Team Blue

July 25, 2013

Mr. & Mrs. Smith Retirement Report

Prepared By: Retirement Specialist

Taelor Mason Caleb Dyson Wealth Manager Portfolio Manager Kara Everhart Brian Fernander Retirement Specialist Investment Strategist

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Table of Contents

Page Description Page About TIAA-CREF & Executive Summary 2

TIAA-CREF and our specialties as well as an overview of our experience that best suits your needs and plans for the best future possible

Steps Toward Achieving Your Retirement 3

Chronological steps that will help us help you navigate through retirement planning as well as tips for understanding

Mr. & Mrs. Smith’s Current Position 4 An overview of your current financial position with your current assets, current liabilities, cash flow etc.

Current Market Analysis 5

A market update based on things that are relevant to your future plans

Mr. & Mrs. Smith’s Current Position Report 9 Retirement Recommendations 10

An overview of everything we recommend that you do in order to prepare for retirement

Appendices 12 Support and clarification for everything that you will be encountering as you embark on your retirement planning journey.

A1. Popular Tax Deferred Investment Vehicles 12

A2. Mr. & Mrs. Smith’s Cash Flow Statement 13 A3. Mr. & Mrs. Smith’s Statement of Net Worth 13 A4. Assumptions 14 References 15

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About TIAA-CREF & Executive Summary

TIAA-CREF: FINANCIAL SERVICES FOR THE GREATER GOOD Since our founding in 1918, we have been helping millions of people plan for retirement. Our clear and long-term commitment to serve those who dedicate themselves to the benefit and enlightenment of others remains unchanged. Specializing in the distinctive needs of those who work in the academic, research, medical, and cultural fields; TIAA-CREF has subscribed to a different set of guiding principles, directly influenced by the people we serve. We focus on the best interest of our participants. For nearly 100 years, we have continued to stay true to our purpose—a commitment to serve those who serve others. TIAA-CREF can help you reach your financial goals—for retirement, saving for college or providing protection for your family. We harmonize your personal needs with the products and services we offer.

Executive Summary MR & MRS. SMITH We take this wonderful opportunity to congratulate you for reaching this period in your life and commend taking the steps to prepare for retirement. We understand that life rarely goes as planned and the transition into retirement requires larger than normal sacrifices and changes from a life that you may have been accustomed; thus our team makes it our goal to effectively prepare individuals and couples like yourself for these (golden years) that you have looked forward to all of your life. We are aware that many people view retirement as a period of freedom of time, some the ability to do the things that have been put off for one reason or the other and for others the ability to spend time with loved ones. For whatever your reason, our team believes in skilled preparation. Understanding that preparing for retirement can be challenging and time consuming, we immerse ourselves in understanding the industry and applying the appropriate recommendations that we feel will best suit our clients. Specifically to meet your needs, you will see in this report an outline of the clear steps you should take towards retirement and plans to make your transition a smooth one. Our recommendations includes the proper asset allocation of investments, developing annuity portfolios and accounts, offloading unnecessary debt and proper downsizing of expenses from large assets such as your house and smart spending on necessities on an annual basis. While we want to ensure the accuracy and relevance of our information, we took the liberty to analyze your current financial position against the current market and as a prudent financial advisor should, we took into consideration your goals so that your retirement would be comfortable. This plan was created for maximum results through ensuring lasting income throughout your retirement, while mitigating as much risks as possible to help you live a longer, healthier, stress-free life with the ability to meet your goals and do those things you enjoy.

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Steps Toward Achieving Your Retirement

Step 1: Define Your Cost of Retirement The first step as you begin to plan for retirement is to define your cost of retirement. Your cost of retirement can be affected by many factors, including:

Your retirement age This is the age at which you plan to stop working full time and start accessing your retirement portfolio assets.

Your life expectancy Life expectancy will outline how many years to plan for in retirement.

Your monthly retirement living expenses Are normally between 70% and 100% of your annual earned income prior to retirement, but can vary with individual goals.

