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April 2012 Newsletter

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  • 1. Company or DBA Name Street Address City, State, Zip Phone number Fax number Rep Name Email address APRIL 2012 Compliments of Matthew Cunningham “Judge no one happy until his life is over.” - Ancient Roman proverb Tax Deferral and the Sword of Damocles At first glance, especially from a distance, some arrangements may seem quite attractive. But when a fuller understanding is acquired, the same situation is not viewed so favorably. This is the theme embodied in The Sword of Damocles, a fable commonly recounted in ancient Greek and Roman literature. According to the story, Dionysius II was a fourth century B.C. ruler over Syracuse, a Greek city in what is now southern Italy. As befit a ruler in those days, Dionysius lived a luxurious and comfortable life, and even kept a group of adsentatores, or court flatterers, to amuse him and inflate his ego. One of the members of Dionysius’ court was Damocles. In his role as a court flatterer, Damocles was lavish and frequent in his praise of Dionysius’ wealth and power. One day, after hearing another recitation of hisRichard Westall’s Sword of Damocles, 1812 greatness, Dionysius turned to Damocles and said, “If you think Im so fortunate, how would you like to try out my life?” At first incredulous, a stunned Damocles agreed tobe “king for a day.” The next day, Damocles was seated on the king’s throne, enjoying a fine feast,wonderful entertainment, and the adoring attention of the court. But looking up, Damoclesnoticed a sharp sword hanging by a single horse hair, with its point aimed directly down on In This Issue…the throne. Startled, Damocles slid off the throne and asked Dionysius for an explanation. “This is the life of a ruler,” explained Dionysius. “I have great wealth and privilege, butevery day there is always the threat that someone or something may cut the slim thread by TAX DEFERRALwhich my prosperity hangs. One of my own advisors might try to kill me, or spread lies AND THE SWORDand turn people against me. A neighboring kingdom could send an army to seize my OF DAMOCLESthrone. Or I might make an unwise decision that will bring my downfall. If you want the Page 1life of a king, you must also accept these risks.” Shaken by the reality of Dionysius’ life, Damocles quickly ended his special day, and RETIREMENTgladly returned to his much safer position as a member of the court. The Roman poet INCOME DISTRIBUTIONCicero, in retelling this fable concludes, “Does not Dionysius seem to have made it METHODSsufficiently clear that there can be nothing happy for the person over whom some fear Page 3always looms?” TAKING TURBULENCEThe Sword of Damocles in Qualified Retirement Plans OUT OF THE Over the years, the phrase “the sword of Damocles” has come to be used to indicate any LONG-TERM CAREsituation where there is a sense of foreboding because of a potential tragedy hanging INSURANCE ISSUEover one’s head. Almost four decades after being established in the tax code, a variety Page 5of circumstances have come together to make the taxes American retirement accountowners must pay when they begin distributions a financial sword of Damocles. LOW NUMBERS = During the years when Baby Boomers were working and saving for retirement, it OPPORTUNITY?seemed like the format of pre-tax deposits and tax-deferred growth in qualified retirement Page 6plans was an ideal arrangement. Not only did participation lower one’s current income tax,but the consensus was that retirees would be in a lower tax bracket after they stopped © Copyright 2012 www.bulfinchgroup.com Page 1
  • 2. working. In this paradigm, it made sense to push any tax likely be more retirees paying a higher percentage of tax toobligations to the future. But now, as many Baby Boomers withdraw their money compared to the break they received tocontemplate retirement, their looming taxes due from their deposit it.retirement accounts may cast an ominous shadow over their Furthermore, undistributed funds in qualified retirementlong-term financial stability. plans represent a significant source of future tax revenue for As a financial strategy, the value of tax-deferral has always governments – the money has already been earned, but hasn’tbeen dependent on whether the tax break received on the yet been taxed. Given the size of the current federal deficit,deposits will exceed the tax cost to be paid in the future. For and the unwillingness to impose higher taxes on a largethe past 40 years or so, conventional thinking was that income segment of the populace, there is a chance that the governmenttaxes in retirement would most likely be lower than income might attempt to collect some tax from these retirementtaxes during one’s working years. This assumption was based accounts “early,” i.e., before the individual has either retiredon the premise that the typical retiree would be fortunate to or reached the Required Minimum Distribution age of 70 ½,accumulate enough assets to provide an annual retirement arguing these accounts are “taxable income in waiting.” (Inincome equal to 70% of their pre-retirement earnings. A 30% the 1990s, the Clinton administration floated a proposal for adecrease in income would result in less income tax, and often one-time tax on all undistributed qualified retirement accountdrop the retiree into a lower marginal tax bracket. balances as part of a budget-balancing effort, but the idea was Several factors – historic, economic, demographic and never formally tendered or put to a legislative vote.) Anotherpolitical – may prove these assumptions in error. First, during possibility mentioned by policy makers is treating retirementthe past four decades, marginal tax rates have actually distributions as a different form of income, and imposing adropped, by some measures substantially. Data collected by different/higher tax bracket for it.the non-profit Tax Foundationshows that during the 1970s and What About a Roth IRA?early 80s, there were 25 different If tax increases occur, more The realization that tax rates haveincome tax rates, ranging from a retirees will likely be paying a higher been low and may be trending higherlow of 14% and a top marginal tax percentage of tax to withdraw their has prompted some qualifiedbracket of 70%. Even in 1982, money compared to the break they retirement account holders towhen tax rates were “simplified,” received to deposit it. consider alternative approaches, suchthere were 12 rates, running from as redirecting new savings to Roth11 to 50%. IRA or, if available, Roth 401(k) Then simplification and reduction became drastic. From accounts. With Roth accounts, the deposit does not receive a1988 to 1990, there were only two rates, 15 and 28 percent. tax deduction, but any earnings accumulate tax-free. More This represented a low point in recent income taxation, but important, under most circumstances, a retiree incurs nothe increases over the past 20 years have been modest. In income tax when a distribution is made.1991, a new top rate of 31% was added. In 1993, the top Consider the following comparison: One individual with amarginal income tax rate was bumped to 39.6%, which 15% marginal income tax bracket makes annual pre-taxremained until 2001, when the top rate was lowered slightly. deposits of $1,000 into an IRA, 401(k) or similar qualifiedSince 2003, the income tax table has featured six rates, retirement account for 20 years. Another individual, also in theranging from 10 to 35%. 15% bracket, makes after-tax deposits of $850 to a Roth Here’s a generalization that can be derived from this account, reflecting the 15% of his $1,000 that is paid in taxes.information: People who participated in qualified retirement Both accounts are invested in the same financial vehicle,plans and made pre-tax deposits in the 1970s and 1980s which generates a 6% annual return.received potentially greater tax benefits than those who made At the end of 20 years, assume the IRA account holder willdeposits in the 1990s and 2000s, simply because marginal tax liquidate this account for retirement, paying income tax at arates were higher in the 70s and 80s. However, given the 15% rate. The Roth account holder will incur no tax upontypical progression of individual careers and earning potential, liquidation. Look at the numbers: (SEE TABLES, next page).many Baby Boomers made the bulk of their retirement If all the variables involved in a retirement account remainaccount deposits during the later years when tax rates (and the static for both individuals, the results of saving for retirementtax deduction for deposits) would have been lower. in a Roth account are identical to saving in a retirement plan that allows pre-tax contributions. But since there is almost noWill Future Taxation Be Higher or Lower chance that tax rates will remain the same for 20 years,for Retirees? projecting future tax rates becomes a critical factor of any tax Place this historical background on tax rates against deferral decision. Higher