Sample of a client 'Financial Profile'
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Sample of a client 'Financial Profile'

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This a sample of the financial planning software output provided to clients.

This a sample of the financial planning software output provided to clients.

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  • 1. Especially Prepared For: Thomas and BethBy: Mr David G. Walsh, CFP®
  • 2. Table of ContentsAssets and Liabilities 10Financial Statements 13Retirement 21Education Goals 36Survivor Needs 46Disability 55
  • 3. *DRAFT PRESENTATION* Personal Data PERSONAL DATA Name Sex Birthdate SS Benefits* Thomas G Sample M 05/03/1955 Earnings Based Beth Michele Sample F 09/27/1958 Earnings Based 20 Hull Street Newton, MA 0 Phone: Fax: *Social Security benefit levels of "Maximum" assume that the worker earned the Social Security maximum earning base in years prior to the current year and that current earnings stay the same until Normal Retirement Age. "Earnings Based" assumes that the worker has received pay raises at a rate equal to the national average each year through the current year and that current earnings stay the same until Normal Retirement Age. Dependents Birthdate SS Until Age Jane 07/02/1995 18 John 01/02/1998 18 OCCUPATION Thomas Job Title: Employer: Phone: Fax: Beth Job Title: Employer: Phone: Fax:Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 1 Presented by: Mr David G. Walsh, CFP®
  • 4. *DRAFT PRESENTATION* Advisors Financial Advisor Mr. David G. Walsh, CFP® Phone : (781) 229-0777 Cornerstone Financial Group Fax: (781) 229-5516 200 Wheeler Road E-mail: dwalsh@htk.com Burlington, MA 01803Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 2 Presented by: Mr David G. Walsh, CFP®
  • 5. *DRAFT PRESENTATION* Analysis Summary Prepared for Thomas and Beth This summary is intended to give you a quick overview of the detailed analyses in the sections that follow, and is based upon your current financial situation and the information you provided. Please review the analysis reports for details concerning assumed rates of return, calculations, tax implications and other factors impacting the analysis results. Included in this summary are: l Financial Statements l Retirement Analysis l Education Funding Analysis l Survivor Needs Analysis l Disability Income Needs l Estate Analysis FINANCIAL STATEMENTS Thomas and Beth, your Net Worth is estimated at $2,803,815. This amount includes $176,975 in readily available assets for emergencies vs. your goal of $118,875. You have a current annual cash flow surplus of $102,807. Net Worth Cash Flow Assets $3,219,232 Income $475,500 Liabilities (415,417) Expenses (372,693) Net Worth $2,803,815 Surplus/Deficit $102,807 Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 3 Presented by: Mr David G. Walsh, CFP®
  • 6. *DRAFT PRESENTATION* RETIREMENT ANALYSIS Your goal is to retire at Thomas age 60 and Beths age 56. Your annual income objective at retirement is $289,206. In addition to anticipated income sources, your projected savings and investments of $2,610,700 at retirement will fund your income objective until Thomas age 74 and Beths age 70. At that time, your available retirement portfolio is estimated to be fully depleted, and there will be a shortfall in future income. Objectives Results Remaining Successful years of retirement 31 14 17 Capitalized value at retirement* $5,299,260 $3,472,568 $1,826,692 Percent of goal 100% 66% 34% *Capitalization is a way of treating a series of cash flows as a lump sum, deposited in a hypothetical account with a return of 6.50% EDUCATION FUNDING ANALYSIS This analysis estimates that you will need $529,802 to provide for all of your education goals. It is projected that you will have $425,500 available, which leaves a shortfall of ($104,301). ---------Funding Alternatives--------- Amount Needed Existing Plan Surplus/ Additional Level Additional Inflating Name (in future dollars) Provides Deficit Monthly Savings Monthly Savings Jane $295,633 $260,477 ($35,156) $140 $117 John 234,169 165,024 (69,145) 478 422 Total $529,802 $425,500 ($104,301) $617 $539 Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 4 Presented by: Mr David G. Walsh, CFP®
  • 7. *DRAFT PRESENTATION* SURVIVOR NEEDS ANALYSIS Thomas, in the event of your death today your goal is to provide your survivors with an initial annual income of $332,850. The additional capital required today to fund all immediate needs, provide for important identified goals and provide the desired income until Beths age 90 is estimated to be $2,612,971. Beth, in the event of your death today your goal is to provide your survivors with an initial annual income of $332,850. The additional capital required today to fund all immediate needs, provide for important identified goals and provide the desired income until Thomas age 90 is estimated to be $4,277,828. In the event of In the event of Thomas death today Beths death today Assets Available $1,888,221 $1,888,157 Life Insurance Death Benefits 5,700,000 1,750,000 Less Immediate Cash Needs ($524,775) ($774,775) Net Capital available for income and other needs $7,063,446 $2,863,382 DISABILITY INCOME NEEDS ANALYSIS Thomas, in the event you have a disability lasting more than 90 days, your estimated monthly income objective is $10,000. This analysis estimates you will have a surplus of $8,750. Beth, in the event you have a disability lasting more than 90 days, your estimated monthly income objective is $10,000. This analysis estimates you will have a surplus of $25,000. Thomas Disability Beths Disability Income Objective Income Objective Monthly Income Objective After $10,000 $10,000 90 Days Total Income 18,750 35,000 Surplus/Deficit $8,750 $25,000 Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 5 Presented by: Mr David G. Walsh, CFP®
  • 8. *DRAFT PRESENTATION* ESTATE ANALYSIS A primary purpose of estate planning is to minimize estate shrinkage and maximize the estate left to survivors. Estate shrinkage occurs because of various estate settlement costs, including federal and state estate taxes. You may wish to consider various estate planning techniques and strategies to accomplish your goals. Summary numbers assuming Thomas dies first If Thomas dies at age 61 Gross Estate $2,596,800 Estate settlement costs ($217,091) If Beth dies at age 62 Gross Estate $3,074,784 Estate settlement costs ($1,026,141) Amounts passing to: Beneficiaries $2,053,485 Charities $0Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 6 Presented by: Mr David G. Walsh, CFP®
  • 9. *DRAFT PRESENTATION* Emergency Reserves $200,000 $176,975 $150,000 $118,875 $100,000 $50,000 $0 Your Your Current Needs Emergency Reserves Cash Savings Life Insurance Cash Values Before preparing for any long-term needs or even short-term accumulation goals, you should always be prepared for the unexpected - those emergencies requiring immediate cash. Generally speaking, you should maintain liquid cash reserves of between three and six times your monthly income. Emergency Reserves Needs $118,875 Current Emergency Reserves: Cash $51,700 Savings 85,900 Life Insurance Cash Values 39,375 Total $176,975 Surplus / (Deficit) $58,100Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 7 Presented by: Mr David G. Walsh, CFP®