Step 2: Apply Your Income Sources Once you have determined your cost of retirement we will look at the income sources that will be available to you in retirement to help meet these costs. Income sources include but are not limited to:

Social Security Pensions Immediate annuity payments

Step 3: Determine Portfolio Withdrawal Requirements Once your existing income sources have been applied to your costs of retirement, you can take withdrawals against your portfolio assets to make up the difference. Portfolio assets include:

Brokerage accounts Money Market Accounts 401(k)s, 403(b)s, and other employer-sponsored retirement accounts IRAs (Traditional & Roth) After-tax Annuities

Step 4: Identify Planning Gaps & Making Changes If it is determined that you are not on path to achieve your retirement objectives, changes will be needed. These changes may include:

Portfolio re-balancing and investment recommendations Save more Redefine retirement age Consider part time employment during retirement Reduce retirement spending

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Mr. & Mrs. Smith’s Current Position

Your annual financial current position is shown below: (to see report in their entirety refer to the Appendices A2).

Income

Salaries $170,000

Annuity $22,000

Total Annual Income $192,000

Expenses ($62,364)

Taxes ($47,600)

Surplus $82,036

Savings $54,000

Total Surplus $136,036

*Expenses include your home, food, transportation, and other miscellaneous expenditures. **Salaries exclude taxes

*Assets include bank accounts, equity, automotive, and real estate. *Liabilities include real estate and credit debt.

Currently, your available income sources for retirement are:

Sources Liquidity Favorable Tips

Social Security $74,000

Look into File & Suspend on SS website

Mr. Smith’s 401(k) $200,000

Use as residual monthly income

Mrs. Smith’s Annual Annuity $22,000

Kick-start IRA with this annual amount

Pensions - Every day income

Our team is delighted that you have come to us for financial assistance. We hope that you both will trust that our team is here to make your future more affordable and financially longer lasting. Our team has shown you what your retirement looks like today; however, you want to retire at age 65 and it will be our pleasure to show you throughout the remainder of the report that the longer you wait to retire the better. We will provide you with recommendations that will best fit your personal needs and set you up for the rest of your lives.

Assets

$926,571

Liabilities

$197,500

Net Worth $729,071

You are in a great place, you have $82,000 surplus each year and the key to this plan will be to use these

dollars to plan for a secure retirement.

Combined Needed Income: $112,073

Combined Needed Income

(including S.S.): $38,018

Savings Needed:

$664,621

You have more assets than liabilities! In total your net worth is in good shape, at $729,000! However it is our job to help

make it great.

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Current Market Analysis

Mr. and Mrs. Smith, you are going to enter into retirement soon. A number of risks will affect how your life will be funded for the next 25-30 years. This section focuses on your personal state of the union, providing insight into what the market, and your decisions thus far have prepared for your future in retirement.

Social Security and You The future of social security is unknown; however, it would be in your best interest to be prepared for all ends of the spectrum. The best way to understand the current state of your social security is to start getting interactive:

Visit & start exploring tools to help calculate benefits and other helpful interactions to be able to begin planning on behalf of your benefits! A few quick things to note about the changes that can ensue during your Social Security journey:

Your earnings may increase or decrease in the future

After you start receiving benefits, they will be adjusted for cost-of-living increases & the benefits are

structured to take on inflation

Your estimated benefits are based on current law. The law governing benefit amounts may change because,

by 2033, the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled

benefits

Let’s take a look at your current position within social security:

Social Security Annual Income

- Mr.

The graph to the left shows estimates both of your overall benefits if you retire at age 65 and then age 70 with a life expectancy of 95 years old by retiring at 65 you would be decreasing your lifetime benefits 17%

Source: CNN Money Retirement Calculator - We recommend that you take the time to visit the Social Security website and try other calculators.

