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April 7th, 2019

Jamie and Claire Jackson

1234 Oakwood Circle

Homewood Heights, OH, 45044

Dear Jamie and Claire,

Thank you for giving our firm the opportunity to serve as your financial advisors and to assist you with your financial planning needs. We are excited to work with you and feel that this partnership will be productive and beneficial to both parties involved. As financial advisors at Blue Wave Financial, we are fiduciaries and are committed to always acting in the best interests of our clients. We pride ourselves on going the extra mile to provide a worthwhile experience and ensure that you, the client, are satisfied with the end result.

After analyzing the personal and financial information that you provided, we have established a comprehensive financial plan that caters to your specific goals and needs that you outlined for us. The financial plan includes seven main topics in order to accurately and completely cover all areas, including cash and debt management, education planning, risk management, retirement planning, investment planning, tax planning, and estate planning. In addition, we have included an action checklist which will allow you to mark off tasks as completed, detailing your progress as you implement the plan. This is a living document, meaning that it will be reviewed and updated annually to ensure that changes are implemented and reflected accurately within the plan.

Our team is eager to get started and continue building a relationship with each of you. We are always available and are more than happy to answer any questions you might have regarding the plan. Please do not hesitate to give us a call or email us, and we will help in any way possible.

We appreciate you placing your trust and confidence in our firm and want to welcome you to the family here at Blue Wave Financial.

Sincerely,

The Team at Blue Wave Financial

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Disclaimer Blue Wave Financial has relied on the information provided by Jamie and Claire Jackson in preparing the contents of this comprehensive financial plan. In order to ensure that the financial plan contains sound and appropriate recommendations, it is your responsibility to provide complete and accurate information regarding pertinent aspects of your personal and financial situation including objectives, needs and values, investment statements, tax returns, copies of wills, powers of attorney, insurance policies, employment benefits, retirement benefits, and relevant legal agreements. This list is not all-inclusive and any other relevant information should be disclosed in a timely manner. It is your responsibility to ensure that any material changes to the above noted circumstances are disclosed to me as your financial planner on a timely basis since they could impact the financial planning recommendations.

Our services will be charged on an asset under management (AUM) fee. The way we have structured our fees is the following. A 1.1% fee based on assets up to $1 million. 0.9% fee on the next $2 million. 0.7% on the amount over $3 million. We also have a flat-fee for the construction of the financial plan. This includes development and delivery of your financial plan, unlimited email communication and a review meeting in 2019. The fee for this option is $10,000. If you were to bring your assets to our firm, we would waive the plan fee and charge only based upon the asset model described above. Please provide a check with the agreed upon amount with a signed copy of this engagement letter. The balance will be payable upon completion of the plan or quarterly under the AUM model. You agree to pay any outstanding charges in full within 15 days of billing. Please make checks payable to Blue Wave Financial.

Advice has been given to Jamie and Claire Jackson to contact legal advisors and other professionals in addition to the recommendations provided in the contents of the financial plan. Blue Wave Financial, along with the clients, agree that any action taken by Mr. and Mrs. Jackson as a result of the plan is based upon their own judgments. In addition, Blue Wave Financial does not provide legal or tax advice and nothing within the plan constitutes as such.

As your advisors at Blue Wave Financial, we have no known conflicts of interest in the acceptance of this engagement. We commit that we will advise you of any conflicts of interest, in writing, if they should arise.

Mr. and Mrs. Jackson and the advisors at Blue Wave Financial agree that performance of the financial markets cannot be guaranteed or predicted by the firm. In addition, both parties understand that all investments involve risk and that the past performances discussed within the confines of this plan are not guarantees of future results. Clients have reviewed, understand, and consent to the terms as stated in this disclaimer.

_______________________ . ______________ . _______________________ . ______________ Jamie Jackson Date Claire Jackson Date __________________ __________________ . ___________________ . ______________ Taylor James Jordan Smith Alex Jones Date

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Table of Contents

CLIENT INFORMATION

CLIENT GOALS

PLAN ASSUMPTIONS

S.W.O.T. ANALYSIS

EXECUTIVE SUMMARY

CASH AND DEBT MANAGEMENT

EDUCATION PLANNING

RISK MANAGEMENT

RETIREMENT PLANNING

INVESTMENT PLANNING

TAX PLANNING

ESTATE PLANNING

ACTION CHECKLIST

INTEGRATION REPORT

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Jamie and Claire Name Jamie Jackson Claire Jackson

Age 40 38

Employer Apex Groceries, Inc. Boeing, Inc.

Job Store Manager Executive Assistant

Salary $124,400 $59,400

Primary Beneficiaries Claire Jackson Jamie Jackson

Contingent Beneficiaries Brianna and Riley Jackson Brianna and Riley Jackson

Residence State Ohio Ohio

Children Name Brianna Jackson Riley Jackson

Age 14 12

Relationship to Clients Daughter Son

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Client Goals (in order of priority) 1. Retire with an income of $8,000 per month in today's dollars when Jamie turns 65, with

funding for a projected 30-year life expectancy.

2. Fund 80% of the cost of attending Eastern State University for Brianna and Riley.

3. Wedding for Brianna - save $15,000 by Brianna's age 25. The wedding fund savings will be invested 50% in conservative stocks and 50% in corporate bonds.

Hidden Goals • Have an adequate emergency fund of 3-6 months’ worth of living expenses, in case of

unforeseen circumstances

• Have a sufficient amount of disability coverage for Mr. and Mrs. Jackson in the case of disability that does not allow them to work full time

• Have an adequate amount of long-term care coverage on both Mr. and Mrs. Jackson to help provide for assisted living, nursing home care, or home health care, in the event that you are not able to take care of yourselves

• Have sufficient amounts of life insurance on both Mr. and Mrs. Jackson to ensure that the surviving spouse and children will have enough assets to maintain current standards of living in case of unexpected passing

• Update and review beneficiaries on all accounts to ensure proper and efficient titling of assets

• Update and review will to include Riley and make sure assets are distributed correctly according to your wishes

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Assumption Source Safe Retirement Account

6% Rate of Return Provided

Personal Residence 2% Increase Provided Aggressive Stocks 11% Rate of Return Provided Conservative Stocks 8% Rate of Return Provided Corporate Bonds 5% Rate of Return Provided 5-year CDs 2.5% Rate of Return Provided Inflation 3.5% Increase Provided College Inflation 7% Increase Provided Risk-Free Rate 4% Rate of Return Provided 15- Year Mortgage 5.5% Interest Rate Provided 30-Year Mortgage 6.75% Interest Rate Provided Refinance Costs (points and fees)

4% Rate Provided

Auto Loan 5.75% Interest Rate Provided Credit Card 18% Provided Yearly Wage Increase 3% Conservative estimate based on inflation Estimated Return of Portfolio

8.22% Pre-Retirement 6.9% Post-Retirement

Plan Assumption & Calculation

529 Plan Rate 4.36% https://www.collegeadvantage.com/new-to-collegeadvantage/see-all-investment-options/portfolios/ready-made-risk-based-portfolios https://www.morningstar.com/

Life Expectancy Jamie- 95 years Claire- 93 years

Provided by client

Current Cost to Attend Eastern State University

$9,000 per year Provided by client

Federal Marginal Tax Bracket

24% Provided by client

State Marginal Tax Bracket

4.5% Provided by client

Retirement Federal Marginal Tax Bracket

32% Plan Assumption & Calculation

Social Security Benefits https://www.ssa.gov/planners/retire/AnypiaApplet.html Social Security Inflation 3.5% Inflation provided 401(k) and Traditional IRA

Assumed that retirement vehicles allow for passive investing and across multiple asset classes

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Overview The SWOT analysis is our initial review of your financial situation.

Strengths • Healthy investment account balances • Jamie and Claire are both currently in excellent health • Saving to Tax-Deferred retirement accounts and maxing out employer matches • Currently have $20,000 saved for Brianna’s college education

Weaknesses • Claire is currently not contributing to a tax-deferred account • Investments are currently heavily invested in equities, currently holding a large amount

of individual stocks • Not currently utilizing any tax-free investments or accounts

Opportunities • Positive cash flow leaves room for goal planning • Deferred annuity can be used to combat longevity risk • Have enough saved to spend more during retirement or leave a bequest

Threats • Lacking proper life, disability, and umbrella insurance • Will is not updated and there is a lack of essential estate planning documents • Not a significant amount of time to save for children’s education by the time they start

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Cash and Debt • Continue payments on auto loans and mortgage • Increase monthly credit card payments to $790 • Use discretionary cash flow to fund education goal (refer to education planning section

for details) • Save $1,435 per year for Brianna’s wedding, starting in 2022 • Use discretionary cash flow in 2022 and 2023 to increase emergency fund to $55,000 • Increase mortgage payments once all other cash flow goals have been met

Education • Open an Ohio 529 plan for Brianna • Open an Ohio 529 plan for Riley • Transfer funds from UTMA account to Brianna’s 529 • Fund 529 accounts beginning in 2019

o $4,150/year for Brianna o $7,010/year for Riley

Risk Management • Purchase level premium term insurance for Jamie in the amount of $1,900,000 • Purchase level premium term insurance for Claire in the amount of $1,100,000 • Purchase disability insurance for Claire with same policy features as Jamie’s policy • Maintain current health insurance through Apex Groceries • Upgrade homeowner’s insurance to a HO-5 policy with a $260,000 policy limit. • Review auto insurance policy to ensure adequate features; upgrade policy if needed • Purchase umbrella insurance in the amount of $2,000,000 • Purchase long-term care insurance by age 55

Retirement • Begin receiving Social Security benefits in 2044

o Jamie age 65 o Claire age 63

• Continue saving at current rate o Max out employer match

• Considerations o Spending more during retirement o Retire 1-2 years early

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Investments • Sell a large portion of your individual stocks within your portfolio and invest the

proceeds from the sale into passive, low cost Exchange Traded Funds (ETFs). • Sell a portion of your U.S. stocks to decrease the concentration of U.S. securities in your

portfolio. Use the proceeds to purchase REITs and municipal bonds.

