Financial Needs Analysis. Frank and Kathy Sample-Accumulator Hartford, Connecticut

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1 Financial Needs Analysis Frank and Kathy Sample-Accumulator Hartford, Connecticut PREPARED BY: JANET LERNER, CFP - LERNER, STEVENSON & ASSOC. JUNE 8, 2012

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3 Table of Contents Introduction... 4 Net Worth... 7 Cash Flow Overview Education Retirement Asset Allocation Action Plan Conclusion Appendix A - Plan Data Summary Appendix B - Asset Allocation Modifications Tax Considerations Important Terminology Disclaimer

4 Introduction What is Financial Planning? Financial planning can be a life-long process that assists you and your family in taking control of your financial future. By setting financial goals, developing and implementing financial strategies, and monitoring progress on a regular basis, the likelihood of achieving your results is greatly increased. There are usually five steps in the preparation of a professional financial plan: 1. An Opening Interview to assess your current financial situation and to identify your priorities and concerns. 2. Gathering information to develop a Profile of your current situation, including a review of your financial information and relevant documents. We will analyze this data to be certain we understand your unique situation and how to address it. 3. Presenting the planning analysis during a strategy session allowing you to understand where you are in relation to where you want to be in the future. 4. Using the plan as a blueprint, develop an Implementation schedule and identify specific products and services to help you reach your goals. 5. The last step in the process is the Periodic Review of your financial situation. At a minimum, we recommend you assess the need for any changes annually. Even the best financial plan must be monitored on a regular basis to make sure you are continuing in the right direction. Why develop a financial plan? Most people find that managing their finances is a challenge. We face many opportunities, obstacles, and hazards along the way. We struggle with anxiety relating to our personal financial circumstances. Further, many families are too busy dealing with the challenges of day-to-day life to think about next month; let alone retirement, which may be twenty years or more into the future. By developing a financial plan, you and your family: Will have a better understanding of your current financial situation. Determine attainable retirement, education, insurance, and other financial goals. Review goals, funding strategies, and alternatives where goals have to be compromised. Have the necessary financial resources set aside to fund your goals as they occur. Reduce the effect of unexpected events, such as disability, premature death, etc. Page 4 of 138

5 Client Information Family Information Client Name Frank Sample-Accumulator Date of Birth Oct Gender Male Address 123 Johnson Street Hartford, Connecticut United States Citizenship United States Name Kathy Sample-Accumulator Date of Birth Sep Gender Female Address 123 Johnson Street Hartford, Connecticut United States Citizenship United States Dependents Dependents Name Tasha Sample-Accumulator Date of Birth Apr Gender Female Address 123 Johnson Street Hartford, Connecticut United States Dependent of Frank and Kathy Name James Sample-Accumulator Date of Birth Jan Gender Male Address 123 Johnson Street Hartford, Connecticut United States Dependent of Frank and Kathy Professional Advisors Business Type Name Phone # Cell Phone # Advisor Janet Lerner Page 5 of 138

6 Page 6 of 138

7 Net Worth Page 7 of 138

8 Net Worth Overview Your current financial position is a key factor in your analysis. You need to know where you are today before you can begin your financial journey to where you would like to be. Your net worth statement is a listing of all the assets you currently own: your house, cars, bank accounts, investments, cash value of your life insurance policies, other personal property, and your liabilities. Typical liabilities are your mortgage, credit cards, and other debts. Your net worth is represented by the difference between these two values. In theory, if you sold all your assets and paid off all your liabilities, your net worth is the amount you would have left over before taxes. A net worth statement is important because it helps check progress towards financial goals, plan for changes in assets or liabilities, estimate how well dependent survivors would be able to live on their current inheritance, give an estimate of retirement income potential, and provide a way to chart financial progress over the years. Your net worth statement is an essential financial tool. You should update it at least yearly and whenever there is a major change in your assets and/or liabilities. When you know your net worth, you can set realistic financial goals. Page 8 of 138

9 Net Worth Summary - Current This net worth summary provides a snap shot showing a financial situation at a certain point in time. It includes what you own (assets), what you owe to creditors (liabilities), and the net value or difference between the two (net worth). In simple terms, the net worth statement shows how much money would be left if everything you owned was converted into cash and used to pay off your debts (before taxes). The following information is a description of items likely to appear in the report below. Your report may contain some or all of the items listed: Lifestyle assets include your home, vacation homes and collectibles. Non-Qualified assets include stocks, bonds, mutual funds, investment real estate and annuities. Qualified assets include your retirement plans including IRAs and 401(k)s, and it may also contain certain education assets such as 529 Plans or Coverdell ESAs. Liabilities include your mortgages, loans, personal lines of credits and credit cards. Cash Flow Surplus is the amount of surplus funds from your cash flow statement. In other words, income you did not spend which may be representative of your checking account, for instance. Net Worth Summary As of January 1, 2012 Frank Kathy Joint Total Non-Qualified Assets Investment Portfolios , ,000 Other , ,000 Non-Qualified Annuities Qualified Assets IRAs / Spousal IRAs 90,000 40, , (k) 210, , ,000 Other Qualified 39,000 27, ,000 Qualified Annuities Lifestyle Assets (residences, etc.) 500, ,000 Life Insurance Cash Value Liabilities (315,000) (315,000) Total Net Worth 339, , ,000 1,076,000 Page 9 of 138

10 Net Worth Summary - Proposed This net worth summary provides a snap shot showing a financial situation at a certain point in time. It includes what you own (assets), what you owe to creditors (liabilities), and the net value or difference between the two (net worth). In simple terms, the net worth statement shows how much money would be left if everything you owned was converted into cash and used to pay off your debts (before taxes). The following information is a description of items likely to appear in the report below. Your report may contain some or all of the items listed: Lifestyle assets include your home, vacation homes and collectibles. Non-Qualified assets include stocks, bonds, mutual funds, investment real estate and annuities. Qualified assets include your retirement plans including IRAs and 401(k)s, and it may also contain certain education assets such as 529 Plans or Coverdell ESAs. Liabilities include your mortgages, loans, personal lines of credits and credit cards. Cash Flow Surplus is the amount of surplus funds from your cash flow statement. In other words, income you did not spend which may be representative of your checking account, for instance. Net Worth Summary As of January 1, 2012 Frank Kathy Joint Total Non-Qualified Assets Investment Portfolios , ,000 Other , ,000 Non-Qualified Annuities Qualified Assets IRAs / Spousal IRAs 90,000 40, , (k) 210, , ,000 Other Qualified 39,000 27, ,000 Qualified Annuities Lifestyle Assets (residences, etc.) 500, ,000 Life Insurance Cash Value Liabilities (315,000) (315,000) Total Net Worth 339, , ,000 1,076,000 Page 10 of 138

11 Net Worth Statement This net worth statement provides a detailed breakdown of your financial situation as of January 1, Net Worth Statement As of January 1, 2012 Frank Kathy Joint Total Non-Qualified Assets Joint Savings 100, ,000 Fifth-Wheel Trailer Savings 10,000 10,000 Ridgefield Bank Savings 35,000 35,000 Fleet Bank Savings 15,000 15, Main St. 125, ,000 Total Non-Qualified Assets 285, ,000 Qualified Assets Frank's IRA (Inherited) 90,000 90,000 Frank's 401(k) 210, ,000 James' Education Plan 37,000 37,000 James' Coverdell 2,000 2,000 Kathy's IRA 40,000 40,000 Kathy's 401(k) 200, ,000 Tasha's Education Plan 27,000 27,000 Total Qualified Assets 339, , ,000 Lifestyle Assets Residence 400, ,000 Personal Use Property 100, ,000 Total Lifestyle Assets 500, ,000 Total Assets 339, , ,000 1,391,000 Liabilities Mortgage (300,000) (300,000) Line of Credit (15,000) (15,000) Total Liabilities (315,000) (315,000) Total Net Worth 339, , ,000 1,076,000 Page 11 of 138

12 Net Worth Outlook - Current The following report represents the outlook of the major components of your net worth from the current year until the end of your life expectancy in your current plan. Year Ages Non-Qualified Assets Qualified Assets Business Assets Lifestyle Assets Total Liabilities Accumulated Surplus/(Deficit) Total Net Worth /47 296, , , ,832 45,448 1,197, /48 308, , , ,284 93,120 1,324, /49 320, , , , ,080 1,457, /50 333, , , , ,391 1,596, /51 346, , , , ,117 1,743, /52 360, , , , ,325 1,876, /53 375, , , , ,585 2,015, /54 390,504 1,008, , , ,466 2,159, /55 406,561 1,038, , , ,822 2,286, /56 396,731 1,086, , , ,758 2,439, /57 413,288 1,148, , , ,578 2,600, /58 430,534 1,224, , , ,600 2,768, /59 448,500 1,305, , , ,360 2,969, *62/60* 466,210 1,387, , ,848 6,822 2,387, /61 341,478 1,465, , , ,361, /62 232,923 1,512, , , ,329, /63 237,372 1,427, , , ,279, /64 241,906 1,332, , , ,221, /65 246,527 1,226, , , ,154, /66 251,238 1,110, ,755 83, ,077, /67 256, , ,750 63, ,992, /68 260, , ,065 41, ,896, /69 265, , ,706 18, ,788, /70 271, , ,680 15, ,676, /71 276, , ,994 15, ,552, /72 281, , ,654 15, ,415, /73 286,845 74, ,667 15, ,264, /74 292,331 13, ,040 15,000 (93,737) 1,134, /75 297,922 14, ,781 15,000 (238,617) 1,014, /76 303,621 14, ,897 15,000 (387,894) 890, /77 309,430 15, ,395 15,000 (541,702) 762, /78 315,350 16, ,014,283 15,000 (700,181) 630, /79 321,384 16, ,034,568 15,000 (863,472) 494, /80 327,534 17, ,055,260 15,000 (1,031,722) 353, /81 333,803 18, ,076,365 15,000 (1,205,082) 208, /82 340,193 18, ,097,892 15,000 (1,383,709) 58, /83 346,705 19, ,119,850 15,000 (1,567,763) (96,542) /84 353,343 20, ,142,247 15,000 (1,757,409) (256,340) /85 360,109 21, ,165,092 15,000 (1,952,817) (421,291) /86 367,005 22, ,188,394 15,000 (2,154,165) (591,558) /89 340,700 25, ,261,133 15,000 (1,936,804) (324,893) * = Year of retirement Page 12 of 138

13 Net Worth Accumulation - Current The following report provides a summary of the accumulation and/or depletion of your assets over time. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital /47 1,391,000 17,400 3,018 41,799 12,729 1,460, /48 1,460,678 17,400 3,167 44,604 13,073 1,533, /49 1,533,352 17,400 3,324 47,916 13,427 1,609, /50 1,609,529 17,400 3,491 51,409 13,793 1,689, /51 1,689,394 17,400 3,668 55,094 14,170 1,773, /52 1,773,140 17,400 23,000 58,101 14,529 1,840, /53 1,840,914 17,400 23,656 61,198 14,887 1,911, /54 1,911,479 17,400 24,871 64,422 15,253 1,984, /55 1,984,412 16,200 40,895 67,028 15,572 2,043, /56 2,043,040 16,200 53,191 69,598 16,852 2,138, /57 2,138,883 16,200 15,543 73,745 17,575 2,231, /58 2,231,330 15,000 5,869 78,577 18,659 2,337, /59 2,337,560 15,000 5,023 83,706 19,149 2,450, *62/60* 2,450,248 10,550 5,322 89,074 19,653 2,564, /61 2,564, ,765 82,520 20,157 2,531, /62 2,531, ,083 87,116 20,403 2,484, /63 2,484, ,458 89,877 20,619 2,418, /64 2,418, ,824 84,841 20,827 2,342, /65 2,342, ,310 79,239 21,025 2,257, /66 2,257, ,920 73,029 21,212 2,161, /67 2,161, ,320 66,167 21,387 2,055, /68 2,055, ,631 58,685 21,551 1,937, /69 1,937, ,669 50,067 21,669 1,807, /70 1,807, ,540 41,172 21,774 1,691, /71 1,691, ,667 32,814 21,915 1,567, /72 1,567, ,664 24,349 22,085 1,430, /73 1,430, ,804 15,110 22,240 1,279, /74 1,279, ,345 5,149 22,563 1,243, /75 1,243, ,836 23,061 1,267, /76 1,267, ,881 23,521 1,293, /77 1,293, ,928 23,991 1,319, /78 1,319, ,976 24,470 1,345, /79 1,345, ,025 24,959 1,372, /80 1,372, ,076 25,458 1,400, /81 1,400, ,128 25,966 1,428, /82 1,428, ,182 26,485 1,456, /83 1,456, ,237 27,014 1,486, /84 1,486, ,295 27,554 1,516, /85 1,516, ,354 28,104 1,546, /86 1,546, ,415 28,665 1,577, /89 1,594, ,825 30,422 1,626,912 * = Year of retirement Page 13 of 138

14 Net Worth Outlook - Proposed The following report represents the outlook of the major components of your net worth from the current year until the end of your life expectancy in your proposed plan. Year Ages Non-Qualified Assets Qualified Assets Business Assets Lifestyle Assets Total Liabilities Accumulated Surplus/(Deficit) Total Net Worth /47 302, , , ,832 33,381 1,204, /48 325, , , ,284 68,987 1,345, /49 349, , , , ,901 1,495, /50 374, , , , ,189 1,655, /51 400, , , , ,918 1,824, /52 428,519 1,029, , , ,156 1,984, /53 458,361 1,101, , , ,480 2,153, /54 489,811 1,177, , , ,457 2,331, /55 508,493 1,245, , , ,846 2,496, /56 490,774 1,328, , , ,947 2,688, /57 520,024 1,417, , , ,930 2,892, /58 523,550 1,536, , , ,071 3,106, /59 553,313 1,665, , , ,469 3,359, /60 584,669 1,803, , , ,523 3,628, *63/61* 611,865 1,940, ,318 15,000 16,005 3,091, /62 502,340 2,055, ,084 15, ,092, /63 365,599 2,178, ,066 15, ,088, /64 277,156 2,243, ,267 15,000 (7) 3,076, /65 283,069 2,172, ,693 15,000 (1) 3,023, /66 289,970 2,164, ,347 15, ,033, /67 298,773 2,162, ,233 15, ,052, /68 307,930 2,200, ,358 15, ,111, /69 317,459 2,236, ,725 15,000 (9) 3,169, /70 327,379 2,271, ,340 15,000 (9) 3,226, /71 337,708 2,272, ,207 15,000 (8) 3,251, /72 348,468 2,236, ,331 15, ,239, /73 359,680 2,194, ,717 15, ,221, /74 371,368 2,144, ,372 15, ,196, /75 383,555 2,086, ,299 15, ,164, /76 396,266 2,019, ,505 15, ,125, /77 409,529 1,943, ,995 15, ,076, /78 423,373 1,856, ,775 15, ,019, /79 437,827 1,760, ,851 15, ,952, /80 452,923 1,653, ,228 15, ,875, /81 468,694 1,533, ,912 15, ,786, /82 485,176 1,401, ,910 15, ,687, /83 502,406 1,254, ,229 15, ,574, /84 520,424 1,094, ,873 15, ,448, /85 539, , ,851 15, ,307, /86 558, , ,168 15,000 (1) 2,151, /89 898, , ,225 15, ,130,400 * = Year of retirement Page 14 of 138

15 Net Worth Accumulation - Proposed The following report provides a summary of the accumulation and/or depletion of your assets over time. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital /47 1,391, , ,894 47,957 15,423 1,479, /48 1,479,975 26,400 3,197 57,036 16,210 1,578, /49 1,578,713 26,400 3,407 62,767 17,078 1,683, /50 1,683,832 26,400 3,635 68,913 17,995 1,795, /51 1,795,780 26,400 3,880 75,505 18,964 1,915, /52 1,915,035 26,400 23,288 81,190 19,877 2,021, /53 2,021,471 26,400 24,031 87,236 20,866 2,134, /54 2,134,180 26,400 25,343 93,641 21,907 2,253, /55 2,253,013 23,700 48,973 99,022 22,814 2,351, /56 2,351,794 22,200 74, ,678 24,517 2,475, /57 2,475,720 22,200 29, ,844 25,960 2,606, /58 2,606,923 19,200 31, ,900 27,680 2,742, /59 2,742,440 19,200 6, ,767 29,076 2,914, /60 2,914,625 19,200 6, ,355 30,555 3,098, *63/61* 3,098,375 80, , ,164 29,058 3,090, /62 3,090, , ,603 23,229 3,107, /63 3,107, , ,562 23,234 3,103, /64 3,103, , ,925 23,093 3,091, /65 3,091, , ,919 23,091 3,038, /66 3,038, , ,928 23,128 3,048, /67 3,048, , ,666 23,444 3,067, /68 3,067, , ,841 23,802 3,126, /69 3,126, , ,197 24,205 3,184, /70 3,184, , ,562 24,637 3,241, /71 3,241, , ,575 25,001 3,266, /72 3,266, , ,879 25,399 3,254, /73 3,254, , ,042 25,660 3,236, /74 3,236, , ,798 25,904 3,211, /75 3,211, , ,136 26,130 3,179, /76 3,179, , ,008 26,336 3,140, /77 3,140, , ,396 26,522 3,091, /78 3,091, , ,240 26,682 3,034, /79 3,034, , ,511 27,518 2,967, /80 2,967, , ,206 27,628 2,890, /81 2,890, , ,316 27,717 2,801, /82 2,801, ,039 99,855 27,835 2,702, /83 2,702, ,010 92,931 27,838 2,589, /84 2,589, ,166 85,284 27,803 2,463, /85 2,463, ,526 76,879 27,730 2,322, /86 2,322, ,094 67,664 27,615 2,166, /89 2,310, ,530 34,997 35,313 2,145,400 * = Year of retirement Page 15 of 138

16 Page 16 of 138

17 Cash Flow Page 17 of 138

18 Cash Flow Overview Cash flow management takes into account all sources of income and expenses. The following diagram represents the many items that can have an effect on a household s cash flow. Lifestyle Assets Taxes Debt Business Assets Cash Expenses Investment Assets Retirement Assets Employment Income Assets are a use of cash when they are purchased and a source of cash when they are sold. Investment assets that produce income can provide a source of cash throughout their life. A liability is a source of cash when it is incurred and a use of cash as it is paid off. Employment income is a source of cash. Expenses and taxes are a use of cash. In short, cash inflows come from income, debt, and the sale of assets. Cash outflows pay expenses, reduce debt, and purchase assets. Page 18 of 138

19 Cash Flow Summary - Current The cash flow report below outlines your current sources of income and expenses. Your income includes employment income, investment income and any other sources. Your expenses include your daily living expenses, debt payments including your mortgage, current investment contributions and insurance premiums. Current Surplus/(Deficit) displays any excess cash available or shortfall at the end of the current year once all expenses have been covered and investments made. Ending Surplus/(Deficit) displays the final surplus or deficit at the end of the current year after adjustments to or from other family members. The family s ending surplus or deficit is the sum of the individual family member s ending surpluses or deficits. Frank Kathy Family Cash Inflows Employment Inflows $75,000 $95,000 $170,000 Investment Inflows $9,525 $9,525 $19,050 Pension Inflows $2,594 $0 $2,594 Received Capital $248 $248 $497 Total Cash Inflows $87,367 $104,774 $192,141 Cash Outflows Lifestyle Expenses $33,450 $33,450 $66,900 Taxes $23,416 $28,737 $52,153 Miscellaneous Expenses $2,578 $2,398 $4,975 Non-Qualified Contributions and Reinvestments $4,706 $4,706 $9,412 Investment Expenses $1,769 $684 $2,453 Qualified Contributions $6,000 $4,800 $10,800 Total Cash Outflows $71,919 $74,774 $146,693 Current Surplus/(Deficit) 45,448 Ending Surplus/(Deficit) 45,448 Consider the following: Continue to maintain a positive cash flow to generate the funds necessary to meet your goals. Page 19 of 138

20 Cash Flow Summary - Proposed The cash flow report below outlines your current sources of income and expenses. Your income includes employment income, investment income and any other sources. Your expenses include your daily living expenses, debt payments including your mortgage, current investment contributions and insurance premiums. Current Surplus/(Deficit) displays any excess cash available or shortfall at the end of the current year once all expenses have been covered and investments made. Ending Surplus/(Deficit) displays the final surplus or deficit at the end of the current year after adjustments to or from other family members. The family s ending surplus or deficit is the sum of the individual family member s ending surpluses or deficits. Frank Kathy Family Cash Inflows Employment Inflows $75,000 $95,000 $170,000 Investment Inflows $21,870 $21,870 $43,741 Pension Inflows $2,594 $0 $2,594 Received Capital $43,376 $43,376 $86,753 Total Cash Inflows $142,840 $160,247 $303,087 Cash Outflows Lifestyle Expenses $33,450 $33,450 $66,900 Taxes $25,727 $31,173 $56,901 Miscellaneous Expenses $5,238 $3,118 $8,355 Non-Qualified Contributions and Reinvestments $61,594 $61,594 $123,189 Investment Expenses $1,777 $684 $2,462 Qualified Contributions $7,100 $4,800 $11,900 Total Cash Outflows $134,887 $134,820 $269,706 Current Surplus/(Deficit) 33,381 Ending Surplus/(Deficit) 33,381 Consider the following: Continue to maintain a positive cash flow to generate the funds necessary to meet your goals. Page 20 of 138

21 Cash Flow Outlook - Current The following report shows your sources of income and expenses over the next 5 years. Cash Inflows Employment Inflows Frank's Salary (Frank) 75,000 77,250 79,568 81,955 84,413 Kathy's Salary (Kathy) 95,000 97, , , ,923 Total Employment Inflows 170, , , , ,336 Investment Inflows Fifth-Wheel Trailer Savings (Joint/Non-Qualified) Fleet Bank Savings (Joint/Non-Qualified) Joint Savings (Non-Qualified) 7,309 7,833 8,359 8,912 9,493 Ridgefield Bank Savings (Joint/Non-Qualified) 1,359 1,361 1,363 1,365 1, Main St. (Joint/Real Estate) 10,000 10,200 10,404 10,612 10,824 Total Investment Inflows 19,547 20,353 21,167 22,013 22,895 Pension Inflows Frank's IRA (Inherited) 2,594 2,747 2,909 3,080 3,262 Total Pension Inflows 2,594 2,747 2,909 3,080 3,262 Total Cash Inflows 192, , , , ,494 Cash Outflows Lifestyle Expenses Housing (e.g. utilities, repairs) (Joint) 42,000 43,260 44,558 45,895 47,271 Line of Credit (Joint) Mortgage (Joint) 24,000 24,000 24,000 24,000 24,000 Total Lifestyle Expenses 66,900 68,160 69,458 70,795 72,171 Non-Qualified Contributions and Reinvestments Fifth-Wheel Trailer Savings (Joint/Non-Qualified) 1,548 1,588 1,638 1,691 1,744 Fleet Bank Savings (Joint/Non-Qualified) Joint Savings (Non-Qualified) 7,038 7,048 7,401 7,771 8,160 Ridgefield Bank Savings (Joint/Non-Qualified) Total Non-Qualified Contributions and Reinvestments 9,412 9,467 9,876 10,304 10,752 Investment Expenses Account Fees 1,603 1,737 1,877 2,026 2, Main St. (Joint/Real Estate) Total Investment Expenses 1 2,453 2,604 2,762 2,928 3,104 Qualified Contributions Frank's 401(k) 3,600 3,600 3,600 3,600 3,600 James' Coverdell (Frank/Coverdell for James) 1,200 1,200 1,200 1,200 1,200 James' Education Plan (Frank/529 Plan for James) 1,200 1,200 1,200 1,200 1,200 Kathy's 401(k) 3,600 3,600 3,600 3,600 3,600 Tasha's Education Plan (Kathy/529 Plan for Tasha) 1,200 1,200 1,200 1,200 1,200 Total Qualified Contributions 10,800 10,800 10,800 10,800 10,800 Page 21 of 138

22 Miscellaneous Expenses Frank's GRP LTD Policy (Frank) Frank's GRP STD Policy (Frank) Life Insurance (Frank/Term 10 Life) LTC Insurance (Frank) Kathy's GRP LTD Policy (Kathy) Kathy's GRP STD Policy (Kathy) Life Insurance (Kathy/Term 10 Life) LTC Insurance (Kathy) Tax Deductible Property Taxes - Residence (Joint/Lifestyle) 1,195 1,231 1,268 1,306 1,345 Total Miscellaneous Expenses 4,975 5,011 5,048 5,086 5,125 Taxes State Taxes 7,424 7,720 8,026 8,341 8,668 Federal Taxes 31,725 33,370 34,703 36,082 37,509 Medicare Tax - employment 2,465 2,539 2,615 2,694 2,774 Social Security Tax - employment 10,540 10,856 11,182 11,517 11,863 Total Taxes 52,153 54,485 56,525 58,634 60,815 Total Cash Outflows 146, , , , ,767 Current Surplus/(Deficit) 45,448 47,672 49,960 52,310 54,726 Previous Surplus/(Deficit) 0 45,448 93, , ,391 Ending Surplus/(Deficit) 45,448 93, , , , Does not include any additional fees paid from accounts. Page 22 of 138