Mr. Smith Mrs. Smith Total SS

age 95

~ $27,234 ~ $25,512 ~ $1, 582,380

~ $35,538 ~ $35,538 ~ $1,850,000

Retirement 65

70 Mrs. Smith,

765,360

Mrs. Smith, 888,450

Mr.Smith, 817,020

Mr.Smith, 962,925

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

65 retirement 70 retirement

$ A

ccum

ala

tio

n

Retirement Accumalation at age 95

17%

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Investments, Investments, and More Investments

The Good News is your Above Average:

90% of working-age households in the U.S. are not saving enough for retirement 45% have nothing saved $12,000 is the median retirement savings of households nearing retirement

Investments are going to make your lifestyle sustainable, and that is why it is important to understand the basics of the current state of the bond market as well as the stock market. It is a typical rule of investment thumb that when stocks are up, bonds are down and in terms of asset allocation it is the simplest answer to say at this age your portfolio should roughly be a mix of bonds with 60% and stocks 40%. However we believe in the situation of the current market that your assets should be invested in a ROTH IRA, and RETIREMENT INCOME VARIABLE ANNUIT Y FUNDS! Our goal is to make sure you are taking enough portfolio risk to make substantial income but safe enough to sustain in harder market times.

Currently bond yields are LOW while stock market return is HIGH.

Putting the Current Market in Perspective:

Bond Market as of 07/19/2013 Stock Market as of 07/19/2013

Mutual Funds Reflect Current Market

Source: CNN Money, real-time data reflected

The bond market represented is U.S. Treasury and Corporate Bonds respectively while fund categories & stock markets are offered by industry. Bottom line: Bond yields are declining while the stock market returns are inclining

Diversifying is a safe way to be more risky – By investing in FUNDS rather than individual stock you are providing a safety net… optimistically everything won’t decline.

Bottom Line: TIAA-CREF offers a variety of funds that will make

it possible to provide more monthly income but also have

the longevity you need to sustain your lifestyle

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• Get this: A portfolio that is 80% invested in stocks and 20% in bonds in this market with a 4% withdrawal rate has only a 14% probability of running out of money. This is because the higher expected returns for stocks. If they only have a 3% withdrawal rate the probability goes down to 4%

• Get this: A typical 65-year-old couple with $1 million in tax-free municipal BONDS want to retire. They

plan to withdraw 4% of their savings a year. But in this market if they spend that $40,000 a year, adjusted for inflation, there is a 72% probability they will run out of that money before they die

Living in Dallas, Texas for Retirement

“This is definitely a seller’s market,”- Jeff Duffey, of Jeff Duffey & Associates, in Dallas, TX. Currently in Dallas Texas it is a perfect time to SELL and it just may be the place to BUY. During the huge residential housing boom between 2000 & 2006, places like L.A. saw triple-digit gains in home prices while Dallas home prices only rose a measly 24% in total. But now the single family home inventory is just 2.8 months, meaning every available house would be sold in theory in 2.8 months when just 20 years ago it was 10.3 months and 10 years ago in the middle of the “boom” it was 6.7 months.

Healthcare Costs Will Include Out-of-Pocket Costs

As healthy individuals the expectations for healthcare costs are increasing. Out of pocket costs are of the greatest concern because this directly affects your income. The chart below shows both of your out-of- pocket healthcare costs for the both of you if you were to retire now, at the age of 65 and then 70. This is shown given the current market for life expectancies of 75, 80, 85, 90, and 95.

Source: Society of Actuaries, Healthcare Costs from Birth to Death, June 2013

246,800

101,800

46,000

353,000

182,400

107,400

498,600

292,800

191,000

694,400

441,200

303,600

953,600

637,600

452,400

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

60 65 70

Healt

h C

are

Co

sts

Retirement Age

Healthcare Costs for 2 by Retirement Age and Life Expectancy

75 80 85 90 95

Life Expectancy

Note: This graph shows that if you were to retire at age 65 out-of pocket costs until age 90 would be $637,600 versus $452,400 retiring at age 70

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Bottom Line: Medicare can couple with your employer benefits to provide you with a strong healthcare plan. APPLY at 65 regardless of your working status to make sure you will have the benefits you need when you do plan to retire.