taxes today? Maybe a 401(k) is best.today’s economic, demographic and political circumstances. A Higher taxes in retirement? Perhaps a Roth account is the wayfitfully recovering economy and a massive influx of Baby to go.Boomer retirees is wreaking havoc on the math of maintaining There is another way to evaluate this tax projectiongovernment entitlement programs like Social Security and dilemma: Pre- and post-tax retirement savings is the differenceMedicare. Despite an expressed reluctance to further burden between a known cost today and an unknown cost in theAmerican citizens, many legislators and public policy makers future. If the choice is a Roth account, the tax is paid up-front,have spoken of the necessity to raise taxes, specifically by and while the current tax cost may be considered high, it isincreasing the marginal tax rates at the upper end of the tax paid; the account holder knows there is not a “sword oftable. If these increases occur, one of the ripple effects will Damocles” in the form of taxation hanging over future © Copyright 2012 www.bulfinchgroup.com Page 2
  • 3. IRA - 6% ANNUAL RETURN ROTH - 6% ANNUAL RETURN used to make house payments, the tax cost might be offset by the interest ANNUAL INVESTMENT ENDING ANNUAL INVESTMENT ENDING deduction on the mortgage. Of YR DEPOSIT EARNINGS BALANCE DEPOSIT EARNINGS BALANCE course, the effectiveness of many of 1 $1,000.00 $60.00 $1,060.00 $850.00 $51.00 $901.00 these strategies may also depend on 2 $1,000.00 $123.60 $2,183.60 $850.00 $105.06 $1,856.06 current tax regulations. Which leads $850.00 $162.36 $2,868.42 back to the original thought… 3 $1,000.00 $191.02 $3,374.62 Tax-deferral, while attractive in 4 $1,000.00 $262.48 $4,637.09 $850.00 $223.11 $3,941.53 the present, creates a future liability 5 $1,000.00 $338.23 $5,975.32 $850.00 $287.49 $5,079.02 that hangs over one’s finances. How 6 $1,000.00 $418.52 $7,393.84 $850.00 $355.74 $6,284.76 great is this future liability? No one 7 $1,000.00 $503.63 $8,897.47 $850.00 $428.09 $7,562.85 knows until it has to be paid. When it 8 $1,000.00 $593.85 $10,491.32 $850.00 $504.77 $8,917.62 comes to retirement plans, the ancient 9 $1,000.00 $689.48 $12,180.79 $850.00 $586.06 $10,353.68 Roman proverb might be 10 $1,000.00 $790.85 $13,971.64 $850.00 $672.22 $11,875.90 appropriately modified to state, 11 $1,000.00 $898.30 $15,869.94 $850.00 $763.55 $13,489.45 “Judge no plan happy until its life is $850.00 $860.37 $15,199.82 over.” 12 $1,000.00 $1,012.20 $17,882.14 13 $1,000.00 $1,132.93 $20,015.07 $850.00 $962.99 $17,012.81 IS RETIREMENT TAXATION 14 $1,000.00 $1,260.90 $22,275.97 $850.00 $1,071.77 $18,934.57 A “SWORD OF DAMOCLES” IN 15 $1,000.00 $1,396.56 $24,672.53 $850.00 $1,187.07 $20,971.65 YOUR FINANCIAL PROGRAM? 16 $1,000.00 $1,540.35 $27,212.88 $850.00 $1,309.30 $23,130.95 17 $1,000.00 $1,692.77 $29,905.65 $850.00 $1,438.86 $25,419.80 EVEN IF YOUR RETIREMENT IS 18 $1,000.00 $1,854.34 $32,759.99 $850.00 $1,576.19 $27,845.99 A WAYS OFF, NOW MIGHT BE $850.00 $1,721.76 $30,417.75 THE TIME TO RETHINK YOUR 19 $1,000.00 $2,025.60 $35,785.59 $850.00 $1,876.07 $33,143.82 POSITIONS, AND PERHAPS 20 $1,000.00 $2,207.14 $38,992.73 INCREASE THE FINANCIAL 15.00% TAX DUE $5,848.91 (NO TAX 0) CERTAINTY OF YOUR PLANS. ______________________________ Net Proceeds $33,143.82 Net Proceeds $33,143.82 _____________________________distributions. The certainty of no future taxation can be asignificant planning factor. The chance to “lock down” the tax cost in retirement RETIREMENTaccounts is also a driving force behind Roth conversions. INCOMECurrent tax law allows individuals to reclassify their pre-taxretirement accounts as Roth accounts, as long as tax is paid at DISTRIBUTIONthe time of the change. This option gives the individual an METHODS:opportunity to select a year when current income may belower, hopefully minimizing the tax cost of conversion. At the When it absolutely,same time, Roth conversions add tax dollars to the positively has to last your entire lifetimegovernment treasury that normally wouldn’t have been paiduntil retirement. “Will your retirement income last as long as you do?” – 2011 TIAA-CREF bulletinGetting Out From Under the Sword of “Retirement: Make your savings last as long as youFuture Taxes do” – USA Today, December 12, 2011 In the context of tax certainty, there may be several factorswhich favor the Roth approach, but there are other “Make your nest egg last as long as you do” –considerations. First, one’s eligibility for making contributions Financial Finesse, October 