23 Cash Flow Summary Report - Current The following report represents the major components of your cash flow from the current year until the end of your life expectancy in your current plan. Year Ages Cash Inflows Cash Outflows Surplus/(Deficit) /47 192, ,693 45, /48 198, ,527 47, /49 204, ,468 49, /50 210, ,547 52, /51 217, ,767 54, /52 243, ,280 57, /53 251, ,770 59, /54 259, ,468 61, /55 282, ,344 58, /56 301, ,399 46, /57 271, ,628 56, /58 269, ,759 50, /59 277, ,439 75, *62/60* 227, ,422 6, /61 230, ,070 (6,822) /62 250, , /63 291, , /64 299, , /65 307, , /66 315, , /67 322, , /68 330, , /69 338, , /70 319, , /71 322, , /72 331, , /73 341, , /74 221, ,471 (93,736) /75 161, ,584 (144,880) /76 166, ,633 (149,277) /77 171, ,953 (153,809) /78 176, ,550 (158,479) /79 181, ,433 (163,291) /80 186, ,612 (168,250) /81 191, ,094 (173,360) /82 197, ,888 (178,627) /83 202, ,005 (184,054) /84 208, ,453 (189,646) /85 214, ,243 (195,409) /86 221, ,385 (201,347) /89 175, ,342 (277,119) * = Year of retirement Page 23 of 138

24 Cash Inflows Report - Current The following report represents the major components of your cash inflows from the current year until the end of your life expectancy in your current plan. Year Ages Regular Income Social Security Pension Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Cash Inflow /47 170, ,594 19, , /48 175, ,747 20, , /49 180, ,909 21, , /50 185, ,080 22, , /51 191, ,262 22, , /52 197, ,455 23,813 19, , /53 202, ,659 24,281 20, , /54 209, ,875 25,289 21, , /55 215, ,105 26,338 36, , /56 221, ,348 51,906 23, , /57 228, ,605 27,310 11, , /58 235, ,878 28,456 1, , /59 242, ,168 29, , *62/60* 175,612 6,828 8,444 5,474 30, , / ,132 34,790 5, , , / ,021 35,833 41, , , / ,992 36, ,637 15, , / ,882 38, ,013 15, , / ,828 39, ,510 15, , / ,833 40, ,131 16, , / ,898 41, ,543 16, , / ,025 42, ,866 16, , / ,216 44, ,257 17, , / ,472 45, ,073 17, , / ,796 46, ,399 17, , / ,190 48, ,272 18, , / ,656 49, ,265 18, , / ,196 51,090 64,551 18, , / ,812 52, , , / ,506 54, , , / ,281 55, , , / ,139 57, , , / ,084 59, , , / ,116 61, , , / ,240 62, , , / ,457 64, , , / ,771 66, , , / ,184 68, , , / ,699 70, , , / ,320 72, , , / ,484 79, , ,223 * = Year of retirement Page 24 of 138

25 Cash Outflows Report - Current The following report represents the major components of your cash outflows from the current year until the end of your life expectancy in your current plan. Lifestyle and Medical Expenses Non-Qualified Contributions and Reinvestments Qualified Plan Other Total Cash Year Ages Taxes Contributions Outflows Outflow /47 66,900 52,153 10,800 9,412 7, , /48 68,160 54,485 10,800 9,467 7, , /49 69,458 56,525 10,800 9,876 7, , /50 70,795 58,634 10,800 10,304 8, , /51 72,171 60,815 10,800 10,752 8, , /52 73,590 63,069 10,800 11,222 27, , /53 75,050 65,403 10,800 11,723 28, , /54 76,555 67,818 10,800 12,247 30, , /55 78,104 70,315 9,600 12,797 53, , /56 125,368 74,127 9,600 12,553 32, , /57 81,344 76,587 9,600 13,130 33, , /58 83,038 79,692 8,400 13,735 34, , /59 84,782 84,326 8,400 14,369 9, , *62/60* 125,171 65,818 6,000 14,025 9, , /61 204,132 23, , , /62 209,509 32, ,006 8, , /63 215,047 67, ,023 7, , /64 220,752 69, ,040 7, , /65 226,627 72, ,057 7, , /66 232,679 74, ,075 7, , /67 238,913 75, ,093 7, , /68 245,333 77, ,111 6, , /69 251,946 78, ,129 6, , /70 238,660 73, ,148 6, , /71 241,773 73, ,167 6, , /72 248,999 75, ,186 5, , /73 256,442 77, ,206 5, , /74 264,109 44, ,226 5, , /75 272,005 27, ,246 5, , /76 280,138 28, ,267 5, , /77 288,515 29, ,288 5, , /78 297,144 30, ,309 5, , /79 306,031 31, ,331 5, , /80 315,185 32, ,353 6, , /81 324,613 32, ,375 6, , /82 334,325 33, ,398 6, , /83 344,327 34, ,421 6, , /84 354,630 35, ,445 6, , /85 365,242 36, ,469 6, , /86 376,172 37, ,493 6, , /89 410,970 33, , ,342 * = Year of retirement Page 25 of 138

26 Cash Flow Outlook - Proposed The following report shows your sources of income and expenses over the next 5 years. Cash Inflows Employment Inflows Frank's Salary (Frank) 75,000 77,250 79,568 81,955 84,413 Kathy's Salary (Kathy) 95,000 97, , , ,923 Total Employment Inflows 170, , , , ,336 Investment Inflows Fifth-Wheel Trailer Fund (Joint/Non-Qualified) Fifth-Wheel Trailer Savings (Joint/Non-Qualified) 6, ,025 1,167 1,315 Fleet Bank Savings (Joint/Non-Qualified) 9, James' Education Goal Fund (Joint/Non-Qualified) Joint Savings (Non-Qualified) 78,126 7,602 8,176 8,784 9,427 Retirement Fund (Joint/Non-Qualified) ,098 Ridgefield Bank Savings (Joint/Non-Qualified) 25,489 2,551 2,623 2,700 2,780 Tasha's Education Goal Fund (Joint/Non-Qualified) Main St. (Joint/Real Estate) 10,000 10,200 10,404 10,612 10,824 Total Investment Inflows 130,494 22,978 24,623 26,356 28,181 Pension Inflows Frank's IRA (Inherited) 1,297 1,398 1,507 1,624 1,751 Frank's IRA (Inherited) 1,297 1,398 1,507 1,624 1,751 Total Pension Inflows 2,594 2,796 3,014 3,249 3,502 Total Cash Inflows 303, , , , ,019 Cash Outflows Lifestyle Expenses Housing (e.g. utilities, repairs) (Joint) 42,000 43,260 44,558 45,895 47,271 Line of Credit (Joint) Mortgage (Joint) 24,000 24,000 24,000 24,000 24,000 Total Lifestyle Expenses 66,900 68,160 69,458 70,795 72,171 Non-Qualified Contributions and Reinvestments Fifth-Wheel Trailer Fund (Joint/Non-Qualified) 1,541 1,615 1,694 1,779 1,868 Fifth-Wheel Trailer Savings (Joint/Non-Qualified) 7,624 1,797 1,887 1,982 2,081 Fleet Bank Savings (Joint/Non-Qualified) 9, James' Education Goal Fund (Joint/Non-Qualified) 1,541 1,615 1,694 1,779 1,868 Joint Savings (Non-Qualified) 73,617 6,893 7,278 7,685 8,116 Retirement Fund (Joint/Non-Qualified) 3,082 3,229 3,389 3,557 3,735 Ridgefield Bank Savings (Joint/Non-Qualified) 24,381 1,374 1,423 1,474 1,528 Tasha's Education Goal Fund (Joint/Non-Qualified) 1,849 1,938 2,033 2,134 2,241 Total Non-Qualified Contributions and Reinvestments 123,189 19,026 19,992 21,013 22,094 Investment Expenses Account Fees 1,612 1,749 1,918 2,100 2, Main St. (Joint/Real Estate) Total Investment Expenses 1 2,462 2,616 2,803 3,002 3,215 Page 26 of 138

27 Qualified Contributions Frank's 401(k) 3,600 3,600 3,600 3,600 3,600 James' Coverdell (Frank/Coverdell for James) 1,200 1,200 1,200 1,200 1,200 James' Education Plan (Frank/529 Plan for James) 1,200 1,200 1,200 1,200 1,200 Kathy's 401(k) 3,600 3,600 3,600 3,600 3,600 Roth IRA - Spousal (Kathy) 1,100 1,200 1,200 1,200 1,200 Tasha's Education Plan (Kathy/529 Plan for Tasha) 1,200 1,200 1,200 1,200 1,200 Total Qualified Contributions 11,900 12,000 12,000 12,000 12,000 Miscellaneous Expenses Charitable donations (Frank) 1,000 1,000 1,000 1,000 1,000 Additional Disability Insurance (Frank) Frank's GRP LTD Policy (Frank) Frank's GRP STD Policy (Frank) Additional Life Insurance (Frank/Whole Life) Life Insurance (Frank/Term 10 Life) LTC Insurance (Frank) Additional Disability Insurance (Kathy) Kathy's GRP LTD Policy (Kathy) Kathy's GRP STD Policy (Kathy) Additional Life Insurance (Kathy/Whole Life) Life Insurance (Kathy/Term 10 Life) LTC Insurance (Kathy) Tax Deductible Property Taxes - Residence (Joint/Lifestyle) 1,195 1,231 1,268 1,306 1,345 Frank's ILIT Total Miscellaneous Expenses 8,355 8,391 8,428 8,466 8,505 Taxes State Taxes 8,608 7,804 8,154 8,518 8,896 Federal Taxes 35,288 33,875 35,444 37,076 38,772 Medicare Tax - employment 2,465 2,539 2,615 2,694 2,774 Social Security Tax - employment 10,540 10,856 11,182 11,517 11,863 Total Taxes 56,901 55,075 57,396 59,805 62,305 Total Cash Outflows 269, , , , ,291 Current Surplus/(Deficit) 33,381 35,606 37,914 40,288 42,729 Previous Surplus/(Deficit) 0 33,381 68, , ,189 Ending Surplus/(Deficit) 33,381 68, , , , Does not include any additional fees paid from accounts. Page 27 of 138

28 Cash Flow Summary Report - Proposed The following report represents the major components of your cash flow from the current year until the end of your life expectancy in your proposed plan. Year Ages Cash Inflows Cash Outflows Surplus/(Deficit) /47 303, ,706 33, /48 200, ,268 35, /49 207, ,076 37, /50 215, ,080 40, /51 223, ,291 42, /52 250, ,861 45, /53 258, ,499 47, /54 268, ,430 49, /55 299, ,275 55, /56 330, ,247 58, /57 294, ,465 60, /58 303, ,339 67, /59 287, ,793 68, /60 297, ,076 71, *63/61* 854, ,052 16, /62 249, ,213 (16,005) /63 272, , /64 282, ,554 (6) /65 336, , /66 308, , /67 316, , /68 323, , /69 333, ,740 (9) /70 343, , /71 364, , /72 367, , /73 378, , /74 389, , /75 400, , /76 411, , /77 422, , /78 434, , /79 446, , /80 458, , /81 471, , /82 485, , /83 498, , /84 513, , /85 527, , /86 542, , /89 506, ,347 0 * = Year of retirement Page 28 of 138

29 Cash Inflows Report - Proposed The following report represents the major components of your cash inflows from the current year until the end of your life expectancy in your proposed plan. Year Ages Regular Income Social Security Pension Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Cash Inflow /47 170, , , , /48 175, ,796 22, , /49 180, ,014 24, , /50 185, ,249 26, , /51 191, ,502 28, , /52 197, ,776 30,103 19, , /53 202, ,071 31,663 20, , /54 209, ,389 33,833 21, , /55 215, ,732 47,383 32, , /56 221, ,102 80,165 23, , /57 228, ,502 36,737 23, , /58 235, ,933 61,085 1, , /59 242, ,398 38, , /60 249, ,900 40, , *63/61* 196, ,697 7, , , /62 45, ,833 8, , , /63 47, ,908 8, , , /64 48, ,015 73, , , /65 50,081 11,316 39, ,463 22, , /66 51,584 46,622 40, ,320 22, , /67 53,131 61,345 41, ,564 21, , /68 54, ,356 42,787 99,981 21, , /69 56, ,486 44, ,191 22, , /70 58, ,711 45, ,464 23, , /71 39, ,032 46, ,413 24, , / ,453 48, ,534 24, , / ,977 49, ,338 25, , / ,606 51, ,010 26, , / ,344 52, ,808 27, , / ,195 54, ,736 28, , / ,161 55, ,798 29, , / ,245 57, ,997 30, , / ,453 59, ,372 31, , / ,786 61, ,858 32, , / ,250 62, ,494 33, , / ,847 64, ,252 34, , / ,583 66, ,078 35, , / ,460 68, ,049 36, , / ,484 70, ,170 38, , / ,659 72, ,441 39, , / ,120 79, ,131 22, ,347 * = Year of retirement Page 29 of 138

