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! Welcom

e to our seminar!

Welcome to our seminar!

Financial Changes Effecting You in 2011 and Beyond

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Securities offered through ProEquities, Inc., a Registered Broker Dealer and Member FINRA and SIPC. Advisory Services offered through Honkamp Krueger Financial Services, Inc., a Registered Investment Advisor. Honkamp Krueger Financial Services, Inc. is independent of ProEquities, Inc.

Tonight’s Discussion Topics

1) 2011 -2012 Federal Tax Extensions

Federal Spending & Taxes

2) The American Dream-Retirement

Social Security

Asset Protection

Federal Estate Taxes

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Tonight’s Discussion topics

3) Financial Reforms effecting you

Retirement Protection through Asset Allocation

4) How much do I need to retire comfortably?

Steps to take for a lifetime

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Tax Extension Provisions

• Only for 2 Years• 2010 Federal income tax rates Married filing joint

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Married Couples Filing Jointly Tax Rate

Not over $16,750 10% of taxable income

$16,750 - $68,000 $1675 + 15% of the excess over $16,750

$68,000 - $137,300 $9365.50 + 25% of the excess over $68,000

$137,300 - $209,250 $26,687.50 + 28% of the excess over $137,300

$209,250 - $373,650 $46,833.50 + 33% of the excess over $209,250

Over $373,650 $101,085.50 + 35% of the excess over $373,650

Tax Extension Provisions

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Married Couples Filing Jointly Tax Rate

Not over $17,000 10% of taxable income

$17,000 - $69,000 $1700 + 15% of the excess over $17,000

$69,000 - $139,350 $9500 + 25% of the excess over $69,000

$139,350 - $212,300 $27,087.50 + 28% of the excess over $139,350

$212,300 - $379,150 $47,513.50 + 33% of the excess over $212,300

Over $379,150 $102,574 + 35% of the excess over $379,150

Tax Extension Provisions

Most of the Bush Tax Cut provisions were retained including:- Capital gains tax rates of 0-15%

- Qualified dividend income rates at 0-15%- Marriage tax penalty relief- Repeal of the personal exemption phase out- Alternative minimum tax exemption patch- $100,000 --IRA--RMD contributions to charity - Adoption, Child Care, American Opportunity credits- Student loan interest & Educational savings accounts

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New Tax Provisions

• New 2% Employee payroll tax cut-2011 only

– Maximum individual savings is $2,136 ($106,800*2%)

• Old work to pay credit is history

– $400 maximum individual credit if you qualified

• New additional employee Medicare payroll tax in 2013

– Additional .9% on wages over individual limits

– 1.45% on first $250,000 married filing Joint & 2.35% on all additional wages.

– 1.45 on first $200,000 unmarried individuals & 2.35% on all additional wages.

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New Tax Provisions

• New Medicare Contribution Tax on Unearned Income of 3.8%– Begins in 2013– The tax applies to unearned income– Applies to Individuals, Estates & Trusts– Tax applies to the lesser of:

• Net investment income or• Modified adjusted gross income that exceeds

$250,000 Married or $200,000 unmarried

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What is Net Investment Income?

• Net investment income generally includes:– Interest– Dividends– Annuities– Rents & Royalties– Capital gains– Passive activity income (partnerships)– Commodities

• Qualified retirement plans & IRA distributions are not considered investment income

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What is Modified Adjusted Gross Income?

• Modified AGI is basically total income excluding:– Tax Exempt Bonds– Veterans’ Benefits– Gain on sale of principal residence– Roth IRA distributions –Not Regular IRA

Together, these two new Medicare-related taxes are expected to raise $210 Billion over the six year period (2013-2019) ending in 2019.

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Future Taxes ???

• As of December 31, 2010 total U S debt was reported as $14,025,200,000,000 (that’s trillion) or approximately 96.5% of fiscal year 2010 end GDP.

