,83 Total Cash Needs at Margaret's Death Immediate cash needs at death include debts, emergency funds, final expenses, taxes, education funds. Have - $ vs. Need - $42,83 Providing for these expenses at your death will reduce your survivor s income needs. 2 Emergency funds are estimated at the greater of % of all liquid assets or three months salary. The amount needed today to fund total costs of education. This does not consider education assets the portion that may be provided by other sources. February 26, 29 6 of 4

17 Income Needs at Margaret's Death You provide for your family's lifestyle through your income. In the event of your death, your survivors will need to replace a portion of that income to maintain the lifestyle you have established. Social Security benefits may provide a portion of the needed income. Usually, this is only a part of the income needed. Withdrawals or liquidations of some of your assets may be necessary. Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses $,223 6,77 9,832 2,378, $ $34,2 9,722 8,633 9,466 2,328 $8, 3,699 8,49,47 4,37 $,982 3,74 3,98 4,4 4,832 $,36 9,2 2,49 2,49 2,49 6,286 23,29 23, 23,8 $322,97 327,6 333,47 34,6 3, ,72 2,484 23,38 26,39 29,36 8,794 22,37 23,74 2,22 22,44 23, 24,89 24,94 7,69 2,934 24,27 27,73 3,232,277,736 8,4 8,347 8,97 2,49 2,49 2,3 24,7 24,443 4,68,866 7,67 36, ,66 368,63 32, , ,49 3,76 39,39 42,46 4,98 2,36 2,422 2,32 26,64 28,239 2,797 26,686 27,68 28,64 29,7 34,86 38,94 42,43 46,378,43 8,8 9,22 69,39 69,87 72, 74,6 322,482 3, 279,93 29,7 239, ,6 3,347 7,98 6,6 6,2 7,46 3,87 3,67 32,767 33,92 3,9 4,6 8,893 63,3 67,83 72,486 2, 2, 2, 2, 64,636 48,4 48,972 49,927,92 233, ,46 262,3 28,289 3, R ,464 73,8 78,266 82,868 87,6 36,377 37,78 39, 26,96 77,27 82,27 87,3 64,78 74,6,927 37,8 2,7 2,6 2,6,97 3,96 4,266-32,389 32,62 383,99 33,3 233, ,264 76,847 82,23 87,34 92,84 4,399 36,73 49,33 4,6 4,263 42, 43,776 4,89 2,6 2,6 2,6 2,6 2,6 29,3 7,38 37,363 4,49 4,96 7,274 -,2-2,877-92, , , 24,326 2,327 26,7 222,872 46,44 47,83 49,27,748 2,27 2,6 2,6 2,6 2,6 2,6 49,9 4,332 8,897 63,99 68, ,779-47,78-68,64-667,36-767,934 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) 6 Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. R-Retirement assumed to begin in this year. 2 February 26, 29 7 of 4

18 Income Needs at Margaret's Death (Continued) Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses , ,82 243,38 2,33 27,682 3,838,44 7,7 8,83 6,96 2,6 2,6 2,6 2,6 2,6 73,43 78,69 83,86 89,32 94,927-87,36-974,66 -,8,699 -,88,84 -,298, , ,2 28,76 289,48 62,43 64,286 66,24 68,2 2,6 2,6 2,6 2,6 2,7 26,666 22,8 29,2 -,49,68 -,22,78 -,637,7 -,73,982 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. February 26, 29 8 of 4

19 Needs if Death in Various Years Needs change over time incomes change, bills are paid new living expenses are established, others increase, some assets are sold others acquired some assets just increase or decrease in value. The prior charts illustrate the income needs if death occurred today. The charts below show the survivor income needs if death were to occur in any of the next 2 years. Analysis should consider the possibility of death in various years. Value of all future needs at Robert's death. $,8,,,,2, 9, 6, 3, Year of Death At Robert's' death, this is the amount that would need to be invested at % to provide the amounts needed for the shortages. The need if death occurred today is $,4,26 the largest need of $,77,33 occurs if death is in year 8. Value of all future needs at Margaret's death. $,6,,4,,2,,, 8, 6, 4, 2, Year of Death At Margaret's' death, this is the amount that would need to be invested at % to provide the amounts needed for the shortages. The need if death occurred today is $,4,473 the largest need of $,42,3 occurs if death is in year 2. Life insurance can provide for the needs caused by death. February 26, 29 9 of 4