30 Cash Outflows Report - Proposed The following report represents the major components of your cash outflows from the current year until the end of your life expectancy in your proposed plan. Lifestyle and Medical Expenses Non-Qualified Contributions and Reinvestments Qualified Plan Other Total Cash Year Ages Taxes Contributions Outflows Outflow /47 66,900 56,901 11, ,189 10, , /48 68,160 55,075 12,000 19,026 11, , /49 69,458 57,396 12,000 19,992 11, , /50 70,795 59,805 12,000 21,013 11, , /51 72,171 62,305 12,000 22,094 11, , /52 73,590 64,902 12,000 23,236 31, , /53 75,050 67,602 12,000 24,469 32, , /54 76,555 70,414 12,000 25,772 33, , /55 78,107 73,116 10,800 25,018 57, , /56 125,407 76,925 10,800 22,587 36, , /57 81,344 79,717 10,800 23,781 37, , /58 83,040 82,828 9,600 22,028 38, , /59 84,782 87,559 9,600 23,239 13, , /60 86,578 91,311 9,600 24,521 14, , *63/61* 654,295 77,692 6,800 86,060 13, , /62 214,745 36, ,677 10, , /63 221,160 36, ,764 10, , /64 227,768 40, ,855 10, , /65 234,574 87, ,951 10, , /66 215,282 78, ,090 9, , /67 221,713 80, ,312 9, , /68 228,338 80, ,547 9, , /69 235,161 83, ,795 9, , /70 242,189 86, ,058 10, , /71 259,427 89, ,335 10, , /72 266,883 85, ,628 10, , /73 274,563 88, ,938 9, , /74 282,473 90, ,266 9, , /75 290,620 93, ,613 9, , /76 299,011 95, ,979 9, , /77 307,655 98, ,367 9, , /78 316, , ,777 9, , /79 325, , ,210 8, , /80 335, , ,669 8, , /81 344, , ,153 8, , /82 354, , ,666 7, , /83 365, , ,208 7, , /84 375, , ,781 7, , /85 386, , ,388 6, , /86 398, , ,029 6, , /89 424,001 65, ,184 2, ,347 * = Year of retirement Page 30 of 138

31 Overview Page 31 of 138

32 Overview The Goal Coverage graph(s) illustrate the percentage of all cash outflows that occur during the goal period, except for income and estate taxes, which can be covered using all goal resources and the specified goal dates. Current 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Goal Description Goal Coverage Retirement 72.00% Tasha's Education Goal 61.00% James' Education Goal 91.00% Fifth-Wheel Trailer 55.00% Emergency Fund 78.00% Life Insurance - Frank 72.00% Life Insurance - Kathy 77.00% Life Insurance - Frank and Kathy % Disability Insurance - Frank 83.00% Disability Insurance - Kathy 82.00% Long-term care Insurance - Frank 59.00% Long-term care Insurance - Kathy 66.00% Page 32 of 138

33 Proposed 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Goal Description Goal Coverage Retirement % Tasha's Education Goal % James' Education Goal % Fifth-Wheel Trailer % Emergency Fund % Life Insurance - Frank % Life Insurance - Kathy % Life Insurance - Frank and Kathy % Disability Insurance - Frank % Disability Insurance - Kathy % Long-term care Insurance - Frank % Long-term care Insurance - Kathy % Page 33 of 138

34 Page 34 of 138

35 Education Page 35 of 138

36 Education Overview Many of the education plans available today offer tax advantages that lessen the financial burden by reducing the amount you need to save. Educational costs have been increasing at a rate greater than the general level of inflation. We cannot control these increasing costs but we can effectively save for these goals using the right type of savings plan. Some education funding options are described below. *Tax Considerations Investment Accounts Custodial Accounts -UGMA -UTMA First $950 of investment income is tax-free for children under 19 or full-time students age next $950 is taxed at the child's tax rate; excess taxed at parent s rate. 529 Plans**** Distributions tax-free if used for education expenses. Coverdell ESAs Investments U.S. Savings Bonds (zero coupon bond) Withdrawals and earnings not taxed as long as funds are used for education expenses. *Interest is tax exempt provided proceeds are for tuition and/or fees. Contribution Limit Up to $13,000 per donor for each donee without incurring federal gift tax. Limits vary by state. Special gifting rules apply. *$2,000 per year per child - child must be under 18. Tax Reductions and Credits Hope Credit Credit of up to $2,500 for each eligible (American student. Opportunity Credit) Lifetime Learning Credit Student Loan Interest Deduction Maximum of $2,000 per taxpayer. Maximum of $2,500 above-the-line deductions. Deduction is subject to income limitations. Allowable Use Unlimited (must be for benefit of child and not used for food, clothing etc.) **Qualified Higher Education Expenses ***Qualified Education Expenses Contributor Control over assets Custodian has full control only until beneficiary reaches legal age of majority. Full control Full control Rollovers to family members N/A Yes Yes N/A Tuition and Fees Full control N/A Notes First four years of post-secondary education. Enrolled in degree program at least half-time. Tuition and related expenses (excluding room and board). Phase-outs apply. Qualified tuition and related expenses (excluding room and board). One or more courses. Graduate level work is eligible. Phase-outs apply. Interest is deductible for all years during loan repayment period. Phase-outs apply. Investors should consider the investment objectives, risks, charges and expenses associated with a 529 Plan before investing. This and other information is available in a Plan s official statement. The official statement should be read carefully before investing. *Restrictions apply at certain income levels and proceeds may have to be used for education expenses. **Qualified Higher Education Expenses refer to amounts paid for tuition and fees, books, room and board, equipment, supplies, etc., as a result of attendance at a post-secondary institution. ***Qualified Education Expenses include the following: Qualified Higher Education Expenses, amounts paid for tuition and fees, books, supplies and tutoring; a beneficiary s enrolment in a public, private or religious elementary, or secondary school. Coverdell and 529 assets may affect a beneficiary s ability to qualify for financial aid, grants, or loans. ****Favorable tax treatment for investing in a 529 College Savings Plan may be limited to investments made in a 529 plan offered by your home state. Please consult your tax advisor about any state tax consequences of an investment in a specific College Savings Plan. Page 36 of 138

37 Tasha's Education Goal Scenario Summary The following information provides an overview of the selected scenarios and their estimated effect on the Tasha's Education Goal goal. The following graph illustrates the ability of each scenario to achieve the Tasha's Education Goal goal. Scenario Coverage 120% 100% 80% 60% 40% 20% 0% Current Plan Proposed Plan Goal Coverage Capital at Start of Goal Capital at End of Goal Year Capital Exhausted Current Plan 61.00% $52,009 $ Proposed Plan % $80,268 $2,218 Never Page 37 of 138

38 Scenario Assumption Comparison Key Differences Current Alternative 1 Objectives: Desired Expenses Covered (Annual Goal Amount) 100%($15,000) 100%($15,000) Start Year (Duration) 2020 (4 years) 2020 (4 years) Index Rate 5.00% 5.00% Additional Lump Sum Savings $0 $0 Current Monthly Savings $100 $100 Additional Monthly Savings $0 $150 Additional Monthly Savings Indexed at 0.00% 0.00% Additional Monthly Savings Start Date Jan 1, 2012 Jan 1, 2012 Investment Objective Current - Rebalanced Moderate Rate of Return 5.62% 8.23% Transfer Strategies: N/A Goal Funding Strategy: Current Plan Modified New Accounts: New accounts/annuities have been added Note: Items in bold indicate a change from the Current Plan What-if strategies are not applicable to the Current Plan scenario. Page 38 of 138

39 Tasha's Education Goal Summary You have indicated you wish to establish an investment plan to fund the following education goal: Member Current Age Education Starts at Estimated Costs/yr Years of Education Index Rate Estimated Actual Cost Current Tasha $15, % $95,520 Proposed Tasha $15, % $95,520 The graphs below illustrate needs vs. abilities for your education scenarios. Education Needs Vs. Abilities Current $30K $25K $20K $15K $10K $5K $0K Proposed $30K $25K $20K $15K $10K $5K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Current Proposed Available Assets $27,000 $27,000 Return Rate 5.62% 8.23% Assumed Monthly Savings $100 $250 Required Additional Monthly Savings $234 $0 Required Additional Lump Sum Savings $25,212 $0 Note: Numbers in bold indicate a change from the Current Plan. Consider the following: Alternatively, increase your monthly savings by $0 to fund your education goal. Consider allocating additional assets to meet your education goals. If you have not already reviewed the benefits of a Coverdell Education Savings Account, consult with your tax advisor to determine your eligibility to contribute to this type of account. Review opportunities and eligibility for scholarship programs and financial aid. Keep in mind that not all financial aid is based on need. Page 39 of 138

40 Asset Allocation for Tasha's Education Goal - Proposed These pie graphs illustrate your current asset mix and suggested asset mix for your education goal. Current Asset Mix Suggested Asset Mix Moderate Rate of Return 5.62% Standard Deviation 9.23% Rate of Return 8.23% Standard Deviation 12.98% The table below provides a breakdown of the percentages and dollar values for each asset class in the current asset mix and suggested asset mix. The Change column indicates the rebalancing required to reach the suggested asset mix. Current Asset Mix Change Suggested Asset Mix Asset Class (%) ($) (%) ($) (%) ($) Large Cap Growth Equity , ,970 Large Cap Value Equity , , ,780 Mid Cap Equity , ,430 Small Cap Equity , ,620 US REITs International Equity , ,780 Emerging Markets Equity Long Term Bonds , , ,350 Intermediate Term Bonds , ,240 Short Term Bonds , ,700 High Yield Bonds , ,080 International Bonds , ,620 Cash , , Total , , Ibbotson Associated, Inc., All rights reserved. Zywave, Inc. has engaged Ibbotson to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to Zywave a license to use the asset allocation tools. Some assets in this report may have been classified based on returns-based style analysis and others may have been manually classified. Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar and Ibbotson are not affiliated with Zywave. Page 40 of 138

41 Tasha's Education Goal - Current *61% This scenario covers 61% of the desired Tasha's Education Goal goal objectives. *This represents your total education needs covered by your total education resources during the education period. Assumptions The following table details the key assumptions used in the generation of this scenario: Desired Expenses Covered (Annual Goal Amount) 100% ($15,000) Start Year (Duration) 2020 (4 years) Current Monthly Savings $100 Index Rate 5.00% Investment Objective (ROR) Current - Rebalanced (5.62%) Analysis $25K $20K $15K $10K $5K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Capital at Start of Goal: $52,009 Capital at End of Goal: $0 Year Capital Exhausted: 2023 Page 41 of 138

42 Tasha's Education Goal - Proposed *100% This scenario covers 100% of the desired Tasha's Education Goal goal objectives. *This represents your total education needs covered by your total education resources during the education period. Assumptions The following table details the key assumptions used in the generation of this scenario: Desired Expenses Covered (Annual Goal Amount) 100% ($15,000) Start Year (Duration) 2020 (4 years) Additional Lump-Sum Savings $0 Current Monthly Savings $100 Change in Monthly savings $150 Total Monthly Savings $250 Index Rate 5.00% Investment Objective (ROR) Moderate (8.23%) Note: Numbers in bold indicate a change from the Current Plan. Note: Information in the table above is for the February 1, 2012 period. Any strategies occurring in the future are not displayed in this table. Analysis $30K $25K $20K $15K $10K $5K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Capital at Start of Goal: $80,268 Capital at End of Goal: $2,218 Year Capital Exhausted: Never Page 42 of 138

43 James' Education Goal Scenario Summary The following information provides an overview of the selected scenarios and their estimated effect on the James' Education Goal goal. The following graph illustrates the ability of each scenario to achieve the James' Education Goal goal. Scenario Coverage 120% 100% 80% 60% 40% 20% 0% Current Plan Proposed Plan Goal Coverage Capital at Start of Goal Capital at End of Goal Year Capital Exhausted Current Plan 91.00% $63,389 $1,124 Never Proposed Plan % $69,578 $3,195 Never Page 43 of 138

44 Scenario Assumption Comparison Key Differences Current Alternative 1 Objectives: Desired Expenses Covered (Annual Goal Amount) 100%($15,000) 100%($15,000) Start Year (Duration) 2017 (4 years) 2017 (4 years) Index Rate 5.00% 5.00% Additional Lump Sum Savings $0 $0 Current Monthly Savings $200 $100 Additional Monthly Savings $0 $125 Additional Monthly Savings Indexed at 0.00% 0.00% Additional Monthly Savings Start Date Jan 1, 2012 Jan 1, 2012 Investment Objective Current - Rebalanced Moderate Rate of Return 5.57% 8.23% Transfer Strategies: N/A Goal Funding Strategy: Current Plan Modified New Accounts: New accounts/annuities have been added Note: Items in bold indicate a change from the Current Plan What-if strategies are not applicable to the Current Plan scenario. Page 44 of 138

