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Strategic Financial
Planning: Financial
Planning Basics
and Settlement Strategies
Becky Gustafson, CFP®, CLU®, ChFC®, RICP®, CASL®, LUTCF®, CLTC®
GUSTAFSON WEALTH MANAGEMENT
Becky.gustafson@nm.com (o) 504 - 831 - 8146 Beckygustafson.nm.com
HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY
Northwestern Mutual is the marketing name for The Northwestern Mutual Life
Insurance Company (NM), Milwaukee, WI (life and disability insurance, annuities,
and life insurance with long-term care benefits) and its subsidiaries. Northwestern
Mutual Investment Services, LLC (NMIS) (securities), subsidiary of NM, registered
investment adviser, broker-dealer, member FINRA and SIPC. Northwestern Mutual
Wealth Management Company® (NMWMC), Milwaukee, WI, (fiduciary and fee-
based financial planning services) subsidiary of NM and federal savings bank.
29-5471 (0417)
The Northwestern Mutual Life Insurance Company — Milwaukee, WI
DO YOU HAVE A PLAN TO REACH YOUR GOALS?
2
How confident are you that your plan will meet your goals?
4
NORTHWESTERN MUTUAL RESOURCES:
How to Create A Greater Level of Financial Security Worksheet
29-5471-01 (0417)
HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY
FIVE KEY ACTIONS FOR CREATING FINANCIAL SECURITY
No matter how old you are or how much money you have, your
plan to create a more secure financial future should include
strategies to do five things—wisely:
TOP THREE GOALS FOR THE FUTURE
SHORT TERM (1-5 YEARS):
MID TERM (5-10 YEARS):
LONG TERM (10+ YEARS):
SAVE
•Identify your goals –
short-, mid- and
long-term goals.
•Depending on your
goals, allocate about
20 percent of your
income to savings.
SPEND
•Track your expenses
so you know what’s
coming in and what’s
going out.
•Free up money by
managing your credit
card, student loan
and mortgage debt.
GROW
•Determine your risk
tolerance.
•Develop a diversified
portfolio based on your
risk tolerance.
PROTECT
•Develop a plan that
protects your paycheck
and your loved ones.
•Consider how a long-
term care incident
could impact you and
your family.
GIVE
•Share your money with people and causes
that matter to you.
•Build charitable giving
into your financial plan.
5
FIVE KEY ACTIONS TO CREATING FINANCIAL SECURITY
SAVE
WHAT ARE YOU SAVING FOR?
A new home?
Your retirement?
Tuition assistance
for your children?
7
WHAT ARE YOUR GOALS?
SHORT-TERM GOALS 5-10 YEAR GOALS LONG-TERM GOALS
8
HOW MUCH MONEY SHOULD YOU PUT AWAY?
20% Saving and Investing
20% Discretionary
Expenses
60% Essential Expenses
INCREASE YOUR SAVING BY 1% EVERY YEAR
+1%
WHERE SHOULD YOU PUT YOUR MONEY?
TAXABLE
SHORT-TERM 0-2 Years
MID-TERM 2+ Years
Investment
Accounts
LONG-TERM 10+ Years
Cash Value
Life Insurance
TAX DEFERRED
RETIREMENT Age 59½
401(k)
Traditional IRA
Roth IRA
Annuity
MIX OF TAX DEFERRED AND
TAXABLE
Cash, Checking &
Savings Accounts
Emergency Fund (6 months of
expenses)
The primary purpose of permanent life insurance is the death benefit. Using cash values to achieve other long-term goals will reduce benefits. Generally, surrenders (cash value from the termination of your policy) and dividends payable in cash are taxed only when they exceed premiums paid.
9
10
•Leave where it is
•Roll it over into new employer’s plan
•Roll it over into an Individual Retirement Account (IRA)
•Cash it out (penalties and taxes)
ROLL OVER THAT 401(k)
Options for your 401(k) when you change jobs:
401(k)
JOB #1
JOB #2
JOB #3
SPEND
BY SPENDING WISELY YOU CAN AFFORD THE THINGS YOU NEED WHILE STILL ENJOYING THE THINGS YOU WANT.
12
TAKE INVENTORY: Money Coming in Versus Money Going Out
A budget or spending plan is key to understanding your finances.
Northwestern Mutual offers online tools to track your expenses and see your full financial picture.
Downloadable budget worksheet at: NorthwesternMutual.com
Start Here! i MONTHLY BUDGET
29-3914
Transportation
Auto Payment(s) $
Auto Insurance $
Gas $
Maintenance/License $
Parking/Tolls/Bus/Train $
$
Student Loans $
Credit Card Debt $
$
Housing
Mortgage/Rent $
Property Taxes $
Home Maintenance $
Homeowner’s/ $
Renter’s Ins.
Utilities (Electric, Gas, $
Water, etc.)
$
Health Care/Insurance (Not deducted from paycheck)
Health Insurance $
Life Insurance $
Disability Income $
Insurance
Long-term Care $
Insurance
Medical/Dental/Drugs $
$
Household/Personal
Groceries $
Personal Care $
Clothing/Dry Cleaning $
Professional Dues $
Cell Phone $
$
Personal Loans Children
$ Dependent/Child Care
Education/School $
$
Name: Date:
To complete your current financial profile, it is important to review your monthly expenses.
ESSENTIAL EXPENSES (60%) DISCRETIONARY EXPENSES (20%)
Emergency Fund $
College Savings $
Short/Mid-Term Needs $
Retirement Savings $
(Not deducted from paycheck)
$
Essential
Expenses Subtotal
SAVING AND INVESTING (20%)*
Saving and
Investing Subtotal
* The 20% includes both after-tax and pre-tax savings and
investments, including contributions to employer-sponsored
retirement plans.