• Reallocate your investment allocations to closer match your risk tolerance. We recommended a 60% equity 40% fixed income portfolio.

• Allocate a small percentage of your portfolio towards cash. • Claire, we recommend that you open a Traditional IRA.

Taxes • Contribute to 529 accounts to receive favorable tax treatment and tax deduction. • Continue to contribute to your qualified retirement plans in order to defer taxation

Estate

• Work with our team to find an estate attorney if you do not already have one. • Update both of your wills to ensure they are valid and include Riley with the help of

your estate attorney. • Determine who you want to be appointed for the various Powers of Attorney and have

these documents created with your estate attorney. • Draft an Advance Medical Directive with your estate attorney for both of you. This will

create a plan for life sustaining treatment wishes, in case either of you were to become incapacitated.

• Complete a review of all your account beneficiaries to ensure they are correct. Name secondary beneficiaries for these accounts.

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Overview

Managing cash flow is the first step in achieving your financial goals. Effective cash management includes funding everyday living and retirement goals, while appropriately eliminating debt and preparing for unexpected emergencies and expenses. By first understanding your cash situation, we can make the most appropriate recommendations for how to spend and distribute future income and earnings.

Net Worth Statement Analysis

The net worth statement is a snapshot of your current financial situation. It includes three major totals: total assets (what you own), total liabilities (what you owe), and net worth (the excess of assets minus liabilities). Starting on the left side of the statement, you will see your total assets are $610,000. Of this, over 40% is currently attributed to the value of your home. This is not an ideal situation for someone only a few years away from retirement but is not uncommon at your age. Just under 35% of your assets are in tax-advantaged retirement accounts, which is a strong position to be in. Moving to the right side of the statement, we see your total liabilities of $232,000 and a net worth of $378,000. As a percentage, your liabilities account for nearly 40% of total assets. This

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is an acceptable range for your age, and we expect your liabilities to decrease to zero as you pay off debts and near retirement. Like many others your age, most of your debt is attributed to your mortgage.

Cash Flow Statement Analysis

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The cash flow statement illustrates your cash inflows and outflows. Cash inflows are income from your jobs; outflows include living expenses, taxes, as well as retirement and other savings. Subtracting your total outflows from your total inflows gives us your discretionary cash flow. A positive cash flow is great and means you are spending less than you are making, leaving you around $14,500 to put towards other goals.

Most of your after-tax income is going to lifestyle expenses, which is the case for most people. Debt payments account for another large portion of your current outflows and we will be addressing this in the debt section below. You are currently saving around 10% of your after-tax income, which is a good figure to see. We will further discuss retirement savings in the retirement section of the plan. We recommend utilizing your discretionary cash flow to fund your education goal through the year 2024. Afterwords, starting in 2022, you can begin contributing $1,435 to Brianna’s wedding goal to be fully funded by 2030.

Emergency Fund An emergency fund is a critical piece of any successful plan. It is used to pay for living expenses in emergency situations, including the loss of wages. Having a properly funded emergency fund helps avoid the risk of an unexpected event negatively affecting your overall retirement goals. You are currently sitting at $29,600 in cash, which would cover roughly three months of expenses. This is typically considered the minimum appropriate balance for an emergency fund.

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The waiting period for all the insurance products we recommend later in the plan is 90 days, so your emergency fund will cover living expenses during that period. We recommend increasing the balance to six months expenses in the future, but we assume you will want to prioritize education funding for your children in the short term. We estimate you will be able to begin increasing your emergency fund in 2022. Having a six-month emergency fund will provide a larger safety net and allow you to cover additional emergencies during any insurance waiting periods.

Debt Management Proper debt management is a key part of improving cash flow. Paying debt off early can save you a large amount of money in interest payments over the life of your debts. Your current total debt balance is $232,180, which includes your $175,000 mortgage balance. This is normal for those only a few years into their mortgage payments. Your credit card debt has the highest interest rate of all debts, so this is the debt we want to pay down quickly and focus towards. We recommend using discretionary cash flow to payoff this balance by 2022. For the auto loans and mortgage, we recommend continuing your current payments until your education goal has been fully funded. At that point, you can use your remaining discretionary cash flow to put towards paying off the mortgage sooner.

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Recommendations

• Continue payments on auto loans and mortgage • Increase monthly credit card payments to $790 • Use discretionary cash flow to fund education goal (refer to education planning section

for details) • Save $1,435 per year for Brianna’s wedding, starting in 2022 • Use discretionary cash flow in 2022 and 2023 to increase emergency fund to $55,000 • Increase mortgage payments once all other cash flow goals have been met

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Education Planning Education Planning is a very important aspect of your financial plan, especially in regard to your children. At Blue Wave Financial, we make sure we lay out our client’s priorities and do everything we can to help accomplish them. In our planning for your children’s education expenses, we will use Ohio’s in-state tuition rate and increase that amount by the college inflation rate. We will be running an analysis, detailed below, on what steps you will need to complete in order to fulfill your goal of funding your children’s education costs.

Goals • Fund 80% of Brianna & Riley’s Education Costs • Have accounts funded by the time children start school

Assumptions • College Inflation: 7% • College start age: 18 • Ohio 529 Conservative Growth Index rate: 4.36% • Brianna College start year: 2023 • Riley College Start Year: 2025 • Ohio In-State tuition rate in 2019: $9,000 • Begin Saving in 2019

Recommendations First, we would like to applaud you for already having money saved for your daughter Brianna’s college expenses. This is a great first step towards meeting your education planning goals. One of our first recommendations is to open an Ohio 529 plan for both Brianna and Riley. An Ohio 529 plan has a few advantages. First, when contributing to an Ohio 529 plan, your contributions will be state tax deductible, which will decrease your overall tax liability. Another advantage of this 529 plan is that it’s not considered your child’s asset. The advantage of this is for the sake of financial aid. If the assets were to be considered the child’s, they might forfeit financial aid they would have otherwise received.

After setting up their 529 accounts we recommend you transfer the funds set up in the UTMA account to these 529 accounts. There are two main reasons why we are suggesting this. First, money in an UTMA account is considered the child’s asset. This may affect financial aid, as talked about in the previous paragraph. The second reason is that once the child turns 18, they

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have the ability to use the money for whatever they please. In a 529 plan the child is limited to spending the money on only education expenses.

Required Savings When calculating the required savings for college funding, we used inflated tuition costs for Ohio in-state tuition. From those costs, we used the estimated return achieved from the 529 investment. As you can see in the below graph, the combined amount you will need to save annually is $11,160. You’ll notice that the saving requirement is less for Brianna than it is for Riley. This is because of the $20,000 you currently have saved for her. One thing we will need to discuss before we finalize this plan is the maturity of the CD the $20,000 is currently invested in. To move the funds from the UTMA to the Ohio 529, we will need to liquidate the CD. Depending on the maturity date and if we will need to liquidate, we may incur a CD liquidation fee. This may slightly affect our annual required saving amount.

Child Annual Required Saving

Estimated 529 return

Years to start college

80% of college tuition cost

Brianna $4,150 4.36% 4 $41,903 Riley $7,010 4.36% 6 $47,975

Portfolio

Fund Weight Average Annual Rate Weighted Total Vanguard Total Bond Market II Index Fund

52.5% 3.51% 1.84%

Vanguard Total International Bond Index

Fund

22.5% 4.04% .91%

Vanguard Institutional Total Stock Market Index

Fund

15% 7.5% 1.13%

Vanguard Total International Stock Index

Fund

10% 6.79% .68%

Total Fees - - .196%

Total Return - - 4.36%

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Investments The Ohio 529 plan allows us to construct an investment portfolio depending on your needs. We believe the best option would be the Conservative Growth Index Fund. If you look at the graph above, you will see the funds, allocation, average return, and fees of this portfolio outlined. Using this approach allows us to yield an estimated 4.36% after fees. The reason we are suggesting a conservative approach is because of the short time horizon until your children will start attending college. Since Brianna will be starting in 4 years and Riley in 6, we want to make sure we take a conservative approach to ensure we don’t lose the money needed to fund their college in a market downturn.

Recommendations Summary

• Open an Ohio 529 plan for Brianna • Open an Ohio 529 plan for Riley • Transfer funds from UTMA account to Brianna’s 529 • Fund 529 accounts beginning in 2019

o $4,150/year for Brianna o $7,010/year for Riley

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Overview Your financial plan would be incomplete without a full assessment of the risks you face. Some of these risks you will be a part of your everyday life, while others are more situational. Without proper protection from risk, your assets are at risk of being depleted and your financial plan falling apart. In this section, we recommend a variety of insurance products to increase the likelihood of reaching your desired financial destination.

Life Insurance Life insurance pays a benefit if the person insured passes away. It is used to replace the income of that individual for the benefit of surviving family members. Because your plan is based on two incomes and you have two dependent children, it is important that you both have life insurance coverage. In your situation, the need for life insurance will end at retirement, making term insurance the most appropriate policy. Premiums for term insurance will be considerably lower than whole or variable life insurance. For these reasons, we recommend surrendering the variable life insurance policy. There may be a surrender charge, but the savings in premiums over the next twenty years will make up for that.

We use the life-value approach to calculate how much life insurance coverage you need. This method uses estimates of your future earnings to calculate the insurance need. We are recommending coverage amounts of $2,250,000 and $1,100,000, for Jamie and Claire respectively. Jamie’s current term policy will be in force for another 15 years, so we will subtract that amount from his total need, bringing the amount to purchase to $1,900,000. These policies should be 25-year level premium term policies that cover you until retirement. We estimate the annual premiums will be around $3,050 for both policies. 25-year term policies are not common, so if it is not possible to find an appropriate policy for that term length, we recommend a 20-year term. This leaves a 5-year gap, but your retirement should be funded enough at that point to provide for the remaining spouse to be fully supported.