20 Robert's Disability Income Needs Disability Income Needed Robert, should you lose your ability to provide an income due to an accident or illness, how would your family maintain its lifestyle? If you suffered a long-term disability today, most of your needs, or monthly lifestyle expenses, would continue. These needs may change in later years. This illustration assumes they will increase for inflation at 3.% per year. Income Sources Salary Other Income Estimated Social Security Retirement Plans Used Shortfall 2.% 26.%.% 44.% 3.% Assumes Robert is disabled today remains disabled until retirement. Cash flow failure in 29 Social Security Benefits Social Security benefits are available to those who fulfill work requirements in positions covered by Social Security. If you are disabled for 6 months or longer prior to your normal retirement, you can receive a monthly benefit for you, your spouse children under 8 years of age, subject to a family maximum benefit. To qualify for Social Security disability benefits, you must not be able to perform any substantial employment. Benefits begin after a full five-month waiting period continue as long as you are disabled. The estimated initial monthly Social Security disability benefit is $2,62. Disability Income Replacement Long-term disability income coverage may be available through employer benefit programs individual disability income plans. The maximum benefit available is usually limited to a portion of pre-disability earnings. Generally, group insurance has higher limits but must be coordinated with Social Security benefits other employer disability plans. Individual coverage is normally limited to 6% of salary. Some policies pay benefits for a limited number of years, while others will pay benefits until retirement. The definition of disability is one of the most important features of any disability income policy. Social Security benefits are based on a number of factors. One factor is the portion of your wages each year that are subject to Social Security taxes. Based on the information you provided, Robert's Social Security are estimates based on salary Margaret's Social Security are estimates based on salary. This is an estimate of the monthly benefit available. Actual disability benefits may be greater or less than the amount shown. February 26, 29 2 of 4

21 Family Needs If Robert Is Disabled Should you lose your ability to provide income through an accident or illness, how would you maintain your lifestyle? Social Security benefits may provide a portion of needed income. How long would your present assets provide the necessary funds? Long-term disability is another life uncertainty that prevents the accumulation of wealth. Salary stops Living expenses continue (medical care often increases) Retirement contributions stop Before age 6, it is 2.83 times more likely that Robert will suffer a long-term disability than die! Consider the effects of a long-term disability. What if you were out of work for two years? Five years? Until retirement? Effects on Net Worth of Situation $ Net Worth at Retirement Situation Condition Considered Not Disabled Disabled for Next 2 Years Disabled for Next Years Disabled Now until Retirement Net Worth at Retirement2 $,43,33 $,6, $92,799 $48,263 % Reduction in Net Worth at Retirement 7.27% 6.6% 9.78% A disability before retirement may greatly reduce the amount of assets you will have available for retirement. You should consider disability income insurance based on the amount of benefits for which you qualify. Protect your greatest asset your ability to earn! 2 Based on a disability expected to last more than 2 years following a 6-day elimination period (see Assumptions). Estimated value at end of year of desired retirement. February 26, 29 2 of 4

22 Robert's Disability Income Needs Should you lose your ability to provide income through an accident or illness, how would you maintain your lifestyle? Social Security benefits may provide a portion of needed income. How long would your present assets provide the necessary funds? This illustrates the estimated cash flow if Robert became disabled today remained disabled until retirement. Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses $98,63 7,38,62 3,247,92 $ $4,7 4,26 3,3 3,4 3,3 $33, 48,63,7 2,76 4,287 $,37 3,672 32,622 33,6 34,69 $32,86 2,6 2,6 2,6 2,6 $3,447 4,734 4,97 4,8 42,77 $37, ,67 289,68 282,92 277, ,738 2,68 24,64 26,323 29,363 8,794 22,37 23,74 3,68 3,727 3,838 4,88 4,842,9 7,93 9,32 6,96 62,63 3,647 36,77 37,88 38,93 4,2 2,6 2,6 2,6 2,6 2,6 42,8 43,472 2,942 66,66 68, ,499 27,4 26,43 239,84 28, ,49 3,72 39,42 42,464 4,989 2,36 2,422 2,32 26,64 28,239,62 6,437 7,28 8, 8,83 63,39 64,649 6,939 67,26 68,874 4,32 28,376 29,228 3, 3,8 2,6 2,6 2,6 2,6 2,6 7,39 87,2 88,739 92,27 9,4 96,83 6,94 27,79 93,67 9, ,69 3,38 7,29 6,76 6,262 7,46 9,4,42,73,393 2,4 7,98 72,366 74,77 76,33 77,93 3,938 32,896 33,883 34,899 3,946 2,6 2,6 2,6 2,6 2,6 86,34 7,7 72,367 74,222 76,43 38,36 36,4 36,78 39,4 43, R ,47 73,8 78,27 82,868 87,6 2,868 3,6 4,479 29,2 79,883 8,878 83,92 4,2,8 37,2 38,36 39,28 4,48 9,43 2,6 2,6 2,6 2,6 2,6 78,33 8,94 82,329 -,634 62,9 7,89 48,263-4, ,264 76,847 82,23 87,34 92,84 4,29 4,9,43,8 96,869 62,9 64,788 66,732 68,734 7,796 2,6 2,6 2,6 2,6 2,6 6,262 6,46 9,889 -,7-99,777-26,78-32,77-39, , 24,326 2,327 26,7 222,872 72,92 7,7 77,36 79,68 82,72 2,6 2,6 2,6 2,6 2,6 23,42 27,9 3,86 34,66 38,64-47,336-2,6-93, ,62-734,392 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) 6 Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. R-Retirement assumed to begin in this year. 2 February 26, of 4

23 Robert's Disability Income Needs (Continued) Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses , ,82 243,38 2,33 27,682 84,34 87,7 89,682 92,373 9,44 2,6 2,6 2,6 2,6 2,6 42,73 46,92,296,77 6,378-86,9-878,762-92,279 -,26,623 -,, , ,2 28,76 289,48 97,998,938 3,966 7,8 2,6 2,6 2,6 2,6 6,2 7,4 7,49 8,236 -,77,64 -,24,34 -,33,73 -,48,99 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. February 26, of 4