45 James' Education Goal Summary You have indicated you wish to establish an investment plan to fund the following education goal: Member Current Age Education Starts at Estimated Costs/yr Years of Education Index Rate Estimated Actual Cost Current James $15, % $82,514 Proposed James $15, % $82,514 The graphs below illustrate needs vs. abilities for your education scenarios. Education Needs Vs. Abilities Current Proposed $25K $25K $20K $20K $15K $15K $10K $10K $5K $5K $0K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Current Proposed Available Assets $39,000 $37,000 Return Rate 5.57% 8.23% Assumed Monthly Savings $200 $225 Required Additional Monthly Savings $66 $0 Required Additional Lump Sum Savings $5,474 $0 Note: Numbers in bold indicate a change from the Current Plan. Consider the following: Alternatively, increase your monthly savings by $0 to fund your education goal. Consider allocating additional assets to meet your education goals. If you have not already reviewed the benefits of a Coverdell Education Savings Account, consult with your tax advisor to determine your eligibility to contribute to this type of account. Review opportunities and eligibility for scholarship programs and financial aid. Keep in mind that not all financial aid is based on need. Page 45 of 138

46 Asset Allocation for James' Education Goal - Proposed These pie graphs illustrate your current asset mix and suggested asset mix for your education goal. Current Asset Mix Suggested Asset Mix Moderate Rate of Return 5.57% Standard Deviation 9.05% Rate of Return 8.23% Standard Deviation 12.98% The table below provides a breakdown of the percentages and dollar values for each asset class in the current asset mix and suggested asset mix. The Change column indicates the rebalancing required to reach the suggested asset mix. Current Asset Mix Change Suggested Asset Mix Asset Class (%) ($) (%) ($) (%) ($) Large Cap Growth Equity , ,070 Large Cap Value Equity , , ,180 Mid Cap Equity , ,330 Small Cap Equity , ,220 US REITs , ,110 International Equity , ,180 Emerging Markets Equity , ,110 Long Term Bonds , , ,850 Intermediate Term Bonds 2.6 1, , ,440 Short Term Bonds , ,700 High Yield Bonds , ,480 International Bonds , ,220 Cash , , ,110 Total , , , Ibbotson Associated, Inc., All rights reserved. Zywave, Inc. has engaged Ibbotson to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to Zywave a license to use the asset allocation tools. Some assets in this report may have been classified based on returns-based style analysis and others may have been manually classified. Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar and Ibbotson are not affiliated with Zywave. Page 46 of 138

47 James' Education Goal - Current *91% This scenario covers 91% of the desired James' Education Goal goal objectives. *This represents your total education needs covered by your total education resources during the education period. Assumptions The following table details the key assumptions used in the generation of this scenario: Desired Expenses Covered (Annual Goal Amount) 100% ($15,000) Start Year (Duration) 2017 (4 years) Current Monthly Savings $200 Index Rate 5.00% Investment Objective (ROR) Current - Rebalanced (5.57%) Analysis $20K $15K $10K $5K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Capital at Start of Goal: $63,389 Capital at End of Goal: $1,124 Year Capital Exhausted: Never Page 47 of 138

48 James' Education Goal - Proposed *100% This scenario covers 100% of the desired James' Education Goal goal objectives. *This represents your total education needs covered by your total education resources during the education period. Assumptions The following table details the key assumptions used in the generation of this scenario: Desired Expenses Covered (Annual Goal Amount) 100% ($15,000) Start Year (Duration) 2017 (4 years) Additional Lump-Sum Savings $0 Current Monthly Savings $200 Change in Monthly savings $25 Total Monthly Savings $225 Index Rate 5.00% Investment Objective (ROR) Moderate (8.23%) Note: Numbers in bold indicate a change from the Current Plan. Note: Information in the table above is for the February 1, 2012 period. Any strategies occurring in the future are not displayed in this table. Analysis $25K $20K $15K $10K $5K $0K Desired Needs Ability to Cover Needs Shortfall Surplus Capital at Start of Goal: $69,578 Capital at End of Goal: $3,195 Year Capital Exhausted: Never Page 48 of 138

49 Education Cash Flow Summary - Current The following report summarizes your cash flow for your education objective for your current plan. The report begins in the current year and continues until the year in which your last education goal occurs, based upon your current plan. Year Ages Education Abilities Education Needs Surplus/(Deficit) / / / / / /52 19,144 19, /53 20,101 20, /54 21,107 21, /55 36,907 44,324 (7,417) /56 23,270 23, /57 11,067 24,433 (13,366) /58 1,127 25,655 (24,528) Page 49 of 138

50 Education Net Worth Accumulation - Current The following report provides a summary of the accumulation and/or depletion of your assets linked to your education goals. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Total Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital /47 66,000 3, , , /48 73,040 3, , , /49 80,427 3, , , /50 88,177 3, , , /51 96,308 3, , , /52 104,839 3,600 19,144 4, , /53 93,734 3,600 20,101 3, , /54 81,055 3,600 21,107 3, , /55 66,673 2,400 36,907 1, , /56 32,573 1,200 23, (4) 10, /57 10,981 1,200 11, (12) 1, /58 1, ,127 0 (1) 0 Page 50 of 138

51 Capital Accumulation and Depletion - Current The following graph provides a summary of the accumulation and/or depletion of your assets linked to your education goals. $110K $100K $90K $80K $70K $60K $50K $40K $30K $20K $10K $0K Non-Qualified Annuities and Qualified Accounts 529 Education Accounts Page 51 of 138

52 Education Cash Flow Summary - Proposed The following report summarizes your cash flow for your education objective for your proposed plan. The report begins in the current year and continues until the year in which your last education goal occurs, based upon your proposed plan. Year Ages Education Abilities Education Needs Surplus/(Deficit) / / / / / /52 19,144 19, /53 20,101 20, /54 21,107 21, /55 44,327 44, /56 23,270 23, /57 24,433 24, /58 25,657 25,655 2 Page 52 of 138

53 Education Net Worth Accumulation - Proposed The following report provides a summary of the accumulation and/or depletion of your assets linked to your education goals. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Total Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital /47 64,000 5, , , /48 74,831 5, , , /49 86,428 5, , , /50 98,850 5, , , /51 112,156 5, , , /52 126,412 5,700 19,144 7, , /53 121,042 5,700 20,101 6, , /54 114,143 5,700 21,107 6, , /55 105,541 3,000 44,404 4, , /56 65,314 3,000 23,270 2, , /57 47,960 3,000 24,439 1, , /58 27, , ,218 Page 53 of 138

54 Capital Accumulation and Depletion - Proposed The following graph provides a summary of the accumulation and/or depletion of your assets linked to your education goals. $140K $120K $100K $80K $60K $40K $20K $0K Non-Qualified Annuities and Qualified Accounts 529 Education Accounts Page 54 of 138

55 Retirement Page 55 of 138

56 Retirement Overview Retirement planning is an integral part of your overall analysis. Strategies should be designed to suit your goals and comfort level as well as to take advantage of tax saving opportunities. For any plan to be effective, it is necessary to implement these strategies and to review your goals and progress periodically. The amount you will need in retirement depends on the age you plan to retire, your desired retirement lifestyle, how long you expect to live and the rate of return you expect to earn on your investments. Social Security and employer-sponsored pension plans will probably provide a smaller percentage of what you will need than they did for your parents. The most important aspect of calculating your future needs is estimating how much you will have to save each year to produce the income you need to maintain your standard of living after you stop working. Pre-Retirement Considerations Consider using one or more of the following strategies to maximize your retirement income: Invest to potentially earn a higher rate of return on investments While there are no guarantees that a higher rate of return can be achieved by an investment style, if you have a lengthy time horizon until retirement, assets that have the potential for significant growth over the long term should be considered. It is important that your investment choices be consistent with the level of risk that you are willing to assume. In addition, a good analysis must always take inflation into account. If you disregard inflation, you may end up investing too conservatively. Together we can determine a suitable mix of investments that meets your objectives, time frame and risk tolerance. Save more It is hard to motivate yourself to save for retirement because it generally requires spending less money now. You will have a much better chance of achieving your retirement goal if you maintain (or even reduce) today's standard of living and save as much as you can. Retirement planners generally suggest committing 10% to 15% of your gross earnings, or earnings before tax, to savings for retirement. Spend less during retirement Many retirement experts estimate that you need between 70% and 80% of your pre-retirement income to maintain your standard of living during retirement. This may or may not be appropriate for you, as everyone s goals are different. Some of your expenses will increase and others will decrease. For instance, you may spend less on business clothing and lunches, but more on vacations. Also, consider the differences in your living expenses for early and later phases of retirement. For example, you ll likely spend more on travel when you re 65 than when you are 85. Retire at a later age The effect of retiring later is two-fold. Not only will you have contributed to your retirement plan for more years but also your salary is also typically higher at the end of your career. Retiring early means losing retirement plan contributions based on those later, higher income amounts. This normally results in a smaller pension. Another effect of retiring early is being retired longer, and being dependent on your investments for a greater number of years. Page 56 of 138

57 Maximize Contributions to Qualified Retirement Plans Many retirement accounts have a dual advantage; contributions are deducted from current taxable income, and the account itself grows tax deferred. Sources of Income in Retirement The following assumptions are made when determining the source of your retirement income. Generally, your retirement income begins drawing from the first item on the list, and if that particular source is insufficient, it will draw from the next item on the list, and so on: Social Security and defined benefit pension income are paid out based on the assumptions made in your retirement plan. Your employer-defined benefit pension benefits are based on your pension formula and years of service. Investment earnings on non-qualified investments. Non-qualified assets that do not have a growth component, such as T-Bills and CDs. These assets are redeemed in the order of lowest return rate to highest. Non-qualified assets with a growth component, such as stocks and most mutual funds. These assets are redeemed starting with those with the least percentage growth to the greatest percentage growth. Non-qualified deferred annuities. Qualified assets, such as IRAs and 401(k)s from lowest return rate to the highest return rate. If your income need is low during retirement, this analysis will enforce the required minimum distributions from these assets. Page 57 of 138

58 Below is a partial list of retirement accounts that may be available to you: Qualification to make Contributions Traditional IRA Spousal IRA Nondeductible IRA Roth IRA Individual must have Individual must be Individual or spouse Individual or spouse earned income and under age 70½ at end must have earned must have earned under age 70½ at end of year. Contributions income and under age income. May be any of year. based on other 70½ at end of year. age, including over 70½. spouse s earned Annual $5,000 Contribution Limits Indexed for inflation, in $500 increments. Lesser of the above limits or owner s taxable compensation. Annual total contribution limit between Roth IRA and Traditional IRA is $5,000 (2012) Additional catch-up contributions available for individuals age 50 and over. Deductibility of Contributions Taxation of Distributions Above-the-line deduction. If active participant in employer retirement plan, phase-out rules apply; phase-out reduction of deduction begins and ends: Single, HOH: $58,000 - $68,000 MFJ: $92,000 - $112,000 MFS: $0 - $10,000 Not covered under employer plan but filing joint return with a spouse who is covered under employer plan. Phase-out begins and ends MFJ: $173,000 - $183,000 All distributions are taxable. income $5,000 Indexed for inflation, in $500 increments. Lesser of the above limits, or total compensation, less your spouse s IRA contribution and less any contributions for the year to a Roth IRA. Additional catch-up contributions available for individuals age 50 and over. Above-the-line deduction. Phase-outs apply if the couple s AGI is between $173,000 and $183,000. All distributions are taxable $5,000 Indexed for inflation, in $500 increments. Lesser of the above limits, or owner s taxable compensation. Annual total contribution limit between Roth IRA and Traditional IRA is $5,000 (2012) Additional catch-up contributions available for individuals age 50 and over. Not deductible. Basis distribution non-taxable. Earnings portion is taxable $5,000 Indexed for inflation, in $500 increments. Lesser of the above limits, or owner s taxable compensation. Annual total contribution limit between Roth IRA and Traditional IRA is $5,000 (2012) Additional catch-up contributions available for individuals age 50 and over. Not deductible. Phase-outs begin and end: Single, HOH: $110,000 - $125,000 MFJ: $173,000 - $183,000 MFS: $0 - $10,000 Qualified distributions are non-taxable, including earnings Page 58 of 138

