Personal Retirement Analysis for Allen and Betty Abbett Real Financial Planning, LLC A Registered Investment Advisor 303 Church Street Guilford, CT 06403 203.909.1012 www.realfinancialplanning.com IMPORTANT: The illustrations or other information generated by this report regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.
Cash Flow Planning This financial analysis has been prepared with the objective of illustrating your present and future cash flows, integrated with your assets and income taxes. Cash Flow Planning Cash flow planning is designed to account for all sources of income and expense, and to illustrate the impact that any surpluses or shortages might have on the ability of your assets to last through your life expectancy. This method of planning is sometimes referred to as an "optimized" approach. What do we mean by "Optimized" planning? Cash Flow Each year your income sources are compared to your annual expenses. Any surplus of spendable income is automatically added to your savings and investments starting in the first year. If there is a shortage of spendable income, the amount needed to make up the shortage is withdrawn from your asset accounts. This approach is intended to reflect what would happen if you are managing your funds in an optimal manner. Assets Every year your savings and investment accounts will have potential interest, dividends, capital gains or appreciation. The cash flow analysis makes the assumption that, unless otherwise indicated, the entire rate of return is reinvested into the account. This approach optimizes the potential growth of each asset account. Taxes are not charged to the earnings on the account, but instead are added to your personal expenses. Taxes Since income and FICA (Social Security) taxes can represent a substantial part of your annual expenses, the "optimized" planning approach carefully computes your tax burden every year. The analysis uses the actual IRS tax rate tables including annual adjustments for "indexing" the rate breakpoints and standard deductions. For high income taxpayers, itemized deductions and exemptions are phased out. Separate tax treatment is provided for dividends, capital gains, alternate minimum tax, the taxable portion of social security income and other areas where special treatment is required. The result is that, instead of showing a "guesstimate" of your annual taxes, the analysis provides a more accurate yearly indication of future potential taxes.
Net Worth Statement ASSETS Ordinary Interest Accounts: Allen Betty Joint / CP Trust/Oth. Total Checking accounts, cash $2,200 $2,200 Savings accounts 3,500 3,500 Money Market accounts 300,228 300,228 Certificate of Deposit 20,000 20,000 Gov't bonds, T Bills, Funds 12,250 12,250 Bonds, Corp bond funds 10,000 10,000 Muni bonds, funds 25,000 25,000 Annuities (fixed, variable) 30,000 30,000 Insurance Cash Value, Dividends 15,300 15,300 Mortgages, notes 93,000 93,000 Total $55,300 $15,750 $440,428 $0 $511,478 Equity (Investment) Accounts: Stocks 23,500 45,429 68,929 Mutual Funds 33,610 2,745 29,063 65,418 Limited partnerships 1,053 1,053 Other ventures, businesses 19,500 19,500 Collectables 5,000 5,000 Total $57,110 $2,745 $100,045 $0 $159,900 Retirement Accounts: 401(k) accounts 27,300 27,300 Profit Share, Keogh, 457, other 32,000 32,000 Roth accounts 2,000 2,000 4,000 Total $34,000 $29,300 $0 $0 $63,300 Personal Use Assets: Personal property 15,000 15,000 Jewelry, furs 2,500 2,500 Autos 12,000 9,600 21,600 Total $27,000 $2,500 $9,600 $0 $39,100 Real Estate Assets: Residence 307,000 307,000 Real Estate, REIT 5,750 5,750 Total $312,750 $0 $0 $0 $312,750 Total Assets $486,160 $50,295 $550,073 $1,086,528 LIABILITIES Allen Betty Joint / CP Trust/Other Total Residence mortgage ($72,000) ($72,000) Auto loans (4,300) (4,300) Credit Cards (1,640) (2,250) (3,890) Life insurance loans (2,500) (2,500) Total Liabilities ($4,140) ($2,250) ($76,300) ($82,690) NET WORTH $482,020 $48,045 $473,773 $1,003,838 Note: Assets held in a Revocable Trust are included in the grantors assets.