• This equates to $44,900 of debt per person in the US or $91,500 per member of the US working population.

• Congress’s answer is more regulation & legislation

• Insert video maybe!!!!!!!!!!!!!!!!!- Reductions in state aid and programs

- And ultimately increases in future income taxes

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Who Will Pay The Additional Taxes?

• Brookings Institute Tax Policy Center reported that in 2009 47% of US households paid NO Federal income tax.

• The Tax Foundation reported that 2008 IRS data indicated that of the roughly 140 million tax returns that were filed the taxes were paid by the following income groups:Top % AGI % of AGI % of Tax50% >$ 33,048 87.25% 97.30%25% >$ 67,280 67.38% 86.34%10% >$113,799 45.77% 69.94% 5% >$159,619 34.70% 58.72% 1% >$380,354 20.00% 38.02%

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Tax Time Bomb!!

• 2 years and counting !!!!!!!!!!!!

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The American Dream

RetirementMy next career!

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1. Income & expenses in retirement

2. Asset protection

3. Estate planning

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Income & Expenses in Retirement

• Major concerns & considerations to reaching the American dream:– Income Sources:

- Wages - Social Security- Savings - Investments- Annuities - Family- Government

- Expenses in Retirement- Housing - Health -Debt- Travel - Family -Hobbies

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What Does Retirement Cost?

• It depends on you!– Your retirement goals– Your health – Your style of retirement– Your resources

• Some “experts” say you need $1 million in savings/investments to retire

• Some say you should plan so that you can replace 80-120% of your current income.

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Protecting the Retirement Dream

• Protection/Insurance----Risk Sharing

- Income-- Social Security

- Property--Home & Auto Coverage

- Family--Life insurance

- Health--Medical, Medicare, Drug, Medicaid

- Long Term Care insurance

The one key element of all of these insurances is that while they reduce a specific risk they protect your Financial assets which ultimately protects our American Dream -- Retirement

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Social Security to the Rescue

• Currently over 50,000,000 (million) receive monthly benefits of some kind

• In January 2011 the first “Baby Boomer” began receiving Social Security benefits as they applied 3 months ago

• More than 78 million Boomers will apply for benefits in the next 18 years

• Starting January 2011 more than 10,000 baby boomers per day will turn age 65

• In 20 years (2031) 26% of the US population will be age 65 or older and drawing benefits

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Social Security Continued

• Social Security benefits average about 30% of your final wages before retirement.

• Maximum monthly SS Benefit in 2011 is $2,366– Annually $28,392

• To find answer to many common questions see:– www.ssa.gov

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Medicare A B C & D’s

• Coverage begins at age full retirement age – age 65, 66 ->

A - Hospital coverage Free

B - Doctors coverage Premiums vary

C - Medicare Advantage Premiums vary

D - Prescription Drugs Premiums vary

Medigap Coverage Supplemental insurance

Medicaid Coverage Income limitations

• www.medicare.gov

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Federal Estate Taxes & Paying it Forward

• Temporary tax changes for 2010-2012• Estate Tax exemption is $5,000,000 per person• Exemption is indexed in 2012• Top transfer tax rate is 35%• New Term “Portability” for the amount of unused

estate tax exemption on first to die

This doesn’t mean you don’t need to plan. There may still be State inheritance taxes and many other important family planning issues and opportunities.

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Estate Documents & Considerations

• Wills - Husband & Wife• Durable powers of attorney• Advanced medical directives• Letters of Instruction• Living Trusts• Review & update ownership & titling of assets:

- Insurance Beneficiaries - IRA beneficiaries

- Home & property ownership - Pension beneficiaries

- Bank & investment accounts - Annuity beneficiaries

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The CPA connection to wealth management planning is critical in order to most effectively manage any tax-related

considerations with your financial situation.