Medicare?

Medicare is our country's health insurance program for people age 65 or older. The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care, the types offered: Hospital insurance (Part A) helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care and hospice care. Note: Most people age 65 or older are eligible for free Medicare Hospital Insurance (Part A) if they have worked and paid Medicare taxes long enough. You should sign up for Medicare Hospital Insurance (Part A) 3 months before your 65th birthday, whether or not you want to begin receiving retirement benefits. Medical insurance (Part B) helps pay for doctors’ services and many other medical services and supplies that are not covered by hospital insurance. Note: Anyone who is eligible for free Medicare hospital insurance (Part A) can enroll in Medicare medical insurance (Part B) by paying a monthly premium. Some beneficiaries with higher incomes will pay a higher monthly Part B premium.

Anticipating Risk is the Back-bone of Retirement

Inflation It is inevitable that your $dollars today will not be worth the same as your $dollars in 20+ years. Luckily, a lot of your income will somewhat adjust to inflation; the best way to fight that risk is to make sure that your money is consistently growing to offset any losses

Longevity

Making sure your money withstands your lifetime is not an easy task especially coupled with the various expenditures that come throughout retirement. The best way to soften this risk is to stick to our plans, if you invest, save, and live as we suggest you will not have the short-comings of outliving your money

Health

You will never be able to completely plan your health risks but there are ways to be prepared. Planning for the unknown may seem difficult but we are here to help. Above you noticed, health is not cheap therefore a combination of insurance and a nice cushion for out-of-pocket costs are needed. Our first step is making sure you have the proper finances for that cushion.

Variable Costs

It is possible that everything could drastically change in the near future or beyond, but making sure that you are equipped with the proper insurance, and providing a net of savings and diversified investments to catch cumbersome expenses will keep you from feeling the ding of the out of pocket costs.

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Mr. & Mrs. Smith’s Current Position Report

Our team has developed a monthly cash flow and a statement of net worth for the current year based on the information given to us by Mrs. Jones. Currently, your salaries combined are a total of $170,000 annually excluding taxes. When considering taxes and Mrs. Smith’s annuity ($22,000 annually), your current cash available is $144,400 annually. Next calculating your expenses, which include home, food, transportation, and miscellaneous your total cash paid out is $62,364.41. After subtracting your cash paid put from your cash available, your cash flow is $82,035.59. When looking at your statement of net worth, your total assets amount to $926,570.90 which includes bank accounts, equity, automotive, and real estate. Your total liabilities amount to $197,500 which includes real estate and credit debt. After subtracting your liabilities from your assets, your current total net worth combined for 2013 is $729,070.90. Currently, your income for retirement consist of Social Security for both Mr. & Mrs. Smith (benefits depend on how long you wait to claim), Mr. Smith’s 401(k) plan, Mrs. Smith’s $22,000 annual annuity, Mr. Smith’s $400,000 term life coverage, Mrs. Smith’s $400,000 term life coverage, equity, and fixed income. Hypothetically, your fixed cost income combined, totals $1, 460,000. This amount does not include your income for Social Security, Mr. Smith’s 401(k) plan, or your taxable investments since they are variable costs. Based on your current age (60), desired retirement age (70), life expectancy (95), and your current income ($90,000/$80,000), your expected Social Security benefits are $38,517 for Mr. Smith and $35,538 for Mrs. Smith. In retirement, Mr. & Mrs. Smith will need $112,073 a year in income. (Because of inflation, in 2023, that will be equivalent to $150,617). Part of that income will come from your Social Security and pensions. To produce the rest ($38,018), you and your spouse should build your nest egg (including 403(b), IRA and other investment/saving vehicles) to $664,621 by the time you retire. (In 2023, that will be equivalent to $893,165). To save $664,621, your investments need to gain an average of 16.14% from now until retirement. If you and your spouse do not invest in any other vehicles you have a 0% chance of saving $664,621 by the time you retire, a 10% chance of saving $335,961, a 50% chance of saving $279,353, and a 90% chance of saving $231,478.