24 Margaret's Disability Income Needs Disability Income Needed Margaret, should you lose your ability to provide an income due to an accident or illness, how would your family maintain its lifestyle? If you suffered a long-term disability today, most of your needs, or monthly lifestyle expenses, would continue. These needs may change in later years. This illustration assumes they will increase for inflation at 3.% per year. Income Sources Salary Other Income Estimated Social Security Retirement Plans Used Shortfall 2.% 8.% 4.% 44.% 9.% Assumes Margaret is disabled today remains disabled until retirement. Cash flow failure in 29 Social Security Benefits Social Security benefits are available to those who fulfill work requirements in positions covered by Social Security. If you are disabled for 6 months or longer prior to your normal retirement, you can receive a monthly benefit for you, your spouse children under 8 years of age, subject to a family maximum benefit. To qualify for Social Security disability benefits, you must not be able to perform any substantial employment. Benefits begin after a full five-month waiting period continue as long as you are disabled. The estimated initial monthly Social Security disability benefit is $,464. Disability Income Replacement Long-term disability income coverage may be available through employer benefit programs individual disability income plans. The maximum benefit available is usually limited to a portion of pre-disability earnings. Generally, group insurance has higher limits but must be coordinated with Social Security benefits other employer disability plans. Individual coverage is normally limited to 6% of salary. Some policies pay benefits for a limited number of years, while others will pay benefits until retirement. The definition of disability is one of the most important features of any disability income policy. Social Security benefits are based on a number of factors. One factor is the portion of your wages each year that are subject to Social Security taxes. Based on the information you provided, Robert's Social Security are estimates based on salary Margaret's Social Security are estimates based on salary. This is an estimate of the monthly benefit available. Actual disability benefits may be greater or less than the amount shown. February 26, of 4

25 Family Needs If Margaret Is Disabled Should you lose your ability to provide income through an accident or illness, how would you maintain your lifestyle? Social Security benefits may provide a portion of needed income. How long would your present assets provide the necessary funds? Long-term disability is another life uncertainty that prevents the accumulation of wealth. Salary stops Living expenses continue (medical care often increases) Retirement contributions stop Before age 6, it is.7 times more likely that Margaret will suffer a long-term disability than die! Consider the effects of a long-term disability. What if you were out of work for two years? Five years? Until retirement? Effects on Net Worth of Situation $ Net Worth at Retirement Situation Condition Considered Not Disabled Disabled for Next 2 Years Disabled for Next Years Disabled Now until Retirement Net Worth at Retirement2 $,43,33 $,24,982 $,6,27 $733,67 % Reduction in Net Worth at Retirement.9% 3.22% 3.82% A disability before retirement may greatly reduce the amount of assets you will have available for retirement. You should consider disability income insurance based on the amount of benefits for which you qualify. Protect your greatest asset your ability to earn! 2 Based on a disability expected to last more than 2 years following a 6-day elimination period (see Assumptions). Estimated value at end of year of desired retirement. February 26, 29 2 of 4

26 Margaret's Disability Income Needs Should you lose your ability to provide income through an accident or illness, how would you maintain your lifestyle? Social Security benefits may provide a portion of needed income. How long would your present assets provide the necessary funds? This illustrates the estimated cash flow if Margaret became disabled today remained disabled until retirement. Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses $98,36,498 4,93 6,767 9,2 $ $32,84 2,98 2,32 22,239 23,8 $77, 2,436,799 8,698,68 $8,786 8,98 8,64 9,2 9,777 $32,773 $2,647 2,76 2,3 2,88 26,228 $326,66 33, ,33 36,7 37, ,37 2,278 28,289 29,378 32,29 8,794 22,37 23,74 24,62 2,74 26,22 27,34 28,2 4,749 7,94 2, 24,488 27,92 2,37 2,98 6,28 6,694 7,9 2,9 2,6 2,6 26,62 27,3 4,627 3,79,28 392,997 42,44 42,67 46,336 43, ,6 37,94 4,93 44,48 47,276 2,36 2,422 2,32 26,64 28,239 29,28 3,99 3,226 32,29 33,39 3,4 3,8 38,83 42,6 46,96 7,7 2,6 2,26 2,92 3,289 2,6 2,6 2,6 2,6 2,6 6,7 62,68 62,8 64,6 66,43 42,492 47,647 4,887 4,79 46, ,89 6,633 6,272 63,972 67,774 7,46 34,4 3,729 36,97 38,29 39,67,62 4,82 9,98 63,46 67,934 3,688 4,98 4,2 4,97,46 2,6 2,6 2,6 2,6 2,6,874 4,38 4,72 42,46 42,8 422,3 48,77 498,93 43,44 92, R ,679 7,689 79,87 82,868 87,6 4,98 42,8 44,9 27,979 72,36 77,26 82,23 63,369 9,92,868 6,344 6,834 7,339 3,2 2,6 2,6 2,6 2,6 2,6 43,36 43, 43,979-64,7 74,88 767,69 733,67 676, ,264 76,847 82,23 87,34 92,84 4,3 46,3 9,82 6,69 7,847 2,38 4,28 8,46 6,2 62,6 63,876 6,793 2,6 2,6 2,6 2,6 2,6 84,634 9,227 3,84 448, , 3, , 24,326 2,327 26,7 222,872 67,766 69,799 7,893 74, 76,272 2,6 2,6 2,6 2,6 2,6 28,7 32,367 36,273 4,297 44,44 244,22 7,98 96,748 2,332 -,24 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) 6 Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. R-Retirement assumed to begin in this year. 2 February 26, of 4