Cost Basis Reporting and the Importance of Asset Allocation

• Honkamp Krueger Financial Services

Jim Siemonsma John Morrow

New Tax Reporting Law

Three Things You Need to Know:

1. Beginning 2011, your broker will need to report all gains and losses on Form 1099B to the IRS

2. Unless your advisor selects another method, FIFO cost basis method will be used. Is that right for your situation?

3. When you sell an investment, the cost basis method used cannot be changed after settlement of that trade. Very important to consider the

tax implications at time of trade.

Implementation Dates

• Equities – Acquired after Jan 1, 2011

• Mutual Funds, ETF’s, DRIP shares – Acquired after Jan 1, 2012

• Other Securities, including options and fixed income securities – Acquired after Jan 1, 2013

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What Does it Mean to You?

• Client must provide cost basis of securities at time of sale for anything purchased prior to dates mentioned on previous slide.

• Do you know your cost basis?

• Be Proactive. Provide this information to your advisor as soon as possible.

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Asset Management

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Asset Allocation

• What does it mean to you?• What are your investment goals?• How do you decide where to invest your $$?

- Stocks - Alternative Investments

- Bonds - Annuities

- ETF’s - CD’s

- Mutual Funds

• Where do you invest…think Global

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Why Diversify Overseas?

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Gross domestic product is the most commonly used single measure of a country’s overall economic activity. It represents the total value at constant prices of final goods and services produced within a country during a specified time period, such as one year.

Source: Ibbotson Associates. Small value stocks are represented by the Russell 2000® Value Index; small growth stocks are represented by the Russell 2000® Growth Index; large value stocks are represented by the S&P 500/Barra Value Index for 1987-2005 and by the S&P 500/Citigroup Value Index for 2006; large growth stocks are represented by the S&P 500/Barra Growth Index for 1987-2005 and by the S&P 500/Citigroup Growth Index for 2006;mid-cap stocks are represented by the S&P MidCap 400 Index; foreign stocks are represented by the MSCI EAFE Index; REITS are represented by the FTSE NAREIT All REITS Index; high yield bonds are represented by the Barclays Capital High-Yield Index; investment-grade bonds are represented by the Barclays Capital Aggregate Bond Index. This material has been obtained from sources generally considered reliable. No guarantee can be made as to its accuracy. Not intended to represent the performance of any particular investment. Indices are unmanaged and one cannot invest directly in an index.

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 10 Year

Foreign LG REITs LG LG SG REITs REITs IG SG REITs Foreign REITs Foreign IG HYStocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks Stocks Bonds Bonds8.06% 38.13% 35.75% 36.52% 42.16% 43.09% 25.88% 15.50% 10.27% 48.54% 30.41% 14.02% 34.35% 11.17% 5.24% 58.21% 10.63%

LG LV LG MC Foreign LG SV SV REITs SV SV MC Foreign LG HY MC SVStocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks3.13% 36.99% 23.96% 32.26% 20.33% 28.25% 22.83% 14.03% 5.22% 46.03% 22.25% 12.55% 26.86% 9.13% -26.16% 37.38% 8.27%REITs SG LV SV MC Foreign MC IG HY Foreign Foreign REITs SV MC SV SG HY

Stocks Stocks Stocks Stocks Stocks Stocks Bonds Bonds Stocks Stocks Stocks Stocks Stocks Stocks Bonds0.81% 31.04% 21.99% 31.78% 19.12% 27.30% 17.51% 8.42% -1.37% 39.17% 20.70% 8.29% 23.48% 7.98% -28.92% 34.47% 6.72%

DIV MC SV LV LV MC IG HY SV REITs MC DIV LV SG DIV Foreign MCPortfoli Stocks Stocks Stocks Stocks Stocks Bonds Bonds Stocks Stocks Portfolio Stocks Stocks Portfolio Stocks Stocks0.09% 30.94% 21.37% 29.98% 14.67% 14.72% 11.63% 5.28% -11.43% 38.47% 16.48% 6.68% 20.80% 7.05% -31.06% 31.78% 6.36%

LV SV MC DIV DIV DIV LV MC DIV MC DIV LV DIV IG LG LG IGStocks Stocks Stocks Portfolio Portfolio Portfolio Stocks Stocks Portfolio Stocks Portfolio Stocks Portfolio Bonds Stocks Stocks Bonds-0.64% 25.75% 19.20% 20.68% 8.84% 12.82% 6.09% -0.61% -11.65% 35.61% 15.84% 6.33% 17.25% 6.97% -34.92% 31.57% 6.33%

HY DIV DIV REITs IG LV DIV DIV MC DIV LV SV SG DIV MC DIV DIV

Bonds Portfolio Portfolio Bonds Stocks Portfolio Portfolio Stocks Portfolio Stocks Stocks Stocks Portfolio Stocks Portfolio Portfolio

-1.01% 25.53% 17.22% 18.87% 8.67% 12.72% 1.91% -1.37% -14.51% 32.93% 15.71% 4.71% 13.35% 2.30% -36.23% 29.87% 3.97%

SV HY HY SG HY HY HY SG Foreign LV SG SG HY LV LVStocks Bonds Bonds Stocks Bonds Bonds Bonds Stocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks-1.55% 19.17% 11.35% 12.95% 1.87% 2.39% -5.86% -9.23% -15.66% 31.79% 14.31% 4.15% 11.87% 1.99% -37.73% 27.99% 1.20%

SG IG SG HY SG IG Foreign LV LV HY HY LG LG HY SG LV ForeignStocks Bonds Stocks Bonds Stocks Bonds Stocks Stocks Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Stocks-2.43% 18.48% 11.26% 12.77% 1.23% -0.83% -13.96% -11.71% -20.85% 28.96% 11.14% 3.46% 11.01% 1.87% -38.54% 21.18% 1.17%

IG REITs Foreign IG SV SV LG LG LG LG LG HY MC SV LV SV SGBonds Stocks Bonds Stocks Stocks Stocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks Stocks Stocks Stocks-2.92% 18.31% 6.36% 9.68% -6.45% -1.49% -22.08% -12.73% -23.59% 25.67% 6.13% 2.74% 10.32% -9.78% -39.22% 20.58% -1.37%

MC Foreign IG Foreign REITs REITs SG Foreign SG IG IG IG IG REITs Foreign IG LG

Stocks Stocks Bonds Stocks Stocks Stocks Stocks Bonds Bonds Bonds Bonds Stocks Bonds Stocks

-3.57% 11.55% 3.61% 2.06% -18.82% -6.48% -22.43% -21.21% -30.26% 4.11% 4.34% 2.43% 4.33% -15.69% -43.38% 5.93% -3.57%

REITs

REITs REITs

BEST

WORST

Large Growth (LG) Stocks Foreign Stocks

Large Value (LV) Stocks Investment-Grade (IG) Bonds

Mid-Cap (MC) Stocks High Yield (HY) Bonds

Small Growth (SG) Stocks REITs

Small Value (SV) Stocks Diversfied Portfolio

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The Periodic Table of Investment ReturnsAnnual Returns for Key Indices (1994 - 2009)

Ranked in order of Performance (Best to Worst)

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Source: Brinson, Singer, and Beebower (1991)

Asset Allocation & Diversification cannot guarantee a profit or prevent a loss.

AssetAllocation

91.5%

Security Selection 4.6%

Market Timing 1.8%Other 2.1%

A Historical Study: Asset Allocation is the Primary Determinant of Total Portfolio Performance &

Volatility

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The Client’s Account Allocation

The HKFS Investment Decision-Making Process

Growth Income

HKFS FA CPA

U.S. Economic Growth

Developed Foreign Economies

Credit MarketsEmerging Market Economies

Housing Market

U.S. Federal Reserve

Stock MarketCurrency/Trade/Politics

How Do You Get Started?