12, 2011to a Roth account is dependent on adjusted gross income – themore you make, the more likely you would be disqualified What is this retirement voodoo that “lasts as long as youfrom using a Roth account. Annual contribution limits are also do?”lower for Roth accounts in comparison with many pre-tax Retirement planning is a relatively new financial activity,qualified retirement plans. Matching contributions offered by one that has really only developed within the past two or threean employer for deposits to the company’s 401(k) plan might generations. The first generation (those born around thealso impact your decision. And as individuals get closer to beginning of the 20th century) experienced longer life spans,retirement age, the shorter time-frame makes for better the first iterations of government-sponsored plans like Socialprojections of both the size of their retirement accounts and Security and the rise of industrial employer pensions. The nextwhat level of taxation will be applied. generation (born in the 1920s through the onset of World War Additionally, as part of a coordinated larger plan, there II) retired in the heyday of generous Social Security andmay be other ways to reduce the looming tax burden of Medicare benefits, along with stable pensions and theretirement plans. For example, if retirement distributions were © Copyright 2012 www.bulfinchgroup.com Page 3
  • 4. opportunity to supplement these retirement sources with devising a drawdown plan: A projection of how longprivately accumulated funds. payments will be made, and what rate of return can be Presently, the Baby Boomers (those born between 1946- expected from the invested principal. While there are many1964) are approaching retirement age, and finding that the methods of arriving at a drawdown number, the following areretirement income resources of previous generations are prevalent approaches today:significantly altered. Because of changing demographics (a The Four Percent Drawdown Rule. In the October 1994much larger cohort of retirees in proportion to workers), the issue of the Journal of Financial Planning, William P.actuarial premises of Social Security are unsustainable. For Bengen, a certified financial planner and author, publishedsimilar reasons, company pensions are also fading from the research on historical market behavior and concluded thefinancial landscape. Now, the primary burden for providing following: A person who placed his retirement accumulationretirement income rests squarely on individual savings. in a hypothetical stock and bond portfolio, and started by The following is an overview of several prominent withdrawing 4% of the balance, then increased this withdrawalretirement income strategies, emphasizing the philosophies by the current inflation rate each year, could expect hisbehind them, and highlighting their perceived strengths and accumulated nest egg to “easily last over 30 years” (per aweaknesses. While each strategy has some unique features, all March 5, 2012, Wall Street Journal article), even withapproaches are attempts to address the main issue in fluctuations in principal. For a retirement starting at the agesretirement: Sufficient income that lasts as long as you do. of 65-70, this retirement income rule-of-thumb could likely last as long as a person does. STRATEGY #1: Live on Earnings, Conserve Over the past 17 years, Bengen’s projection has held up,Principal. This income distribution and he told the WSJ he believes his rule still holds, even withmethod is easy to understand: Your some severe market fluctuations. Bengen has a few cautions:retirement income is the profit – income, A long stretch of low returns and inflation could beinterest, dividends, capital gains – that problematic, especially for those just starting retirement.you receive from your retirement assets. Go to Monte Carlo. Bengen’s 4-percent-drawdownPerhaps the oldest version of retirement approach is a very broad projection of returns and longevity.income distribution, this simple approach For a deeper analysis, retirees may want a Monte Carlohas several positive features. First, by assessment of their retirement income plan. This approach,never touching the principal, you are named for the Monaco resort town renowned for its casinos,assured the money will never run out. was first used in the 1940s by scientists working on the atomicSecond, conserving principal provides an bomb. A Monte Carlo program analyzes a range of possibleinheritance for heirs, another important end-of-life financial