27 Margaret's Disability Income Needs (Continued) Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses , ,82 243,38 2,33 27,682 78,6 8,97 83,344 8,84 88,42 2,6 2,6 2,6 2,6 2,6 48,79 3,6 7,634 62,298 67,2-32,942-2,738-29,94-372,46-44, , ,2 28,76 289,48 9,72 93,8 96,69 99,7 2,6 2,6 2,6 2,6 72, 77,47 82,397 87,84-37,6-62,69-7,46-79,4 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. February 26, of 4

28 What if You Need Long-Term Care? Preparing for long-term care means thinking ahead being prepared for the consequences of needing long-term care. While almost all people face long-term care at some point in their lives, few adequately consider its financial burden. Odds of Needing Long-Term Care The possibility of needing long-term care is one of the greatest threats to your personal wellbeing, financial goals financial security. Forty percent of people 6 older will require some long-term care. Journal of Financial Service Professionals, January 2 Ninety percent of people 8 older will require some long-term care. 996 National Nursing Home Study by AARP As people live longer, these odds are likely to increase. What Will Long-Term Care Cost? Cost Today In 22, the average annual cost for a nursing home stay in North Carolina was $2,322. Rapidly Increasing Costs Historically, the cost of long-term care has doubled in the past 9 years.2 Your Possible Cost If Robert had a nursing home stay at age 7, the expected cost could be $23,9, based on the general inflation rate of 3.%. If Margaret had a nursing home stay at age 7, the expected cost could be $23,9, based on the general inflation rate of 3.%. Paying for Long-Term Care 2 Medicare Medicaid These government benefits are occasionally available after you have depleted your assets. Use Retirement Savings Will you risk your life-long savings? Will you run out of money? Depend on Family What will be the total impact on your family? Long-Term Care Insurance Insurance is available to protect you your family, but it must be obtained before incurring the long-term care expense. Your current state of residence based on a study by Milliman USA. Annual national rate of 8.2%. Source: US Consumer Index for Nursing Home Costs, February 26, of 4

29 What if Robert Needs Long-Term Care? This illustration assumes that Robert has a nursing home stay starting at age 7 ending after 3 years. Costs are estimated based on average costs today increased for the general inflation rate. $3, 3, 2, 2,,,, Social Security Net Outgoing from Cash Flow Total Expected Income Lifestyle Shortfall for Year Remaining Needs Period Before Retirement During Nursing Home Stay Healthy Years After Nursing Home Stay Start Year Through Year Amount Needed in Today's Dollars for Just this Period $386,293 $34,372 $298,44 Amount Needed Today to Fund Through Period $386,293 $386,293 $89,9 Lump Sum to Provide Total Amount Needed Today $89,9 The best way to protect yourself from unexpected expenses like nursing home stays is through various forms of insurance. Long-term care insurance can provide additional funds to help cover the cost of a nursing home stay, but you cannot wait until you need it to get it. Don't let an unexpected expense ruin your plans. February 26, of 4

30 What if Robert Needs Long-Term Care? This illustration assumes that Robert has a nursing home stay starting at age 7 ending after 3 years. Costs are estimated based on average costs today increased for the general inflation rate. Outgoing R L Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Year Living Expenses $97,936,49 4,84 6,76 9,3 $ $46,9 3,494 34,922 36,244 37,6 $, 4,82 46,683,89, $ $32,68 2, 2,4 2, 2, $2,7 2,23 9,44 9,722 9,97 $337,37 3,83 368,23 387,63 49, ,3 2,27 28,28 3,386 34,79 8,794 22,37 23,74 39,2 4,478 4,983 43,6 4,37 9,424 63,92 68,46 73,29 78,4 2, 2, 2, 2,2 2,38 29,38 43,43 44,98 432,874 49,36 478,98 488,3 498, ,867 4,23 44,742 48,33 2,3 2,36 2,422 2,32 26,64 28,239 46,43 48, 49,7,376 3,99 83,3 88,266 93,48 98,98 24,7 46,8 46,9 46,33 47,969 49,74,27 26,972 46,626 68,669 93, ,79 9,773 63,87 67,982 72,272 7,46 4,88 6,726 8,634 6,6 62,64 2,39 26, ,34 228,68 23, 2,6 38,93 2,776 2,9 22,4 22, ,2 694,944 76,86 834,8 9, ,69 8,243 8,933 82,868 87,6 64,77 66,963 69,234 27,38 24,64 248,4 2,47 8,78 9,329 3,434 2,9 2,6 2,6 22,7 22,82 23,7-99,863,86,7,83,32,43,33,92, ,264 76,847 82,23 34,24 323,43 44,99 4,929 7,984 4,77 6,67 246,478,438 6,4 6,84 63,697 6,67 67,76 2,6 2,6 2,6 2,6 2,6 98,369,2, ,8 898,8 76,263 7, ,9 24,326 2,327 26,7 222,872 69,63 7,69 73,842 76,7 78,339 2,6 2,6 2,6 2,6 2,6 26,36 3,47 34,32 38,29 42,374 32,663 24,7 69,229 9,89 2,34 Net Worth Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) R-Retirement assumed to begin in this year. L -Long-term care assumed to begin in this year. 2 February 26, 29 3 of 4