  • 10. *DRAFT PRESENTATION* Emergency Reserves Emergency reserves are required to meet lifes unknown short-term financial crises. Most financial services professionals often suggest that an emergency reserve fund should equal three to six months total income. An early priority of any financial goal should be to establish a cushion of cash reserves to handle emergencies. Cash and other readily liquid assets are measured to determine whether sufficient reserves are available. Without adequate reserves, it is very difficult to concentrate on long-term objectives. Based on your annual income of $465,000, your reserve fund should be maintained at: $116,250 to $232,500Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 8 Presented by: Mr David G. Walsh, CFP®
  • 11. *DRAFT PRESENTATION* Your Needs vs. Your Current Plan Your goal is to be 100% funded Your Needs (100%) vs. your Strategy % Emergency $ 100% Education 80% Accumulation Thomas Death 76% Beths Death 58% Thomas Disability 100% Beths Disability 100% Retirement 66% 0% 20% 40% 60% 80% 100% Current Plan The Need is 100% The above graph illustrates the percentage by which your current financial position meets your goal. l Emergency Reserve provides 100% of the funds needed for unforeseen events or opportunities. l Education Goals are 80% funded when needed. l Accumulation Goals are 0% funded when needed. l Survivorship Income available is 76% of your initial objective if Thomas dies and 58% if Beth dies. lDisability Income requirements are 100% satisfied if Thomas becomes disabled for 90 days and 100% satisfied if Beth becomes disabled for 90 days. l Retirement goal is 66% funded.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 9 Presented by: Mr David G. Walsh, CFP®
  • 12. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 10 Presented by: Mr David G. Walsh, CFP®
  • 13. *DRAFT PRESENTATION* Asset Summary by Asset Type Banking $3,322,857 Qualified Annuities Investments Education Real Estate Personal Business Assets Current Balance Percent of Total Assets Bank Accounts $137,600 4.1% Qualified Retirement Accounts $1,661,452 50.0% Investment Accounts $105,805 3.2% Education Investment Accounts $143,000 4.3% Real Estate and Residence $1,225,000 36.9% Personal Property $50,000 1.5% Total Assets $3,322,857 100.0%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 11 Presented by: Mr David G. Walsh, CFP®
  • 14. *DRAFT PRESENTATION* Liability Summary by Liability Type $415,417 Real Estate Property Loans Personal Loans Credit Cards Percent of Liabilities Current Liability Total Liabilities Real Estate $405,900 98% Property Loans $4,367 1% Personal Loans $5,150 1% Credit Cards $0 0% Total Liabilities $415,417 100%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 12 Presented by: Mr David G. Walsh, CFP®
  • 15. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 13 Presented by: Mr David G. Walsh, CFP®
  • 16. *DRAFT PRESENTATION* Cash Flow Summary For your financial priorities! $475,500 $500,000 $372,693 $400,000 $300,000 $200,000 $102,807 $100,000 $0 INCOME DISBURSEMENTS SURPLUS •Other •Living Expenses •Employment •Liability Payments •Taxes •Insurance •Savings Annual Amount Percentage of Total Income Income Employment $465,000 98% Other 10,500 2% Total $475,500 100% Disbursements Living Expenses $119,308 25% Liability Payments 0 0% Taxes 191,660 40% Insurance 37,125 8% Savings/Retirement Plans 24,600 5% Total 372,693 78% Surplus $102,807 22%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 14 Presented by: Mr David G. Walsh, CFP®
  • 17. *DRAFT PRESENTATION* Cash Flow Annual Monthly Percent of Amount Average Total Income Income Employment - Thomas $420,000 $35,000 88% Employment - Beth 45,000 3,750 9% Interest and Dividends - Thomas 5,500 458 1% Rental Property(Net) - Thomas 5,000 417 1% Total Income $475,500 $39,625 100% Disbursements Living Expenses Housing $54,000 $4,500 11% Child Care 3,000 250 1% Transportation 1,200 100 0% Food & Beverages 12,000 1,000 3% Clothing 3,996 333 1% Furnishings 1,800 150 0% Personal Care and Cash 3,600 300 1% Medical/Dental/Drugs 1,500 125 0% Education/Self-Improvement 2,400 200 1% Entertainment 9,000 750 2% Vacations and Holidays 5,400 450 1% Charitable Contributions 1,000 83 0% Oil 1,500 125 0% Elec 600 50 0% Cable/Internet 1,680 140 0% Water & Sewer 900 75 0% Phone 780 65 0% Mobile Phones 900 75 0% House Cleaning 1,560 130 0% Gutters 144 12 0% Newspaper 168 14 0% Pest Cont/Chimney 180 15 0% Yard Maintenance 600 50 0% Credit Cards 600 50 0% Health Insurance 10,800 900 2% Total Expenses $119,308 $9,942 25% Liability Payments Total Liability Payments $0 $0 0% Taxes Federal - Thomas $150,000 $12,500 32% State - Thomas 24,000 2,000 5% OASDI/Medicare 17,660 1,472 4% Total Taxes $191,660 $15,972 40% Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 15 Presented by: Mr David G. Walsh, CFP®
  • 18. *DRAFT PRESENTATION* Insurance Term Life 30yr $690 $58 0% First Colony Life 960 80 0% AIG 2,000 167 0% Penn Mutual UL 3,500 292 1% CNA 525 44 0% First Colony Life 400 33 0% Penn Mutual UL 2,250 188 0% Principal 3,500 292 1% Umbrella Liability 400 33 0% Homeowners 900 75 0% Medical 20,000 1,667 4% Auto 2,000 167 0% Total Insurance $37,125 $3,094 8% Savings SEP IRA - Client A $7,200 $600 2% Investment Account - Joint 3,600 300 1% 529 Plan for Jane 7,800 650 2% CollegeAmerica 6,000 500 1% Total Savings $24,600 $2,050 5% Total Disbursements $372,693 $31,058 78% Surplus $102,807 $8,567 22%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 16 Presented by: Mr David G. Walsh, CFP®
  • 19. *DRAFT PRESENTATION* Net Worth Summary $2,803,815 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Market Value Liabilities Net Worth Assets $3,219,232 Bank Accounts $137,600 Qualified Retirement Accounts $1,661,452 Investment Accounts $105,805 Real Estate and Residence $1,225,000 Personal Property $50,000 Life Insurance Cash Values $39,375 Liabilities $415,417 Real Estate Loan $405,900 Property Loan $4,367 Personal Loan $5,150 Net Worth $2,803,815Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 17 Presented by: Mr David G. Walsh, CFP®
  • 20. *DRAFT PRESENTATION* Net Worth Statement As of 06/21/2011 Current Total Expected Market Market Assets Owner Rate of Return Value Value Bank Accounts BOA Business Thomas 0.00% 30,000 BOA Thomas 4.50% 50,000 BOA (House) Joint 0.00% 4,700 Sovereign Beth 1.00% 20,000 Sovereign Beth 0.00% 17,000 ING Thomas 3.00% 15,900 Total Bank Accounts 137,600 Qualified Retirement Accounts IRA - Traditional IRA - Client A Thomas Portfolio 9.00% 13,068 SEP (SARSEP) - SEP IRA - Client A Thomas Investments 9.00% 255,000 IRA - Traditional IRA - Client A Thomas Funds 9.00% 9,140 401(k) - 401(k) Plan - Client A Thomas Company 9.00% 858,000 Other Retirement - Other Retirement Plan - Client A Thomas Company 9.00% 25,000 IRA - Traditional IRA - Client B Beth Portfolio 9.00% 485,000 IRA - Traditional IRA - Client B Beth Etrade 9.00% 16,244 Total Qualified Retirement Accounts 1,661,452 Investment Accounts Investment Account - Client B Beth Stocks 9.00% 3,000 Investment Account - Joint Joint Etrade 9.00% 11,607 Investment Account - Joint Joint Brokerage 7.00% 18,698 Investment Account - Client A Thomas Pershing 1.00% 7,500 Investment Account - Client B Beth JPMorgan ESPP (130shrs) 9.00% 65,000 Total Investment Accounts 105,805 Real Estate and Residence Cape House Joint 3.00% 325,000 Home Joint 3.00% 900,000 Total Real Estate and Residence 1,225,000 Personal Property Autos Joint 0.00% 50,000 Total Personal Property 50,000 Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 18 Presented by: Mr David G. Walsh, CFP®
  • 21. *DRAFT PRESENTATION* Life Insurance Cash Values Penn Mutual UL Thomas -- 22,500 Penn Mutual UL Beth -- 16,875 TotalLife Insurance Cash Values 39,375 Total Assets $3,219,232 Assumed Initial Current Total Liabilities Owner Interest Rate Balance Balance Real Estate Loan Loan for Home Joint 0.00% 230,900 Loan for Cape House Joint 0.00% 175,000 Total Real Estate Loan 405,900 Property Loan Loan for Autos Joint 0.00% 4,367 Total Property Loan 4,367 Personal Loan MBNA Joint 0.00% 4,400 Capital One Thomas 0.00% 750 Total Personal Loan 5,150 Total Loans & Liabilities $415,417 Net Worth $2,803,815Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 19 Presented by: Mr David G. Walsh, CFP®