Mr. Smith Mrs. Smith Pre-retirement Income $90,000 $80,000 Social Security Income $38,517 $35,538 Combined Needed Income $112,073 Combined Needed Income (including S.S.) $38,018 Savings Needed come Retirement $664,621

*Figures are based annually **Mrs. Smith’s annual annuity is not factored into this retirement plan Source: CNNMoney.com

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Retirement Recommendations

Retirement is just another phase of your life and we want you to be able to enjoy every part of it. We believe in effective planning to assist you in meeting your retirement goals in a stress-free atmosphere removing any possible challenges and setbacks. Based on our analysis of your current financial position from the information that we have received, we have prepared a Statement of Monthly Cash Flow and Statement of Net Worth. From analyzing these reports, we have developed a plan that would assist you in your preparation for retirement, transition into retirement and cover post retirement challenges. We have also taken into consideration your goals of maintain your lifestyles of annual vacations and replacement of new vehicles in 10 year intervals. Our plan consists of various steps that you should take to prepare for retirement. We ask that you review each step the plan of recommendations below in its entirety and consider these for a smooth transition into retirement and for longevity of the assets for your enjoyment.

Step 1: Initial Retirement Plans Engage Financial Advisor

Using professionals to manage your assets for effective planning, growth & sustainability and most importantly asset protection is easier than you would imagine. It is our job to ensure that you reach all of your goals, mitigate risks from the market and manage your personal finances for the best results, and to even provide effective succession planning for the safe passing of assets to a surviving family including but not limited to spouse, children and grandchildren.

Set Your Retirement Age We recommend that you both retire at or closest to age 70.

We believe that there is still more preparation that can be done to increase your annual retirement income. The amount of your income depends on when you retire, the social security benefits and tax laws which affect distributions from annuities.

Define Retirement Cost Outlining accurately your monthly expenses allows effective planning for retirement. Being that you are in

good health, we anticipate that your retirement will last anywhere from 25 – 30 years.

Step 2: Reduction of Expenses and Asset Adjustments From our analysis, we have found that your largest expense is your home. It is our recommendation that you should, within the next 3 years SELL your home in an effort to ELIMINATE the mortgage and DECREASE taxes and home-owners insurance.

As it is currently assessed, having a value of $550,000, it is our view that selling the house will allow room for you to be able to pay-off the existing mortgage, purchase a new smaller and more manageable home DEBT-FREE and allow the freeing of approximately $30,000 per annum (Additional cash flow that can be invested into a Money Market Fund holding conservative mutual funds).

Pay off and eliminate any credit cards debt, personal loans or any other credit facility charging interest fees.

Consider smart spending options through fulfilling your goals by I. When purchasing your car in 10 year intervals, consider two late-

modeled used cars or as this will be your retirement you can consolidate costs by purchasing one new car for use.

II. When considering travel, as you would be in retirement, you would have additional free time on your hands. Consider traveling by rental car, bus or train to avoid high airplane prices when the option is available. Larger more extravagant trips to exotic countries and historical cities can be done every other year.

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Step 3: Effective Saving for Maximizing Retirement Income Sources

We have found that when a couple worlds together towards one common goal, the individual efforts pay off.

Based on your current financial status, there is a present surplus of $82,065. Below we will outline our

recommendations on how that can be effectively saved and maximize your retirement income through Power

Saving of the excess $82,065 surplus:

Mr. Smith Mrs. Smith Joint Annuity Having an existing 401(k) account with a current balance of $200,000 is a good position but when monthly payments are amortized, it is simply not enough. We recommend that you engage in “Cashing-Up” by injecting $23,000 per annum until retirement takes effect. Over a 10 year period this will yield a total of $230,000 and increase the monthly cash payout from this retirement annuity.

Having no retirement accounts places you in a precarious position. We strongly suggest that you engage in an individual 403(b) and fund it with the maximum of $23,000 per annum. This will be your “Cashing-Up” and will result in $230,000 over a 10 year period.