59 Qualification to make Contributions Annual Contribution Limits Deductibility of Contributions Taxation of Distributions 401(k) 403(b) TSA SEP - Employee SEP-Self Employed Employee of a Anyone with tax-exempt religious, self-employment income. charitable, or educational organization is eligible. Cannot exclude employees who: - Are 21 years old. - Have completed one year of eligibility service (1000 hours). - Service eligibility may be 2 years where plan provides for 100% vesting at start of participation. Employee Elections or designated Roth contributions: $17,000 Indexed for inflation in $500 increments. Total contributions to the plan cannot exceed 100% of compensation (limited to $250,000, adjusted to inflation) or $50,000, adjusted for inflation. Additional catch-up contributions available for individuals age 50 and over for either elective or designated Roth contributions. Contributions made pre-tax. Designated Roth employee contributions are made after-tax. Distributions are taxable unless the distribution is from a designated Roth account. Employee Elections or designated Roth contributions: $17,000 Thereafter, indexed for inflation in $500 increments. Total contributions to the plan cannot exceed 100% of compensation (limited to $250,000, adjusted to inflation) or $50,000, adjusted for inflation. Additional catch-up contributions available for individuals age 50 and over for either elective or designated Roth contributions. Contributions made pre-tax. Designated Roth employee contributions are made after-tax. Distributions are taxable unless the distribution is from a designated Roth account. Cannot exclude employees who: - Are 21 years old. - Are employed in 3 of last 5 plan years. - Earn at least $550 in current year. Employee can contribute up to $5,000 (2012) as an individual IRA contribution to the SEP account in addition to the employer s SEP contribution. Employer may contribute 25% of first $250,000 of compensation up to a maximum of $50,000. Compensation limit of $250,000 adjusted for inflation in $5,000 increments Annual addition limit of $50,000 indexed for inflation in $1,000 increments. Employer s contributions are excluded from income. Contributions independent of employer deducted same as regular IRA; deduction may be reduced because covered by employer plan. All distributions are taxable. 20% of first $250,000 of trade or business income. Limited to 20% of net self-employment earnings. All distributions are taxable. Page 59 of 138

60 Qualification to make Contributions Annual Contribution Limits Deductibility of Contributions Taxation of Distributions SIMPLE Defined Benefit Profit Sharing Money Purchase Cannot exclude Cannot exclude Cannot exclude employees who: employees who: employees who: - Are 21 years old. - Are 21 years old. - Are 21 years old. - Have completed one - Have completed one - Have completed one year of eligibility service year of eligibility year of eligibility services (1000 hours) services (1000 hours). (1000 hours). - Service eligibility may - Service eligibility - Service eligibility may be 2 years where plan may be 2 years where be 2 years where plan provides for 100% plan provides for provides for 100% vesting at start of 100% vesting at start vesting at start of participation. of participation. participation. Employers with 100 or fewer employees and self-employed, who received $5,000 in compensation in the preceding year. Once qualified, can exclude employees who earned less than $5,000 in any two preceding years or expected to receive less than $5,000 in current year. Employee: $11,500 Indexed for inflation in $500 increments. Employer: Required to make either a matching contribution of up to 3% of employee wages or a nonelective contribution of 2% of annual compensation for each eligible employee with proper notification. Additional catch-up contributions available for individuals age 50 and over. Contributions are pre-tax. All distributions are taxable. Lesser of $200,000 (indexed for inflation) or 100% of average compensation during three highest consecutive earning years. Thereafter, indexed for inflation in $5,000 increments. Employee may be permitted to make nondeductible contributions. All distributions, except nondeductible contributions, are taxable. Contribution Limit per Contribution Limit per employee: 100% of employee: 100% of compensation up to compensation up to $50,000 (adjusted for $50,000 (adjusted for inflation in $1,000 inflation in $1,000 increments) increments) Compensation limit: Compensation limit: $250,000 (adjusted for $250,000 (adjusted for inflation in $5,000 inflation in $5,000 increments) increments) Employee may be permitted to make nondeductible contributions. All distributions, except nondeductible contributions, are taxable. Employee may be permitted to make nondeductible contributions. All distributions, except nondeductible contributions, are taxable. Page 60 of 138

61 Retirement Comparison Summary The following information provides an overview of the selected retirement scenarios and their estimated effect on the Retirement goal. The following graph illustrates the ability of each scenario to achieve the Retirement goal. Scenario Coverage 120% 100% 80% 60% 40% 20% 0% Current Plan Proposed Plan Goal Coverage* Net Worth at Retirement Net Worth at Death Year Capital Exhausted % Fixed Needs Covered by Total Resources Current 72% $2,252,972 -$324, % Proposed 100% $2,914,527 $2,130,400 Never 100% * This value indicates the percentage of your total retirement needs that can be covered by your total retirement resources during your retirement time period. Page 61 of 138

62 Scenario Assumption Comparison Key Differences Current Alternative 1 Objectives: Retirement Age/Year (Frank) 62/Oct /Oct 2026 Retirement Age/Year (Kathy) 60/Sep /Sep 2026 Life Expectancy (Frank) 90/ /2053 Life Expectancy (Kathy) 90/ /2055 Inflation Rate for Plan 3.00% 3.00% Retirement Inflation Rate 3.00% 3.00% Annual Retirement Expenses (Fixed) 100% 100% Annual Retirement Expenses (Discretionary) 100% 100% Additional Lump Sum Savings $0 $0 Current Monthly Savings $1,050 $1,150 Additional Monthly Savings $0 $250 Additional Monthly Savings Indexed at 0.00% 0.00% Additional Monthly Savings Start Date Jan 1, 2012 Jan 1, 2012 Investment Objective (Pre-Retirement) Current - Rebalanced Moderate Investment Objective (Retirement) Current - Rebalanced Moderate Conservative Assumed Return Rate: Pre-Retirement 6.52% 8.23% Assumed Return Rate: Retirement 6.51% 6.59% Transfer Strategies: N/A Liquidation Strategies: Capital Liquidation Order Non-Qualified - Roth - Qualified Non-Qualified - Roth - Qualified Qualified assets are available for redemption at age Retirement Retirement (Frank) Qualified assets are available for redemption at age Retirement Retirement (Kathy) Redemption Strategies Current Plan Modified Social Security: Start Age (Frank) Start Age (Kathy) Income and Expenses: Current Plan Modified Annuitization: N/A Goal Funding Strategy: Current Plan Modified New Accounts: New accounts/annuities have been added Note: Items in bold indicate a change from the Current Plan What-if strategies are not applicable to the Current Plan scenario. Page 62 of 138

63 Retirement Summary The following graphs illustrate your projected needs vs. abilities. Current Plan $1.0M $0.8M $0.6M $0.4M $0.2M $0.0M Proposed Plan $1.0M $0.8M $0.6M $0.4M $0.2M $0.0M Retirement Needs Other Needs Ability to Cover Needs Shortfall Surplus After-Tax Cash Inflow Financial Objectives Current Proposed Frank's Retirement Age/Year 62/ /2026 Frank's Life Expectancy Kathy's Retirement Age/Year 60/ /2026 Kathy's Life Expectancy Annual Needs at Retirement, in today s dollars* $120,840 $139,680 Inflation Rate 3.00% 3.00% Return Rate: Pre-Retirement 6.52% 8.23% Return Rate: Retirement 6.52% 6.59% Available Assets $640,000 $595,000 Assumed Monthly Savings $1,050 $1,400 Required Additional Monthly Savings $4,251 $0 Required Additional Lump Sum Savings $489,954 $0 Note: Numbers in bold indicate a change from the Current Plan. *Annual Needs at Retirement excludes property and income taxes, liability payments, insurance premiums (life, disability, long-term care), and expenses from other goals occurring during the retirement period. Page 63 of 138

64 Consider the following: Assess options for increasing your retirement savings. If you cannot meet your savings needs, consider changing your retirement age or reducing your desired income goal. Consider the ongoing impact of your defined benefit plan on your purchasing power in retirement. Review your retirement plan and/or retirement account contributions and maximize to the extent possible. Re-evaluate your situation periodically since retirement calculations are subject to change. Page 64 of 138

65 Asset Allocation for Retirement - Proposed These pie graphs illustrate your current asset mix and suggested asset mix for your retirement goal. However, the suggested asset mix will not be used in the proposed plan. Due to modifications the assumed asset mix (for pre-retirement and retirement) on the following page will be used instead. Current Asset Mix Suggested Asset Mix Pre-Retirement Moderate Suggested Asset Mix* Retirement Moderate Rate of Return 6.52% Standard Deviation 9.68% Rate of Return 8.23% Standard Deviation 12.98% Rate of Return 8.23% Standard Deviation 12.98% *Modifications have been made to the suggested asset mix; please see the Asset Allocation Modifications page at the end of this client report for details. Current Asset Mix Suggested Asset Mix Suggested Asset Mix Asset Class (%) ($) (%) ($) (%) Large Cap Growth Equity , , Large Cap Value Equity , , Mid Cap Equity , , Small Cap Equity 0.2 1, , US REITs , , International Equity , , Emerging Markets Equity 0.9 5, , Long Term Bonds , , Intermediate Term Bonds , , Short Term Bonds , High Yield Bonds , , International Bonds , , Cash , , Total , , Note: The reallocation table above does not reflect the tax effects that may occur when reallocating your assets; these tax effects are accounted for at the end of the year Ibbotson Associated, Inc., All rights reserved. Zywave, Inc. has engaged Ibbotson to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to Zywave a license to use the asset allocation tools. Some assets in this report may have been classified based on returns-based style analysis and others may have been manually classified. Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar and Ibbotson are not affiliated with Zywave. Page 65 of 138

66 Assumed Asset Mix Asset Allocation for Retirement These pie graphs illustrate the suggested asset mix for pre-retirement and the assumed asset mix for retirement for your retirement goal and will be used for the proposed plan. Please see the Asset Allocation Modifications page at the end of this client report for details on the assumed asset mix. Suggested Asset Mix Pre-Retirement Moderate Assumed Asset Mix Retirement Moderate Conservative Rate of Return 8.23% Standard Deviation 12.98% Rate of Return 6.59% Standard Deviation 9.29% The table below provides a breakdown of the percentages and dollar values for each asset class in the current asset mix and assumed asset mix. The Change column indicates the rebalancing required to reach the assumed asset mix. Current Asset Mix Change Suggested Asset Mix Assumed Asset Mix Pre-Retirement Retirement Asset Class (%) ($) (%) ($) (%) ($) (%) Large Cap Growth Equity , , , Large Cap Value Equity , , , Mid Cap Equity , , , Small Cap Equity 0.2 1, , , US REITs , , , International Equity , , , Emerging Markets Equity 0.9 5, , ,850 Long Term Bonds , , , Intermediate Term Bonds , , , Short Term Bonds , , High Yield Bonds , , , International Bonds , , Cash , , , Total , , , Note: The reallocation table above does not reflect the tax effects that may occur when reallocating your assets; these tax effects are accounted for at the end of the year Ibbotson Associated, Inc., All rights reserved. Zywave, Inc. has engaged Ibbotson to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to Zywave a license to use the asset allocation tools. Some assets in this report may have been classified based on returns-based style analysis and others may have been manually classified. Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar and Ibbotson are not affiliated with Zywave. Page 66 of 138

67 Retirement - Current *72% This scenario covers 72% of the desired Retirement goal objectives. * This value indicates the percentage of your total retirement needs that can be covered by your total retirement resources during your retirement time period. Assumptions The following table details the key assumptions used in the generation of this scenario: Frank Kathy Retirement Age/Year 62/ /2025 Life Expectancy 90/ /2055 Desired Fixed Expenses Covered 100% Desired Discretionary Expenses Covered 100% Current Monthly Savings $1,050 Annual Inflation Rate 3.00% Investment Objective (ROR) pre-retirement Current - Rebalanced (6.52%) Investment Objective (ROR) retirement Current - Rebalanced (6.52%) Analysis $500K $400K $300K $200K $100K $0K Social Security Earned Income Pensions RMD Annuities Non-Qualified Distributions Net Worth at Retirement: $2,252,972 Net Worth at Death: ($324,893) Additional Qualified Distributions Shortfall Other Inflows Fixed Needs Previous Year Surplus Used Total Needs Year Capital Exhausted: 2039 % Fixed Needs Covered by Total Resources: 90% Additional Assumptions The following table details the additional assumptions used in the generation of this scenario: Scenario Settings Frank Kathy Capital Liquidation Order Non-Qualified - Roth - Qualified Social Security Start Age Page 67 of 138

68 Capital Accumulation and Depletion - Current The following graph provides a summary of the accumulation and/or depletion of your assets linked to your retirement goal. $1.8M $1.6M $1.4M $1.2M $1.0M $0.8M $0.6M $0.4M $0.2M $0.0M Non-Qualified Qualified Non-Qualified Annuities Page 68 of 138

69 Retirement Cash Flow Summary - Current The following report represents the major components of your cash flow during your retirement period in your current plan. Year Ages Cash Inflows Cash Outflows Surplus/(Deficit) 2025 *62/60* 227, ,422 6, /61 230, ,070 (6,822) /62 250, , /63 291, , /64 299, , /65 307, , /66 315, , /67 322, , /68 330, , /69 338, , /70 319, , /71 322, , /72 331, , /73 341, , /74 221, ,471 (93,736) /75 161, ,584 (144,880) /76 166, ,633 (149,277) /77 171, ,953 (153,809) /78 176, ,550 (158,479) /79 181, ,433 (163,291) /80 186, ,612 (168,250) /81 191, ,094 (173,360) /82 197, ,888 (178,627) /83 202, ,005 (184,054) /84 208, ,453 (189,646) /85 214, ,243 (195,409) /86 221, ,385 (201,347) /87 227, ,890 (207,467) /88 281, ,767 (176,742) /89 175, ,342 (277,119) * = Year of retirement Page 69 of 138

70 Retirement Cash Inflows Report - Current The following report represents the major components of your cash inflows during your retirement period in your current plan. Year Ages Regular Income Social Security Pension Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Cash Inflow 2025 *62/60* 175,612 6,828 8,444 5,474 30, , / ,132 34,790 5, , , / ,021 35,833 41, , , / ,992 36, ,637 15, , / ,882 38, ,013 15, , / ,828 39, ,510 15, , / ,833 40, ,131 16, , / ,898 41, ,543 16, , / ,025 42, ,866 16, , / ,216 44, ,257 17, , / ,472 45, ,073 17, , / ,796 46, ,399 17, , / ,190 48, ,272 18, , / ,656 49, ,265 18, , / ,196 51,090 64,551 18, , / ,812 52, , , / ,506 54, , , / ,281 55, , , / ,139 57, , , / ,084 59, , , / ,116 61, , , / ,240 62, , , / ,457 64, , , / ,771 66, , , / ,184 68, , , / ,699 70, , , / ,320 72, , , / ,050 75, , , / ,891 77, , , / ,484 79, , ,223 * = Year of retirement Page 70 of 138

71 Retirement Cash Outflows Report - Current The following report represents the major components of your cash outflows during your retirement period in your current plan. Lifestyle and Medical Expenses Non-Qualified Contributions and Reinvestments Qualified Plan Other Total Cash Year Ages Taxes Contributions Outflows Outflow 2025 *62/60* 125,171 65,818 6,000 14,025 9, , /61 204,132 23, , , /62 209,509 32, ,006 8, , /63 215,047 67, ,023 7, , /64 220,752 69, ,040 7, , /65 226,627 72, ,057 7, , /66 232,679 74, ,075 7, , /67 238,913 75, ,093 7, , /68 245,333 77, ,111 6, , /69 251,946 78, ,129 6, , /70 238,660 73, ,148 6, , /71 241,773 73, ,167 6, , /72 248,999 75, ,186 5, , /73 256,442 77, ,206 5, , /74 264,109 44, ,226 5, , /75 272,005 27, ,246 5, , /76 280,138 28, ,267 5, , /77 288,515 29, ,288 5, , /78 297,144 30, ,309 5, , /79 306,031 31, ,331 5, , /80 315,185 32, ,353 6, , /81 324,613 32, ,375 6, , /82 334,325 33, ,398 6, , /83 344,327 34, ,421 6, , /84 354,630 35, ,445 6, , /85 365,242 36, ,469 6, , /86 376,172 37, ,493 6, , /87 387,431 38, ,518 7, , /88 409,026 40, ,543 7, , /89 410,970 33, , ,342 * = Year of retirement Page 71 of 138

72 Retirement Income and Expenses - Current The following report shows the annual sources of income that are used to cover your needs throughout retirement in your Current retirement plan. Previous Social Earned Non-Qualified Additional Qualified Other Year Surplus Fixed Total Total Current Year Age Security Pensions Annuities Income RMD Distributions Distributions Inflows Used Needs Needs Taxes Surplus/(Deficit) 2025 *62/60* 6,828 8, ,612 5,474 30, , ,422 65,818 6, /61 28,132 34, , , , , ,070 23,392 (6,822) /62 37,021 35, , ,284 35, , ,766 32, /63 62,992 36, ,511 15, , , ,792 67, /64 64,882 38, ,900 15, , , ,465 69, /65 66,828 39, ,312 15, , , ,354 72, /66 68,833 40, ,749 16, , , ,467 74, /67 70,898 41, ,214 16, , , ,472 75, /68 73,025 42, ,707 16, , , ,492 77, /69 75,216 44, ,523 17, , , ,688 78, /70 77,472 45, ,374 17, , , ,419 73, /71 79,796 46, ,225 17, , , ,776 73, /72 82,190 48, ,698 18, , , ,796 75, /73 84,656 49, ,284 18, , , ,057 77, /74 87,196 51, ,823 18,899 56, , ,471 44,771 (93,736) /75 89,812 52, , , ,584 27,859 (144,880) /76 92,506 54, , , ,633 28,643 (149,277) /77 95,281 55, , , ,953 29,449 (153,809) /78 98,139 57, , , ,550 30,279 (158,479) /79 101,084 59, , , ,433 31,132 (163,291) /80 104,116 61, , , ,612 32,010 (168,250) /81 107,240 62, , , ,094 32,914 (173,360) /82 110,457 64, , , ,888 33,843 (178,627) /83 113,771 66, , , ,005 34,799 (184,054) /84 117,184 68, , , ,453 35,782 (189,646) /85 120,699 70, , , ,243 36,794 (195,409) /86 124,320 72, , , ,385 37,835 (201,347) /87 128,050 75, , , ,890 38,906 (207,467) /88 131,891 77, , , ,767 40,008 (176,742) /89 71,484 79, , , ,342 33,959 (277,119) /90 73,628 81, ,657, ,082 1,500, , ,012 * = Year of retirement investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not would materially reduce these calculations. See the Disclaimers section for more information. Page 72 of 138

73 Attainable Retirement Graph - Current The following graph shows the retirement income that you can sustain given the information entered in your analysis. It compares cash inflows with expenses and determines whether the attainable retirement income is greater than or less than the retirement goal. $450K $400K $350K $300K $250K $200K $150K $100K $50K $0K Retirement Needs Other Needs Ability to Cover Needs Shortfall Surplus After-Tax Cash Inflow Page 73 of 138

74 Retirement Net Worth Accumulation - Current The following report provides a summary of the accumulation and/or depletion of your assets during your retirement period. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital 2025 *62/60* 2,450,248 10,550 5,322 89,074 19,653 2,564, /61 2,564, ,765 82,520 20,157 2,531, /62 2,531, ,083 87,116 20,403 2,484, /63 2,484, ,458 89,877 20,619 2,418, /64 2,418, ,824 84,841 20,827 2,342, /65 2,342, ,310 79,239 21,025 2,257, /66 2,257, ,920 73,029 21,212 2,161, /67 2,161, ,320 66,167 21,387 2,055, /68 2,055, ,631 58,685 21,551 1,937, /69 1,937, ,669 50,067 21,669 1,807, /70 1,807, ,540 41,172 21,774 1,691, /71 1,691, ,667 32,814 21,915 1,567, /72 1,567, ,664 24,349 22,085 1,430, /73 1,430, ,804 15,110 22,240 1,279, /74 1,279, ,345 5,149 22,563 1,243, /75 1,243, ,836 23,061 1,267, /76 1,267, ,881 23,521 1,293, /77 1,293, ,928 23,991 1,319, /78 1,319, ,976 24,470 1,345, /79 1,345, ,025 24,959 1,372, /80 1,372, ,076 25,458 1,400, /81 1,400, ,128 25,966 1,428, /82 1,428, ,182 26,485 1,456, /83 1,456, ,237 27,014 1,486, /84 1,486, ,295 27,554 1,516, /85 1,516, ,354 28,104 1,546, /86 1,546, ,415 28,665 1,577, /87 1,577, ,478 29,238 1,609, /88 1,609, ,021 2,542 29,822 1,594, /89 1,594, ,825 30,422 1,626,912 * = Year of retirement Page 74 of 138

75 Retirement - Proposed *100% This scenario covers 100% of the desired Retirement goal objectives. * This value indicates the percentage of your total retirement needs that can be covered by your total retirement resources during your retirement time period. Assumptions The following table details the key assumptions used in the generation of this scenario: Frank Kathy Retirement Age/Year 63/ /2026 Life Expectancy 90/ /2055 Desired Fixed Expenses Covered 100% Desired Discretionary Expenses Covered 100% Additional Lump-Sum Savings $0 Current Monthly Savings $1,050 Change in Monthly Savings $350 Total Monthly Savings $1,400 Annual Inflation Rate 3.00% Investment Objective (ROR) pre-retirement Moderate (8.23%) Investment Objective (ROR) retirement Moderate Conservative (6.59%) Note: Numbers in bold indicate a change from the Current Plan. Note: Information in the table above is for the February 1, 2012 period. Any strategies occurring in the future are not displayed in this table. Analysis $1.0M $0.8M $0.6M $0.4M $0.2M $0.0M Social Security Earned Income Pensions RMD Annuities Non-Qualified Distributions Net Worth at Retirement: $2,914,527 Net Worth at Death: $2,130,400 Additional Qualified Distributions Shortfall Other Inflows Fixed Needs Previous Year Surplus Used Total Needs Year Capital Exhausted: Never % Fixed Needs Covered by Total Resources: 100% Page 75 of 138

76 Additional Assumptions The following table details the additional assumptions used in the generation of this scenario: Scenario Settings Frank Kathy Capital Liquidation Order Non-Qualified - Roth - Qualified Social Security Start Age Additional Retirement Income (Kathy) $2,500 Indexed at 3.00% Start Age/End Age Ret - Ret + 10 Frequency Monthly Additional Retirement Expense (Joint) $200 Indexed at 3.00% Start Age/End Age Ret - Death Frequency Monthly Additional Retirement Expense (Joint) $120 Indexed at 3.00% Start Age/End Age Ret - Death Frequency Monthly Additional Retirement Expense (Joint) $15,000 Indexed at 3.00% Start Age/End Age Ret - Ret + 5 Frequency Annual Annual amount to Annuitize to during Retirement $0 Note: Numbers in bold indicate a change from the Current Plan Page 76 of 138

77 Capital Accumulation and Depletion - Proposed The following graph provides a summary of the accumulation and/or depletion of your assets linked to your retirement goal. $2.2M $2.0M $1.8M $1.6M $1.4M $1.2M $1.0M $0.8M $0.6M $0.4M $0.2M $0.0M Non-Qualified Qualified Non-Qualified Annuities Page 77 of 138

78 Retirement Cash Flow Summary - Proposed The following report represents the major components of your cash flow during your retirement period in your proposed plan. Year Ages Cash Inflows Cash Outflows Surplus/(Deficit) 2026 *63/61* 854, ,052 16, /62 249, ,213 (16,005) /63 272, , /64 282, ,554 (6) /65 336, , /66 308, , /67 316, , /68 323, , /69 333, ,740 (9) /70 343, , /71 364, , /72 367, , /73 378, , /74 389, , /75 400, , /76 411, , /77 422, , /78 434, , /79 446, , /80 458, , /81 471, , /82 485, , /83 498, , /84 513, , /85 527, , /86 542, , /87 557, , /88 1,084,623 1,084, /89 506, ,347 0 * = Year of retirement Page 78 of 138

79 Retirement Cash Inflows Report - Proposed The following report represents the major components of your cash inflows during your retirement period in your proposed plan. Year Ages Regular Income Social Security Pension Qualified Proceeds Non-Qualified Proceeds Other Inflows Total Cash Inflow 2026 *63/61* 196, ,697 7, , , /62 45, ,833 8, , , /63 47, ,908 8, , , /64 48, ,015 73, , , /65 50,081 11,316 39, ,463 22, , /66 51,584 46,622 40, ,320 22, , /67 53,131 61,345 41, ,564 21, , /68 54, ,356 42,787 99,981 21, , /69 56, ,486 44, ,191 22, , /70 58, ,711 45, ,464 23, , /71 39, ,032 46, ,413 24, , / ,453 48, ,534 24, , / ,977 49, ,338 25, , / ,606 51, ,010 26, , / ,344 52, ,808 27, , / ,195 54, ,736 28, , / ,161 55, ,798 29, , / ,245 57, ,997 30, , / ,453 59, ,372 31, , / ,786 61, ,858 32, , / ,250 62, ,494 33, , / ,847 64, ,252 34, , / ,583 66, ,078 35, , / ,460 68, ,049 36, , / ,484 70, ,170 38, , / ,659 72, ,441 39, , / ,988 75, ,866 41, , / ,478 77, ,350 42, ,958 1,084, / ,120 79, ,131 22, ,347 * = Year of retirement Page 79 of 138