  • 22. *DRAFT PRESENTATION* General Insurance Auto The Need Your Plan $50,000 Personal Property $500,000 $675,000 Homeowners $1,000,000 $5,607,630 Medical $5,607,630 Umbrella Liability $3,000,000 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Approximate Insurable Needs Automobiles l Liability - At least $300,000 may be appropriate. This amount is frequently the base for an umbrella policy. l Deductibles - May be practical to increase deductible amounts and reduce premiums. Some companies offer $500 and $1,000 deductibles. l Collision - For older cars, consider dropping this coverage if the cost is not worth the potential benefits. l Discounts - Determine whether you have taken advantage of proper classifications, including multi-car discounts, good student discounts, safe driving programs, etc. Personal Property l Personal property - Determine if your jewelry, art, silver, collectibles, and other personal property are insured for their actual replacement costs. You may want to have these items appraised and have them “scheduled” to insure full coverage. Home l Dwelling - Coverage should generally be based on estimated rebuilding costs, and should be reviewed annually. Medical Coverage l Your insurance policy should include major medical coverage for $1,000,000 or more. l Be sure that any internal policy limits are in line with customary hospital and medical expenses in your area. Umbrella Liability l Coverage for home and auto, providing an additional layer of coverage over and above the base amounts. l In view of substantial court judgments, this coverage may be essential, especially to high-income earners or those with significant net worth. Two or three million dollar policies are available.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 20 Presented by: Mr David G. Walsh, CFP®
  • 23. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 21 Presented by: Mr David G. Walsh, CFP®
  • 24. *DRAFT PRESENTATION* Save More–Earn More Achieving Your Retirement Objective $35,000 $30,862 $30,000 Additional $25,000 Monthly $20,000 $17,832 Savings (Inflating) * $15,000 $12,587 $10,000 $7,920 $5,000 $3,748 $0 6.50% 8.97% 9.71% 10.46% 11.21% 11.95% Hypothetical Rate of Return The analysis shows that there are not enough assets to provide for your retirement needs. There are only three ways to fix this problem: 1) Reduce or delay your retirement goal; 2) Save more money; or 3) Make your money work harder. Assuming you want to keep your goals intact, lets examine the last two. Save More: At retirement, you need an additional $1,826,692 in a hypothetical taxable account earning 6.50% to meet your goals. Savings of $30,862/month into this account would accomplish this. Currently, your assets are expected to earn an average of 8.97%. If the hypothetical account were earning this rate too, then you would need $1,118,971 at retirement, requiring $17,832/month. Earn More: If, however, your retirement assets could earn 11.95%, no additional savings would be necessary to achieve your retirement goals. Frequently, however, an increase in return can mean an increase in the risks to your portfolio, so care should be taken before proceeding. The Right Combination: Changing your portfolio rate from 8.97% to 10.46% reduces the additional savings to $7,920/month. Factors such as risk tolerance, timeframe and saving ability can help you find the right combination. *Assumes that the monthly savings amount increases by 3.50% each year.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 22 Presented by: Mr David G. Walsh, CFP®
  • 25. *DRAFT PRESENTATION* Spend Less–Earn More Achieving Your Retirement Objective $25,000 $24,100 $22,442 $20,784 $20,000 $19,125 $17,467Monthly $15,000Income $10,000 $5,000 $0 8.97% 9.71% 10.46% 11.21% 11.95% Hypothetical Rate of Return According to the analysis, your retirement income need ($24,100 in the first month) is greater than the income sources and assets you have available to meet that need. When this is the case, and when additional savings is not an option, you are left with essentially two options: 1) Reduce the retirement income objective; or 2) Earn more in your portfolio. Looking at each, consider the following: Spend Less: Currently, your assets are expected to earn an average of 8.97%. At this rate, your portfolio, combined with your income sources, will support 72% of your desired need. Therefore, in the first month, rather than covering $24,100/month of expenses, your resources can support $17,467. Earn More: If you were to reposition your assets in such a way as to earn 11.95%, then 100% of your entire retirement goal ($24,100 in the first month) can be met. Frequently, however, an increase in return can mean an increase in the risks to your portfolio, so care should be taken before proceeding. The Right Combination: If you change your portfolio rate from 8.97% to 10.46%, it would support a monthly income of $20,784 -- reducing your original objective to 86%. What is the right combination for you?Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 23 Presented by: Mr David G. Walsh, CFP®
  • 26. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 24 Presented by: Mr David G. Walsh, CFP®
  • 27. *DRAFT PRESENTATION* Retirement Objective Timeline How much do you need? Income Liability Required Goals and Total Ages Need Payments Savings Gifting Needs 60/ 56 $275,406 $0 $13,800 $0 $289,206 61/ 57 285,045 0 13,800 0 298,845 62/ 58 295,021 0 13,800 0 308,821 63/ 59 305,347 0 13,800 0 319,147 64/ 60 316,034 0 13,800 0 329,834 65/ 61 327,095 0 0 0 327,095 66/ 62 338,544 0 0 0 338,544 67/ 63 350,393 0 0 0 350,393 68/ 64 362,656 0 0 0 362,656 69/ 65 375,349 0 0 0 375,349 70/ 66 349,638 0 0 0 349,638 71/ 67 361,875 0 0 0 361,875 72/ 68 374,541 0 0 0 374,541 73/ 69 387,650 0 0 0 387,650 74/ 70 401,218 0 0 0 401,218 75/ 71 380,655 0 0 0 380,655 76/ 72 393,978 0 0 0 393,978 77/ 73 407,767 0 0 0 407,767 78/ 74 422,039 0 0 0 422,039 79/ 75 436,811 0 0 0 436,811 --/ 76 452,099 0 0 0 452,099 --/ 77 467,923 0 0 0 467,923 --/ 78 484,300 0 0 0 484,300 --/ 79 501,250 0 0 0 501,250 --/ 80 518,794 0 0 0 518,794 --/ 81 536,952 0 0 0 536,952 --/ 82 555,745 0 0 0 555,745 --/ 83 575,196 0 0 0 575,196 --/ 84 595,328 0 0 0 595,328 --/ 85 616,165 0 0 0 616,165 --/ 86 637,730 0 0 0 637,730Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 25 Presented by: Mr David G. Walsh, CFP®
  • 28. *DRAFT PRESENTATION* Retirement Income Sources Details What income will be available? At Annual Thomas End Annual Income Sources Amount Age Age Increase Thomas Social Security $25,121 62 90 2.00% Beths Social Security 16,845 66 94 2.00%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 26 Presented by: Mr David G. Walsh, CFP®