31 What if Robert Needs Long-Term Care? Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Year Living Expenses , ,82 243,38 2,33 27,682 8,689 83, 8,63 88,7 9,86 2,6 2,6 2,6 2,6 2,6 46,8,93,37 9,972 64,76-4,28-3,862-28,49-287,4-366, , ,2 28,76 289,48 93,4 96,347 99,237 2,24 2,6 2,6 2,6 2,6 69,83 74,6 79,779 8,7-446,73-27,792-69,6-69,97 Net Worth Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) February 26, 29 3 of 4

32 What if Margaret Needs Long-Term Care? This illustration assumes that Margaret has a nursing home stay starting at age 7 ending after 3 years. Costs are estimated based on average costs today increased for the general inflation rate. $3, 3, 2, 2,,,, Social Security Net Outgoing from Cash Flow Total Expected Income Lifestyle Shortfall for Year Remaining Needs Period Before Retirement During Nursing Home Stay Healthy Years After Nursing Home Stay Start Year Through Year Amount Needed in Today's Dollars for Just this Period $386,293 $34,372 $298,44 Amount Needed Today to Fund Through Period $386,293 $386,293 $89,9 Lump Sum to Provide Total Amount Needed Today $89,9 The best way to protect yourself from unexpected expenses like nursing home stays is through various forms of insurance. Long-term care insurance can provide additional funds to help cover the cost of a nursing home stay, but you cannot wait until you need it to get it. Don't let an unexpected expense ruin your plans. February 26, of 4

33 What if Margaret Needs Long-Term Care? This illustration assumes that Margaret has a nursing home stay starting at age 7 ending after 3 years. Costs are estimated based on average costs today increased for the general inflation rate. Outgoing R L Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Year Living Expenses $97,936,49 4,84 6,76 9,3 $ $46,9 3,494 34,922 36,244 37,6 $, 4,82 46,683,89, $ $32,68 2, 2,4 2, 2, $2,7 2,23 9,44 9,722 9,97 $337,37 3,83 368,23 387,63 49, ,3 2,27 28,28 3,386 34,79 8,794 22,37 23,74 39,2 4,478 4,983 43,6 4,37 9,424 63,92 68,46 73,29 78,4 2, 2, 2, 2,2 2,38 29,38 43,43 44,98 432,874 49,36 478,98 488,3 498, ,867 4,23 44,742 48,33 2,3 2,36 2,422 2,32 26,64 28,239 46,43 48, 49,7,376 3,99 83,3 88,266 93,48 98,98 24,7 46,8 46,9 46,33 47,969 49,74,27 26,972 46,626 68,669 93, ,79 9,773 63,87 67,982 72,272 7,46 4,88 6,726 8,634 6,6 62,64 2,39 26, ,34 228,68 23, 2,6 38,93 2,776 2,9 22,4 22, ,2 694,944 76,86 834,8 9, ,69 8,243 8,933 82,868 87,6 64,77 66,963 69,234 27,38 24,64 248,4 2,47 8,78 9,329 3,434 2,9 2,6 2,6 22,7 22,82 23,7-99,863,86,7,83,32,43,33,92, ,264 76,847 82,23 34,24 323,43 44,99 4,929 7,984 4,77 6,67 246,478,438 6,4 6,84 63,697 6,67 67,76 2,6 2,6 2,6 2,6 2,6 98,369,2, ,8 898,8 76,263 7, ,9 24,326 2,327 26,7 222,872 69,63 7,69 73,842 76,7 78,339 2,6 2,6 2,6 2,6 2,6 26,36 3,47 34,32 38,29 42,374 32,663 24,7 69,229 9,89 2,34 Net Worth Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) R-Retirement assumed to begin in this year. L -Long-term care assumed to begin in this year. 2 February 26, of 4

34 What if Margaret Needs Long-Term Care? Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Year Living Expenses , ,82 243,38 2,33 27,682 8,689 83, 8,63 88,7 9,86 2,6 2,6 2,6 2,6 2,6 46,8,93,37 9,972 64,76-4,28-3,862-28,49-287,4-366, , ,2 28,76 289,48 93,4 96,347 99,237 2,24 2,6 2,6 2,6 2,6 69,83 74,6 79,779 8,7-446,73-27,792-69,6-69,97 Net Worth Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) February 26, of 4