Having additional funds, we suggest you open a 403(b) account injecting an annual $23,000 per annum to be additional savings for retirement and for the proper “socking-away” of enough cash for use during retirement.

We recommend that you place your stocks into a Variable Annuity Fund for safe keeping and tax

benefits. We anticipate that in your field of work and level of positions, sizable

bonuses would be received on an annual basis and would further recommend

that additional stocks be purchased and inject into the Variable Annuity Fund.

We also recommend you invest in some of our products:

o TIAA-CREF Portfolio Advisor Program & Private Asset Management

o TIAA-CREF IRA

o TIAA-CREF After Tax Annuity

o TIAA-CREF Brokerage Services

Maintaining a basic savings & checking account with a balance of

$50,000 is recommended to cover daily and monthly trivial to emergency

expenses, opportunities and protection. Any additional funds should be

“socked-away” into the Variable Annuity Fund for additional and

expanded investing opportunities. Retirement Employment

Choosing to work throughout your retirement is another excellent way to make extra money or to assist in maintaining your preretirement lifestyles. Being in good health, this can also help you to remain active and engage your talents and skills that you have used for years. We believe and recommend that you do engage in post-retirement employment.

Post-Retirement Employment Options Mr. Smith -Asset Manager -Financial Consultant -Banking Policy & Procedure Consultant -Board of Director or Trustee

Mrs. Smith -Tutor -Substitute Teacher -School Office Secretary -Walmart Greeter -Librarian

Social Security

Social Security is primarily based on how long you have worked and your salary history. The longer you have worked for an employer who pays Social Security, the larger your salary over the years and the more benefits you’ll receive. We want you to get the best benefit from Social Security by not filing for it before the appropriate time (at 70). We note that you both are in good health which places you in the best position to file for Social Security later and get the best benefit.

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Appendices

Popular Tax Deferred Investment Vehicles

Do you want to pay taxes now if you don’t have to? The answer to this question is, no. Tax deferred vehicles allow you to make investments today and defer paying taxes on investment growth until the funds are withdrawn. This allows for many years of potential investment growth because it will be years before you need to tap into these funds. Contributions made on either a pre-tax or tax deferred, your balance will increase more quickly than if you had placed your money in a taxable vehicle. The following table and chart is an example of how tax-deferred growth pans out versus taxable growth for a person saving $9,000 per year over 30 years*: 10 Years 20 Years 30 Years Taxable Balance $128,434 $366,708 $808,758 Tax Deferred Balance $144,865 $472,402 $1,212,957 Difference $16,431 $105,694 $404,198 Tax Deferred Balance After Taxes

$131,149 $399,301 $977,218

*Assumes 8.5% Rate of Return, 25% federal tax rate on the growth of the asset. The tax-deferred values exclude the 10% penalty that would potentially be assessed if the values were withdrawn prior to age 59 ½.

There are many tax-deferred investment vehicles available for you both. The table below lists some of the popular investments:

401(k) Accounts &

403(b) Accounts

401(k): A defined contribution plan offered by a corporation to its employees affording three main advantages. First, contributions come out of your pocket before taxes, lowering your taxable income. Second, tax deferred growth and third, the potential for an employer match on your contribution. All withdrawals are subject to ordinary income taxes and may be subject to a 10% federal tax penalty if taken prior to 59 ½. 403(b): Also a defined contribution plan but made available to employees of educational institutions and certain non-profit organizations. Contributions and investment earnings in a 403(b) grow tax deferred until withdrawal, at which time they are taxed as ordinary income. All withdrawals are subject to ordinary income taxes and may be subject to a 10% federal tax penalty if taken prior to 59 ½. Both a 401(k) and 403(b) have a maximum annual contribution in 2013 of $17,500, and individuals over age 50 can contribute an additional ‘catch-up’ contribution of $5,500.