  • 29. *DRAFT PRESENTATION* Retirement Income Sources Timeline What income will be available? Thomas Beth Total Social Defined Annuity Social Defined Annuity Income Age Security Benefits Benefits Earnings Misc. Age Security Benefits Benefits Earnings Misc. Sources 60 $0 $0 $0 $0 $0 56 $0 $0 $0 $0 $0 $0 61 0 0 0 0 0 57 0 0 0 0 0 0 62 25,121 0 0 0 0 58 0 0 0 0 0 25,121 63 25,623 0 0 0 0 59 0 0 0 0 0 25,623 64 26,136 0 0 0 0 60 0 0 0 0 0 26,136 65 26,659 0 0 0 0 61 0 0 0 0 0 26,659 66 27,192 0 0 0 0 62 16,845 0 0 0 0 44,037 67 27,736 0 0 0 0 63 17,182 0 0 0 0 44,918 68 28,290 0 0 0 0 64 17,526 0 0 0 0 45,816 69 28,856 0 0 0 0 65 17,876 0 0 0 0 46,733 70 29,433 0 0 0 0 66 18,234 0 0 0 0 47,667 71 30,022 0 0 0 0 67 18,599 0 0 0 0 48,621 72 30,622 0 0 0 0 68 18,971 0 0 0 0 49,593 73 31,235 0 0 0 0 69 19,350 0 0 0 0 50,585 74 31,859 0 0 0 0 70 19,737 0 0 0 0 51,597 75 32,497 0 0 0 0 71 20,132 0 0 0 0 52,628 76 33,147 0 0 0 0 72 20,534 0 0 0 0 53,681 77 33,810 0 0 0 0 73 20,945 0 0 0 0 54,755 78 34,486 0 0 0 0 74 21,364 0 0 0 0 55,850 79 35,175 0 0 0 0 75 21,791 0 0 0 0 56,967 -- 0 0 0 0 0 76 35,879 0 0 0 0 35,879 -- 0 0 0 0 0 77 36,597 0 0 0 0 36,597 -- 0 0 0 0 0 78 37,328 0 0 0 0 37,328 -- 0 0 0 0 0 79 38,075 0 0 0 0 38,075 -- 0 0 0 0 0 80 38,837 0 0 0 0 38,837 -- 0 0 0 0 0 81 39,613 0 0 0 0 39,613 -- 0 0 0 0 0 82 40,405 0 0 0 0 40,405 -- 0 0 0 0 0 83 41,214 0 0 0 0 41,214 -- 0 0 0 0 0 84 42,038 0 0 0 0 42,038 -- 0 0 0 0 0 85 42,879 0 0 0 0 42,879 -- 0 0 0 0 0 86 43,736 0 0 0 0 43,736Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 27 Presented by: Mr David G. Walsh, CFP®
  • 30. *DRAFT PRESENTATION* Retirement Capital Available Details How Much Will You Have at Retirement? Current Total Market Total Market Value Value at Value at Accounts Owner Value Today Retirement Retirement Bank Accounts ING Client A 15,900 17,896 Total 15,900 17,896 Investment Accounts Investment Account - Client B Client B 3,000 4,235 Investment Account - Joint Joint 11,607 16,384 Investment Account - Joint Joint 18,698 41,612 Investment Account - Client B Client B 65,000 91,753 Total 98,305 153,984 Deductible Qualified Accounts Traditional IRA - Client A Client A 13,068 18,447 SEP IRA - Client A Client A 255,000 453,499 Traditional IRA - Client A Client A 9,140 12,902 401(k) Plan - Client A Client A 858,000 1,211,137 Other Retirement Plan - Client A Client A 25,000 35,290 Traditional IRA - Client B Client B 485,000 684,617 Traditional IRA - Client B Client B 16,244 22,930 Total 1,661,452 2,438,821 Total Capital Available for Retirement $1,775,657 $2,610,700 These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 28 Presented by: Mr David G. Walsh, CFP®
  • 31. *DRAFT PRESENTATION* Retirement Analysis Results Timeline Has the objective been met? Applied Income Sources Applied Assets Total Social Additional Needed from Required Asset (Shortage) Ages Needs Security Income Assets Distributions Withdrawals Unmet Needs 60 / 56 $289,206 $0 $0 $289,206 $0 $289,206 $0 61 / 57 298,845 0 0 298,845 0 298,845 0 62 / 58 308,821 25,121 0 283,700 0 283,700 0 63 / 59 319,147 25,623 0 293,524 0 293,524 0 64 / 60 329,834 26,136 0 303,698 0 303,698 0 65 / 61 327,095 26,659 0 300,437 0 300,437 0 66 / 62 338,544 44,037 0 294,507 0 294,507 0 67 / 63 350,393 44,918 0 305,475 0 305,475 0 68 / 64 362,656 45,816 0 316,840 0 316,840 0 69 / 65 375,349 46,733 0 328,617 0 328,617 0 70 / 66 349,638 47,667 0 301,971 26,714 275,257 0 71 / 67 361,875 48,621 0 313,255 22,358 290,897 0 72 / 68 374,541 49,593 0 324,948 17,115 307,833 0 73 / 69 387,650 50,585 0 337,065 10,860 326,205 0 74 / 70 401,218 51,597 0 349,621 5,750 141,366 (202,506) 75 / 71 380,655 52,628 0 328,027 0 0 (328,027) 76 / 72 393,978 53,681 0 340,297 0 0 (340,297) 77 / 73 407,767 54,755 0 353,013 0 0 (353,013) 78 / 74 422,039 55,850 0 366,190 0 0 (366,190) 79 / 75 436,811 56,967 0 379,844 0 0 (379,844) -- / 76 452,099 35,879 0 416,220 0 0 (416,220) -- / 77 467,923 36,597 0 431,326 0 0 (431,326) -- / 78 484,300 37,328 0 446,971 0 0 (446,971) -- / 79 501,250 38,075 0 463,175 0 0 (463,175) -- / 80 518,794 38,837 0 479,958 0 0 (479,958) -- / 81 536,952 39,613 0 497,339 0 0 (497,339) -- / 82 555,745 40,405 0 515,340 0 0 (515,340) -- / 83 575,196 41,214 0 533,983 0 0 (533,983) -- / 84 595,328 42,038 0 553,290 0 0 (553,290) -- / 85 616,165 42,879 0 573,286 0 0 (573,286) -- / 86 637,730 43,736 0 593,994 0 0 (593,994)Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 29 Presented by: Mr David G. Walsh, CFP®
  • 32. *DRAFT PRESENTATION* Retirement Capital Results Timeline Contributions, Withdrawals and Growth Additions to Portfolio Withdrawals from Portfolio Total Required Total Contribu- Lump Minimum Withdrawals Other Total Portfolio Age tions Sum Amounts Distributions for Need Withdrawals Growth Balance Beginning Balance $1,775,657 56 / 52 $21,600 $0 $0 $0 $0 $160,353 $1,957,610 57 / 53 22,140 0 0 0 0 176,646 2,156,396 58 / 54 22,696 0 0 0 0 194,447 2,373,539 59 / 55 23,269 0 0 0 0 213,892 2,610,700 60 / 56 0 0 0 289,206 0 208,935 2,530,429 61 / 57 0 0 0 298,845 0 200,843 2,432,427 62 / 58 0 0 0 283,700 0 193,385 2,342,112 63 / 59 0 0 0 293,524 0 184,373 2,232,962 64 / 60 0 0 0 303,698 0 173,634 2,102,897 65 / 61 0 0 0 300,437 0 162,221 1,964,681 66 / 62 0 0 0 294,507 0 150,316 1,820,491 67 / 63 0 0 0 305,475 0 136,351 1,651,367 68 / 64 0 0 0 316,840 0 120,107 1,454,634 69 / 65 0 0 0 328,617 0 101,342 1,227,359 70 / 66 0 0 26,714 275,257 0 83,285 1,008,673 71 / 67 0 0 22,358 290,897 0 62,588 758,006 72 / 68 0 0 17,115 307,833 0 38,975 472,033 73 / 69 0 0 10,860 326,205 0 12,147 147,115 74 / 70 0 0 5,750 141,366 0 0 0 75 / 71 0 0 0 0 0 0 0 76 / 72 0 0 0 0 0 0 0 77 / 73 0 0 0 0 0 0 0 78 / 74 0 0 0 0 0 0 0 79 / 75 0 0 0 0 0 0 0 -- / 76 0 0 0 0 0 0 0 -- / 77 0 0 0 0 0 0 0 -- / 78 0 0 0 0 0 0 0 -- / 79 0 0 0 0 0 0 0 -- / 80 0 0 0 0 0 0 0 -- / 81 0 0 0 0 0 0 0 -- / 82 0 0 0 0 0 0 0 -- / 83 0 0 0 0 0 0 0 -- / 84 0 0 0 0 0 0 0 -- / 85 0 0 0 0 0 0 0 -- / 86 0 0 0 0 0 0 0 The highlighted row indicates the beginning of retirement. These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 30 Presented by: Mr David G. Walsh, CFP®
  • 33. *DRAFT PRESENTATION* Retirement Summary Timeline An Overview of the Results Retirement Analysis Results Retirement Portfolio Results Applied (Shortage) Retirement Total Applied RMD and Unmet RMD and Growth and Portfolio Age Needs Income Withdrawals Needs Withdrawals Additions Balance Beginning Balance $1,775,657 60 / 56 $289,206 $0 $289,206 $0 $289,206 $208,935 $2,530,429 61 / 57 298,845 0 298,845 0 298,845 200,843 2,432,427 62 / 58 308,821 25,121 283,700 0 283,700 193,385 2,342,112 63 / 59 319,147 25,623 293,524 0 293,524 184,373 2,232,962 64 / 60 329,834 26,136 303,698 0 303,698 173,634 2,102,897 65 / 61 327,095 26,659 300,437 0 300,437 162,221 1,964,681 66 / 62 338,544 44,037 294,507 0 294,507 150,316 1,820,491 67 / 63 350,393 44,918 305,475 0 305,475 136,351 1,651,367 68 / 64 362,656 45,816 316,840 0 316,840 120,107 1,454,634 69 / 65 375,349 46,733 328,617 0 328,617 101,342 1,227,359 70 / 66 349,638 47,667 301,971 0 301,971 83,285 1,008,673 71 / 67 361,875 48,621 313,255 0 313,255 62,588 758,006 72 / 68 374,541 49,593 324,948 0 324,948 38,975 472,033 73 / 69 387,650 50,585 337,065 0 337,065 12,147 147,115 74 / 70 401,218 51,597 147,115 (202,506) 147,115 0 0 75 / 71 380,655 52,628 0 (328,027) 0 0 0 76 / 72 393,978 53,681 0 (340,297) 0 0 0 77 / 73 407,767 54,755 0 (353,013) 0 0 0 78 / 74 422,039 55,850 0 (366,190) 0 0 0 79 / 75 436,811 56,967 0 (379,844) 0 0 0 -- / 76 452,099 35,879 0 (416,220) 0 0 0 -- / 77 467,923 36,597 0 (431,326) 0 0 0 -- / 78 484,300 37,328 0 (446,971) 0 0 0 -- / 79 501,250 38,075 0 (463,175) 0 0 0 -- / 80 518,794 38,837 0 (479,958) 0 0 0 -- / 81 536,952 39,613 0 (497,339) 0 0 0 -- / 82 555,745 40,405 0 (515,340) 0 0 0 -- / 83 575,196 41,214 0 (533,983) 0 0 0 -- / 84 595,328 42,038 0 (553,290) 0 0 0 -- / 85 616,165 42,879 0 (573,286) 0 0 0 -- / 86 637,730 43,736 0 (593,994) 0 0 0Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 31 Presented by: Mr David G. Walsh, CFP®