Disability Insurance Disability insurance replaces a portion of your income if you become unable to work due to a disability. The likelihood of missing over 90 days of work due to disability is much higher than most people assume. The loss of wages from disability could prohibit you from reaching your retirement goals. We recommend maintaining the current policy on Jamie and purchasing a new, similar policy for Claire with a 90-day elimination period. This is the amount of time you must wait for benefits to apply. We have made recommendations to cover expenses during this period with money from your emergency fund. The estimated annual cost for the new policy is $750.

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Health Insurance Health insurance is another important part of your plan. Your current insurance plan is a high deductible policy. The deductible is the amount that you must pay before your insurance kicks in. A high deductible is great for those in good health because the premiums are lower than plans with lower deductibles. The 75/25 co-insurance means you must pay 25% of all costs in excess of your deductible, up to the annual limit. The insurance company covers the remaining 75% and all costs over your annual limit. Your current insurance plan is appropriate, covers your entire family, and is paid for by Jamie’s employer, so we recommend staying with it.

Homeowner’s Insurance Homeowner’s insurance is one of the most important policies to have, especially since your home is currently the single largest asset you own. There are many different types of policies to consider when looking for appropriate homeowner’s insurance. Your current policy is a HO-3 policy, which covers damage to your home and personal property against a list of named perils (causes of loss). We recommend switching to a HO-5 policy, which offers more comprehensive coverage. Instead of coverage being limited to named perils, HO-5 policies cover all causes of loss that aren’t specifically excluded. We recommend increasing the coverage to $260,000 to cover the full replacement cost of the home. The policy should also include liability coverage to protect you if someone is hurt while on the property. We estimate the premiums for the new policy will be around $2800 a year.

Auto Insurance Personal auto policies cover more than just damage to your vehicle during an accident. We want to make sure that your policy has the proper provisions for your situation. Liability coverage protects you from negligent use of your auto. Liability suits can be quite large, so this is a very important part of your policy. Medical payments coverage is usually included to pay for medical expenses related to an incident. We also want to have uninsured and underinsured motorist coverage, which protects you from drivers who don’t carry enough insurance. If your current policy is missing any of these, we recommend upgrading. This would be a good time to find a policy with a higher deductible to save money on premiums, since you will have emergency funding to cover the deductible. We estimate premiums would be around what you are paying now.

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Umbrella Insurance A personal umbrella policy is key to protect yourself from catastrophic losses due to personal liability lawsuits. Sometimes, these suits can exceed the policy limits on your homeowner’s or auto insurance and cause lasting damage to your financial situation. Umbrella insurance works by providing excess coverage above your underlying homeowner’s or auto insurance. For example, if you were involved in a multi-car accident in which you were at fault for $500,000 of damages, your auto insurance would cover the first $300,000 (your policy limit) and an umbrella policy would cover the remaining amount. We recommend a $2,000,000 policy to protect your current and future assets. This policy should cost about $475 annually.

Long-Term Care Insurance Long-term care insurance pays a daily or monthly benefit to cover medical or custodial care in nursing homes, hospitals, or at home health. Extended care stays can be extremely costly without insurance coverage. Most long-term care facilities charge $100,000 or more a year. Having to cover these expenses out of pocket is just another way that your financial plan could be toppled. We recommend purchasing a group policy with a $150,000 limit by age 55. The earlier a policy is purchased, the cheaper the premiums will be, especially if you maintain your excellent health. A 90-day elimination period will also help to keep premiums low. The policy should also include inflation protection on the policy limit. We estimate annual premiums for a policy with these features would be around $2,500.

Recommendations • Purchase level premium term insurance for Jamie in the amount of $1,900,000 • Purchase level premium term insurance for Claire in the amount of $1,100,000 • Purchase disability insurance for Claire with same policy features as Jamie’s policy • Maintain current health insurance through Apex Groceries • Upgrade homeowner’s insurance to a HO-5 policy with a $260,000 policy limit. • Review auto insurance policy to ensure adequate features; upgrade policy if needed • Purchase umbrella insurance in the amount of $2,000,000 • Purchase long-term care insurance by age 55

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Retirement Planning Retirement can be a scary time in a person’s life if not properly planned for. You will quit working and live the rest of your life off what you have saved throughout the years. Here at Blue Wave Financial, we strive to make retirement the most stress free and enjoyable time of your life. We will do an in-depth analysis based on your wants and needs and make sure that you have nothing to worry about during retirement.

Goals • $8,000/month in today’s purchasing power • $96,000/year in today’s purchasing power • Accounting for inflation -> $226,872/year in 2044 • Retire in year 2044

Assumptions • Inflation 3.5% • Wage Inflation: 3% • Social Security Cost of Living Adjustment (COLA): 3.5% • 25% drop in SS after 2034 • Social Security Income

o Jamie - $4,331 @ age 65 o Claire - $2,421 @ age 63

• Pre-Retirement Investment Portfolio Return: 8.22% • Post Retirement Investment Portfolio Return: 6.9% • Life Expectancy

o Jamie: 95 o Claire: 93

o Retirement year: 2044 o Retirement Length

o 30 years

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Retirement Income

One of the things you may be asking is, “Where will my money in retirement come from?”. First, the majority of your income will come from money you have saved throughout your working lives. You currently have four investment portfolios. Jamie’s 401(k), Claire’s 401(k), Jamie’s Traditional IRA, and your joint Investment account. We will also have Claire’s Traditional IRA added to these four (see investment section). These accounts are where we will be pulling the distributions from during your retirement, in order to fund all your wants and needs. Second, you have your Social Security benefits. In the graph below you will see the distribution amounts from both of these sources in the years 2044-2074. One of the things we had to consider when deciding how much we wanted to take out of your investment accounts was the impact of the distributions on the total return of the portfolio. Distributions have a large impact on the total accumulation of return in your investment portfolio. Our recommendations for income are based largely on the impact of the investment portfolio accumulation over time.

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Social Security Social Security is a program overseen by the government to provide financial support for individuals when they reach a point in their lives when they will no longer be working for their income. With Social Security, you can elect to begin receiving benefits early at age 62, full retirement age at age 67, or delay up until age 70. When contemplating which age to begin receiving social security benefits, you must consider how late in age you are planning for. Delaying benefits results in an increase in monthly benefits until you die. Normally when considering when to receive Social Security benefits and you are planning for past mid-80s, you would delay until age 70. However, because we are planning for a target year of 2044, when Jamie turns 65 to retire, we suggest Jamie begin receiving benefits at 65 and Claire begin receiving benefits at 63. This will allow our investment portfolio to accrue further gains instead of pulling funds from only our investments.

63 65 67 70 Jamie $4,997 $5,775 $6,663 $8,262 Claire $3,228 $3,730 $4,304 $5,337

Another aspect to remember is the possibility of reduced Social Security benefits. Many professionals expect that the Social Security funds will become depleted by the year 2034. This will result in a drop of Social Security benefits by as much as 25%. Here at Blue Wave Financial, we help our clients prepare for future events such as this. That being said, we recommend that you incorporate this potential cut of Social Security benefits into your plan. You can see in the below chart the expected benefit amount at age 65 and 63 that we will use in our retirement calculations.

63 65 67 70 Jamie $3,748 $4,331 $4,997 $6,197 Claire $2,421 $2,798 $3,228 $4,003

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Capital Needs In our capital needs analysis, we prioritized the amount of income that you both said you would need to properly live during retirement. You told us that amount is $96,000 per year which will be $226,872 in the year 2044 (retirement year). In our calculation, we inflated this yearly amount by 3.5% annually. The next thing we had to consider was your risk tolerance when constructing an investment portfolio during retirement (see investment portion). We believe we can earn 6.9% annually on the investment portion post-retirement. Next, we considered how long your retirement would last. We want to plan conservatively, so we are going to plan for a 31-year retirement period or through Jamie’s 95th year and Claire’s 93rd year. If you have any concerns with how we are planning for longevity, please let us know so that we can adjust our calculations. The final thing that impacted our calculation of how much you would need saved at retirement was how much Social Security Income you would have. Seen in the Social Security section above, we calculated your annual Social Security benefit. Starting in 2044, this annual amount will be about $82,245. This amount will also be adjusted for cost of living by a rate of 3.5%. After all of these being imputed into our calculation, we determined the amount you will need to have accumulated by retirement is $2,902,056.

Required Minimum Distribution (RMD) A term you may have heard or will hear about in the future is a Required Minimum Distribution or RMD. An RMD is an amount that must be withdrawn from your retirement account. This RMD amount will first occur in the year after you turn 70½. We do not foresee RMDs being an issue in your plan because we plan on pulling distributions to fund your retirement needs.

Annuity An annuity is an insurance product that is usually funded by a time called the accumulation period. After the annuity finishes the accumulation phase, it begins the annuitization phase. This is when the insurance contract begins to pay steady streams of income to the individual. Annuities are a very important aspect to the financial plan. One major reason they are very integral to the plan is the impact they have on mitigating risk of longevity. For the sake of Risk Management, we are suggesting you purchase a deferred longevity annuity later on in your plan. Deferred annuities are an annuity that does not pay out immediately after it is funded. Since we are planning for ages of 95 and 93, a deferred annuity could begin paying out if you outlive the plan and your assets and would give you an income stream for the remainder of your life. You could purchase a jointly owned deferred annuity which would provide an income stream until both of you pass. This annuity is something that would be funded further down the

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road. We can take a look at your plan further in the future and decide if a deferred annuity would still be a good idea.

Considerations As you can see from our recommended annual savings, you are currently saving more than what we believe you need to accumulate sufficient assets at retirement. Because of this you will have a few options to consider. The first option to consider is the possibility of retiring early. We do not recommend saving less because of your 401(k)-employer match, which essentially would have you miss out on free money. However, saving at your current rate will end up with more than what you need to supply your retirement needs. We believe that it would be possible for you both to retire 1 year before your preferred retirement year of 2044. The second option to consider is the amount you spend annually. If you choose to retire your intended year of 2044, you have the option to spend more than current estimated need. This means that you would be able to afford to do more during retirement and have the option to spend more on any other activities you may want to do during retirement.

