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2. What Everyone Should Know About Retiring [Presenter Name] [Presenter Title] 0189638

3. Created over 75 years ago, Social Security was originally designed to help senior citizens avoid poverty during the Great Depression. It was created as a self-financing program that would collect payroll taxes from workers which would immediately be paid out in benefits to retirees. Millions of Americans depend on Social Security as their primary source of retirement income. A Little History

4. Major Benefits of Social Security Lifetime Income: Provides what every retiree wants: an income that never runs out. Predictable, Steady Income: After qualifying, the income you receive is set and does not change. Inflation-adjusted Income: Every year, Social Security benefits are increased for inflation purposes. These cost-of-living (COLAs) are a big help to seniors. Survivor Benefits: Even after a spouse dies, their benefits are paid to surviving spouses and dependents.

5. When you turn 62, your exact amount is calculated. Annual earnings are indexed to account for wage inflation. After every year’s earnings are indexed, the government tallies your highest 35 years of earnings. If you worked less than 35 years, any missing years are counted as zeroes. Every year of earnings are totaled and divided by 35 which gives you your “indexed monthly earnings”; also known as AIME. How Are Benefits Calculated?

6. Calculating Benefits Cont’d Every year, the maximum wages subject to Social Security Tax has increased. The government takes your inflation-adjusted indexed monthly number (AIME) and applies a 3-part formula to arrive at your primary insurance amount or PIA calculation. This PIA is your guaranteed monthly benefit. There are tools available online to determine PIA at the government’s Social Security web site.

7. Full retirement age for people born between 1943 and 1954 is 66 – the age you can begin receiving your full, unreduced primary insurance amount (PIA) Early eligibility begins at 62 but reduces benefits Timing is one of the most crucial aspects of Social Security planning “The bread winner will delay” is an important concept that means the longer the primary earner (individual or married) delays, the larger the monthly income will be but it depends on every client’s situation. Receiving Benefits

8. You become eligible for Social Security by working in a Social Security-covered job for at least 10 years To be more precise, you need 40 credits You can earn up to 4 credits per year by earning a certain minimum dollar amount If you earn 4 credits every year for 10 years, you accumulate the 40 credits needed Social Security Eligibility

9. Benefits can increase approximately 8% “guaranteed” for each year you wait. Timing depends on each client, each situation and the client’s retirement plans. If one is not working and has limited funds, they may have to take Social Security. Everyone’s situation is different. First, it is important to understand the impact of what Social Security terms Full Retirement Age (FRA). Receiving Benefits Cont’d

10. FRA is based on your birth year, and can gradually move from age 65 to 67. Full Retirement Age

11. If you apply when you first become eligible at 62, your benefit will equal 75% of your PIA. • So if “Boomer Bill” has a calculated PIA of $2,466 for example, and applies in 2012 when he turns 62, his monthly benefit would be 75% of his PIA or approximately $1,850.* • This is the amount he would receive for the rest of his life, only increased by COLAs annually. *To understand how to calculate PIA, visit www.ssa.gov Applying Early for Benefits

12. At age 66, you obtain your full retirement age. Now you can start receiving your full, unreduced PIA. However, if you delay the onset of benefits past age 66, you will earn what are called delayed actuarial credits. Delayed credits are the first step to increasing your income in order to maximize retirement planning. For each year you delay the start of your benefits, your benefit will increase by 8% per year up to age 70. So if Boomer Bill waits until age 70 to apply, his $2,466 PIA will increase by 32% to $3,255 (excluding COLAs) The Power of Timing: Applying After FRA

13. This is the key area for retirement planning Leveraging the delayed credit system allows you to optimize spousal benefits through two key “switch strategies” By using these two strategies, pre-retirees can maximize benefits and then redirect these additional funds into a tax-deferred annuity as one valuable option. Delayed Credits and Spousal Benefits

14. Depending on your earnings, you are responsible for paying income taxes on a portion of their benefits. The IRS adds half of an individual's Social Security benefits plus all other income (such as pensions, CD/bond interest or capital gains) to calculate the income taxes owed In fact, up to 85% of your benefits could be taxed… Social Security Taxation

15. Social Security Taxation

16. Other solutions like bank CDs, savings accounts and money market accounts are safe and earn interest – no doubt. However, you would have to pay taxes on your interest earnings yearly. Annuity & Life Insurance interest earnings are tax-deferred until withdrawn. Yes, But What of Other Solutions

17. It’s important to know that deferred annuity & life insurance interest is not included in the year it is earned. It is only included in the year it is withdrawn. By repositioning your assets into annuities & life insurance you can defer the interest earnings until they choose to withdraw them, you could save thousands and thousands of dollars. You’ll be able to defer income taxes on your interest earnings and reduce or eliminate income taxes on your Social Security benefits – a double win for you. Avoid the Social Security Tax Trap

18. What is Long Term Care?

19. Long-term care covers a wide range of services but generally falls into two categories: skilled care and personal care. • Skilled care is provided when recovering from an illness or injury. • Personal care helps maintain the activities and functions of daily life. What is Long-Term Care?

20. Just like your automobile, homeowners, or health insurance, long-term care insurance is another way to help guard against risk. It allows you to help protect your assets and maintain control by providing you with long-term care alternatives. For many, it may be an economical way to pay for long-term care What is Long-Term Care Insurance?