Traditional Individual Retirement Account

(IRA)

A Traditional IRAs is a retirement investing tool for employed individuals and their non-working spouses that allow annual contributions up to a specified maximum amount. Tax deductions may be allowed on the contribution amount depending upon the individual’s income and whether or not they participate in an employer-sponsored retirement plan. A 10% federal tax penalty if taken before age 59 ½.

Roth IRA

Similar to a Traditional IRA, a Roth IRA allows individuals to contribute up to a specified maximum amount. Unlike a Traditional IRA, a Roth IRA cannot accept contributions if the owner has adjusted gross income over a certain amount. All contributions made to a Roth IRA are done on an after tax basis. However, if plan requirements are met, withdrawals of earnings are tax-free.

After-tax Annuities

An annuity is a contract, offered by an insurance company, between an investor the holder and an insurance company, designed to provide payments to the holder at specific intervals, usually after retirement. Annuities are tax-deferred, meaning that the earnings grow tax-deferred until withdrawal. Money distributed for the annuity will be taxed as ordinary income in the year the money is received. Money withdrawn prior to 59 ½ may be subject to a 10% federal tax penalty. Annuities provide no additional tax advantages when used to fund a qualified plan.

$0

$500,000

$1,000,000

$1,500,000

10 20 30

Taxable Tax-Deferred

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Current Position

Salaries Jan Feb March April May June July Aug Sep Oct Nov Dec TOTAL

Mr. Smith $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $90,000

Mrs. Smith $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $80,000

Net Salaries $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $14,167 $170,000

After Tax Income $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $10,200 $122,400

Mrs. Smith's Annuity $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $1,833 $22,000

Total Cash Available $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $12,033 $144,400

Cash Paid Out

Home

Mortage (interest 3.75%) $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $1,352 $16,220

Property Taxes/Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $18,000

Utilities $205 $205 $205 $205 $205 $250 $250 $250 $250 $205 $205 $205 $2,640

TV, Internet, & Voice $63 $63 $63 $63 $63 $63 $63 $63 $63 $63 $63 $63 $756

Food

Groceries $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $5,400

Dining Out $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400

Transportation

Car Payment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gas (combined) $312 $312 $312 $312 $312 $312 $312 $312 $312 $312 $312 $312 $3,749

Car Insurance (combined) $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $4,200

Misc.

Entertainment $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000

Shopping $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Paid Out $5,182 $5,182 $5,182 $5,182 $5,182 $5,227 $5,227 $5,227 $5,227 $5,182 $5,182 $5,182 $62,364

Cash Flow (Avail.-Paid) $6,851 $6,851 $6,851 $6,851 $6,851 $6,806 $6,806 $6,806 $6,806 $6,851 $6,851 $6,851 $82,036

Mr. & Mrs. Smith's 2013 Household Cash Flows

Bank Accounts 54,000.00$

Stocks

IBM 20,790.00$

AT&T 5,040.00

Marriott 3,968.75

Microsoft 4,815.00

Marathon Oil * 2,957.15 37,570.90

401 (K) Plan 200,000.00

Cars

Mr. Smith (Lexus GS) 45,000.00$

Mrs. Smith (Lexus ES) 40,000.00 85,000.00

Real Estate

Home 550,000.00

Smith's Total Assets 926,570.90$

Real Estate

Mortgage 190,000.00$

Credit Cards

Mr. Smith AmEx 4,000.00$

Mrs. Smith AmEx 3,500.00 7,500.00

Smith's Total Liabilities 197,500.00$

Smith's Net Worth 729,070.90$

ASSETS

LIABILITIES

Statement of Net WorthMr. & Mrs. Smith

Statement of Net Worth/Balance Sheet

For the year ended December 31, 2012

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Assumptions Item/Category Assumption Reason

Retire at 70

Because there are in good health and reasonable strength, retiring at 70 would be a piece of cake.

In an effort to ensure their comfort throughout their retirement years, retiring at 70 would take them to the max. in social security payments that would be received. This would assist in their ability to maintain the lifestyle that they were accustomed to having.