Annual Savings (with employer match)

Projected investment total in 2044

Investment Income Retirement (Inflate at 3.5%)

Social Security Income (Inflate @ 3.5%)

Total Income During Retirement

Current $18,376 $3,408,173 $171,286 $81,022 $252,308

Capital Needs Analysis

$11,672 $2,902,056 $145,850 $81,022 $226,872

Recommendations

• Begin receiving Social Security benefits in 2044 o Jamie age 65 o Claire age 63

• Continue saving at current rate o Max out employer match

• Considerations o Spending more during retirement o Retire 1-2 years early

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Investment Management Overview Investment management is an essential part of the financial plan and a main factor in your ability to accomplish goals. You can think of your investment portfolio as a car engine. If your engine isn’t working properly, you’re not going to be able to reach your destination. Even further, if you don’t have a high-quality engine you might get somewhere, but it may not be where you actually want to end up. The same is true for your financial plan. We want to ensure that you will reach your final destination and meet all your goals along the way. Your investments will be the driving force behind meeting your goals.

Our team has created an analysis to assess your current portfolio’s effectiveness based on a variety of criteria. First, we analyzed your current portfolio and investment positions in order to compare it with your risk preferences and goals. Our main objective with managing your investments is to create a portfolio and asset combination that achieves the proper rate of return to meet your goals, while allowing you to rest easy knowing that your financial situations is taken care of. Secondly, we looked at your current investment positions to ensure that you are properly diversified across various asset types and classes. Our goal with this analysis, is to make sure that your investment portfolio does not have a large quantity of assets in the same position. Through proper diversification, our team can decrease unnecessary risk in your financial plan and possibly increase your probability of success when it comes to meeting your goals. Last but not least, we took a look at the type of accounts your investments are held. As you might know, there are various account types such as taxable, tax-free, and tax-deferred. Utilizing different types of these accounts and strategically placing investments in each can help your financial plan in two main ways, by minimizing potential taxes and maximizing your real returns. For our analyses, we have chosen to focus on real returns. Real returns are your returns after taxes and fees have been taken out. This ensures we factor multiple financial planning areas in order to give you a true snapchat of your financial position.

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Current Position Retirement Accounts

401(k): Jamie $101,000

401(k): Claire $81,000

Traditional IRA: Jamie $29,000

Personal Investments

Stock Portfolio: JTWROS $45,692

Mutual Funds: JTWROS $7,500

Bonds: JTWROS $5,169

Total $269,361

Investment Category Value Current Allocation

Suggested Allocation Range

U.S. Stock $183,242 70% 30-35% • Aggressive Stock $112,650 43% 17-22%

• Conservative Stock $70,592 27% 7-13% International Stock $51,150 20% 20-25%

• Aggressive Stock $51,150 20% 10-13%

• Conservative Stock $0 0% 9-12%

Real Estate Investment Trusts (REITs) $0 0% 5-10%

Bonds $27,469 10% 45-50% • U.S. Bonds-Taxable $5169 2% 15-20%

• International Bonds- Taxable $22,300 8% 15-20%

• Municipal Bonds- Tax Free $0 0% 10-15%

Cash $0 0% 0-5%

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70%

20%

0%10%0%

Current Portfolio

U.S. Stock

International Stock

REITs

Bonds

Cash

28%

19%5%

43%

5%

Recommended Portfolio

U.S. Stock

International Stock

REITs

Bonds

Cash

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Analysis:

• Your current portfolio is very aggressive when compared with your risk tolerance. Jamie, we understand that your risk preference is aggressive and that yours, Claire, is moderate. Combining both of your attitudes towards risk, we arrive at a moderately aggressive tolerance. However, your current investment positions consist of 90% stocks and 10% bonds. This high concentration in stocks can cause unnecessary risk and financial loss when the stock market goes down. We believe you should invest in other types of assets to help decrease risk and increase overall return.

• You are no currently utilizing any tax-free investments or accounts. Adding tax-free investments such as a municipal-bond or utilizing a tax-free account such as a Roth IRA can give your financial plan more tax flexibility, to make sure your investments are efficient, as well as to provide additional diversification.

• In your stock portfolio, you currently have a large amount of stock in individually held companies. This exposes you to what is known as unsystematic risk. Systematic risk is the risk any investor takes, by simply investing the stock market. Simply put, it is unavoidable. Unsystematic risk on the other hand, is specific to a particular business or industry. By holding on to a large amount of individual stocks, you have the risk that a business will not perform well and jeopardize your financial security.

• Your current portfolio has a very heavy concentration in U.S. stock, making up around 70% of your investments. While historically U.S. stock has performed decently well, no one can truly predict what the stock market will do. When planning for the future, we believe it is best to be invested in various different types of markets rather than just domestic equites. Research has shown that well diversified investments will perform better in market declines and throughout time.

• You currently don’t have cash as a part of your investment portfolio. While you definitely have cash available for your emergency fund and spending needs, we believe that building cash into your investment portfolio can be beneficial. Having a small amount of your portfolio allocated to cash allows us to rebalance your portfolio if your allocations change and allow us to take advantage of buying and selling opportunities easily.

• Claire, we noticed that you are currently not contributing to any type of IRA. Contributing to a traditional IRA can help delay payment of taxes, help you save additional funds for retirement, and provide you with an additional deduction on your annual tax return.

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Recommendations:

• Sell a large portion of your individual stocks within your portfolio and invest the proceeds from the sale into passive, low cost Exchange Traded Funds (ETFs). We will want to ensure that they fit into our recommended asset allocation range in the table above. o Purpose: Holding a large amount of individual stocks increases your exposure to

unsystematic risk. When invested in an index or fund with hundreds of other securities, your exposure to this type of risk decreases significantly.

o Benefit: Decrease unsystematic risk that is not necessary to meet your goals. Provides a large amount of diversification and an increase in expected returns.

• Sell a portion of your U.S. stocks to decrease the concentration of U.S. securities in your portfolio. Use the proceeds to purchase REITs and municipal bonds. o Purpose: Research shows that portfolios with large concentrations in one type of

security underperform when compared to portfolios with a large amount of diversification across various asset types. REITs and municipal bonds will help this diversification effect and provide some tax advantages.

o Benefit: By decreasing your concentration in U.S. stocks, you will in turn decrease the overall risk of the portfolio. REITs and municipal bonds will also be loosely correlated with the rest of your portfolio. This will increase the expected level of concerns while decreasing volatility. Municipal bonds are also tax free investments which give you additional tax advantages and flexibility.

• Reallocate your investment allocations to closer match your risk tolerance. We recommended a 60% equity 40% fixed income portfolio. This has slightly a lower risk level than your moderately aggressive risk tolerance, but based on your current financial position our team does not recommend taking any unnecessary risk if we can still meet all your goals effectively. o Purpose: If your portfolio is too aggressive compared to your risk preference,

you will most likely be uncomfortable and stressed in the conditions of a market downturn. We want ensure you have a comfortable safe ride into and throughout retirement.

o Benefit: A portfolio that matches your risk tolerance investment will keep your comfortable even in the worst market conditions. A portfolio that matches your risk preference puts you in a better position to stick to your financial plan by lowering the changes that you pull out of the market at the wrong time.

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• Allocate a small percentage of your portfolio towards cash. o Purpose: Having a small amount of your portfolio dedicated to cash allows us as

you investment managers to be able to buy at the opportune time and be able to easily rebalance your portfolio as needed.

o Benefit: The cash allocated to your portfolio will allow us to rebalance your portfolio as needed, according to the tolerance bands we have set up. In addition, it means that we will not necessarily have to sell every time we need to re-arrange your allocations.

• Claire, we recommend that you open a Traditional IRA. o Purpose: A traditional IRA is a great way to continue saving for retirement. You

can save a maximum of $6,000 per year, this is adjusted for inflation yearly. In addition, this is also a tax-deferred investment. If you want to contribute more than you are currently contributing to your 401(k) accounts, then this will be our first priority.

o Benefit: You will to continue to save for retirement while also receiving a tax deduction for your contribution. This amount can be invested and taxes will not be paid until distributions are taken.

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Investment Policy Statement

Preface This Investment Policy Statement (IPS) will include numbers that are very precise and exact in nature. However, our team wants you to understand that this does not necessarily translate to exactness with your probability of success in terms of meeting your goals. The projections outlined in this plan are based on current assumptions that can easily change over time. Our team here at Blue Wave Financial strives to use the most accurate data available in our projections, but they still may not be accurate predictions of what is to come in the future. The propose of the IPS document is to assist Mr. and Mrs. Jackson in making investment decisions by creating an easy to follow process that touches on the risk and return components necessary to meet the goals they have laid out for us. This document will detail the investment philosophies and methods used by Blue Wave Financial to evaluate, monitor, and adjust Mr. and Mrs. Jackson’s portfolio and invested assets. The IPS will also detail the scope of advisement and expectations between Blue Wave Financial and Mr. and Mrs. Jackson in way that is clear and specific towards both parties. The Investment Policy Statement will be constantly updated and changed, just like the totality of your financial plan. At a minimum, the IPS will be updated on a yearly basis, corresponding to your goals, concerns, and changes in our current assumptions. If you have any questions about the content contained within your IPS, please do not hesitate to reach out and let our team know.

