The document discusses the evolving landscape of retirement, highlighting the increased duration of retirement and the associated income challenges faced by retirees today. It emphasizes five key retirement challenges, including the need for a stable income, the decline of traditional income sources, rising healthcare costs, and the importance of individualized planning with financial advisors. Solutions such as diversified portfolios, fixed and insured income strategies, and insurance products are proposed to help manage these challenges.

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2. When I’m 65 Will you be able to enjoy the retirement revolution? Andy Hoang Financial Planner January 16, 2009

3. Agenda The transformation of retirement The five challenges Solutions to the revolution

4. The retirement generation gap Longer retirement In 1950, retirement lasted less than 3.5 years. Today, retirement is lasting 20, 30, even 40 years! Chances of a 65-year-old living to age 90 0% 20% 40% At least one spouse 60% 80% 100% Age 80 85 90 95 100 105 Individual

5. The retirement generation gap Healthier, more active lifestyles More flexibility Greater control Lifetime income

6. The retirement generation gap Decline of traditional retirement income sources Social Security Corporate pensions Medicare

7. The retirement generation gap Portfolio management structuring In the past, income management was sufficient Now we need continued accumulation and protection of retirement assets

8. Retirement challenges are a-changin’, too Greater freedom in retirement requires Greater stability of income Control Flexibility

9. The five retirement challenges Changing sources of income 1 Where will all your income come from? ? ? 25 14 3 Earnings Asset income Unaccounted income for future retirees Other

10. The five retirement challenges Your income must last your lifetime 2 0% 50% 25% 100% 75% % Withdrawal rate of income 100% 0% 80% 20% 60% 40% 40% 60% 20% 80% 0% 100% 94% 74% 49% 96% 74% 43% 98% 72% 31% 98% 65% 13% 100% 42% 1% 95% 11% 0% Higher risk/return Lower risk/return Stocks Bonds 4% 6% 8% Simulation estimates the range of possible outcomes by using the historical 1926-2004 annual average return and standard deviation figures for the asset classes and inflation. These projections do not take into account other variables such as fluctuating principal and changing tax consequences. No assurance can be given that the assumptions will prove to be correct, and the difference between assumptions and actual results could vary materially. Indices used: Stocks, S&P 500 Index; Bonds, 5-year U.S. Government Bond Index. Government bonds are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest if held to maturity, while returns and principal invested in stocks are not guaranteed. The above indices are unmanaged and unavailable for direct investment. Index past performance cannot guarantee future returns. Chances of your income lasting throughout a 25-year retirement

11. The five retirement challenges Maintaining your standard of living 3 Hotel stay 1950–2004 6.22% $0.09 Dining out 1950–2004 4.28% $0.11 Admissions to movies, theater, concerts, and 1950–2004 5.05% $0.26 sporting events Avg. annual $1 Equals Expense Time Period inflation rate (2003) Source: U. S. Census Bureau of Labor Statistics, 3/05 Cost of inflation

12. The five retirement challenges Managing market volatility 4 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 Positive 70.9% Negative 29.1% Positive and negative years of the S&P 500 Index (1926 – 2004)

13. The five retirement challenges Rising healthcare costs 90% of employers are likely to increase retiree contributions to healthcare premiums.* 20% of employers are likely to terminate employee health benefits.* The number of employers offering retiree health benefits has declined 42% from 1988 to 2003.* Annual medical spending for consumers age 65+ rose 22.3% over consumers 45 – 55.** Annual medical spending for consumers age 75+ rose 26.1% over consumers 45 – 55.** Sources: *The State of Retiree Health Benefits, Henry J. Kaiser Family Foundation, 2004 **Consumer expenditure survey 2003, U.S. Bureau of Labor Statistics, 2004 5

14. A time to sow, a time to reap Revolutionary income management Variable expenses – travel, leisure activities, gifts, etc. Fixed expenses – mortgage, utilities, monthly healthcare and prescription costs, and other recurring bills Wealth transfer – assets designated for your heirs Healthcare – assets cover expenses beyond routine prescription and doctors’ bills, such as those for emergency and long-term care Emergency/Opportunity funds –immediate cash for emergencies or financial opportunities

15. Finding potential solutions A shifting income portfolio for your evolving retirement needs Variable expenses Fixed expenses Wealth transfer Healthcare Emergency/Opportunity funds

16. Finding potential solutions Income strategy allocation Growth Fixed Insured Liquid Miscellaneous

17. Finding potential solutions Growth Greater return potential; higher risk Help maintain accumulation potential Greater growth potential Tax advantages

18. Finding potential solutions Fixed Provide fixed, stable income and returns Subject to some risk Good for fixed expenses May be appropriate for conservative investors seeking wealth transfer Tax advantages

19. Finding potential solutions Insured Fixed and growth orientation Insurance component with protection Generally cost more Tax advantages Any payments or benefits due on the annuity are backed by the claims-paying ability of the issuing insurance company. Such payments and benefits are subject to the financial condition of the issuing insurance company.

20. Finding potential solutions Liquid Easy and quick access to your money Lower risks and returns Traditionally used for emergency funding

21. Finding potential solutions Miscellaneous Provide regular income Growth and wealth transfer potential Estate benefits

22. Finding potential solutions Several solutions do exist!

23. Finding potential solutions Changing sources of income Create diversified portfolio Flexibility in how you take income Steady income from sources of income with protection benefits Any payments or benefits due on the annuity are backed by the claims-paying ability of the issuing insurance company. Such payments and benefits are subject to the financial condition of the issuing insurance company. 1

24. Finding potential solutions Income longevity Protection benefits for lifetime income streams from annuities Stable income Potential for higher returns Any payments or benefits due on the annuity are backed by the claims-paying ability of the issuing insurance company. Such payments and benefits are subject to the financial condition of the issuing insurance company. 2

25. Finding potential solutions Maintaining your lifestyle Use equity-oriented investments Plan how to spend down assets Consider tax-advantaged investments and financial products Shift 401(k) and other tax-deferred assets to IRA 3

26. Finding potential solutions Managing market volatility Protect a portion of your portfolio Design a more conservative portfolio Any payments or benefits due on the annuity are backed by the claims-paying ability of the issuing insurance company. Such payments and benefits are subject to the financial condition of the issuing insurance company. 4

27. Finding potential solutions Containing medical costs Long-term care insurance 5

28. Get together with your advisor Types of investment and financial products Life Insurance Long-term Care Insurance Annuities Mutual Funds Individual Stocks Individual Bonds Qualified Plans: 401(k), 403(b), etc.

29. Summary Retirement is being revolutionized 5 retirement challenges Solutions

30. What’s next? Start planning now Talk to a financial advisor Lincoln Financial Advisors/Sagemark Consulting can help you plan for a retirement that keeps pace with your pursuits

31. Important information You should consider the investment objectives, risks, charges and expense of any investment carefully before investing. The prospectus contains this and other important information about the investment. Please request a prospectus from your advisor. Any tax information contained in this seminar is not intended or written to be used, and it may not be used by any taxpayer, for the purpose of avoiding penalties under the Internal Revenue Code that may be imposed on the taxpayer. This seminar was created to support the promotion or marketing of the transaction(s) or matter(s) addressed in the seminar. A taxpayer should be advised to seek advice based on the taxpayer's particular circumstances from an independent tax advisor. Insurance products issued by Lincoln affiliates. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Neither Lincoln, its representatives nor its distributors provide tax or legal advice. You should contact your tax advisor or attorney regarding your particular situation. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity.