Strategic Financial

Planning: Financial

Planning Basics

and Settlement Strategies

Becky Gustafson, CFP®, CLU®, ChFC®, RICP®, CASL®, LUTCF®, CLTC®

GUSTAFSON WEALTH MANAGEMENT

Becky.gustafson@nm.com (o) 504 - 831 - 8146 Beckygustafson.nm.com

HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY

Northwestern Mutual is the marketing name for The Northwestern Mutual Life

Insurance Company (NM), Milwaukee, WI (life and disability insurance, annuities,

and life insurance with long-term care benefits) and its subsidiaries. Northwestern

Mutual Investment Services, LLC (NMIS) (securities), subsidiary of NM, registered

investment adviser, broker-dealer, member FINRA and SIPC. Northwestern Mutual

Wealth Management Company® (NMWMC), Milwaukee, WI, (fiduciary and fee-

based financial planning services) subsidiary of NM and federal savings bank.

29-5471 (0417)

The Northwestern Mutual Life Insurance Company — Milwaukee, WI

DO YOU HAVE A PLAN TO REACH YOUR GOALS?

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How confident are you that your plan will meet your goals?

4

NORTHWESTERN MUTUAL RESOURCES:

How to Create A Greater Level of Financial Security Worksheet

29-5471-01 (0417)

HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY

FIVE KEY ACTIONS FOR CREATING FINANCIAL SECURITY

No matter how old you are or how much money you have, your

plan to create a more secure financial future should include

strategies to do five things—wisely:

TOP THREE GOALS FOR THE FUTURE

SHORT TERM (1-5 YEARS):

MID TERM (5-10 YEARS):

LONG TERM (10+ YEARS):

SAVE

•Identify your goals –

short-, mid- and

long-term goals.

•Depending on your

goals, allocate about

20 percent of your

income to savings.

SPEND

•Track your expenses

so you know what’s

coming in and what’s

going out.

•Free up money by

managing your credit

card, student loan

and mortgage debt.

GROW

•Determine your risk

tolerance.

•Develop a diversified

portfolio based on your

risk tolerance.

PROTECT

•Develop a plan that

protects your paycheck

and your loved ones.

•Consider how a long-

term care incident

could impact you and

your family.

GIVE

•Share your money with people and causes

that matter to you.

•Build charitable giving

into your financial plan.

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FIVE KEY ACTIONS TO CREATING FINANCIAL SECURITY

SAVE

WHAT ARE YOU SAVING FOR?

A new home?

Your retirement?

Tuition assistance

for your children?

7

WHAT ARE YOUR GOALS?

SHORT-TERM GOALS 5-10 YEAR GOALS LONG-TERM GOALS

8

HOW MUCH MONEY SHOULD YOU PUT AWAY?

20% Saving and Investing

20% Discretionary

Expenses

60% Essential Expenses

INCREASE YOUR SAVING BY 1% EVERY YEAR

+1%

WHERE SHOULD YOU PUT YOUR MONEY?

TAXABLE

SHORT-TERM 0-2 Years

MID-TERM 2+ Years

Investment

Accounts

LONG-TERM 10+ Years

Cash Value

Life Insurance

TAX DEFERRED

RETIREMENT Age 59½

401(k)

Traditional IRA

Roth IRA

Annuity

MIX OF TAX DEFERRED AND

TAXABLE

Cash, Checking &

Savings Accounts

Emergency Fund (6 months of

expenses)

The primary purpose of permanent life insurance is the death benefit. Using cash values to achieve other long-term goals will reduce benefits. Generally, surrenders (cash value from the termination of your policy) and dividends payable in cash are taxed only when they exceed premiums paid.

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•Leave where it is

•Roll it over into new employer’s plan

•Roll it over into an Individual Retirement Account (IRA)

•Cash it out (penalties and taxes)

ROLL OVER THAT 401(k)

Options for your 401(k) when you change jobs:

401(k)

JOB #1

JOB #2

JOB #3

SPEND

BY SPENDING WISELY YOU CAN AFFORD THE THINGS YOU NEED WHILE STILL ENJOYING THE THINGS YOU WANT.

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TAKE INVENTORY: Money Coming in Versus Money Going Out

A budget or spending plan is key to understanding your finances.

Northwestern Mutual offers online tools to track your expenses and see your full financial picture.

Downloadable budget worksheet at: NorthwesternMutual.com

Start Here! i MONTHLY BUDGET

29-3914

Transportation

Auto Payment(s) $

Auto Insurance $

Gas $

Maintenance/License $

Parking/Tolls/Bus/Train $

$

Student Loans $

Credit Card Debt $

$

Housing

Mortgage/Rent $

Property Taxes $

Home Maintenance $

Homeowner’s/ $

Renter’s Ins.

Utilities (Electric, Gas, $

Water, etc.)

$

Health Care/Insurance (Not deducted from paycheck)

Health Insurance $

Life Insurance $

Disability Income $

Insurance

Long-term Care $

Insurance

Medical/Dental/Drugs $

$

Household/Personal

Groceries $

Personal Care $

Clothing/Dry Cleaning $

Professional Dues $

Cell Phone $

$

Personal Loans Children

$ Dependent/Child Care

Education/School $

$

Name: Date:

To complete your current financial profile, it is important to review your monthly expenses.

ESSENTIAL EXPENSES (60%) DISCRETIONARY EXPENSES (20%)

Emergency Fund $

College Savings $

Short/Mid-Term Needs $

Retirement Savings $

(Not deducted from paycheck)

$

Essential

Expenses Subtotal

SAVING AND INVESTING (20%)*

Saving and

Investing Subtotal

* The 20% includes both after-tax and pre-tax savings and

investments, including contributions to employer-sponsored

retirement plans.