35 One of the biggest problems facing today s consumers is debt a plague that can rob people of their financial futures. Nothing can derail your financial dreams faster than excessive, revolving, highinterest credit card debt. The first step is to accept that it won t be easy, but with a consistent strategy, you can find your way out of debt. Set your goal today to eliminate or consolidate your debt. Here are a few strategies to consider: Pay Yourself First simultaneously work on savings debt elimination Cut Spending Stop Borrowing Manage Your Debt-to-Earned Income Ratio Pay Off the Right Debt First Consolidate Bad Debt into Better Debt at Lower Rate Good Uses of Debt There are situations where debt is not only a necessity, but potentially smart. Debt can actually provide flexibility convenience that can help you manage your money provide for your lifestyle needs. Good uses of debt may include purchasing assets or financing an education. Other favorable uses of debt may include: Purchasing a Home Purchasing an Appreciating Asset or Investment Investment in Education Bad Uses of Debt Bad uses of debt can be the biggest obstacle for achieving your desired lifestyle. Debt that spirals upward because of high interest charges poor purchase decisions can strain monthly cash flow. Large interest payments perpetuate the debt can consume the cash flow necessary to maintain your lifestyle to accomplish your goals. Bad uses of debt include: Using Credit Cards to Pay for Lifestyle Needs Using Credit Cards to Pay Credit Cards Using Credit Cards to Purchase Depreciating All debt, good bad, must be analyzed together for proper debt management. Better debt management means better cash flow better financial planning. February 26, 29 3 of 4

36 Analyzing Your Debt The effective use of debt can enhance your financial plans. Debt management starts with examining your existing debt. You should examine each individual debt as well as your total, overall debt. Total debt is often analyzed by comparing earned income to debt payments. Finding the Right Ratio of Debt Income Debt as a Percent of Earned Income Total Monthly Debt $,972 Total Monthly Earned Income $, Your Debt-to-Earned Income Ratio 9.72% A debt-to-earned income ratio of 2% is considered average. The lower your debt-to-earned income ratio, the better your financial flexibility will be. Depending on your particular circumstances a ratio of 2% or higher may be a sign that your credit is out of control, could lead to difficulty obtaining future loans /or a lower credit rating. You may also be unable to qualify for the best rates terms. Your Existing Debt Date of Interest Years Until Debt is Name Balance Balance Rate Payment Frequency Paid Off Loan for Primary $2, Feb. 23, 29 6.% $,722 Monthly 2 Years Residence Credit Card Debt $3, Feb. 23, 29 2.% $2 Monthly 6 Years 2 Months Total Current Debt $268, Total Current Credit Card Debt $3, Average Interest Rate on Credit Cards 2.% Managing Your Debt There are many steps you can take to manage your debt, but the most important step is to start today. Here are some ideas on ways to manage your debt. Consider restructuring your debt Consolidate multiple credit cards to one card with a lower rate Pay more than the minimum payment Call the credit card company ask for a lower rate Cut up credit cards you don t need Stop credit card solicitations (-888--OPTOUT) Assumes no additions to the balance, you continue the current monthly payment, the current interest rate stays the same. February 26, of 4

37 Whether natural or man-made, disasters emergencies can happen at any time. Even a small "catastrophe", requiring cash, can occur with little or no warning. The key is to be prepared for whatever life throws your way. Don t Think You Need an Emergency Fund? Consider how you would pay for any of the following unexpected events. A source of available funds will provide the peace of mind of knowing you can recover quickly with the least disruption to your life. Major Car Repairs Major Home Repairs Major Appliance Replacement Job Interruption Serious Illness or Hospitalization Your Emergency Fund: Do You Have Enough? A good rule of thumb is that your emergency fund should equal to 3-6 months salary. Emergency funds should be kept in cash or any other form of liquid assets that can quickly provide the resources needed after a short-term financial crisis. Emergency Fund Needed (Greater of 3 months household salary or % of investments.) $3, Current Emergency Funds Available $4, Checking Account $6, Savings/CDs $8, Current Emergency Funds Emergency Funds Needed Have - $4, vs. Need - $3, February 26, of 4

38 To help provide security later in life, its important to have a long-term asset accumulation program in place designed to outpace inflation reduce taxation. Retirement income has increased in its importance as people stop working earlier are living longer in their retirement years. Therefore, when building a program you should consider how many years you may be living in retirement how much it will cost you to live comfortably during these years. The Rule of 72 Helping to Outpace Inflation The Rule of 72 can help you determine how long it will take for your savings to double. Dividing the number 72 by the interest rate that your savings or investment is earning provides you with the total number of years it will take for you to double your initial investment. The examples below show how much you can earn over time with an investment of $, at different rates of interest. Age 4% Money doubles every 8 years $, $2, $4, Age 6% Money doubles every 2 years $, $2, $4, $8, Age 8% Money doubles every 9 years $, $2, $4, $8, $6, Age 2% Money doubles every 6 years $, $2, $4, $8, $6, $32, $64, All figures are for illustrative purposes only do not reflect an actual investment in any product. They do not reflect the performance risks, expenses or charges associated with any actual investment. Past performance is not an indication of future performance. The Rule of 72 is a mathematical concept that approximates the number of years it would take to double the principle at a constant rate of return. The performance of investments fluctuate over time, as a result, the actual time it will take an investment to double in value cannot be predicted with any certainty. Additionally, there are no guarantees that any investment or savings program can outpace inflation. Please note that high risk has been historically associated with higher rates of return. ACBO Study, November 23, Baby Boomers Retirement Prospects: An Overview. February 26, of 4