  • 34. *DRAFT PRESENTATION* Retirement Capital Balances Timeline Assets At Work Over Time Retirement Account Balances Deferred Non-deductible Deductible Total Bank Roth Investment Annuity Qualified Qualified Portfolio Age Accounts Accounts Accounts Accounts Accounts Accounts Balance Beg Bal $17,896 $0 $153,984 $0 $0 $2,438,821 $2,610,700 60 / 56 $0 $0 $0 $0 $0 $2,530,429 $2,530,429 61 / 57 0 0 0 0 0 2,432,427 2,432,427 62 / 58 0 0 0 0 0 2,342,112 2,342,112 63 / 59 0 0 0 0 0 2,232,962 2,232,962 64 / 60 0 0 0 0 0 2,102,897 2,102,897 65 / 61 0 0 0 0 0 1,964,681 1,964,681 66 / 62 0 0 0 0 0 1,820,491 1,820,491 67 / 63 0 0 0 0 0 1,651,367 1,651,367 68 / 64 0 0 0 0 0 1,454,634 1,454,634 69 / 65 0 0 0 0 0 1,227,359 1,227,359 70 / 66 0 0 0 0 0 1,008,673 1,008,673 71 / 67 0 0 0 0 0 758,006 758,006 72 / 68 0 0 0 0 0 472,033 472,033 73 / 69 0 0 0 0 0 147,115 147,115 74 / 70 0 0 0 0 0 0 0 75 / 71 0 0 0 0 0 0 0 76 / 72 0 0 0 0 0 0 0 77 / 73 0 0 0 0 0 0 0 78 / 74 0 0 0 0 0 0 0 79 / 75 0 0 0 0 0 0 0 -- / 76 0 0 0 0 0 0 0 -- / 77 0 0 0 0 0 0 0 -- / 78 0 0 0 0 0 0 0 -- / 79 0 0 0 0 0 0 0 -- / 80 0 0 0 0 0 0 0 -- / 81 0 0 0 0 0 0 0 -- / 82 0 0 0 0 0 0 0 -- / 83 0 0 0 0 0 0 0 -- / 84 0 0 0 0 0 0 0 -- / 85 0 0 0 0 0 0 0 -- / 86 0 0 0 0 0 0 0Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 32 Presented by: Mr David G. Walsh, CFP®
  • 35. *DRAFT PRESENTATION* Retirement Distribution Details Meeting Your Needs with the Retirement Portfolio In the analysis, withdrawals were made from your retirement assets for two reasons: 1. Required Minimum Distributions: For each qualified account, (e.g., 401(k)), the IRS requires that you pay out a portion of your funds (and pay the taxes!) starting at age 70½. In this analysis, these distributions were used to pay your retirement income needs after other income sources (e.g., Social Security) have been applied. Excess RMD, if any, was reinvested. 2. Withdrawals to Meet Needs: In years when your needs surpassed your income sources and RMD, the analysis withdrew money from your pool of retirement assets. Based on the types of assets you have, withdrawals were made with the goal of deferring income taxes as long as possible. Retirement Withdrawals to Meet Needs Age at 1st Total Total Distribution Retirement Retirement Balance at Name RMD Order Withdrawal Withdrawals End of Plan ING $0 2 60 $17,896 $0 Investment Account - Client B 0 3 60 4,235 0 Investment Account - Client B 0 3 60 91,753 0 Investment Account - Joint 0 3 60 16,384 0 Investment Account - Joint 0 3 60 41,612 0 Other Retirement Plan - Client A 0 4 60 58,641 0 401(k) Plan - Client A 57,484 4 60 1,948,948 0 SEP IRA - Client A 21,525 4 60 729,766 0 Traditional IRA - Client A 876 4 60 29,684 0 Traditional IRA - Client A 612 4 60 20,762 0 Traditional IRA - Client B 2,225 4 63 1,351,462 0 Traditional IRA - Client B 75 4 63 45,264 0 Totals $82,796 $4,356,405 $0Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 33 Presented by: Mr David G. Walsh, CFP®
  • 36. *DRAFT PRESENTATION* High Withdrawal Rates Will Quickly Deplete Your Assets Age to which a portfolio may last based on withdrawal rate (90% confidence level) Withdrawal Rate 10% 74 Portfolio Stocks 50% 9% 75 Bonds 40% Cash 10% 8% 77 7% 79 6% 82 5% 86 4% 94 3% 100+ Age 65 70 75 80 85 90 95 100 Important: Projections generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary over time and with each simulation. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2010 Ibbotson Associates, Inc., a wholly owned subsidiary of Morningstar, Inc. All rights reserved. EISI has engaged Ibbotson to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to EISI a license for use thereof. High Withdrawal Rates Will Quickly Deplete Your Assets Withdrawal rates have a dramatic impact on determining how long a portfolio can last in retirement. How much can a retiree safely withdraw each year from his or her portfolio? Finding the answer is like hitting a moving target--the optimal withdrawal rate is dependent upon investment performance and the impact of inflation. Several issues should be examined when determining an investors withdrawal rate. Asset allocation, time horizon, and consumption patterns are all important factors in shaping how long portfolio wealth will last. The image shows how a portfolio of 50% stocks, 40% bonds, and 10% cash investments might have lasted given inflation-adjusted withdrawal rates between 3% and 10%. As illustrated, the higher the withdrawal rate, the faster an investor will run out of money. The lower the rate, the less likely a retiree will outlive his or her portfolio. Therefore, retirees who anticipate long payout periods may want to consider assuming lower withdrawal rates. Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 34 Presented by: Mr David G. Walsh, CFP®
  • 37. *DRAFT PRESENTATION* It is assumed that a person retires at age 65 and withdraws an inflation-adjusted percentage of the initial portfolio wealth (assumed $1 million) each year beginning at age 66. The image was created using Monte Carlo parametric simulation that estimates the range of possible outcomes based on a set of assumptions including arithmetic mean (return), standard deviation (risk), and correlation for a set of asset classes. The inputs used are historical 1926-2009 figures. The risk and return of each asset class, crosscorrelation, and annual average inflation over this time period follow. Stocks: risk 20.5%, return 11.8%; Bonds: risk 5.7%, return 5.5%; Cash: risk 3.1%, return 3.7%; Correlations: -0.01 (stocks and bonds), -0.01 (stocks and cash), 0.47 (bonds and cash); Inflation: return 3.1%. Annual investment expenses were assumed to be 0.88% for stock mutual funds and 0.74% for bond mutual funds and cash. Other investments not considered may have characteristics similar or superior to those being analyzed. The simulation is run 5,000 times, to give 5,000 possible 35-year scenarios. While simulation can produce results that show probabilities of an outcome, the analysis included herein is presented as the 90% confidence level. A 90% confidence level indicates that there is a 90% chance of the outcome being as shown or better. Higher confidence levels are chosen in order to view tougher market conditions. A limitation of the simulation model is that it assumes a constant inflation-adjusted rate of withdrawal, which may not be representative of actual retirement income needs. This type of simulation also assumes that the distribution of returns is normal. Should actual returns not follow this pattern, results may vary. Government bonds and Treasury bills are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest, while returns and principal invested in stocks are not guaranteed. About the data Stocks are represented by the Standard & Poors 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general. Bonds are represented by the five-year U.S. government bond, Treasury bills by the 30-day U.S. Treasury bill, inflation by the Consumer Price Index, and mutual fund expenses from Morningstar. The data assumes reinvestment of income and does not account for taxes or transaction costs.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 35 Presented by: Mr David G. Walsh, CFP®
  • 38. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 36 Presented by: Mr David G. Walsh, CFP®
  • 39. *DRAFT PRESENTATION* Education Goals Total Education Need $529,802 Your Education Plan Provides $425,500 $295,633 Jane $260,477 $234,169 John $165,024 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 Need Education Plan This graph illustrates the projected capital needed to meet your education objectives and how your projected current savings and investments are helping meet the objectives. _______Funding Alternatives1_______ Amount Needed Additional Additional Per Year Additional Monthly Level Monthly Inflating Name (Todays $) Sum1 Savings Savings2 Jane $40,000 $14,356 $140 $117 John 40,000 38,835 478 422 Totals $80,000 $53,191 $617 $539 1Single-sum investment alternative assumes that existing savings will continue and Funding Alternatives earn an assumed rate of return of 8.00%. 2The amount shown is for the first year only; this amount must be increased annually by the assumed inflation rate of 3.50%. These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 37 Presented by: Mr David G. Walsh, CFP®