$ 0

Cable/Phone/Internet $

Dining Out $

Recreation/Club Dues $

Movies/Sporting Events $

Hobbies $

Vacation/Travel $

Gifts/Contributions $

$

$

$

$

Discretionary

Expenses Subtotal 0

$ 0

TOTAL MONTHLY EXPENSES $ 0

NET MONTHLY INCOME $

LESS EXPENSES $ 0 TOTAL SURPLUS/DEFICIT $ 0

13

FREE UP MONEY AND MANAGE DEBT.

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MANAGING CREDIT CARD DEBT: Free Up Money

Set a goal to pay off all credit card debt.

•Always make at least the minimum monthly payment on all your credit card bills.

•When possible, pay more than the minimum on your high-interest credit cards to pay them down faster.

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MANAGING STUDENT LOAN DEBT: Free Up Money

LOAN CONSOLIDATION LOAN FORGIVENESS

•Public Service Loan Forgiveness and Teacher Loan Forgiveness

•Meet certain criteria

•May be able to lower monthly payments by extending the length of the loan

•May get lower interest rate

1 Source: Bankrate - http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx

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MANAGING MORTGAGE DEBT: Free Up Money

Refinancing Mortgage:

•Lower interest rate

•Lower payments

•Shorten term of loan (you save on interest but will be paying a higher monthly payment)

Paying extra on the principal:

•Make sure lender allows for early repayment

•May affect tax deductions

Pay $240 Extra Each

Month

$57,000 saved in interest & loan reduced by 7 years!1

Mortgage = $300k +

GROW

WHAT DO YOU DO WITH THAT FOUND MONEY?

What’s your goal?

What’s your risk tolerance?

What’s your investment time horizon?

INVESTING

29-5471-01 (0417)

HOW TO CREATE A GREATER LEVEL OF FINANCIAL SECURITY

FIVE KEY ACTIONS FOR CREATING FINANCIAL SECURITY

No matter how old you are or how much money you have, your

plan to create a more secure financial future should include

strategies to do five things—wisely:

TOP THREE GOALS FOR THE FUTURE

SHORT TERM (1-5 YEARS):

MID TERM (5-10 YEARS):

LONG TERM (10+ YEARS):

SAVE

•Identify your goals –

short-, mid- and

long-term goals.

•Depending on your

goals, allocate about

20 percent of your

income to savings.

SPEND

•Track your expenses

so you know what’s

coming in and what’s

going out.

•Free up money by

managing your credit

card, student loan

and mortgage debt.

GROW

•Determine your risk

tolerance.

•Develop a diversified

portfolio based on your

risk tolerance.

PROTECT

•Develop a plan that

protects your paycheck

and your loved ones.

•Consider how a long-

term care incident

could impact you and

your family.

GIVE

•Share your money with people and causes

that matter to you.

•Build charitable giving

into your financial plan.

All investments carry some level of risk including the potential loss of principal invested.

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PROTECT

WHAT WOULD HAPPEN TO YOUR GOALS IF SOMETHING WERE TO HAPPEN TO YOU?

* Source: Northwestern Mutual Claim Data 2008-2013

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DISABILITY: Protect your most valuable asset—your income

1 in 4 will be disabled at some point in their career*

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GROUP DISABILITY INSURANCE

Most group plans have some sort of cap …

usually about 60% of your income.

60%

NOTE: Disability income insurance is available to full-time workers, part-time workers and those who stay at home.

GROUP DISABILITY INSURANCE

THROUGH YOUR EMPLOYER

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LIFE INSURANCE

Mortgage

Child Care

Student Loans

College Tuition

Child’s Wedding

Support Kids or Family Members

Inheritance for Children or Grandchildren

HAVE A PLAN FOR LONG-TERM CARE.

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LONG-TERM CARE

Someone turning 65 today has

almost a 70% chance of needing

long-term care.2

2US Department of Health and Human Services as of September 2015

32015 Cost of Care Research Study conducted by the Long Term Care Group, Inc. on behalf of Northwestern Long Term Care Insurance Company: https://www.northwesternmutual.com/about-us/studies/cost-of-long-term-care-study

4In California, “Assisted Living Facilities” are called “Residential Care Facilities”

$450,000

$400,000

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

Home Care Community-Based Care

Assisted Living4

Nursing Facility

$233,731

$55,961

$227,296

$431,054

TODAY

$54,0803

TODAY

$12,9483

TODAY

$52,5913

TODAY

$99,7363

POTENTIAL ANNUAL COSTS IN 30 YEARS

WITH 5% INFLATION

WHERE WOULD YOU LIKE TO MAKE A DIFFERENCE?

GIVE

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CONSIDER HOW GIVING FITS INTO YOUR FINANCIAL PLAN

Give with your time:

•Volunteer in your community

•Volunteer abroad

Give with your money:

•Establish a scholarship

•Start your own nonprofit

NOTE: Charitable donations can be tax deductible.

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Write on the back of the worksheet one step you will take in the next month

to create a greater level of financial security.

FIVE KEY ACTIONS FOR CREATING A LIFETIME OF FINANCIAL SECURITY

Q & A

Becky Gustafson, CFP®, CLU®, ChFC®, RICP®, CASL®, LUTCF®, CLTC®

GUSTAFSON WEALTH MANAGEMENT

becky.gustafson@nm.com

(o) 504 - 831 - 8146

beckygustafson.nm.com

THANK YOU

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI

(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Northwestern

Mutual Investment Services, LLC (NMIS) (securities), subsidiary of NM, registered investment adviser, broker-dealer,

member FINRA and SIPC. Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, (fiduciary and

fee-based financial planning services) subsidiary of NM and federal savings bank.