Cash Flow The bars in the above graph represent the amounts available from... Earned income (wages & self employment) Pension plans and Social Security Misc - (inheritances, sale of residence, investment account systematic withdrawal plans or interest/dividends taken in cash, scheduled retirement account distributions or required minimum distribution amounts.) The line illustrates the annual expenses including... Personal living expenses Life insurance and other premiums Mortgage and debt repayment Planned deposits to investments and retirement accounts Miscellaneous expense items Taxes If income from various sources exceeds expenses, the excess is reinvested in savings and investment accounts. If expenses are greater than income, it is assumed that funds required to meet such excess expenses will be drawn from savings and investment accounts to make up the shortage.
Cash Flow Illustration Ages Scheduled Cash flow sources and Required Minimum Distributions Earned Income Retire/Roth Accounts * Investment Accounts * Pension/ SocSec Other Income Total Sources Less Living Expense & Taxes Surplus (Shortage) 1 2 3 4 5 6 7 8 53 51 $101,000 $1,500 $102,500 ($127,245) ($24,745) 54 52 113,250 1,500 114,750 (131,767) (17,017) 55 53 115,568 1,500 117,068 (132,869) (15,801) 56 54 117,955 18,400 136,355 (142,618) (6,263) 57 55 36,000 30,320 66,320 (122,968) (56,648) 58 56 36,000 20,180 56,180 (128,698) (72,518) 59 57 126,041 126,041 (158,872) (32,831) 60 58 130,543 130,543 (163,351) (32,808) 61 59 135,270 57,005 192,275 (194,473) (2,198) 62 60 140,233 68,447 208,680 (179,006) 29,674 63 61 145,445 57,630 203,075 (190,616) 12,459 64 62 150,917 150,917 (163,322) (12,405) 65 63 35,000 34,225 370,099 439,324 (140,783) 298,541 66 64 35,000 34,909 5,000 74,909 (129,775) (54,865) 67 65 60,712 5,200 65,912 (122,506) (56,594) 68 66 61,986 14,408 76,394 (125,768) (49,374) 69 67 63,287 14,894 78,181 (116,743) (38,562) 70 68 64,616 15,397 80,013 (159,871) (79,858) 71 69 5,076 65,975 15,918 86,969 (123,089) (36,120) 72 70 5,340 67,362 16,457 89,159 (127,056) (37,897) 73 71 15,349 68,778 6,580 90,707 (134,468) (43,761) 74 72 16,245 70,226 6,843 93,314 (138,729) (45,415) 75 73 17,192 71,704 7,117 96,013 (143,154) (47,141) 76 74 18,193 73,214 91,407 (145,609) (54,202) 77 75 19,217 74,756 93,973 (153,294) (59,322) 78 76 20,332 76,332 96,664 (159,600) (62,936) 79 77 21,404 77,943 99,347 (166,162) (66,815) 80 78 22,598 79,587 102,185 (163,840) (61,656) 81 79 23,773 81,266 105,039 (148,146) (43,107) 82 80 25,001 82,983 107,984 (152,396) (44,412) 83 81 26,280 84,735 111,015 (156,788) (45,773) 84 82 27,613 86,527 114,140 (161,327) (47,188) 85 83 28,934 88,356 117,290 (166,074) (48,784) 86 84 30,299 90,225 120,524 (171,169) (50,645) 87 85 31,563 92,135 123,698 (176,604) (52,906) 88 86 32,849 94,087 126,936 (182,420) (55,484) 89 87 34,150 96,080 130,230 (188,429) (58,198) 90 88 35,361 98,117 133,478 (194,611) (61,133) 91 89 36,566 100,198 157,500 294,264 (192,904) 101,359 92 90 37,526 65,348 102,874 (170,774) (67,899) 93 91 * Scheduled distributions, interest or dividends taken in cash or amounts taken to meet the IRS minimum distribution requirements.