  • 40. *DRAFT PRESENTATION* Education Goals Summary Education Goals: Amount Annual Years Needed Goal Amount Until Years Inflated Future Number Name School Needed Needed Needed at Dollars 1 Jane Northeastern $40,000 9 4 6.00% $295,633 University 2 John BC 40,000 5 4 6.00% 234,169 Total amount needed - future dollars $529,802 Assets and Savings Available: Current ----------------------Monthly Savings -------------------- Market Year Savings Number of Assigned Accounts Value Amount Start Years to Save to Goal 529 Plan for Jane CollegeAmerica $75,000 $650 2011 9 1 CollegeAmerica CollegeAmerica $68,000 $500 2011 9 2 Total $143,000 Funding Alternatives: ------Additional Amount Needed1 ------ Amount Existing Monthly Monthly Needed Plan Level Inflating Future Dollars Provides Single Sum Savings Savings2 Jane $295,633 $260,477 $14,356 $140 $117 John 234,169 165,024 38,835 478 422 Total $529,802 $425,500 $53,191 $617 $539 1 All additional savings begin today and assume a rate of return of 8.00%. 2 Inflating savings will increase annually by 3.50%.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 38 Presented by: Mr David G. Walsh, CFP®
  • 41. *DRAFT PRESENTATION* Education Goals Existing Plan for Jane Amount needed $40,000 per year needed in 9 years for 4 years inflating annually at 6.00% Needed in year 1 of goal, $40,000 inflated by 6.00% = $67,579 Needed in year 2 of goal, $40,000 inflated by 6.00% = 71,634 Needed in year 3 of goal, $40,000 inflated by 6.00% = 75,932 Needed in year 4 of goal, $40,000 inflated by 6.00% = 80,488 Total amount needed $295,633 Capital available Current Assumed Amount Market Monthly Rate of Applied Accounts Value Savings Return To Goals 529 Plan for Jane $75,000 $650 7.00% $260,477 Total $75,000 $260,477 Distribution Plan: Year 1 Year 2 Year 3 Year 4 529 Plan for Jane $67,579 $71,634 $75,932 $45,332 Total Withdrawals 67,579 71,634 75,932 45,332 Liabilities 0 0 0 0 Net for Goal 67,579 71,634 75,932 45,332 (Shortfall) $0 $0 $0 ($35,156)Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 39 Presented by: Mr David G. Walsh, CFP®
  • 42. *DRAFT PRESENTATION* Education Goals Existing Plan for John Amount needed $40,000 per year needed in 5 years for 4 years inflating annually at 6.00% Needed in year 1 of goal, $40,000 inflated by 6.00% = $53,529 Needed in year 2 of goal, $40,000 inflated by 6.00% = 56,741 Needed in year 3 of goal, $40,000 inflated by 6.00% = 60,145 Needed in year 4 of goal, $40,000 inflated by 6.00% = 63,754 Total amount needed $234,169 Capital available Current Assumed Amount Market Monthly Rate of Applied Accounts Value Savings Return To Goals CollegeAmerica $68,000 $500 7.00% $165,024 Total $68,000 $165,024 Distribution Plan: Year 1 Year 2 Year 3 Year 4 CollegeAmerica $53,529 $56,741 $48,754 $6,000 Total Withdrawals 53,529 56,741 48,754 6,000 Liabilities 0 0 0 0 Net for Goal 53,529 56,741 48,754 6,000 (Shortfall) $0 $0 ($11,391) ($57,754)Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 40 Presented by: Mr David G. Walsh, CFP®
  • 43. *DRAFT PRESENTATION* Education Goal Capital Analysis for Jane: Northeastern University $250,000 $200,000 Capital Available $150,000 $100,000 $50,000 $0 $-50,000 2012 2014 2016 2018 2020 2022 2024 Year Positive Capital Balance Negative Capital Balance Current assets available $75,000 Current monthly savings $650 Current plan provides $260,477 Total need1 $295,633 Funding Alternatives 2 Single sum investment $14,356 Additional level monthly savings $140 Additional inflating monthly savings4 $117 1 Assumes that the cost will increase annually by 6.00% 2 Assumes that the additional savings earn a rate of return of 8.00%. All alternatives are in addition to the current savings. 4 The amount shown is for the first year only; the savings must increase annually by 3.50%. These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 41 Presented by: Mr David G. Walsh, CFP®
  • 44. *DRAFT PRESENTATION* Education Goal Capital Analysis for John: BC $150,000 $100,000 Capital Available $50,000 $0 $-50,000 $-100,000 2012 2014 2016 2018 2020 Year Positive Capital Balance Negative Capital Balance Current assets available $68,000 Current monthly savings $500 Current plan provides $165,024 Total need1 $234,169 Funding Alternatives 2 Single sum investment $38,835 Additional level monthly savings $478 Additional inflating monthly savings4 $422 1 Assumes that the cost will increase annually by 6.00% 2 Assumes that the additional savings earn a rate of return of 8.00%. All alternatives are in addition to the current savings. 4 The amount shown is for the first year only; the savings must increase annually by 3.50%. These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 42 Presented by: Mr David G. Walsh, CFP®
  • 45. *DRAFT PRESENTATION* Education Goal Timeline for Jane: Northeastern University Annual Annual Capital Lump Capital Change in Capital Year Need Savings Earnings Sum Withdrawals Liabilities Available Today: $75,000 2011 $0 $7,800 $5,796 $0 $0 $0 $88,596 2012 0 7,800 6,748 0 0 0 103,144 2013 0 7,800 7,766 0 0 0 118,710 2014 0 7,800 8,856 0 0 0 135,365 2015 0 7,800 10,022 0 0 0 153,187 2016 0 7,800 11,269 0 0 0 172,256 2017 0 7,800 12,604 0 0 0 192,660 2018 0 7,800 14,032 0 0 0 214,492 2019 0 7,800 15,560 0 0 0 237,853 2020 67,579 0 11,919 0 67,579 0 182,193 2021 71,634 0 7,739 0 71,634 0 118,298 2022 75,932 0 2,966 0 75,932 0 45,332 2023 80,488 0 0 0 45,332 35,156 (35,156) These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 43 Presented by: Mr David G. Walsh, CFP®
  • 46. *DRAFT PRESENTATION* Education Goal Timeline for John: BC Annual Annual Capital Lump Capital Change in Capital Year Need Savings Earnings Sum Withdrawals Liabilities Available Today: $68,000 2011 $0 $6,000 $5,180 $0 $0 $0 $79,180 2012 0 6,000 5,963 0 0 0 91,143 2013 0 6,000 6,800 0 0 0 103,943 2014 0 6,000 7,696 0 0 0 117,639 2015 0 6,000 8,655 0 0 0 132,293 2016 53,529 6,000 5,933 0 53,529 0 90,698 2017 56,741 6,000 2,797 0 56,741 0 42,754 2018 60,145 6,000 0 0 48,754 11,391 (11,391) 2019 63,754 6,000 0 0 6,000 57,754 (69,145) These results are hypothetical and are not a promise of future performance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 44 Presented by: Mr David G. Walsh, CFP®
  • 47. *DRAFT PRESENTATION* Cost of Education Jane How will you meet the rising cost of education? Tuition & Fees Four-Year Total School 2009-2010¹ Cost in 2011 * Stanford University $37,380 $163,523 Princeton University $35,340 $154,599 Ohio State University $8,706 $38,085 Arizona State University $6,334 $27,709 University of Florida $4,373 $19,130 Four-year private average² $26,273 $114,934 Four-year public average² $7,020 $30,710 $25,000 $109,365 Tuition and Fee Levels over Time2 Private Four-Year Public Four-Year Academic Tuition Annual Tuition Annual Consumer Year & Fees % Change & Fees % Change Price Index3 2000-01 $16,072 3.6% $3,508 4.3% 3.5% 2001-02 $17.377 8.1% $3,766 7.4% 2.6% 2002-03 $18,060 3.9% $4,098 8.8% 1.5% 2003-04 $18,950 4.9% $4,645 13.3% 2.3% 2004-05 $20,045 5.8% $5,126 10.4% 2.5% 2005-06 $20,980 4.7% $5,492 7.1% 4.7% 2006-07 $22,308 6.3% $5,804 5.7% 2.1% 2007-08 $23,745 6.4% $6,191 6.7% 2.8% 2008-09 $25,177 6.0% $6,591 6.5% 4.9% 2009-10 $26,273 4.4% $7,020 6.5% -1.3% 2000-2010 -- 5.4% -- 7.7% 2.6% *Assumes college costs increase at 6.00% annually. 1 Source: Copyright © 2009 collegeboard.com, Inc. All rights reserved. Assumes in-state tuition and fees. 2 Source: 2009 Trends in College Pricing Table 4a. Copyright© 2009 The College Board. All rights reserved. 3 Source: Bureau of Labor Statistics - CPI-U based on September month-end index values..Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 45 Presented by: Mr David G. Walsh, CFP®