Scope of the Client and Assets If you are committed to our financial advice, this Investment Policy Statement and its contents pertains to certain investment accounts. This accounts that this IPS governs are as follows:

• Mr. and Mrs. Jackson’s Checking Account • Mr. and Mrs. Jackson’s Saving’s Account • Mr. and Mrs. Jackson’s Money Markets Account • Mr. and Mrs. Jackson’s Stock Portfolio • Mr. and Mrs. Jackson’s Equity Growth Mutual Funds • Mr. and Mrs. Jackson’s Bonds • Mr. Jackson’s 401(k) and Traditional IRA • Ms. Jackson’s 401(k) • Brianna’s Wedding Fund

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Scope of Advisement Taylor James, Jordan Smith, and Alex Jones are responsible for placing the Jackson’s best interests ahead of their own. As financial advisors to Mr. and Mrs. Jackson, our team at Blue Wave Financial will keep up to date with current assumptions and make sure they update projections as needed. In addition, we will consult with our CPA’s and attorneys, always giving our best advice to make sure the Jackson’s are able to meet their specific goals outline to us. On the client side, Mr. and Mrs. Jackson will be responsible for updating us, as their financial advisor, on changes to their situation that will affect their plan. This includes changes to their goals, risk preferences, properly executing policy procedures, and notifying us when they believe policy procedures have not been met. Mr. and Mrs. Jackson will also be responsible for approving this IPS, along with any updates and changes that occur in the future.

Client Description Name: Jamie Jackson

Age: 40

Occupation: Store Manager- Apex Groceries, Inc.

Salary: Gross- $124,400 Net- $81,342

Spouse: Claire Jackson

Children: Brianna (14) and Riley (12)

State of residence: Ohio

Health: Excellent- Nonsmoker

Name: Claire Jackson

Age: 38

Occupation: Executive Assistant- Boeing, Inc.

Salary: Gross- $124,400 Net- $81,342

Spouse: Jamie Jackson

Children: Brianna (14) and Riley (12)

State of residence: Ohio

Health: Excellent- Nonsmoker

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Client Goals The primary objective of your personal investment policy is to accumulate the capital needed to fully meet your specific goals. This will be completed while staying in line with your risk preferences and considering how much risk you can realistically take on, given your current financial position.

The specific goals you have outlined to us to address, in order of priority include:

1. Retire with an income of $8,000 per month in today's dollars when Jamie turns 65, with funding for a projected 30-year life expectancy

2. Fund 80% of the cost of attending Eastern State University for Brianna and Riley. 3. Wedding for Brianna - save $15,000 by Brianna's age 25. The wedding fund savings will be

invested 50% in conservative stocks and 50% in corporate bonds.

Hidden Goals “Hidden Goals” are goals that are not directly expressed but are essential to achieving each of your specific goals and needs. In a way, hidden goals are similar to the foundation of a home. There must be a firm foundation, so that if a catastrophic event was to occur, the house is still left standing and intact. Similarly in your financial plan, your hidden goals must be covered so that one event doesn’t destroy or derail your entire plan that you have set in palace

The hidden goals we have included for your plan include the following:

• Have an adequate emergency fund in case of any unforeseen event. This sum of money should be used to maintain the same standard of living for 3-6 months, in the case of a medical accident, job loss, or any other event that could threaten the success of your financial plan. For your situation, we are recommending an emergency fund that has 6 months’ worth of living expenses. This is partly due to the fact that your insurance plans all have a 90 day elimination period, meaning that you cannot receive benefits for the first 90 days. By having this month emergency fund, this will give you extra time to sort out your situation and not have to worry about running out of funds.

• Have an adequate amount of coverage for disability insurance for both Mr. and Mrs. Jackson. This will provide income to the family in the event that either of you becomes disabled and cannot work full time. No one plans to become disabled, but we want to ensure that your children are fully cared for and that your financial plan stays the course.

• Have an adequate amount of coverage for long-term care insurance for both Mr. and Mrs. Jackson. Long-term care insurance will assist with paying for assisted living, nursing

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home care, or home health care in the event that either of you are not able to care for yourselves due to any disability or chronic condition.

• Have adequate amounts of life insurance on both Mr. and Mrs. Jackson. This is vital in the event that either of you end up passing before you plan to. By having the correct amount of life insurance, you will make sure that your surviving spouse and children, Brianna and Riley, are able to maintain the same standard of living and will not have to compromise their lifestyle in any way.

• Update and review beneficiaries on all accounts to ensure that titling is correct. This alone will ensure that most of your assets pass to the appropriate heir at the time of your passing.

Investment Objectives Investment objectives are created by doing a comparison of your risk and return preferences and needs. Return and risk go together hand in hand and need to complement each other to truly have a realistic and well-designed investment objective. Essentially, it is important to never increase risk in order to just meet your goals, if it violates your risk tolerance. Our team at Blue Wave Financial is committed to never increasing your return objectives without also evaluation your risk tolerance as well.

Return Objectives The returns we want to focus on are real returns. These return percentages are more realistic to what you will actually achieve, as they are the returns after inflation has been factored in. This is important, as inflation erodes your purchasing power. This means that a dollar today cannot purchase the same amount of goods in 5 years, because it simply isn’t worth as much. This is important to consider since certain goals like education funding can have an inflation rate of almost twice that of a normal dollar. We have accounted for this inflation when doing a capital needs analysis for your retirement, education, and marriage fund goals.

Risk Objectives As mentioned earlier, your return must match up correctly with your risk tolerance. Standard deviation is what we will use to measure risk. Standard deviation simply put is a measure of volatility that lets us know the amount of variation in returns that an investor can expect if they own that investment. A lower standard deviation lets us know that there

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will be a smaller variation in returns, while a high standard deviation tells us that returns may vary significantly. Essentially a lower standard deviation tells us that there is a smaller change that the actual return is different than the expected return.

We have talked a decent amount about risk tolerance throughout our plan. Risk tolerance, is the worst conditions you can tolerate when the stock market has a downturn, before wanting to sell all your investments and get out of the market entirely. Simply put, it is your own comfortability level with changes within you portfolio. At the end of the day, we want you to be able to go to sleep at night without staying up worrying about how the stock market is going to perform. A higher risk tolerance allows a higher threshold for volatility, while a lower tolerance means a lower threshold. Based on our conversations with you and the results of our risk tolerance questionnaire, you have a combined risk preference of moderately aggressive. Within our recommendation for your asset allocation, you will see that we have taken your risk tolerance into account and our portfolio design is a reflection of that.

Risk capacity is also an important concept to understand, as it directly affects your investment constraints. Risk capacity measures how much risk you can realistically take on, based on the assets located on your balance sheet. It is the greatest amount of standard deviation that you will be able to take on to satisfy your goals and protect your assets from inflation. One interesting thing about risk capacity is that it can actually increase when you have a longer time period to meet your goals. We call this factor time horizon. An example of this in your plan is that you have a retirement goal time horizon that is much longer than your education funding time horizon. This means we can take more risk in accomplishing your retirement goal than when looking to fund Brianna and Riley’s education.

Investment Constraints Risk and return characteristics are essential when setting up a portfolio model to fund your goals. However, we must also consider the limitations of your situation and keep those at the forefront of our minds as we implement recommendations. Constraints for your portfolio include time horizon, tax, considerations, liquidity needs, legal and regulatory concerns.

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Time Horizon Time horizon is an investment constraints that is based on many qualities, including liquidity needs, investment objectives, and client goals. Here at Blue Wave Financial, we have a strategy that helps keep the riskiness of your investment portfolio at bay by keeping the money you need in the next five years readily available. We have a separate account that is used to hold cash and cash equivalents to pay for all of your expenses for the next five years. This strategy allows us to pull the money out from your portfolio and set it aside to make sure the money is there for you to use when you need it. This also means that if the market has a severe decline, that the money you need for the current five years will still be available and the rest of your portfolio has time to regain what is has lost. The five year strategy is something we will mainly be using during your retirement years, as most of your income will be coming from portfolio withdrawals during that time period. Our portfolio is constructed using a long-term time horizon to ensure that everything in the short term will be taken care of.

Tax Considerations When considering taxes, many of our first reactions are try and minimize the amount we owe on a yearly basis. Here at Blue Wave Financial, instead of focusing on minimizing tax liabilities, we look to maximize your after-tax wealth while considering your stated goals and risk

Withdrwawls

Main Investment

PortfolioSpent as needed

5 Years Cash Equivalents to

Fund Goals

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tolerance. Below are our tax considerations that we will account for, assuming a 3% annual wage increase for both of your salaries.

• Mr. and Mrs. Jackson are currently in the 24% federal income tax bracket and the 4.5% state income tax bracket. Under current tax laws, Mr. and Mrs. Jackson are expected to move into the 32% tax federal income tax bracket and in the --------- Ohio state income tax bracket in 2044, the year of retirement. Mr. and Mrs. Jackson can expect there federal income tax bracket to decrease in retirement, moving down the 22% bracket. The sale of investment assets will be taxed at preferential rates during this period.

• Mr. and Mrs. Jackson can expect to pay a 15% long term capital gains tax on any long term capital assets they decide to sell.

• Mr. and Mrs. Jackson can expect to receive ordinary income tax treatment on their brokerage account on capital gains, income from interest gaining investments, and income from non-qualified dividends.

• Any withdrawals from Mr. and Mrs. Jackson’s 401(k) accounts will be taxed at ordinary income rates. The rate will be determined by the tax bracket on the date of withdrawal. Any distributions taken before the age of 59 ½ will additionally incur a 10% penalty. These same rules govern the traditional IRA that Mr. Jackson has.

• With the current estate tax laws, we project that Mr. and Mrs. Jackson will not have any estate tax liability. This is due to the large applicable estate tax credit. We will want to monitor any changes in legislation to ensure that this stays the same.

Legal and Regulatory Concerns 529 Plans currently allow for the withdrawal of funds in the account to be tax-free, if they are utilized for qualified education expenses. Qualified education expenses include tuition, room and board, and supplies. If money is withdrawn and not used for a qualified education expense, there will be a 10% tax penalty on the withdrawal. In addition, there will also be ordinary income tax on any gain within the account. Since withdrawals can only be used for qualified education expenses, there is a risk associated with funding education through these types of plans. Essentially, if your child does not attend college then you will end up forfeiting around 10% of your assets that you invested.