Asset Accounts Your assets are illustrated in this plan based on two major groups, Personal Accounts and Tax Deductible Retirement accounts. Within these groups, the assets are further divided as described below. Personal Accounts: Fully Taxable: These are savings and investments that earn interest or dividends which are fully taxable at ordinary income rates. Included in this category are savings accounts, certificates of deposit, money market funds and accounts, bonds, notes and mortgages, etc. Tax-Deferred: Some assets allow you to accumulate money without current taxation on interest or other returns. The most common are fixed or variable annuities issued by insurance companies. Any illustration of an annuity account is hypothetical, and does not represent any specific product or underlying investment accounts and is not intended to project or predict investment results. The variable nature of a variable annuity will affect not only the investment returns, but will also affect the cash value and death benefits of the annuity. The annuity could result in zero or negative return, depending on the performance of the underlying investments and the terms of the annuity contract. Tax-Free: Interest earned on certain bonds issued by federal, state or local municipalities are exempt from federal and in some cases state income tax. These are referred to as "tax exempt" securities and may be purchased individually or as muni bond investment trusts or mutual funds. Equity and Other: Assets which receive part or all of their return in the form of appreciation and qualify for special capital gains treatment on the profits would be included in this category. Such assets include: stocks, equity mutual funds, real estate, business interest, etc. Tax Deductible Retirement Accounts: This includes any account that is treated by the IRS as qualified for special tax-deferral or deduction. IRA 401(k) Keogh or SEP TSA SIMPLE 401(k) and SIMPLE IRA Profit Sharing Roth IRA accounts Roth 401(k) Individual Retirement Accounts. Corporate thrift or savings plans. Retirement plans for self employed individuals. Tax sheltered annuity plans for employees of 403(b) tax exempt organizations. Employer sponsored plans. Corporate plans for employee profit sharing. (Tax-free growth). Tax-free after-tax personal contributions, pre-tax company additions. These accounts generally allow for pre-tax contributions and tax deferred earnings. When funds are withdrawn from these accounts the entire amount is taxable at the ordinary tax rate. (Roth accounts use after tax contributions and tax free accumulation and withdrawal.) Not an Investment Offer: This is not an offer to sell or a solicitation of an offer to buy any security. Such offer would be accompanied by a prospectus or other offering materials. IMPORTANT: The projections or other information generated by Money Tree regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.