39 February 26, of 4

40 Once Retirement Begins This page considers your expenses during retirement whether you are currently saving enough to meet your retirement goals. It does not consider your lifestyle prior to retirement. Retirement begins at Robert's age 6, Margaret's age 6 Social Security retirement benefits begin at age 66 for Robert at 66 for Margaret Retirement is illustrated for 2 years. Retirement Income Needed Instead of asking you to estimate income needed to pay your expenses at retirement, this analysis examines your lifestyle expenses. It then considers sources of income such as any continuing salaries, other income, Social Security benefits, your retirement plans. you have designated for use at retirement are also considered. you designated as "Do Not Use," have not been used to pay retirement expenses. Estimated retirement income available assets are compared to all retirement expenses. Retirement success is defined as: Paying all expenses Not using any of those assets you have designated not to use Not running out of money Sources of Retirement Income Salary Other Income Estimated Social Security Retirement Plans Used Shortfall.% 29.% 9.% 42.% 2.% Retirement Failure Estimated income assets available for your retirement appear to be insufficient to provide for the retirement lifestyle. A cash flow failure occurs in 29 The value of expenses not covered the shortfall at the start of retirement in year 232 is $,83,679. For the purpose of this analysis, the retirement shortage is the equivalent of reducing outgoing payments during retirement by 24%. To fund the shortfall assuming a % growth rate, you would need $336,4 today or make monthly deposits of $,93 between now the start of retirement. Unfortunately, you have a cash flow failure before retirement! Social Security benefits are based on a number of factors. One factor is the portion of your wages each year that are subject to Social Security taxes. Based on the information you provided, Robert's Social Security are estimates based on salary Margaret's Social Security are estimates based on salary. This is an estimate of the monthly benefit available. Actual retirement benefits may be greater or less than the amount shown. February 26, 29 4 of 4

41 Now Through Retirement Retirement is set to begin when Robert is age 6. Retirement is illustrated for 2 years. A successful retirement requires that all lifestyle expenses be satisfied before retirement. Otherwise, assets intended for retirement may be depleted. $32, 28, 24, 2, 6, 2, 8, 4, Social Security Net Outgoing from Cash Flow Total Expected Income Lifestyle Shortfall for Year Remaining Needs Period With Children at Home Before Retirement During Retirement Start Year Through Year Amount Needed in Today's Dollars for Just this Period $232,6 $3,688 $338,77 Cash Flow Before Retirement It is important to consider cash flows between now retirement when analyzing your retirement needs. Expenses before retirement may deplete the assets investments intended to support you through retirement. If cash flow failures occur before retirement, examining your pre-retirement lifestyle may be a necessary step in creating a realistic retirement plan. February 26, 29 4 of 4

42 Now Through Retirement Retirement is set to begin when Robert is age 6. Retirement is illustrated for 2 years. A successful retirement requires that all lifestyle expenses be satisfied before retirement. Otherwise, assets intended for retirement may be depleted. Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses $97,936,49 4,84 6,76 9,3 $ $46,9 3,494 34,922 36,244 37,6 $, 4,82 46,683,89, $ $32,68 2, 2,4 2, 2, $2,7 2,23 9,44 9,722 9,97 $337,37 3,83 368,23 387,63 49, ,3 2,27 28,28 3,386 34,79 8,794 22,37 23,74 39,2 4,478 4,983 43,6 4,37 9,424 63,92 68,46 73,29 78,4 2, 2, 2, 2,2 2,38 29,38 43,43 44,98 432,874 49,36 478,98 488,3 498, ,867 4,23 44,742 48,33 2,3 2,36 2,422 2,32 26,64 28,239 46,43 48, 49,7,376 3,99 83,3 88,266 93,48 98,98 24,7 46,8 46,9 46,33 47,969 49,74,27 26,972 46,626 68,669 93, ,79 9,773 63,87 67,982 72,272 7,46 4,88 6,726 8,634 6,6 62,64 2,39 26, ,34 228,68 23, 2,6 38,93 2,776 2,9 22,4 22, ,2 694,944 76,86 834,8 9, R ,69 8,243 8,933 82,868 87,6 64,77 66,963 69,234 27,38 24,64 248,4 2,47 8,78 9,329 3,434 2,9 2,6 2,6 22,7 22,82 23,7-99,863,86,7,83,32,43,33,92, ,264 76,847 82,23 87,34 92,84 44,99 4,929 7,984 4,77 6,67 9,87 23, 6,4 6,84 63,697 6,67 67,76 2,6 2,6 2,6 2,6 2,6 -,2, ,8 898,8 847,7 786, , 24,326 2,327 26,7 222,872 72,87 69,63 7,69 73,842 76,7 78,339 2,6 2,6 2,6 2,6 2,6 4, 3,47 34,32 38,29 42,374 78, ,92 74,83, ,888 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. 3 Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions 4 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) 6 Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. R-Retirement assumed to begin in this year. 2 February 26, of 4