Preferential rates also may change in the future, was tax laws change. This can have major implications on your investments if they increase. Our team will be constantly monitoring this

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to make sure any changes will be implemented into the plan and that you are set up fully for success.

Another regulatory concern that could affect your plan is changes to the estate tax exemption amount. This value is constantly changing, due to inflation and political policy changes. For now, neither of you will have to worry about estate and gift taxation, but this could change in the future. Our team at Blue Wave Financial is constantly keeping up with the changes in estate laws and will let you know if anything is different in the future. The following section will go over our recommended asset allocation recommendation, based on your investment goals and restraints. In addition, we have detailed out the thought process behind the process used to develop our recommendations.

Asset Class Constraints Here at Blue Wave Financial, we believe that markets are efficient. Thus, we believe it is difficult to consistently beat the market consistently, year after year. We believe this frame of thinking is proved even further when considering taxes and fees that are incurred by being invested in the market. Due to this line of thinking, we concentrate on just being in the market and making sure we can achieve a rate of return that is sufficient to meet your goals, rather than trying to outperform the market. This is also why we employ passive investment management and only buy and sell when needed, rather than constantly buying and selling through active management. Research has proven that that over long-time horizons, passive management outperforms active management when considering both taxes and fees into the picture. Another foundational piece of our asset allocation is investing across multiple asset classes and in international and domestic securities. Research has shown that portfolios containing multiple assets that are weakly correlated to each other outperform traditional portfolios. In addition, this model creates a great deal of diversification that overtime will decreases risk and increase your expected return from your portfolio as a whole.

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Our team at Blue Wave Financial additionally believes that past performance is not necessarily a indicator of the future. Essentially, we believe that we cannot consistently and accurately predict which asset will outperform others in a given year. Therefore, we believe so much in diversification across multiple asset classes to ensure that you come out on top, no matter what happens in the market. As you can see in the above image, asset returns can change drastically within twelve months and even more over long time horizons.

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As you can see from the pictoral representation above, investing across multiple asset classes increases your returns and decreased the amount of volatility within your portfolio. Using a combination of U.S. stocks, international stocks, U.S. bonds, international bonds, municipal bonds, and real estate investment trusts (REITs), we will be able to create an asset allocation that maximized your return for a given level of risk. This is due to using multiple assets that are not closely correlated. This diversification will benefit you in favorable and even more in unfavorable market conditions, when assets become more correlated with each other. This reasoning is why we use asset allocation as our largest influence on predicted investment performance at our firm.

Mr. and Mrs. Jackson’s investment portfolio currently contains the following asset classes:

1. U.S. Stocks 2. International Stocks 3. U.S. Bonds 4. International Bonds

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Mr. and Mrs. Jackson’s recommended investment portfolio will consist of the following asset classes

1. U.S. Stocks 2. International Stocks 3. U.S. Bonds 4. International Bonds 5. Cash and Cash Equivalents 6. Real Estate Investment Trusts 7. Municipal Bonds

Investment Constraints At Blue Wave Financial, we do not utilize the shorting of stock or buy on margin unless there is a great deal of evidence that it will benefit you as the client. We employ the use of passive investments overwhelmingly, as we believe this is the best strategy when considering long-time horizons. Bringing these constraints into fruition, we recommend not having concentrated positions in the market or owning large portions of individual stock.

Investment Strategies At Blue wave financial, we believe that all portfolios and your accounts as a whole need to be diversified across multiple asset class while maximizing tax efficiency to the best of our ability. Due to this, we recommend our clients utilize investments such as ETFs and funds that are passive in nature to maximize after-tax returns and over cost effectiveness. To help with maximizing your after-tax returns, we recommend your tax-free investments such as municipal bonds within your taxable accounts like your brokerage, while placing taxable assets like a corporate bond in one of you tax advantaged accounts like a 401(k). We want to use your asset allocation and tax location together to give you the best results possible. Looking at Mr. And Mrs. Jackson’s risk tolerance, we are recommending a portfolio that includes domestic and international stocks and bonds, while also including municipal bonds and Real Estate Investment Trusts. This will increase your expected return and decrease the volatility of your overall investments. One thing we want to note is that our team does not believe or utilize rule of thumb investing methods. These strategies consist of models that base your investments based on criteria such as your age. We do not utilize such methods, as they mainly consider only one criteria and do not factor in risk tolerance or capacity.

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Fees Minimize Investment Performance

This table displays the advantage of passively managed funds vs active management. We can see that passively managed funds win overall, since an active fund manager must beat the market and all the fees. Due to this, there must be at least a 2.21% return above the market on an actively managed fund to have the advantage over a passively managed fund. This is quite difficult to consistently achieve on a yearly basis.

Long Term Effects of Fees

This table shows the effect of fees over a long-time horizon. Assuming a 7% annual return, after 30 years the 2.21% return that the index fund had accumulates to an amount that is almost two times that of the actively managed fund. This is the basis that we use for recommending passive investing that are low cost in nature.

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Implementation, Monitoring, and Review The following section will detail the responsibilities of Blue Wave Financial, surviving as your financial advisors, as well as the responsible of you as the client in regard to measuring, evaluating, reviewing, and rebalancing your investment portfolios

Responsibilities of Each Party Mr. And Mrs. Jackson: Wil be responsible for notifying Taylor James, Jordan Smith, and Alex Jones of any changes in regards to their current goals, risk tolerance, and any events that may affect their financial state in away way. Examples of such events affecting your financial situation can include loss of income, a medical emergency, disability, life insurance received form a family member, and any raise in salary. Please be aware that this Is not a comprehensive list and we recommend reaching out to us if you think an event will affect you in any way financially

Taylor James, Jordan Smith, and Alex Jones: Will be responsible for alerting Mr. and Mrs. Jackson in the occurrence of changes in the areas of assumptions, projections, and the legal environment. Next, our team will also be responsible for updating your recommendations in the event that your financial situation changes in anyway, or if your goals and priorities alter in any way. Third, our team is responsible for recommendation proper reallocations to your investments when needed and ensuring that they fit well within your risk tolerance. Last, but not least we will review and monitor you plan to ensure everything is going to plan.

Performance Measures

Portfolio performance will be measured and evaluated on an annual basis, using a time-weighted rate of return. This is the most appropriate considering your goals will have contributions and withdrawals to meet your various goals. If a yearly withdrawal or contributions exceeds 4% of the portfolio, we will evaluate and make sure that is still the most appropriate for your given situation.

Performance Evaluation

Evaluation of each asset class will be in relation to a benchmark for performance. The return of each benchmark will be stated in real returns, factoring in inflation. The inflation rate we will assume is 3.5%.

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The Benchmarks for our recommended portfolio include:

• Risk Free Rate- 90 day T-bill o Tracks treasury bills that have a maturity of 90 days or less

• Russell 2000 o Tracks 2000 small companies held within the United States. Contains a

comfortable mix of various types of stock. • S&P 500 Index

o Tracks the largest 500 companies in the United States • MSCI EAFE

o Tracks large and medium sized companies in countries outside of the United States and Canada

• Aggregate Bond Index o Tracks the performance of investment grade bonds in the United States

• Real Estate Investment Trust o Comprised of real estate owners that are publicly traded across the stock market

Review Schedule Taylor James, Jordan Smith, and Alex Jones are responsible for monitoring and reviewing the portfolio that has been recommended on at least an annual basis. This will ensure that any changes in inputs, assumptions, and goals are fully integrated and up to date. We are committed to providing you with an annual report to document how your investments have performed and whether you are on pace to meet your stated goals. Together we will meet semi-annually to annually to discuss our evaluations.

Rebalancing Guidelines

Blue Wave Financial approaches rebalancing our clients’ portfolios on an as needed basis. This means that unless we notice something wrong with your allocations, we will not rebalance unless your allocations are outside our suggested range. Our tolerance bands normally sit around a 5% threshold, but you can refer back to our suggested allocation range chart to see how we will treat each asset. We will monitor your portfolio to make sure that when an asset class, such as international stock, increased outside it’s recommending range that we rebalance and evaluate accordingly. The 0-5% cash in your portfolio will also assist with rebalancing, by allowing us to buy and sell easily and as needed. We will always analyze where a reallocation needs to occur, but it is safe to say that if your allocations are outside the suggested range that it will be adjusted as needed. We do not simply rebalance on a yearly or quarterly basis, but only when needed. This will make sure that we rebalance at the right time and keep your taxes from the buying and selling of investments low.

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Tax Planning Tax planning is an integral part of the financial planning process because there is a tax consequence and effect for almost every financial action taken. Taxes have a large impact on your financial welfare, which is why we place a high priority on tax planning here at Blue Wave Financial. Our strategy is to maximize your after-tax wealth, rather than attempting to minimize the amount of tax that you actually pay. This means that our team is committed to utilizing a tax strategy that is best for your particular situation by considering all factors that go into the plan. We plan to maximize your after-tax outcome in order to accurate and properly meet all of your financial goals

Implications of Recommendations The various recommendations that we have made throughout your comprehensive financial plan will have an impact on your overall tax situation, changing it from where it currently stands. In our investment recommendations sections, we recommended selling and buying various investments to create more diversification and to spread out investment concentrations within your portfolio. The sale of your current investments will create what is known as a capital gain. Capital gains are taxed at preferential rates, at either 15% or 20% based on your income. Your annual income makes you taxes at 15% on the amount of your capital gain. We want you to understand that while it is not necessarily preferable to pay additional taxes just to reallocate your portfolio, this reallocation of investments will provide you with higher after-tax returns over the long run and will add additional diversification benefits to lower your risk.

Current Situation • You are currently in the 24% federal marginal income tax bracket • You are currently in the 4.5% state income tax bracket for Ohio • For 2019, you currently have a combined estimated tax liability of $47,880

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Strategies to Minimize Tax Liability As things currently stand, you are in the 24% marginal tax bracket for federal income tax. Between your combined incomes, you paid a total of $25,556 in federal income taxes over the past year. We have a few strategies that we recommend you implement in order to lower your federal tax liability, therefore maximizing your growth of investment and keeping as much money in your pocket as possible.