outcomes and determines their probability of occurring. Itissue. This approach can provide a high level of certainty, both shows the extreme possibilities—the outcomes of going forto retirees and heirs. broke and for the most conservative decision—along with all But for many retirees, the principal required to generate a possible consequences for middle-of-the-road decisions.sufficient income may be substantial. If the principal earns 5 The strongest benefit of a Monte Carlo analysis is itpercent annually, a $100,000/yr. retirement income requires provides a format for concisely comparing what might be$2 million in principal. Conserving principal also means the considered apples and oranges – different time frames,greater portion of one’s wealth will not be enjoyed by the different incomes, different investment risk levels. Retireesowner during his/her lifetime; $2 million must be conserved to can weigh their financial priorities, such as security,continue providing $100,000 each year. And remember: inheritance, income, etc.Anytime principal is diminished, income will also be Most financial service companies have proprietarynegatively affected. retirement income programs that incorporate Monte Carlo STRATEGY #2: Devise a Drawdown Plan. technology. Like any other computer-driven analysis, theRecognizing that retirees will not live forever, some financial value of the Monte Carlo method is dependent on the accuracyexperts recommend a strategy that systematically distributes of the data used in analysis, and it must be noted that evenboth earnings and principal. This approach, frequently called a events with the highest of probabilities are not guarantees.“drawdown” or “spend down,” delivers a significantly larger STRATEGY #3: Annuitize. The simplest way toannual income in comparison to a strategy that conserves establish a secure retirement income is to pay someone else toprincipal. assume responsibility for investment risk and the length of Using the $2 million accumulation earning 5 percent from payments. Annuities are contractual agreements fromthe previous example, a retiree could receive $125,000 in insurance companies that promise to deliver an income thatannual income for 29 years. That’s a 25 percent increase in will last as long as you want – even as long as you live.retirement income from the same accumulation. Selecting a One prominent advantage of an annuity is the lifetimefixed drawdown amount also adds certainty to the retirement income feature. Regardless of what happens to the economy,budget, which helps other retirement planning. or how long one lives, a lifetime annuity is a contractual But there is a potential problem: About the fourth month of promise to continue delivering a regular income. Thisthe 30th year, the money runs out. This means your retirement certainty not only stabilizes one’s finances, it also eliminatesincome may not last as long as you do. And even if it does, a investment risk. Going back to the 1960s, economists havesuccessful drawdown leaves no principal to pass on to heirs. produced studies asserting that annuitizing is the most These challenges highlight two critical elements in efficient strategy for delivering retirement income. And unlike © Copyright 2012 www.bulfinchgroup.com Page 4
  • 5. other retirement income strategies, the longer one lives, the retirement. If anything, the demand for long-term care hasbetter the return. increased. But based on a range of comments from insurance However, the greatest obstacle for most prospective industry observers, insurance companies are rethinking how toannuity purchasers, especially when considering a lifetime package and price long-term care coverage.income option, is the complete surrender of their principal. In Long-term care is a relatively new insurance product (theexchange for assuming all the risk of providing a retirement first widely-marketed policies were issued in the 1980s), and aincome, the insurance company takes full control of the combination of economic, medical and consumer behaviorinvested principal. Consider this example: assumptions have diverged from companies’ initial actuarial Using rates quoted in March 2012, a 65-year-old male projections.retiree with a $2 million nest egg could secure a $139,000 In order to maintain adequate reserves to pay claims,annual annuity income for life. If a retiree lived to 100, his $2 insurance companies are required to invest a significantmillion investment would provide almost $4.9 million in portion of their assets in conservative, safe