Account Summary Ages Taxable Equity Tax Tax Retirement accounts Roth IRAs Account & Other Free Deferred Allen Betty Allen Betty 4.35% 6.64% 5.70% 7.25% 5.50% 6.50% 3.38% 5.50% Begin. Year Account Totals 1 2 3 4 5 6 7 8 9 53 51 $428,928 $137,149 $25,000 $30,000 $32,000 $27,300 $2,000 $2,000 $684,378 54 52 422,246 149,497 26,425 32,174 35,605 33,153 11,507 11,642 722,249 55 53 423,185 162,695 27,931 34,505 39,480 39,546 21,434 21,915 770,691 56 54 425,410 176,799 29,523 37,006 43,643 46,520 31,799 32,856 823,557 57 55 437,498 191,871 31,205 39,688 48,112 54,119 42,620 44,507 889,620 58 56 398,523 207,973 32,983 42,564 52,908 62,390 53,916 56,909 908,167 59 57 341,606 225,177 34,863 45,649 58,052 71,384 65,708 70,109 912,548 60 58 322,846 243,556 36,850 48,957 63,566 81,155 78,016 84,154 959,100 61 59 303,294 263,188 38,950 52,506 69,474 91,762 90,862 99,095 1,009,131 62 60 314,233 284,157 41,170 56,311 75,801 103,266 104,267 114,986 1,094,192 63 61 333,975 318,858 49,638 66,529 82,573 115,734 111,655 125,217 1,204,178 64 62 351,050 348,758 55,037 73,928 89,819 129,237 119,427 136,146 1,303,401 65 63 353,615 375,512 58,174 79,286 97,570 143,851 134,203 154,485 1,396,696 66 64 430,127 525,051 123,073 146,766 102,935 159,657 138,730 173,979 1,800,317 67 65 392,657 560,716 130,088 157,406 108,595 176,742 143,410 194,697 1,864,310 68 66 351,787 597,926 137,503 168,817 114,566 188,229 148,248 205,403 1,912,478 69 67 316,533 637,606 145,340 181,055 120,866 200,462 153,249 216,698 1,971,808 70 68 290,815 679,919 153,624 194,180 127,512 213,490 158,419 228,614 2,046,573 71 69 221,698 725,040 162,380 208,257 134,524 227,365 163,763 241,185 2,084,211 72 70 194,357 773,155 171,635 223,355 136,715 242,142 169,288 254,448 2,165,094 73 71 164,007 824,463 181,418 239,547 138,756 257,880 174,999 268,440 2,249,509 74 72 126,334 879,176 191,758 256,913 140,625 264,614 180,903 283,202 2,323,524 75 73 85,328 937,520 202,688 275,538 142,298 271,162 187,006 298,776 2,400,316 76 74 40,773 999,736 214,241 295,513 143,750 277,475 193,315 315,206 2,480,009 77 75 1,052,158 226,452 316,937 144,953 283,497 199,837 332,540 2,556,374 78 76 1,060,484 239,359 339,914 145,911 289,167 206,579 350,827 2,632,240 79 77 1,065,615 253,002 364,556 146,563 294,419 213,549 370,120 2,707,824 80 78 1,067,065 267,423 390,986 146,914 299,246 220,754 390,474 2,782,861 81 79 1,073,960 282,666 419,331 146,935 303,507 228,202 411,948 2,866,549 82 80 1,100,542 298,777 449,732 146,596 307,197 235,901 434,603 2,973,347 83 81 1,127,535 315,807 482,336 145,865 310,237 243,860 458,504 3,084,144 84 82 1,154,908 333,807 517,304 144,708 312,543 252,088 483,719 3,199,077 85 83 1,182,631 352,833 554,808 143,090 314,025 260,593 510,321 3,318,301 86 84 1,210,540 372,944 595,030 141,043 314,585 269,386 538,386 3,441,914 87 85 1,238,370 394,201 638,169 138,540 314,120 278,475 567,995 3,569,870 88 86 1,265,704 416,670 684,435 135,555 312,668 287,871 599,232 3,702,135 89 87 1,292,179 440,420 734,056 132,062 310,142 297,584 632,187 3,838,630 90 88 1,317,598 465,523 787,274 128,037 306,453 307,625 666,955 3,979,464 91 89 1,341,661 492,057 844,350 123,559 301,509 318,005 703,635 4,124,776 92 90 25,945 1,456,966 546,240 931,763 118,620 295,218 328,735 742,332 4,445,818 93 91 1,510,159 577,375 999,315 113,215 287,724 339,827 783,158 4,610,773 Note: Rates shown above are for first year only. Refer to account reports for future year rates.