• One strategy that we mentioned in our investment management sections was to purchase some municipal bonds in your brokerage account. These municipal bonds are tax free and are extremely useful to help lower the amount of taxes you owe each year.

• The contributions you make to the 529 accounts for Brianna and Riley will also not be subject to income tax. This is since the contributions are considered a gift and are below the annual gift exclusion amount of $15,000 per person. This combines for married couples, equaling a total exclusion amount of $30,000.

• 529 contributions can also be used in a different way in order to lower state tax liability. Based on your contributions, you are eligible for a $4,000 deduction per 529 account to use against your Virginia state income taxes every year that you contribute.

• Another tax advantage built into your financial plan is the utilization of traditional IRAs. You are able to deduct contributions to your IRA’s on your tax return each year. These accounts will grow tax-deferred and the amount will be taxed at a lower tax bracket when you start taking distributions in retirement.

• Your 401(k) accounts also have a great value in terms of taxes, as you are able to defer tax on investment income. You both have utilized 401(k) well as you are contributing a large match and utilizing the employer match feature.

• Another important for you to understand regarding taxes is that your effective tax rate will be lower than your current marginal tax rate. The reasoning behind this is due to tax credits, exemptions, and deductions. Your current marginal tax rate is 24%.

• For your current situation, you have the option of either taking the standard deduction or you may itemize your deductions. The standard deduction has increased slightly in 2019 from the previous year, now sitting at $24,400. This should decrease your overall tax liability. We are happy to work with you to determine whether itemizing or taking the standard deduction would be best for your situation, or we can refer you to a CPA for all your tax and accounting needs.

• You will also be eligible for the child tax credit for both Brianna and Riley. This amount is currently $2,000 and assuming current tax laws stay the same, you will be able to claim this for both children if they are younger than 17 at the end of the tax year.

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Alternative Minimum Tax Alternative minimum tax (AMT) is an alternative tax that is calculated separate from the standard ordinary tax bracket. It is a flat tax that is imposed on wages earned over a certain threshold. What this means is that you will calculate your taxes first under the ordinary tax bracket and then again for the AMT. The threshold for 2019 is $111,700. To make sure that you get the best possible advice on this we recommend sitting down with a Certified Public Accountant (CPA) and going over this with them. We have a CPA that we work with that we would be happy to refer you to.

Account Taxation You currently have two different types of accounts that will each be taxed differently on distributions. The first type is your 401(k) accounts. These accounts are each tax-deferred. This means that instead of paying taxes on the earnings today, you will pay taxes on the distributions. You will pay ordinary tax on these distributions. The second type of account that you have is your taxable account. This account is taxed differently than your 401(k) accounts. The funds that you use in this account have already been taxed at the ordinary rate. When trading in this account, you will pay taxes on the amount of realized gain. If held for less than one year, the gains will be taxed at the ordinary rate. If held for greater than one year, you will be taxed at a preferential rate of 15% on the gains.

Retirement Taxation Once you retire and begin taking distributions from your investment accounts and social security, we project that you will be in a different marginal tax rate. We believe you will be in the 22% Federal marginal tax rate instead of the 24% rate you are currently in. Along with a lower federal rate, we believe you will also be in a lower Ohio state tax bracket. We project you will be subject to 3.96% state tax. Your Social Security will also be taxed differently than your normal income as well. Since you are above the income threshold, 85% of your Social Security will be subject to ordinary income tax.

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Gift Tax Gift tax is a tax that is imposed on gifts made from one person to another. There are limits put on how much one person can “gift” to another without imposing a tax. The limit is called the Annual Exclusion. The Annual Exclusion amount in 2019 is $30,000. This means you are allowed to gift someone $30,000 with no tax liability. You also have a lifetime exclusion amount called the Applicable Exclusion Amount or AEA. The AEA for Married Filing Jointly in 2019 is $22,400,000.

Estate Tax Estate tax is a tax that is imposed on assets that is transferred from one estate to another. The estate tax will only incur on estate transfers over the AEA limit of $11.2 million dollars or $22.4 million dollars for Married Filing Jointly couples. Because of this, we do not believe you will need to worry about incurring any estate tax at the time of an estate transfer.

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Estate Planning Estate planning is an essential part of any financial plan. It involves efficiently transferring and conserving what assets you leave behind to heirs in a strategic way that considers the legal system, taxes, and your own personal preferences. It is vital to have a proper estate plan in place to be properly prepared for any unforeseen circumstances and for your inevitable passing. In order to a proper and smooth transition, it is critical to create an estate plan that addresses foreseen and unforeseen needs in the future. By doing so, you will ensure that all your assets are administered to the correct individuals and that you, as well as your heirs, are not subject to a large amount of estate tax. Your estate plan will be fully customized to your personal situation and preferences, including important legal documents such as an updated and valid will, guardianship clauses, medical directives, power of attorney, and proper beneficiaries.

As financial planners, we do not have the power or credentials to practice law and cannot create all these legal documents for you. This means you will need to have an estate planning attorney to help draft these documents. Our team will work in coordination with the attorney of your choice to make sure everything is completed according to your wishes and your financial plan. If you do not have already have an attorney that you work with, we have a list of attorneys that we commonly coordinate with that we can refer you to. We understand that the subject of death can be an uncomfortable and difficult discussion, but we believe it is of major importance to make sure your wishes are carried out successfully.

Estate Planning Flowchart: Where Do Your Assets Go?

The Jackon's Estate

At Passing of First Spouse

Brianna50% of Assets

Riley50% of Assets

Surviving Spouse

Using Unlimited Marital Deduction

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Will A will is one of the most basic, yet important legal documents that pertains to your estate planning needs. A will gives you the power to control how and where your assets will go after your passing. It is of the utmost importance that we ensure that your will is valid and up to date with your current situation. By having a will that is not valid, your assets will pass through probate, the legal process that takes place after someone’s passing, and the laws of the state will determine who receives your assets.

Using the information, you have given us, we know that you both have a basic will that was written after Brianna was born. We will want to update this to include Riley in the will as well and make sure everything is updated with your current information. In addition, we highly recommend adding a guardianship clause to your existing will. This will allow you to identify any individuals you select to raise your children, in the event that something was to happen to both of you. We also recommend having a successor guardian selected in case your original choice becomes unable or willing to serve as the guardian.

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Power of Attorney A Power of Attorney is a legal document that allows a specified person to act on your behalf. A Power of Attorney is important to have so that someone can make decisions if anything were to happen to you, making you unable to make the decisions for yourself. Power of Attorneys come in different forms which allow us to utilize the type that is best for your personal situation. Below is a chart detailing the various types and what they are used for.

General Power of Attorney This power of attorney give the appointed individual the broadest and greatest amount of power. The appointed person will be able to act and perform anything on your behalf, as if they were actually you.

Limited Power of Attorney This power of attorney is similar to general power of attorney, but it restricts the power given. Only in particular situations will the appointed individual have power. This power will also be specific and detailed in nature.

Durable Power of Attorney for Health Care Allows the individual appointed to make medical decisions on your behalf if you are not able to make a decision yourself.

Power of Attorney for Property This power of attorney gives the appointed person the ability to manage your finances and property in the event that you are unable to make the decisions for yourself.

Our team at Blue Wave Financial recommends that you appoint each other for these various types of power of attorney. We also recommend having a secondary person listed in case both of you are not able to make these important decisions. These Power of Attorneys can also have a spring power clause. This allows the power of attorney to only go into effect under a certain condition or situation. Under normal conditions, these powers brought about by the Power of Attorney cease when you pass away. However, a Durable Feature can be added to the various Power of Attorneys. This allows the powers to stay with the appointed person, even after you pass away. These can all be drafted with the help of the estate attorney of your preference.

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Advance Medical Directives (Living Will) An Advance Medical Directive, also known as a living will, can play a vital role in situations that require life sustaining treatment. An Advance Medical Directive can often be easily confused with the Durable Power of Attorney for Health Care that we mentioned earlier. The key difference is that A Durable Power of Attorney for Health Care appoints someone to make medical decisions for you, while an Advance Medical Directive allows you to specify your preferences and last wishes in regard to life sustaining treatment. This legal document allows you to detail medical situations when you prefer or do not prefer life sustaining measures in the event that you are not capable of making such decisions on your own. Our team recommends that you each both work with your estate attorney to draft an Advance Medical Directive.

Estate and Gift Taxation After analyzing your current net worth, how your assets are titled, and considering your future wealth accumulation according to your financial plan, we do not believe that you will have to deal with estate and gift taxation at this time. As of 2019, the current estate exemption amount is $11,400,000 per person. A great tool at our disposal in addition to the estate exemption amount is the unlimited marital deduction. The unlimited marital deduction allows either of you to transfer an unlimited amount to your surviving spouse at the time of your passing. You are also ability to currently use portability, which allows any unused estate exemption to transfer over to the surviving spouse. This will increase the surviving spouse’s estate exemption to $22,800,000. One thing to note about the estate tax exemption amount is that the value is constantly changing, due to inflation and political policy changes. Our team at Blue Wave Financial is constantly keeping up with the changes in estate laws and will let you know if anything is different in the future. For now however, neither of you will have to worry about estate and gift taxation. With that said, your annual contributions to the 529 savings plan, in order to pay for both Brianna and Riley’s education, will be considered a gift. This will decrease your applicable excludible amount but should not disrupt the plan in anyway.

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Beneficiary Designation To ensure the smoothest transition possible after either of you passes, we will want to review the beneficiaries on all of your accounts and make sure they are up to date. This includes your portfolio, savings, checking, retirement accounts, life insurance, and other investments. Making sure that all your beneficiaries are correct on your accounts and doing a review every few years will ensure that the accounts do not go through probate and that you will avoid paying tax on them. Our team at Blue Wave Financial recommends you having each other as the primary beneficiaries on your accounts. From there, we also suggest placing a secondary beneficiary stated if both of you were to pass away. We will want to ensure that the secondary beneficiaries are not your children, at least as of today. Minor children, that is anyone under the age of eighteen, are not allowed to possess ownership of accounts. If you want to set up the assets to go to your children at this point in time while they are still minors, the assets would need to be either given to the named guardian of your choice or put into a trust until Brianna and Riley are no longer minors.