Financial Advisor

Mr. & Mrs. Smith are not in a bad financial position at all. Engaging a financial advisor would assist in the protection of their assets for longevity and for succession to surviving family.

Our retirees seemed to be very successful and well rounded; their children wouldn't be far from the mark either. Having families of their own, the succession plan of our retirees can extend to their children and even grandchildren in years to come.

Mrs. Smith Annuity Her annuity of $22,000.00 p/a will continue through until death.

Understanding that it was a "life" benefit, we can assume this would carry on and be to her benefit and use.

Health Insurance

Mr. and Mrs. Smith Retired with full Health Insurance coverage.

Industry standard in the Banking profession affords staff full coverage medical, health, vision, and dental insurance and it is extended to the spouse and dependents. Industry standard also dictates that once an employee retires from the institution, these benefits go with them to death. We safely assumed that this is the case for our retirees.

Home-Owners Insurance

The smaller the house, the least expensive home-owners insurance will be.

From the value of the home in the state of Texas we can assume that this is a large estate. Downsizing will not only decrease or eliminate the mortgage but it will put the retirees in a more manageable position during their retirement.

Vehicles

Mr. Smith has a Lexus GS350 and Mrs. Smith has a Lexus ES350.

Being at this stage in their lives, our retirees need comfort, reliability, and a touch of luxury. We assume that being the level headed conservative consumers that they are, these vehicles matched their lifestyles.

Credit-Card

Mr. and Mrs. Smith both had independent American Express credit card accounts.

Industry standard and in keeping up with the time and technology, or retirees would have credit cards. Looking at their conservative lifestyle, we safely assumed that they would have normal balances from normal usage.

House-Hold Expenses

Using industry standard and looking closely at their lifestyle, we assumed that they would enjoy what the average American enjoys in their home.

As individuals reach their golden ages comfort and stability becomes a necessity. Our retirees are of no exception to this law and we wanted to comprehensively paint a snap-shot of our clients in an effort to better meet their retirement needs.

Marathon Oil Stock Value

Used stock price of $34.79. At the time the financials were prepared (June 21, 2013), the NYSE trading value was $34.79. We saw it fitting to give present market value for an accurate calculation of their Net Worth.

Taxes

As Dallas, TX residents we calculated after-tax income is a product of net salaries les income taxes which only calculate federal taxes.

Mr. & Mrs. Smith are Dallas, TX residents and Texas does not have state income tax.

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For More Reference

Reports FSD Financial Services Inc, Immediate Annuity Experts Examples <http://www.immediateannuityexperts.com/Immediate_Annuity_percentage.htm> Society of Actuaries, Health Care Costs – From Birth to Death June 2013 <http://www.soa.org/Research/Research-Projects/Health/research-health-care-birth-death.aspx> TIAA CREF Life Goals Series: Achieving Your Financial Goals <http://www1.tiaa-cref.org/ucm/groups/content/@ap_ucm_p_tcp/documents/document/tiaa04016242.pdf> Texas A&M University Real Estate Center 2012 Market Report Dallas-Fort Worth- Arlington <http://recenter.tamu.edu/mreports/2012/DallasFWArl.pdf>

Articles Guinto, Joseph “The Hottest Dallas Housing Market Ever” June 25, 2013; The D Magazine <http://www.dmagazine.com/Home/D_Magazine/2013/July/The_Hottest_Dallas_Housing_Market_Ever_01.aspx> Klein, Matthew “Are Americans Saving Too Much or Too Little?”, June 11, 2013; Bloomberg <http://www.bloomberg.com/news/2013-06-11/are-americans-saving-too-much-or-too-little-.html> State Taxes - Texas <http://www.bankrate.com/finance/taxes/state-taxes-texas.aspx>

Tools CNN Money Market Overview <http://money.cnn.com/data/markets/> CNN Money, Retirement Planner <http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp> Social Security Administration, Retirement <http://www.ssa.gov/pgm/retirement.htm> TIAA CREF Financial Services <www.tiaa-cref.org>