investments. In theincome, delivering an annual rate of return of better than 6.6 current economy, these safe investments have been deliveringpercent. historically low yields. On the other hand, if the retiree dies in an automobile According to a March 7, 2012, Bloomberg News article,crash two months after establishing the annuity, the insurance the low returns exacerbate another issue: The costs andcompany does not refund the unused principal (unless the circumstances of long-term care are different than theretiree included a return-of-principal provision in the annuity, projections of 20 years ago:which would decrease the monthly income payments). Not only did insurers not predict thatA Blended Approach Americans would be living longer when they Each of the retirement income strategies mentioned above began writing long-term care policies in thehas strengths and weaknesses, and each financial household 1980s, they also failed to project the cost andhas unique retirement issues. It is impossible to make generic scale of care around disabling maladies suchrecommendations that favor one income approach over as dementia. That in turn led to policies beinganother. In reality, many retirees select a combination of these severely underpriced for years, insurancestrategies to address their income needs. With some competent advisers say.assistance from your team of financial professionals, theseapproaches give you options that can optimize both retirement Most long-term care insurance policies include a provisionincome and financial certainty. that premiums may be increased to meet future long-term care claims. Typically, this provision applies only to policies thatHAVE YOU DEVELOPED A COMPREHENSIVE have been in force for a specified number of years, usually 5RETIREMENT INCOME PLAN? to 10 years. In the recent past, some of the premium increases have been substantial (around 20 percent).WE HAVE ACCESS TO THE PRODUCTS AND One of the possible responses to increased premiums thatPROCESS TO HELP MAXIMIZE YOUR actuaries factor into their pricing models is that someRETIREMENT. policyholders will drop the coverage. But a high percentage of long-term care policyholders have maintained coverage in________________________________________________________ spite of premium increases. Why? As Malcolm Cheung, vice president of long-term care for Prudential told Bloomberg, “People value the coverage and protection.” Cheung’s TAKING TURBULENCE comments reinforce the conclusion that long-term care is a OUT OF THE significant financial challenge and the insurance is valuable; having made the investment to obtain coverage, most LONG-TERM CARE policyholders do not want to forfeit it. INSURANCE ISSUE For some insurance companies, these invalid assumptions about the economy, medical history and customer behavior When Prudential Financial have prompted them to step away, and take a breather, and announced on March 7, 2012 that the reassess the way they want to do business. And it may be company would stop taking awhile before some clarity emerges about the most effectiveapplications for individual long-term care insurance on March way for both customers and policyholders to deal with long-30, the news meant that 10 of the top 20 long-term care term care. But for many Americans, waiting for “clarity”insurance companies by sales had left the market in the past about long-term care is not a reasonable approach; they needfive years, according to a March 10, 2012 Wall Street Journal to address long-term care now. So, despite the current turmoil,article. The insurance companies will continue to pay long- what actions can be taken today to provide financial certaintyterm care claims on policies currently in-force, but many of in the face of what could be a serious shock to one’s standardthese policyholders may encounter premium increases in the of living and well-being?future. Apply for coverage now. It may seem counter-intuitive, These exits from the long-term care insurance market but in the midst of this uncertainty, there can be advantages tomight seem curious, considering that long-term care is buying coverage now. As one brokerage company noted in itsbecoming an increasingly important financial issue in March 7, 2012, blog: © Copyright 2012 www.bulfinchgroup.com Page 5