Income Tax - Current Year The following calculations give an idea of the amount of taxes you might pay based on the income and asset information provided. These amounts are approximations only and the actual tax amounts may be higher or lower than illustrated. INCOME: Salaries and wages Interest Dividends* Schedule C (self employment) Schedule D (net gain/loss) GROSS INCOME Adjustments: Retirement plan deposits - Betty Self Employment FICA ADJUSTED GROSS INCOME Gross $100,000 21,838 896 1,000 1,411 142 Taxable $100,000 18,239 896 1,000 1,411 $121,546 ($2,400) (71) $119,075 Itemized Deductions: Mortgage interest Charitable contributions Property taxes State taxes Misc Itemized deductions TAXABLE INCOME Gross $5,867 750 3,500 8,234 8,750 Allowed $5,867 750 3,500 8,234 6,368 Itemized deductions $24,719 or Standard deductions $12,200 Personal exemptions ( 4 ) TAX SUMMARY: Federal Income Tax $11,316 FICA (Social Security) & HI Tax 7,791 Other Taxes or (credits) (1,500) State Income Tax 8,234 TOTAL TAXES Your combined federal & state marginal tax bracket is 34.00 %. Your total taxes equal 21.70 % of your Adjusted Gross Income, and 32.81% of your Taxable income. *Dividend and Capital Gains taxed marginally at 15.00%. ($24,719) ($15,600) $78,756 $25,841
Tax Summary Ages Federal Income Tax Federal Income Tax Amounts Additional AMT Tax Federal Credits Early distr. & other tax Total Fed. Income Tax 1 2 3 4 5 6 7 8 9 State Tax Additional State Tax or (credits) FICA and HI Tax 53 51 $11,316 ($1,500) $9,816 $8,644 ($410) $7,791 $25,841 54 52 14,141 (900) 13,241 9,771 (410) 8,727 31,329 55 53 14,707 (800) 13,907 10,003 (410) 8,905 32,405 56 54 19,332 19,332 11,843 (660) 9,087 39,602 57 55 5,472 (1,000) 4,472 5,371 (660) 2,818 12,001 58 56 4,539 (1,000) 3,539 4,397 (495) 2,818 10,259 59 57 17,335 17,335 10,698 (495) 9,706 37,244 60 58 18,243 18,243 11,070 (495) 10,050 38,868 61 59 20,313 20,313 11,516 (330) 10,412 41,911 62 60 32,399 760 33,159 16,182 (330) 10,792 59,803 63 61 37,467 2,208 39,675 17,994 (330) 11,190 68,529 64 62 24,592 24,592 13,265 (330) 11,419 48,946 65 63 6,431 6,431 5,692 (330) 2,677 14,470 66 64 5,653 5,653 5,264 (330) 2,677 13,264 67 65 3,155 3,155 3,675 (330) 6,500 68 66 3,053 3,053 3,668 (330) 6,391 69 67 3,052 3,052 3,733 (330) 6,455 70 68 2,854 2,854 3,672 (330) 6,196 71 69 4,019 4,019 4,514 (330) 8,203 72 70 4,151 4,151 4,681 (330) 8,502 73 71 6,266 6,266 6,159 (330) 12,095 74 72 6,384 6,384 6,327 (330) 12,381 75 73 6,499 6,499 6,499 (330) 12,668 76 74 5,332 5,332 5,813 (330) 10,815 77 75 6,525 6,525 7,820 (330) 14,015 78 76 7,651 7,651 8,329 (330) 15,650 79 77 8,816 8,816 8,862 (330) 17,348 80 78 9,472 9,472 9,008 (330) 18,150 81 79 9,059 9,059 8,443 (330) 17,172 82 80 9,783 9,783 8,752 (330) 18,205 83 81 10,529 10,529 9,070 (330) 19,269 84 82 11,299 11,299 9,398 (330) 20,367 85 83 12,083 65 12,148 9,737 (330) 21,555 86 84 12,906 295 13,201 10,098 (330) 22,969 87 85 13,740 711 14,451 10,476 (330) 24,597 88 86 14,612 1,314 15,926 10,879 (330) 26,475 89 87 15,507 1,938 17,445 11,296 (330) 28,411 90 88 16,403 2,585 18,988 11,723 (330) 30,381 91 89 13,851 1,116 14,967 9,681 (330) 24,318 92 90 15,233 2,445 17,678 8,955 (165) 26,468 93 91 0 Total Taxes
Retirement Estimate As inflation increases the amount of income needed for your standard of living, there is the potential need to draw increasing amounts out of savings, investments and retirement accounts. The graph shows how long your capital might last. The objective is to assure that your capital is properly managed so that it will last at least until your life expectancy. If the capital is depleted before your need for income has ceased, then you will become dependent on your pensions, Social Security, relatives or public sources. If there is capital remaining when your need for income stops then the remaining capital is available for your heirs. The line allows you to visualize the annual expenses as compared to your capital accounts. If the bars dip below the "0" level on the graph, it indicates that you have consumed all your savings, investment, and retirement accounts, and your spending requirements have caused a "deficit" spending situation - a need for funds where none exists.