21. $19 per hour for homemaker services $21 per hour for home healthcare $67 per day for services in adult day healthcare center $3,293 per month for care in an assisted living facility (one-bedroom unit) $6,235 per month for a semiprivate room and $6,965 for a private room in a nursing home Medical and Long-Term Care Costs The average costs of long-term care: From 2015 to 2121, healthcare spending is projected to grow at an average annual rate of 6.2% Source: http://longtermcare.gov/costs-how-to-pay/costs-of-care/ Society for Financial Awareness

22. Long-term care insurance is designed to help pay for services for those who need help with activities of daily living (ADL’s)-those everyday activities of caring for yourself such as getting dressed, eating, or moving from a bed to a chair. Someone with a cognitive impairment (such as Alzheimer’s disease or senile dementia) may need constant supervision and reminders to do simple daily tasks. How Does Long-Term Care Insurance Work?

23. Over 20 years ago, the first long-term care insurance policies only covered nursing home care for individuals. Today, there are many long-term care alternatives, and insurance policies emphasize care in the home and support of caregivers. Some long-term care policies even provide “Cash Benefits” which pay regardless of what type of services are received. What Services Are Covered?

24. Covered Services…..continued Some policies cover Home Care Adult Day Care Home Health Care Homemaker Personal Care Institutional Care • Nursing Home • Adult Foster Home • Assisted Living Services Facility • Residential Health Care Facility • Bed Reservation • Respite Care • Hospice Care

25. Many people do not know the actual cost of long-term care insurance and mistakenly believe it is unaffordable. Although actual premiums may vary, the cost of NOT having long-term care insurance could be much higher. Many of us underestimate the costs of long-term care services and could end up depleting our retirement savings and income. What Does Long-Term Care Insurance Cost?

26. Step 1 – Understand the Need

27. Step 2 – Consider the Options You can…

28. Medicare provides limited help: • Covers Skilled Care Only • Pays less than 25% of cost* *Congressional Budget Office, Financing Long-Term Care for the elderly, Washington, DC, April 2004 • http://youtu.be/1s6oyFkYOA8 Medicare Pays the First 20 days

29. Step 3 – Plan for the Costs

30. Making an informed decisionhttp://kiplinger.com/article/insurance/T036-C000-S002-long-term-care-rate-hikes-loom.html

31. You Pay For WHAT? Too many times families pay for a long term care policy only to drop the plan before it starts paying benefits!

32. This really isn’t a bad option from one point of view But from a Financial Point of view it is HORRIBLE! Die and Never use the Benefits

33. Might as well throw your money down the toilet.

34. First of all, the contract would have to guarantee the rate to NEVER CHANGE! No unexpected rate increases! What makes it worth it?

35. A Guarantee that I will at least get my money back if I die and don’t need Long Term Care. Secondly

36. Life Insurance with a Chronic Illness rider. A Guaranteed Universal Life Insurance policy Premiums are level and guaranteed never to increase. If you die, the death benefit pays to your heirs. If you need long term care, use your death benefit to pay these costs. (Riders differ by company) Consider this not that…

37. Unable to perform at least two Activities of Daily Living (ADLs)2 or Severe Cognitive Impairment3 2Activities of Daily Living include bathing, continence, dressing, eating, toileting or transferring. 3Severe Cognitive Impairment means the insured requires substantial supervision by another person to protect him or herself from threats to health and safety due to a severe cognitive impairment. Definition…

38. Retirement It’s what you keep that counts!

39. Trying to grow your money in the Stock Market without a Safety Net is Risky! • The market has averaged a downturn once every four years! • In the past 56 years (1954 – 2012) it has had 14 down cycles. • From 2000 to 2013 the S&P has had NO GROWTH! Over 6 years to recover Over 7 years to recover

40. The Risk Trap Question Does your current retirement strategy guarantee you will Neverlose money when the stock market goes down?

41. History of Stock Market Returns The S&P 500 AverageReturns

42. If you had an account that experienced: • -50% Return In Year 1 • +50% Return In Year 2 What would be the Averagereturn?

43. TheAveragereturn would be… 0%

44. What is the actual (REAL) Return? -25% • Beginning of Year 1 = $1,000 (-50% Return) • End of Year 1 = $500 (+50% Return) • End of Year 2 = $750

45. History of the S&P 500 Returns Average vs. Real Which return do you think most mutual fund companies use to advertise to the public?

46. Moneychimp.com Here is a website that you enter any range of years and see the average vs. the actual return. www.moneychimp.com

47. Why the Difference? Even one year of negative return will cause these two averages to differ. What’s the only way these two averages will ever be equal? NO NEGATIVE YEARS

48. Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Initial Investment $100,000 Annual Change in S&P 500 Rate of Return -11.98% -22.10% 28.68% 10.88% 4.91% 15.79% 5.49% -37.00% 26.46% 15.06% 2.11% 16.00% Ending Balance $88,110 $68,640 $88,320 $97,930 $102,740 $118,960 $125,490 $79,060 $99,980 $115,040 $117,470 $136,260 Total Rate of Return 3.63%

49. Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Initial Investment $100,000 Annual Change in S&P 500 with Growth Cap & Growth Floor Ending Balance $100,000$100,000 $113,500 $125,850 $132,030 $149,850 $170,080 $170,080 $193,040 $219,100 $223,720 $253,930 Rate of Return 0.00% 0.00% 13.50% 10.88% 4.91% 13.50% 5.49% 0.00% 13.50% 13.50% 2.11% 13.50% Total Rate of Return 7.71% Difference 86%

50. 140K 120K 100K 1 2 3 4 5 6 S & P 500 Index Credits Hypothetical Example – “demonstrates” Annual Reset Design only. The advantages of “No” Market Type Loss and an Annual Reset Design It’s not what you make – but what you Keep!