43 Now Through Retirement (Continued) Outgoing Expected Income Education Tax Spending 2 Goals Withholdings Salary Other3 Income Social4 Security Withdrawn from Available Shortfall Net Worth Year Living Expenses , ,82 243,38 2,33 27,682 8,689 83, 8,63 88,7 9,86 2,6 2,6 2,6 2,6 2,6 46,8,93,37 9,972 64,76 3,36 274,72 97,6 8,7 39, , ,2 28,76 289,48 93,4 96,347 99,237 2,24 2,6 2,6 2,6 2,6 69,83 74,6 79,779 8,7-4,6-22,27-23,98-286,382 6 Basic expenses, loan payments, retirement contributions, taxes withholdings. All payroll withholding taxes, including any FICA taxes, plus additional tax payments (income capital gains tax). Refunds are shown as other income in the year received. Salary, other income, dividends, other distributions from holdings, new loan proceeds, retirement plan distributions Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for Robert is age 67 FRA for Margaret is age 67. The sum of the amount the monthly outgoing payments exceeded the expected income after using any assets available for the needed cash flow. ( designated Do Not Use, or restricted are not considered available.) Net Worth is equal to the estimated value of all assets less liabilities cumulative annal shortfalls. February 26, of 4

44 Education Funding Education costs have been rising faster than general inflation. In the past ten years, the average annual increase has been twice that of the average annual increase in the Consumer Price Index. These annual education cost estimates consider an education inflation rate of 6.%. Education Funding How will you pay for college? $32, 24, 6, 8, Education Education Shortfall Hope for scholarships Use college loans Pay as you go Begin a saving investment strategy today Other Sources Education Goals Education For School Stephen The University of North Carolina at Chapel Hill North Carolina State University Mary Education Cost Today Start in Year2 Years $4, $2, Total Cost of Education Needs3 $8,32 The amount needed today to fund all education goals invested at.% provides the total costs for all years of education of $22,98 at the start of the individual education goal. This amount assumes inflation at 6.% but does not consider your education assets or funding provided by other sources. Education Funding Shortfall Today4 $8,32 The remaining funds needed today consider your assets designated for education (current value $) as well as anticipated funding from other sources. This amount is assumed to be invested until needed with.% growth would provide the additional money needed by the start of each education goal. Monthly Savings Required to Fund Shortfall $,248 An alternative way to provide the additional funds needed today of $8,32 would be a savings fund. These monthly deposits invested at.% would provide the money needed by the start of each individual education need. The monthly amount would reduce as each education need is started U.S. Bureau of Labor Statistics "Trends in College Pricing 26." The College Board ( 26. Annual costs are assumed paid in 2 monthly payments. The lump sum investment today that would grow to the amount needed at the start of the education need. Values assume that interest is earned at the rate of % each year until needed. Additional Funds Needed Today reflects the Total Projected Costs less Education the Portion from Other Sources. February 26, of 4

45 Summary of Education Needs Education Goals Education For School Stephen The University of North Carolina at Chapel Hill North Carolina State University Mary Annual Education Cost Today Start in Year $4,36 26 $2, $2,49 22 $23,7 First For Year Cost2 Years Total Projected Costs2 Amount Required Today3,4 4 $9,7 $6,48 4 $7,3 $,94 $22,98 $8,32 Total Education No assets specifically for education. Education Needs Education For Amount Required Today3,4 Stephen Mary Total $6,48 $,94 $8,32 Portion Funded from Other Sources.%.% Additional Funds Needed Today6 Additional Monthly Savings Required4 Time Monthly Savings Required $6,48 $,94 $8,32 $73 $49 $,248 7 yrs.6 mo. yrs.6 mo. Annual Education Needs Year Annual Education Cost Paid from Other Sources Balance of for7 Education Education Shortage for Year $ $ $ $ ,794 22,37 23,74 8,794 22,37 23, ,36 2,422 2,32 26,64 28,239 2,36 2,422 2,32 26,64 28, ,46 7,46 Annual costs are assumed paid in 2 monthly payments. Estimated costs based on Annual Cost Today inflation rate of 6.%. Total Projected Costs is the sum of these costs throughout the education years. Annual costs are assumed paid in 2 monthly payments from August through July. The graph reflects costs by calendar year. The lump sum investment today that would grow to the amount needed at the start of the education need. Values assume that interest is earned at the rate of.% each year until needed. Other sources may include scholarships, financial aid, gifts, or student work. Additional Funds Needed Today reflects the Total Projected Costs less Education the Portion from Other Sources. Balance includes any predetermined deposits to education assets. February 26, 29 4 of 4

46 Preserve Your Estate Don t let a lifetime of successful savings be devoured by taxes, lawyers unintended heirs. A proper estate plan can take care of your family during your life after your death. Estate planning can help you develop a firm strategy for the proper transfer of your wealth. By minimizing the costs associated with transferring wealth, you can increase the amount passed on to your heirs. Keys to preserving your estate include: Have adequate life insurance protection Have a will Underst the probate process for the state in which you reside Avoid probate Underst what a trust is Transfer assets through trusts Learn how to minimize estate taxes Don t delay February 26, of 4

47 Many people today, whether through poor planning or lack of a financial education, have downsized or discarded their dreams. You have determined that your family deserves better they deserve to achieve their dreams. And World Financial Group is here to help you do just that. You ve begun the journey to your financial dreams by meeting with your WFG associate completing a WFG Financial Dream Map. In the following pages are recommendations that will help you make informed choices on how you can build a better financial future for you your family. World Financial Group believes that there is no room for compromise when it comes to someone s dreams. So let us work with you to help you move from dreaming to doing today. Isn't it time you started dreaming again? Now, let's set a strategy to help you achieve your dreams! February 26, of 4