$ 0
Cable/Phone/Internet $
Dining Out $
Recreation/Club Dues $
Movies/Sporting Events $
Hobbies $
Vacation/Travel $
Gifts/Contributions $
$
$
$
$
Discretionary
Expenses Subtotal 0
$ 0
TOTAL MONTHLY EXPENSES $ 0
NET MONTHLY INCOME $
LESS EXPENSES $ 0 TOTAL SURPLUS/DEFICIT $ 0
13
FREE UP MONEY AND MANAGE DEBT.
14
MANAGING CREDIT CARD DEBT: Free Up Money
Set a goal to pay off all credit card debt.
•Always make at least the minimum monthly payment on all your credit card bills.
•When possible, pay more than the minimum on your high-interest credit cards to pay them down faster.
15
MANAGING STUDENT LOAN DEBT: Free Up Money
LOAN CONSOLIDATION LOAN FORGIVENESS
•Public Service Loan Forgiveness and Teacher Loan Forgiveness
•Meet certain criteria
•May be able to lower monthly payments by extending the length of the loan
•May get lower interest rate
1 Source: Bankrate - http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
16
MANAGING MORTGAGE DEBT: Free Up Money
Refinancing Mortgage:
•Lower interest rate
•Lower payments
•Shorten term of loan (you save on interest but will be paying a higher monthly payment)
Paying extra on the principal:
•Make sure lender allows for early repayment
•May affect tax deductions
Pay $240 Extra Each
Month
$57,000 saved in interest & loan reduced by 7 years!1
Mortgage = $300k +
GROW
WHAT DO YOU DO WITH THAT FOUND MONEY?
What’s your goal?
What’s your risk tolerance?
What’s your investment time horizon?
INVESTING
29-5471-01 (0417)
HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY
FIVE KEY ACTIONS FOR CREATING FINANCIAL SECURITY
No matter how old you are or how much money you have, your
plan to create a more secure financial future should include
strategies to do five things—wisely:
TOP THREE GOALS FOR THE FUTURE
SHORT TERM (1-5 YEARS):
MID TERM (5-10 YEARS):
LONG TERM (10+ YEARS):
SAVE
•Identify your goals –
short-, mid- and
long-term goals.
•Depending on your
goals, allocate about
20 percent of your
income to savings.
SPEND
•Track your expenses
so you know what’s
coming in and what’s
going out.
•Free up money by
managing your credit
card, student loan
and mortgage debt.
GROW
•Determine your risk
tolerance.
•Develop a diversified
portfolio based on your
risk tolerance.
PROTECT
•Develop a plan that
protects your paycheck
and your loved ones.
•Consider how a long-
term care incident
could impact you and
your family.
GIVE
•Share your money with people and causes
that matter to you.
•Build charitable giving
into your financial plan.
All investments carry some level of risk including the potential loss of principal invested.
18
PROTECT
WHAT WOULD HAPPEN TO YOUR GOALS IF SOMETHING WERE TO HAPPEN TO YOU?
* Source: Northwestern Mutual Claim Data 2008-2013
21
DISABILITY: Protect your most valuable asset—your income
1 in 4 will be disabled at some point in their career*
22
GROUP DISABILITY INSURANCE
Most group plans have some sort of cap …
usually about 60% of your income.
60%
NOTE: Disability income insurance is available to full-time workers, part-time workers and those who stay at home.
GROUP DISABILITY INSURANCE
THROUGH YOUR EMPLOYER
23
LIFE INSURANCE
Mortgage
Child Care
Student Loans
College Tuition
Child’s Wedding
Support Kids or Family Members
Inheritance for Children or Grandchildren
HAVE A PLAN FOR LONG-TERM CARE.
24
25
LONG-TERM CARE
Someone turning 65 today has
almost a 70% chance of needing
long-term care.2
2US Department of Health and Human Services as of September 2015
32015 Cost of Care Research Study conducted by the Long Term Care Group, Inc. on behalf of Northwestern Long Term Care Insurance Company: https://www.northwesternmutual.com/about-us/studies/cost-of-long-term-care-study
4In California, “Assisted Living Facilities” are called “Residential Care Facilities”
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Home Care Community-Based Care
Assisted Living4
Nursing Facility
$233,731
$55,961
$227,296
$431,054
TODAY
$54,0803
TODAY
$12,9483
TODAY
$52,5913
TODAY
$99,7363
POTENTIAL ANNUAL COSTS IN 30 YEARS
WITH 5% INFLATION
WHERE WOULD YOU LIKE TO MAKE A DIFFERENCE?
GIVE
27
CONSIDER HOW GIVING FITS INTO YOUR FINANCIAL PLAN
Give with your time:
•Volunteer in your community
•Volunteer abroad
Give with your money:
•Establish a scholarship
•Start your own nonprofit
NOTE: Charitable donations can be tax deductible.
28
Write on the back of the worksheet one step you will take in the next month
to create a greater level of financial security.
FIVE KEY ACTIONS FOR CREATING A LIFETIME OF FINANCIAL SECURITY
Q & A
Becky Gustafson, CFP®, CLU®, ChFC®, RICP®, CASL®, LUTCF®, CLTC®
GUSTAFSON WEALTH MANAGEMENT
becky.gustafson@nm.com
(o) 504 - 831 - 8146
beckygustafson.nm.com
THANK YOU
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI
(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Northwestern
Mutual Investment Services, LLC (NMIS) (securities), subsidiary of NM, registered investment adviser, broker-dealer,
member FINRA and SIPC. Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, (fiduciary and
fee-based financial planning services) subsidiary of NM and federal savings bank.
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