Retirement Capital Estimate Ages * Begin. Yr. Account Totals Annual Expenses Incl. Tax Earned Income Income and Capital Distributions ** Retirement Acct Distr. ** Investment Acct Distr. Pensions/ Soc Sec Other Inc. & St. Opt. Annual Surplus Ending Year Account Totals 1 2 3 4 5 6 7 8 53 51 $684,378 ($127,245) $101,000 $24,745 $1,500 $722,251 54 52 722,251 (131,767) 113,250 17,017 1,500 770,693 55 53 770,693 (132,869) 115,568 15,800 1,500 823,558 56 54 823,558 (142,618) 117,955 6,262 18,400 889,622 57 55 889,622 (122,968) 36,000 56,648 30,320 908,169 58 56 908,169 (128,698) 36,000 72,517 20,180 912,549 59 57 912,549 (158,872) 126,041 32,831 959,102 60 58 959,102 (163,351) 130,543 32,808 1,009,132 61 59 1,009,132 (194,473) 135,270 2,198 57,005 1,094,194 62 60 1,094,194 (179,006) 140,233 68,447 29,674 1,204,181 63 61 1,204,181 (190,616) 145,445 57,630 12,459 1,303,404 64 62 1,303,404 (163,322) 150,917 12,404 1,396,698 65 63 1,396,698 (140,783) 35,000 34,225 370,099 298,541 1,800,320 66 64 1,800,320 (129,775) 35,000 54,865 34,909 5,000 1,864,313 67 65 1,864,313 (122,506) 56,594 60,712 5,200 1,912,481 68 66 1,912,481 (125,768) 49,374 61,986 14,408 1,971,811 69 67 1,971,811 (116,743) 38,562 63,287 14,894 2,046,576 70 68 2,046,576 (159,871) 79,857 64,616 15,397 2,084,214 71 69 2,084,214 (123,089) 5,076 36,119 65,975 15,918 2,165,097 72 70 2,165,097 (127,056) 5,340 37,897 67,362 16,457 2,249,511 73 71 2,249,511 (134,468) 15,349 43,761 68,778 6,580 2,323,526 74 72 2,323,526 (138,729) 16,245 45,415 70,226 6,843 2,400,319 75 73 2,400,319 (143,154) 17,192 47,140 71,704 7,117 2,480,011 76 74 2,480,011 (145,609) 18,193 54,202 73,214 2,556,377 77 75 2,556,377 (153,294) 19,217 59,321 74,756 2,632,244 78 76 2,632,244 (159,600) 20,332 62,936 76,332 2,707,826 79 77 2,707,826 (166,162) 21,404 66,815 77,943 2,782,864 80 78 2,782,864 (163,840) 22,598 61,655 79,587 2,866,552 81 79 2,866,552 (148,146) 23,773 43,107 81,266 2,973,350 82 80 2,973,350 (152,396) 25,001 44,412 82,983 3,084,147 83 81 3,084,147 (156,788) 26,280 45,772 84,735 3,199,081 84 82 3,199,081 (161,327) 27,613 47,187 86,527 3,318,304 85 83 3,318,304 (166,074) 28,934 48,783 88,356 3,441,917 86 84 3,441,917 (171,169) 30,299 50,645 90,225 3,569,873 87 85 3,569,873 (176,604) 31,563 52,906 92,135 3,702,138 88 86 3,702,138 (182,420) 32,849 55,483 94,087 3,838,633 89 87 3,838,633 (188,429) 34,150 58,198 96,080 3,979,467 90 88 3,979,467 (194,611) 35,361 61,132 98,117 4,124,778 91 89 1 4,124,778 (192,904) 36,566 100,198 157,500 101,359 4,445,821 92 90 2 4,445,821 (170,774) 37,526 67,899 65,348 4,610,776 93 91 4,610,776 4,610,773 *Note - 1 = Allen's life expectancy age. 2 = Betty's life expectancy age. **Investment and Retirement distributions include withdrawals from account totals to satisfy "Income needed" shortages from Cash Flow report.