Recommendations

• Work with our team to find an estate attorney if you do not already have one. • Update both of your wills to ensure they are valid and include Riley with the help of

your estate attorney. • Determine who you want to be appointed for the various Powers of Attorney and have

these documents created with your estate attorney. • Draft an Advance Medical Directive with your estate attorney for both of you. This will

create a plan for life sustaining treatment wishes, in case either of you were to become incapacitated.

• Complete a review of all your account beneficiaries to ensure they are correct. Name secondary beneficiaries for these accounts.

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Category Action Parties Involved Date Completed

Estate Planning Work with our team to find an estate attorney, if you do not currently have one

Jamie and Claire Estate Planning Attorney Blue Wave Financial if needed.

Estate Planning Update wills, ensuring they are valid and include Riley

Jamie and Claire Estate Planning Attorney

Estate Planning Appoint various forms of Power of Attorney and create these documents.

Jamie and Claire Estate Planning Attorney

Estate Planning Draft Avanced Medical Directives for both Jamie and Claire

Jamie and Claire Estate Planning Attorney

Estate Planning Review beneficiary designations

Jamie and Claire Estate Planning Attorney

Risk Management Purchase level premium term insurance for Jamie in the amount of $1,900,000

Jamie and Claire Insurance Company/Agent

Risk Management Purchase level premium term insurance for Claire in the amount of $1,100,000

Jamie and Claire Insurance Company/Agent

Risk Management Purchase disability insurance for Claire with same policy features as Jamie’s existing policy

Jamie and Claire Insurance Company/Agent

Risk Management Purchase umbrella insurance in the amount of $2,000,000

Jamie and Claire Insurance Company/Agent

Cash and Debt Management

Increase monthly credit card payments to $790

Jamie and Claire

Cash and Debt Management

Increase emergency fund to $55,000

Jamie and Claire

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Investments Sell a large portion of individually held stocks and invest the proceeds in ETFs

Jamie and Claire Blue Wave Financial

Investments Sell a portion of U.S. stocks to fit into our recommended allocation. Use proceeds to purchase REITs and Municipal bonds

Jamie and Claire Blue Wave Financial

Investments Reallocate your portfolio to a 60% stock 40% fixed income allocation

Jamie and Claire Blue Wave Financial

Investments Allocate 0-5% of your investment portfolio to cash

Jamie and Claire Blue Wave Financial

Investments Open a Traditional IRA for Claire

Jamie and Claire

Tax Planning Fund 529 Accounts to receive favorable tax-deduction

Jamie and Claire

Retirement Planning Decide on whether to retire early or to spend more during retirement

Jamie and Claire

Retirement Planning Continue saving at current rate and maxing out employer matches

Jamie and Claire

Education Planning Open an Ohio 529 for both children

Jamie and Claire Blue Wave Financial

Education Planning Transfer funds from UTMA account to Brianna’s 529

Jamie and Claire Blue Wave Financial

Education Planning Fund children’s 529 to total 80% of their college tuition costs

Jamie and Claire Blue Wave Financial

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InflowsJamie's Gross Income 124,400$ 135,935$ 140,013$ Claire's Gross Income 59,400 64,908 66,855 Total Inflows 183,800 200,843 206,869 Income TaxesFICA (14,056) (15,365) (15,825) State (8,268) (9,038) (9,309) Federal (25,556) (27,926) (28,764) Total Income Tax (47,880) (52,328) (53,898) SavingsJamie's 401(k) (8,708) (9,515) (9,801) Claire's 401(k) (3,560) (3,894) (4,011) Education Funding (11,160) (11,160) (7,010) Wedding Fund - (1,435) (1,435) Emergency Fund - (10,870) (14,530) Total Savings (23,428) (36,875) (36,787) Liability PaymentsMortgage (23,712) (23,712) (37,365) Auto Loan 1 (4,608) - - Auto Loan 2 (5,352) (5,352) - Credit Cards (9,472) (5,753) - Total Liability Payments (43,144) (34,817) (37,365) InsuranceLife (3,408) (3,313) (3,313) Disability (1,560) (2,310) (2,310) Auto (1,404) (1,404) (1,404) Homeowner's (2,100) (2,800) (2,800) Umbrella - (475) (475) Total Insurance (8,472) (10,302) (10,302) Other ExpensesReal Estate Taxes (2,220) (2,426) (2,499) Transportation (3,600) (3,934) (4,052) Charitable Contributions (1,200) (1,311) (1,351) Household Expenses (16,800) (18,358) (18,909) Medical (1,800) (1,967) (2,026) Children (3,900) (4,262) (4,389) Clothing/Grooming (5,100) (5,573) (5,740) Recreation (18,696) (20,430) (21,043) Gifts (3,000) (3,278) (3,377) Miscellaneous (4,560) (4,983) (5,132) Total Other Expenses (60,876) (66,521) (68,516) Total Cash Outlfow (183,800) (200,843) (206,869) Discretionary Cash Flow -$ -$ -$

20232019 2022

Jamie and Claire JacksonProjected Cash Flows

For the Years:

Projected Cash Flows

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Age Income Age Income2019 40 124,400$ 38 59,400$ 2020 41 128,132 39 61,182 2021 42 131,976 40 63,017 2022 43 135,935 41 64,908 2023 44 140,013 42 66,855 2024 45 144,214 43 68,861 2025 46 148,540 44 70,927 2026 47 152,996 45 73,055 2027 48 157,586 46 75,246 2028 49 162,314 47 77,504 2029 50 167,183 48 79,829 2030 51 172,199 49 82,223 2031 52 177,365 50 84,690 2032 53 182,686 51 87,231 2033 54 188,166 52 89,848 2034 55 193,811 53 92,543 2035 56 199,625 54 95,320 2036 57 205,614 55 98,179 2037 58 211,783 56 101,125 2038 59 218,136 57 104,158 2039 60 224,680 58 107,283 2040 61 231,421 59 110,501 2041 62 238,363 60 113,817 2042 63 245,514 61 117,231 2043 64 252,880 62 120,748 2044 65 260,466 63 124,370

Totals 4,795,998$ 2,290,051$

N 25 25IY 3% 3%PMT 0 0FV 4,795,998$ 2,290,051$ PV $2,290,595.57 $1,093,740.97

Year Jamie Claire

Life Insurance Need Calculation

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Social Security Calculation

Jamie Claire Age Year Income Age Year Income

21 2000 $69,740 19 2000 $- 22 2001 $71,897 20 2001 $- 23 2002 $74,121 21 2002 $35,392 24 2003 $76,413 22 2003 $36,487 25 2004 $78,776 23 2004 $37,615 26 2005 $81,213 24 2005 $38,778 27 2006 $83,725 25 2006 $39,978 28 2007 $86,314 26 2007 $41,214 29 2008 $88,983 27 2008 $42,489 30 2009 $91,736 28 2009 $43,803 31 2010 $94,573 29 2010 $45,158 32 2011 $97,498 30 2011 $46,554 33 2012 $100,513 31 2012 $47,994 34 2013 $103,622 32 2013 $49,479 35 2014 $106,827 33 2014 $51,009 36 2015 $110,130 34 2015 $52,586 37 2016 $113,537 35 2016 $54,213 38 2017 $117,048 36 2017 $55,889 39 2018 $120,668 37 2018 $57,618 40 2019 $124,400 38 2019 $59,400 41 2020 $128,132 39 2020 $61,182 42 2021 $131,976 40 2021 $63,017 43 2022 $135,935 41 2022 $64,908 44 2023 $140,013 42 2023 $66,855 45 2024 $144,214 43 2024 $68,861 46 2025 $148,540 44 2025 $70,927 47 2026 $152,996 45 2026 $73,055 48 2027 $157,586 46 2027 $75,246 49 2028 $162,314 47 2028 $77,504 50 2029 $167,183 48 2029 $79,829 51 2030 $172,199 49 2030 $82,223 52 2031 $177,365 50 2031 $84,690 53 2032 $182,686 51 2032 $87,231 54 2033 $188,166 52 2033 $89,848 55 2034 $193,811 53 2034 $92,543 56 2035 $199,625 54 2035 $95,320 57 2036 $205,614 55 2036 $98,179 58 2037 $211,783 56 2037 $101,125 59 2038 $218,136 57 2038 $104,158 60 2039 $224,680 58 2039 $107,283 61 2040 $231,421 59 2040 $110,501 62 2041 $238,363 60 2041 $113,817 63 2042 $245,514 61 2042 $117,231

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64 2043 $252,880 62 2043 $120,748 65 2044 $260,466 63 2044 $124,370

Age 62 Benefit $1,842 $1,111 FRA Benefit Amount $2,632 $1,587 Age 70 Benefit $3,264 $1,968

Education Cost Briann

a Riley

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 $9,000 $9,630 $10,30

4 $11,025

$11,797

$12,623

$13,507

$14,452

$15,464

$16,546

$17,704

Capital Needs Calculations Inflate Income Need

N 25 IY 3.50% PV -96000 PMT 0 FV $226,871.52

Lump Sum Need @ Retirement

N 31 IY 3.29% PMT $145,849.63 FV 0 PV ($2,902,056.10)

Required Annual Savings

N 25 IY 8% PV -280441 FV $2,902,056.10 PMT ($11,672.25)

Current Saving N 25

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PV -280441 IY 0.0822 PMT ($18,376.00) FV $3,408,173.17

Increased Investment Distribution based on Current

Saving N 31 PV $3,408,173.17 IY 0.032850242 PMT ($171,285.73) FV 0