  • 48. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 46 Presented by: Mr David G. Walsh, CFP®
  • 49. *DRAFT PRESENTATION* Survivor Needs In the event of Thomas Death $12,000,000 $10,201,192 $10,000,000 $7,588,221 $8,000,000 $6,000,000 $4,000,000 $2,612,971 $2,000,000 $0 REQUIRED $ CURRENT $ NEW INSURANCE Income Insurance Immediate Assets Objective: Initial annual income beginning today of $332,850 Amount required in todays dollars (present value) Capital needed to fund income objectives $10,593,113 Less capitalized value of income sources (1,381,288) Additional capital required for income needs 9,211,824 Immediate cash needs 524,775 Total additional capital needed 9,736,599 Capital available Assets 1,888,221 Insurance death benefits 5,700,000 Total capital available 7,588,221 Additional capital required to maintain a $0 capital balance 464,593 Additional capital required to fund survivor needs $2,612,971Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 47 Presented by: Mr David G. Walsh, CFP®
  • 50. *DRAFT PRESENTATION* Survivor Needs In the event of Beths Death $7,915,985 $8,000,000 $6,000,000 $4,277,828 $3,638,157 $4,000,000 $2,000,000 $0 REQUIRED $ CURRENT $ NEW INSURANCE Income Insurance Immediate Assets Objective: Initial annual income beginning today of $332,850 Amount required in todays dollars (present value) Capital needed to fund income objectives $9,463,712 Less capitalized value of income sources (2,373,401) Additional capital required for income needs 7,090,312 Immediate cash needs 774,775 Total additional capital needed 7,865,087 Capital available Assets 1,888,157 Insurance death benefits 1,750,000 Total capital available 3,638,157 Additional capital required to maintain a $0 capital balance 50,898 Additional capital required to fund survivor needs $4,277,828Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 48 Presented by: Mr David G. Walsh, CFP®
  • 51. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 49 Presented by: Mr David G. Walsh, CFP®
  • 52. *DRAFT PRESENTATION* Survivor Needs Summary Timeline In the event of Thomas Death Total Annual Total Total Total Survivor Income Annual Income Surplus/ Withdrawal Additions Needs Age Need Sources (Shortage) from Capital to Capital Capital Available Beginning Balance: $7,206,446 52 $332,850 $96,373 ($236,477) ($236,477) $204,809 $7,184,788 53 344,500 98,638 (245,862) (245,862) 203,577 7,153,214 54 356,557 100,960 (255,598) (255,598) 202,017 7,111,094 55 369,037 73,519 (295,517) (295,517) 199,212 7,027,051 56 381,953 24,100 (357,854) (357,854) 194,453 6,876,771 57 335,901 0 (335,901) (335,901) 191,815 6,742,977 58 348,996 0 (348,996) (348,996) 188,443 6,590,302 59 362,630 0 (362,630) (362,630) 183,217 6,419,320 60 376,825 0 (376,825) (376,825) 177,409 6,228,924 61 391,608 0 (391,608) (391,608) 173,010 6,015,248 62 407,004 29,514 (377,490) (377,490) 169,025 5,807,034 63 423,040 30,104 (392,936) (392,936) 162,423 5,576,522 64 439,744 30,706 (409,038) (409,038) 155,024 5,322,508 65 371,831 31,320 (340,510) (340,510) 149,460 5,131,457 66 384,845 31,947 (352,898) (352,898) 143,357 4,921,916 67 398,314 32,586 (365,729) (365,729) 136,686 4,692,873 68 412,255 33,237 (379,018) (379,018) 129,416 4,443,271 69 426,684 33,902 (392,782) (392,782) 121,515 4,172,003 70 441,618 34,580 (407,038) (407,038) 112,949 3,877,914 71 457,075 35,272 (421,803) (421,803) 103,683 3,559,795 72 473,072 35,977 (437,095) (437,095) 93,681 3,216,380 73 489,630 36,697 (452,933) (452,933) 82,903 2,846,351 74 506,767 37,431 (469,336) (469,336) 71,310 2,448,325 75 524,504 38,179 (486,325) (486,325) 58,860 2,020,860 76 542,861 38,943 (503,919) (503,919) 45,508 1,562,450 77 561,861 39,722 (522,140) (522,140) 31,209 1,071,519 78 581,527 40,516 (541,011) (541,011) 15,915 546,424 79 601,880 41,326 (560,554) (546,424) 0 (14,554) 80 622,946 42,153 (580,793) 0 0 (613,207) 81 644,749 42,996 (601,753) 0 0 (1,251,409) 82 667,315 43,856 (623,459) 0 0 (1,931,115) 83 690,671 44,733 (645,938) 0 0 (2,654,364) 84 714,845 45,628 (669,217) 0 0 (3,423,289) 85 739,864 46,540 (693,324) 0 0 (4,240,111) 86 765,760 47,471 (718,289) 0 0 (5,107,152) 87 792,561 48,420 (744,141) 0 0 (6,026,832) 88 820,301 49,389 (770,912) 0 0 (7,001,676) 89 849,011 50,377 (798,635) 0 0 (8,034,320)Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 50 Presented by: Mr David G. Walsh, CFP®
  • 53. *DRAFT PRESENTATION* Survivor Needs Summary Timeline In the event of Beths Death Total Annual Total Total Total Survivor Income Annual Income Surplus/ Withdrawal Additions Needs Age Need Sources (Shortage) from Capital to Capital Capital Available Beginning Balance: $3,006,382 56 $332,850 $448,507 $115,657 $0 $205,028 $3,221,420 57 344,500 463,777 119,277 0 214,908 3,447,039 58 356,557 479,573 123,016 0 225,206 3,683,705 59 369,037 480,787 111,751 0 220,359 3,916,326 60 381,953 15,428 (366,525) (366,525) 100,871 3,663,794 61 335,901 0 (335,901) (335,901) 95,426 3,433,610 62 348,996 25,121 (323,875) (323,875) 89,915 3,207,529 63 362,630 25,623 (337,006) (337,006) 82,503 2,961,456 64 376,825 26,136 (350,689) (350,689) 74,457 2,694,244 65 391,608 26,659 (364,949) (364,949) 67,770 2,401,986 66 407,004 27,192 (379,812) (379,812) 60,557 2,082,983 67 423,040 27,736 (395,304) (395,304) 50,630 1,738,309 68 439,744 28,290 (411,454) (411,454) 39,806 1,366,660 69 371,831 28,856 (342,974) (342,974) 30,711 1,054,397 70 384,845 29,433 (355,411) (355,411) 20,970 719,955 71 398,314 30,022 (368,292) (368,292) 10,550 362,212 72 412,255 30,622 (381,633) (362,212) 0 (20,003) 73 426,684 31,235 (395,449) 0 0 (427,916) 74 441,618 31,859 (409,759) 0 0 (862,805) 75 457,075 32,497 (424,578) 0 0 (1,326,005) 76 473,072 33,147 (439,926) 0 0 (1,818,908) 77 489,630 33,810 (455,820) 0 0 (2,342,970) 78 506,767 34,486 (472,281) 0 0 (2,899,709) 79 524,504 35,175 (489,328) 0 0 (3,490,708) 80 542,861 35,879 (506,982) 0 0 (4,117,622) 81 561,861 36,597 (525,265) 0 0 (4,782,173) 82 581,527 37,328 (544,198) 0 0 (5,486,163) 83 601,880 38,075 (563,805) 0 0 (6,231,467) 84 622,946 38,837 (584,109) 0 0 (7,020,043) 85 644,749 39,613 (605,136) 0 0 (7,853,934) 86 667,315 40,405 (626,910) 0 0 (8,735,269) 87 690,671 41,214 (649,458) 0 0 (9,666,269) 88 714,845 42,038 (672,807) 0 0 (10,649,248) 89 739,864 42,879 (696,986) 0 0 (11,686,621)Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 51 Presented by: Mr David G. Walsh, CFP®