  • 6. When a large life insurance and long-term LOW NUMBERS = OPPORTUNITY? care insurance company decides to stop selling individual long-term care insurance because it does not view the sales as profitable, the 3.87 % 3.13% message is that the consumer is receiving 30-YR FIXED MORTGAGE 15-YR FIXED MORTGAGE significantly the best end of the bargain. According to recent data from Freddie Mac, the federally- Most industry analysts expect the underwriting criteria for sponsored mortgage lending corporation, the average rate for a LTC will eventually get stricter, making it harder to obtain 30-year fixed mortgage dropped to a record-low 3.87% in coverage. The reality: Younger, healthier applicants who February 2012. Rates for a 15-year fixed mortgage hit bottom apply under more generous guidelines have a much better in early March at 3.13%. Since then, the numbers have spiked chance of obtaining coverage on favorable terms. slightly, causing some observers to conclude that rates have Use a paid-up plan. Some insurers offer the option of finally bottomed out. paying higher premiums for a specified period of time, If this assessment is true, homeowners with positive loan- typically ten years. Once the paid-up period is fulfilled, no to-equity ratios may want to consider refinancing before rates more premiums are required, and the coverage remains in trend higher. In a depressed housing market, the primary force for the life of the contract. This feature eliminates the attraction in refinancing for most homeowners may be possibility of premium increases and locks in the benefits, securing a lower interest rate and lower monthly payment making long-term care costs a known quantity in your rather than extracting equity from the property. Some other financial plans. homeowners may want to shorten the payoff period on the Make long-term care part of your life insurance policy. mortgage, switching to a 15-year loan from a 30-year one. Many life insurance policies now offer an accelerated benefit However, in coordination with other aspects of your financial rider, which permits a percentage of the death benefit to be program, refinancing may provide other advantages as well, paid in the event of certain long-term care events. While this such as coverage is typically not as comprehensive as a true long-term  Making a greater portion of interest payments care insurance policy, it does have one advantage: If you don’t tax-deductible need long-term care, the premiums will be “recaptured” by  Improving monthly cash flow your beneficiaries when the death benefit is paid.  Allowing more dollars to be directed to other investments  Consolidating other debt under more favorable terms HOW ARE YOU GOING TO ADDRESS LONG- TERM CARE RIGHT NOW? If you are considering a refi, why not check all the options __________________________________________________ before you enter into a new mortgage agreement? Discover the ways that low mortgage rates could provide a high- opportunity boost to your overall financial picture. _________________________________________________This newsletter is prepared by an independent third party for distribution by your Representative(s). Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice. Links to other sites arefor your convenience in locating related information and services. The Representative(s) does not maintain these other sites and has no control over the organizations that maintain the sites or the information, products or services these organizations provide. The Representative(s) expressly disclaims any responsibility for the content, the accuracy of the information or the quality of products or services provided by the organizations that maintain these sites. The Representative(s) does not recommend or endorse these organizations or their products or services in any way. We have not reviewed or approved the above referenced publications nor recommend or endorse them in any way. Matthew Cunningham, RFC® Financial Advisor, Park Avenue Securities The Bulfinch Group 300 Ledgewood Place, Suite 105 Rockland, MA 02370 (P) 781-681-1510 / (Fax) 781-681-1550 matthew_cunningham@bulfinchgroup.com / www.bulfinchgroup.com Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 140 Kendrick Street, Needham, MA 02494, (781) 449-4402. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Field Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. The Bulfinch Group is not an affiliate or subsidiary of PAS or Guardian. Life insurance offered through The Bulfinch Group Insurance Agency, LLC, an affiliate of The Bulfinch Group, LLC. The Bulfinch Group, LLC is not licensed to sell insurance. PAS is a member FINRA, SIPC. © Copyright 2012 www.bulfinchgroup.com Page 6

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