It’s a Process:

1. Confirm your goals and objectives

2. Allocation to stocks/bonds/cash etc. Consider Risk/Return Relationship

3. Investment Selection

4. Re-balance

5. Review, adjust and see #1 above…

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1

2

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Fixed Income Considerations Today

• “Quite the Paradox”

• Safety• Hard with rising interest rates/inflation• Targeting Duration• (Un)usual alternatives

• Annuities• Dividend Paying Stocks• Direct Participation Programs

Inflation

HKFS-------

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Steps to Retire Comfortably

Retirement Statistics• The average 65 year old male can expect to live 17

years

• A 65 year old woman should plan on at least 20 years in retirement

• Its estimated that 60% of current retirees receive the bulk of their retirement income from Social Security

• Per a 2009 Boston College study 51% of baby boomer households will face a lower standard of living in retirement

• Today 43% of men and 48% of women claim Social Security benefits at age 62 accepting a 25% reduction in benefits to receive payments 4 years earlier

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What is Your Number?

• It all depends upon your assumptions:– Will you work in retirement?– When do you plan to retire?– Where will you retire?– What style will you retire in?– One home or two or three?– Travel?– Family?– Health?– Investment risk & market performance?

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The Three Legged Stool

• Dwight D. Eisenhower said Social Security was never intended as a substitute for private savings but rather a foundation upon which other forms of protection (i.e.: savings & investments) can be soundly built.

• HKFS --ADD PICTURE OF 3 LEGGED STOOL

- Social Security 1/3- Company pensions 1/3- Personal savings & investments 1/3

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Today

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Company Pensions

• Today only about 15% of companies maintain

defined benefit plans and their numbers are decreasing• Many Government (Federal & States) pensions are

currently under funded but probably safe for now• Union plans -- many are under funded and in trouble• 42% of workers participate in company 401K plans but

there is no guarantees of performance or benefits

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Savings & Investments

• The US personal savings rate dropped from 10% in the 70’s and 80’s to a negative 1% in 90’s

• The current savings rate is just above 5%• According to a Wells Fargo Bank study respondents ages

50-59 had saved on average only $29,000• Assuming a 5% return on the $29,000 the monthly check in

retirement of only be $190 for 20 years• Wells Fargo study also found that 37% of respondents e

vastly under estimated the amount of money they’ll need in retirement

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Wages in Retirement

• According to a survey of their 40 million members - 40% of “Boomers” turning 65 this year said that they plan to work “until I drop”

• The Wells Fargo survey found that 72% of Americans now “expect to work through retirement”---39% by their own choice and 39% felt that they had no choice

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What is your Number?

• Some say you need $1million in savings and investments at the start of your retirement.

• Others report that you need enough savings and investments to generate 80-120% of my current income.

• The number is different for each and

every one of us.

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Taking Control of Your Retirement

• Identify your retirement needs– Pick a planned retirement date– Think about where you want to retire– Plan for 20-30 years in retirement– Estimate your income needs– Review your estimated retirement income sources

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Taking Control

• Run your numbers– Based upon your information and goals

project your retirement.– Match your goals to your projection and make

adjustments– Make the hard decisions now when time is more on your

side

- Save more - Spend Less-Work Longer - Work in retirement

- Pay off the mortgage - Consider Insurance

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Retirement as a Life Long Quest

• Monitor and adjust your retirement plans• Develop and maintain proper wills and trusts• Review and consider risks and insurance where necessary• Don’t ignore estate planning because of the current

exemption• Know your options for planning and ask questions• Make the tough informed decisions while time is still on you

side• Take control of your retirement because no one else

will.

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THANK YOU for coming tonight

•Boyle, Hess & Elliott CPA’s– John Elliott CPA ???– Tom Hosier CPA/PFS

•Honkamp Kruger Financial Services– Jim Siemonsma– John Morrow

52Client Approved