  • 54. *DRAFT PRESENTATION* Survivor Needs Timeline Definitions Survivor Needs Cash Flow Timeline Annual Income Needs Income Need The Income Need column represents the annual income needed by the survivor. This need may be adjusted based on certain events such as the youngest child attaining age 18 and the survivors retirement. Goals Need The Goals Need column will list the projected value of all education goals and accumulation goals to be funded during the survivors analysis. Qualified Plan Contributions The Qualified Plan Contribution column illustrates the dollars needed to fully fund the survivors savings to the survivors retirement plans if you have elected in Qualified Plan Preferences to treat contributions to qualified plans as a required expense. Total Need The sum of all income needs for the survivor. Annual Income Sources Earnings The Earnings column will illustrate the expected earnings of the surviving client. The earnings in the survivors analysis may be different than the surviving clients current salary and self-employment income due to assumptions made for the survivors analysis. Social Security The Social Security column illustrates the estimated Social Security benefit for the surviving client and/or dependents. The Social Security benefit will be based on any Social Security income sources entered for the plan, or if none have been entered, they will be based on estimates consistent with the Social Security Administration using salary information entered in the plan. Other Sources The Other Sources column provides totals for all incomes not defined in the other columns such as defined benefit plans and annuity payments. Surplus/(Shortage) The Surplus/(Shortage) column is equal to the Total Income Sources minus the Total Income Needs. Survivor Needs Capital Available Timeline Withdrawals from Capital Withdrawal The Total Capital Withdrawals column is equal to the income shortage. If there is no income shortage then this column will be zero. Additions to Capital Surplus Income, Excess RMD & Employer Contributions This column illustrates the amount of money added to the Survivor Needs Capital Available due to the surplus of income over need, employee and employer contributions to retirement plans, and any excess required minimum distributions. Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 52 Presented by: Mr David G. Walsh, CFP®
  • 55. *DRAFT PRESENTATION* Lump Sum Income & Sale Proceeds The Lump Sum Income and Sales Proceeds column illustrates all additions to capital made to the designated lump sum asset. Total Investment Return The Total Investment Return column illustrates the investment earnings on all assets available to meet survivor income needs including all survivor owned retirement plans. Each available asset will grow at its specified rate of return, subject to any rebalancing or reallocations. Asset Balances Survivor Owned Qualified Plans The Survivor Owned Retirement Plans column illustrates the projected value of all retirement plans owned by the survivor. These assets may be unavailable until the survivors age 59½ based on the plan assumptions. 529 Plans and Coverdell Accounts The 529 Plans and Coverdell Accounts column shows the projected value of education accounts included in the plan. Surpluses remaining after an education goal is funded may be used to fund survivor income needs based on the plan assumptions. All Other Available Assets The All Other Available Assets column illustrates the total assets available to meet the survivors income needs. Survivor owned retirement plans will be excluded from this column. Total Liabilities The Total Liabilities column illustrates the accumulated unmet shortages. Survivor Needs Capital Available The Survivor Needs Capital Available column illustrates the net amount of all assets that can be used towards meeting survivor needs shortages. Survivor Needs Summary Timeline Total Annual Income Need The Total Annual Income Need column is the total income needed to cover survivor expenses, goals to be funded in the event of death and survivor savings to retirement plans, if applicable. Total Annual Income Sources The Total Annual Income Sources column illustrates the total of survivor earnings, Social Security and direct income sources. Surplus/(Shortage) The Surplus/(Shortage) column is equal to the Total Annual Income Sources minus the Total Annual Income Needs. Total Withdrawal from Capital The Total Withdrawal from Capital column is equal to the income shortage. If there is no income shortage then this column will be zero. Total Additions to Capital The Total Additions to Capital column illustrates the total of surplus income, employee and employer contributions to retirement plans, excess RMD, lump sum income, sale proceeds and investment return on available assets. Survivor Needs Capital Available The Survivor Needs Capital Available column illustrates the net amount of all assets that can be used towards meeting survivor needs shortages. Continued...Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 53 Presented by: Mr David G. Walsh, CFP®
  • 56. *DRAFT PRESENTATION* Survivor Needs Solved Timeline Solution Amount The solution amount represents the amount of money necessary to prevent the timeline from dropping below a target balance, between now and the survivors mortality. The solution amount is determined by increasing the value of the surplus income asset until there is no year in which the capital available falls below the target balance.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 54 Presented by: Mr David G. Walsh, CFP®
  • 57. *DRAFT PRESENTATION*Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 55 Presented by: Mr David G. Walsh, CFP®
  • 58. *DRAFT PRESENTATION* Disability Income Needs In the event of Thomas disability $20,000 Monthly Income $15,000 $10,000 $5,000 $0 To- 7 14 1 2 3 6 1 2 5 Age After Day Days Days Mo. Mos. Mos. Mos. Yr. Yrs. Yrs. 64 65 Length of Disability Income Provided Income Objective -------------- Estimated Monthly Income Provided -------------- Monthly Personal Income Income Beths Group Disability Surplus/ Need Objective1 Earnings2 Insurance Insurance Other (Shortage) Today $10,000 $3,750 $0 $0 $0 ($6,250) After 7 Days 10,000 3,750 0 0 0 (6,250) After 14 Days 10,000 3,750 0 0 0 (6,250) After 1 Month 10,000 3,750 0 0 0 (6,250) After 2 Months 10,000 3,750 0 0 0 (6,250) After 3 Months 10,000 3,750 0 15,000 0 8,750 After 6 Months 10,000 3,750 0 15,000 0 8,750 After 1 Year 10,350 3,881 0 15,450 0 8,981 After 2 Years 10,712 4,017 0 15,914 0 9,218 After 5 Years 11,877 0 0 17,389 0 5,512 Age 64 13,168 0 0 19,002 0 5,833 After 65 13,629 0 0 0 0 (13,629) 1Increases at the assumed rate of inflation of 3.50%. 2Increases annually by 3.50%. Potential Social Security Benefits have not been included.Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 56 Presented by: Mr David G. Walsh, CFP®
  • 59. *DRAFT PRESENTATION* Disability Income Needs In the event of Thomas disability -----------------Estimated Monthly Income Provided -------------- Monthly Income Beths Personal Objective Earnings Disability Income Inflating at Increasing at Group Income Surplus/ Need 3.50% 3.50% Insurance Insurance1 Other (Shortage) Today $10,000 $3,750 $0 $0 $0 ($6,250) After 7 Days 10,000 3,750 0 0 0 (6,250) After 14 Days 10,000 3,750 0 0 0 (6,250) After 1 Month 10,000 3,750 0 0 0 (6,250) After 2 Months 10,000 3,750 0 0 0 (6,250) After 3 Months 10,000 3,750 0 15,000 0 8,750 After 6 Months 10,000 3,750 0 15,000 0 8,750 After 1 Year 10,350 3,881 0 15,450 0 8,981 After 2 Years 10,712 4,017 0 15,914 0 9,218 After 5 Years 11,877 0 0 17,389 0 5,512 Thomas Age 62 12,293 0 0 17,911 0 5,618 63 12,723 0 0 18,448 0 5,725 64 13,168 0 0 19,002 0 5,833 65 13,629 0 0 0 0 (13,629) Need Consecutive periods of disability. Thomas Age Thomas age starting at the beginning of the seventh year of disability. Monthly Income Objective Monthly income needs increasing at the assumed inflation rate are shown for each respective period. Beths Earnings Ongoing earnings increasing at the assumed inflation rate are shown for each respective period. Group Insurance Group long-term disability benefits. Potential Social Security Benefits have not been included. 1Disability Insurance Policies benefits are as follows: Elimination Benefit Monthly Annual Policy Name Period Period Benefit COLA% Personal Principal 90 Days Age 65 $15,000 3.00%Cornerstone Financial Group June 21, 2011 Thomas and BethPenn Mutual Page 57 Presented by: Mr David G. Walsh, CFP®