80 Retirement Cash Outflows Report - Proposed The following report represents the major components of your cash outflows during your retirement period in your proposed plan. Lifestyle and Medical Expenses Non-Qualified Contributions and Reinvestments Qualified Plan Other Total Cash Year Ages Taxes Contributions Outflows Outflow 2026 *63/61* 654,295 77,692 6,800 86,060 13, , /62 214,745 36, ,677 10, , /63 221,160 36, ,764 10, , /64 227,768 40, ,855 10, , /65 234,574 87, ,951 10, , /66 215,282 78, ,090 9, , /67 221,713 80, ,312 9, , /68 228,338 80, ,547 9, , /69 235,161 83, ,795 9, , /70 242,189 86, ,058 10, , /71 259,427 89, ,335 10, , /72 266,883 85, ,628 10, , /73 274,563 88, ,938 9, , /74 282,473 90, ,266 9, , /75 290,620 93, ,613 9, , /76 299,011 95, ,979 9, , /77 307,655 98, ,367 9, , /78 316, , ,777 9, , /79 325, , ,210 8, , /80 335, , ,669 8, , /81 344, , ,153 8, , /82 354, , ,666 7, , /83 365, , ,208 7, , /84 375, , ,781 7, , /85 386, , ,388 6, , /86 398, , ,029 6, , /87 409, , ,708 5, , /88 431, , ,679 5,334 1,084, /89 424,001 65, ,184 2, ,347 * = Year of retirement Page 80 of 138

81 Retirement Income and Expenses - Proposed The following report shows the annual sources of income that are used to cover your needs throughout retirement in your Proposed retirement plan. Previous Social Earned Non-Qualified Additional Qualified Other Year Surplus Fixed Total Total Current Year Age Security Pensions Annuities Income RMD Distributions Distributions Inflows Used Needs Needs Taxes Surplus/(Deficit) 2026 *63/61* 0 8, ,006 7, , , ,052 77,692 16, / , ,831 8, , , , ,213 36,192 (16,005) / , ,206 8, , , ,218 36, / , ,623 9, ,445 64, , ,554 40,578 (6) /65 11,316 39, ,081 9,831 22, , , ,590 87, /66 46,622 40, ,584 10,528 22, , , ,128 78, /67 61,345 41, ,131 11,276 21, , , ,876 80, /68 104,356 42, ,725 12,080 21,943 87, , ,792 80, /69 107,486 44, ,367 49,371 22,617 53, , ,740 83,794 (9) /70 110,711 45, ,058 51,540 23,318 54, , ,943 86, /71 114,032 46, ,472 94,350 24,047 46, , ,717 89, /72 117,453 48, ,329 24,806 79, , ,943 85, /73 120,977 49, ,093 25,597 81, , ,514 88, /74 124,606 51, ,816 26,421 83, , ,127 90, /75 128,344 52, ,283 27,280 85, , ,055 93, /76 132,195 54, ,861 28,175 87, , ,308 95, /77 136,161 55, ,894 29,109 90, , ,895 98, /78 140,245 57, ,973 30,083 94, , , , /79 144,453 59, ,646 31,099 96, , , , /80 148,786 61, ,232 32, , , , , /81 153,250 62, ,225 33, , , , , /82 157,847 64, ,398 34, , , , , /83 162,583 66, ,046 35, , , , , /84 167,460 68, ,152 36, , , , , /85 172,484 70, ,164 38, , , , , /86 177,659 72, ,964 39, , , , , /87 182,988 75, ,095 41, , , , , /88 188,478 77, ,935 42, , , ,845 1,084, , /89 102,120 79, , , , ,347 65, /90 105,184 81, ,626, , ,464 1,430, , ,252 * = Year of retirement investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not would materially reduce these calculations. See the Disclaimers section for more information. Page 81 of 138

82 Attainable Retirement Graph - Proposed The following graph shows the retirement income that you can sustain given the information entered in your analysis. It compares cash inflows with expenses and determines whether the attainable retirement income is greater than or less than the retirement goal. $1.0M $0.9M $0.8M $0.7M $0.6M $0.5M $0.4M $0.3M $0.2M $0.1M $0.0M Retirement Needs Other Needs Ability to Cover Needs Shortfall Surplus After-Tax Cash Inflow Page 82 of 138

83 Retirement Net Worth Accumulation - Proposed The following report provides a summary of the accumulation and/or depletion of your assets during your retirement period. It displays the start of year asset balance, along with any contributions, redemptions, reinvestments or growth that are applicable throughout each year, as well as the end of year asset balance. Year Ages SOY Total Capital Regular Savings Redemptions from Assets Reinvestments Growth EOY Total Capital 2026 *63/61* 3,098,375 80, , ,164 29,058 3,090, /62 3,090, , ,603 23,229 3,107, /63 3,107, , ,562 23,234 3,103, /64 3,103, , ,925 23,093 3,091, /65 3,091, , ,919 23,091 3,038, /66 3,038, , ,928 23,128 3,048, /67 3,048, , ,666 23,444 3,067, /68 3,067, , ,841 23,802 3,126, /69 3,126, , ,197 24,205 3,184, /70 3,184, , ,562 24,637 3,241, /71 3,241, , ,575 25,001 3,266, /72 3,266, , ,879 25,399 3,254, /73 3,254, , ,042 25,660 3,236, /74 3,236, , ,798 25,904 3,211, /75 3,211, , ,136 26,130 3,179, /76 3,179, , ,008 26,336 3,140, /77 3,140, , ,396 26,522 3,091, /78 3,091, , ,240 26,682 3,034, /79 3,034, , ,511 27,518 2,967, /80 2,967, , ,206 27,628 2,890, /81 2,890, , ,316 27,717 2,801, /82 2,801, ,039 99,855 27,835 2,702, /83 2,702, ,010 92,931 27,838 2,589, /84 2,589, ,166 85,284 27,803 2,463, /85 2,463, ,526 76,879 27,730 2,322, /86 2,322, ,094 67,664 27,615 2,166, /87 2,166, ,885 57,595 27,455 1,993, /88 1,993, , ,820 46,629 27,250 2,310, /89 2,310, ,530 34,997 35,313 2,145,400 * = Year of retirement Page 83 of 138

84 Page 84 of 138

85 Asset Allocation Page 85 of 138

86 Asset Allocation Overview What is Asset Allocation? Asset allocation is the process of aligning your risk tolerances, financial objectives, and investment time horizon to your investment portfolio. Selecting different asset types (commonly known as asset classes) may reduce the risk of your overall investment portfolio. The three most common asset types (classes) are as follows: Cash or short-term investments (savings accounts, money market accounts, etc.) Fixed Income investments (CDs, bonds, etc.) Equities (domestic and foreign stock, etc.) Each of these three asset classes can be further subdivided. For example, equities may be broken down by size (small, medium or large capitalized companies), different sectors of the economy (technology, financial services, etc.) or be divided geographically (US, Europe, Asia, etc.). The decision of how to allocate your investments depends on a number of factors including your investment objectives, time horizon, attitudes toward acceptable risk, desired return and tax bracket. The basic premise of asset allocation is that by diversifying your investments over a number of different assets and asset classes, you can help reduce the risk of the entire portfolio while maintaining your desired long-term return rate expectations. Over the long term, an appropriate asset allocation (what to buy) is more important than when to buy. Generally, a decline in one asset class can be offset by an increase in another. Your choice of individual investments can also help reduce the risk of your portfolio. For example, if you diversify within each asset class and choose a number of stocks across different industries, your technology stock may be declining while your financial services stock may be rising. This strategy can also help reduce overall portfolio risk as opposed to investing all of your stocks in a single company or sector of the economy. Studies have shown selection of a portfolio's asset allocation can be responsible for over 90% of a portfolio's performance with the remaining portion comprised of market timing, security selection, and other factors. Source: Brinson, Singer and Beebower, Determinants of Portfolio Performance, Financial Analyst Journal, May June Page 86 of 138

87 Higher risk and higher potential return? Your overall comfort level with risk should be a major factor in choosing appropriate investments. It is important to consider that generally, achieving a higher rate of return requires accepting a higher level of risk. Higher risk investments are generally appropriate for clients with more aggressive risk profiles and longer investment time horizons. If your financial objective is many years away (retirement, for example) your investments may withstand the ups and downs of the market. If your goal is only a few years away (such as the purchase of a new car), your investment may decline during the period you wish to redeem the investments. Generally, as your financial goal approaches, you should reduce the risk of your investments by reallocating to a less aggressive asset mix. Why should you consider inflation? When planning for an accumulation goal, (retirement, education, or a major purchase) consider the effect of inflation on the eventual cost of the item. If inflation is not considered, savings may fall short of your goal. For example, an item that costs $1,000 today will cost $1,344 in 10 years, assuming a 3% inflation rate. The graph below shows actual inflation rates for the past 97 years and the average annual rate of inflation from 1914 to 2010 is 3.23%. 25% 20% 15% 10% 5% 0% -5% -10% -15% Inflation Annualized Inflation (to date) Inflation History data obtained from the U.S. Department of Labor. Inflation rates are based on the Consumer Price Index. Page 87 of 138

88 Risk Tolerance Analysis Risk Tolerance Analysis results: Portfolio Investment Profile Time Horizon Unlinked Assets Moderate Very Long Retirement Moderate Very Long Emergency Fund Moderate Very Long Tasha's Education Goal Moderate Very Long Fifth-Wheel Trailer Moderate Long James' Education Goal Moderate Long Different investors have different risk tolerances. Much of the difference stems from time horizon. That is, someone with a short investment time horizon is less able to withstand losses. The remainder of the difference is attributable to the individual s appetite for risk. Volatility can be nerve-wracking for many people and they are more comfortable when they can avoid it. However, there is a definite relationship between risk and return. Investors need to recognize this risk/return trade-off. The following risk tolerance questionnaire has been designed to measure an individual s ability (time horizon) and willingness (risk tolerance) to accept uncertainties in their investment s performance. The total score recommends which of the five risk profiles is most appropriate for the investor. 1. When do you expect to begin withdrawing money from your investment account? Portfolio Unlinked Assets Retirement Emergency Fund Tasha's Education Goal Fifth-Wheel Trailer James' Education Goal Less than 1 year 1 to 2 years 3 to 4 years 5 to 7 years X 8 to 10 years X X 11 years or more X X X 2. Once you begin withdrawing money from your investment account, how long do you expect the withdrawals to last? Portfolio Unlinked Assets Retirement Emergency Fund Tasha's Education Goal Fifth-Wheel Trailer James' Education Goal I plan to take a lump sum distribution 1 to 4 years 5 to 7 years 8 to 10 years X X X 11 years or more X X X Page 88 of 138

89 3. Inflation, the rise in prices over time, can erode your investment return. Long-term investors should be aware that, if portfolio returns are less than the inflation rate, their ability to purchase goods and services in the future might actually decline. However, portfolios with long-term returns that significantly exceed inflation are associated with a higher degree of risk. Which of the following portfolios is most consistent with your investment philosophy? a) Portfolio 1 will most likely exceed long-term inflation by a significant margin and has a high degree of risk. b) Portfolio 2 will most likely exceed long-term inflation by a moderate margin and has a high to moderate degree of risk. c) Portfolio 3 will most likely exceed long-term inflation by a small margin and has a moderate degree of risk. d) Portfolio 4 will most likely match long-term inflation and has a low degree of risk. Portfolio Option a Option b Option c Option d Unlinked Assets X Retirement X Emergency Fund X Tasha's Education Goal X Fifth-Wheel Trailer X James' Education Goal X 4. Portfolios with the highest average returns also tend to have the highest chance of short-term losses. The table below provides the average dollar return of four hypothetical investments of $100,000 and the possibility of losing money (ending value of less than $100,000) over a one-year holding period. Please select the portfolio with which you are most comfortable. Probabilities After 1 Year Possible Average Value at the End of One Year Chance of Losing Money at the End of One Year a. Portfolio A $105,000 21% b. Portfolio B $107,000 25% c. Portfolio C $109,000 27% d. Portfolio D $111,000 29% Portfolio Option a Option b Option c Option d Unlinked Assets X Retirement X Emergency Fund X Tasha's Education Goal X Fifth-Wheel Trailer X James' Education Goal X Page 89 of 138

90 5. Investing involves a trade-off between risk and return. Historically, investors who have received high long-term average returns have experienced greater fluctuations in the value of their portfolio and more frequent short-term losses than investors in more conservative investments have. Considering the above, which statement best describes your investment goals? a) Protect the value of my account. In order to minimize the chance for loss, I am willing to accept the lower long-term returns provided by conservative investments. b) Keep risk to a minimum while trying to achieve slightly higher returns than the returns provided by investments that are more conservative. c) Balance moderate levels of risk with moderate levels of returns. d) Maximize long-term investment returns. I am willing to accept large and sometimes dramatic fluctuations in the value of my investments. Portfolio Statement a Statement b Statement c Statement d Unlinked Assets X Retirement X Emergency Fund X Tasha's Education Goal X Fifth-Wheel Trailer X James' Education Goal X 6. Historically, markets have experienced downturns, both short-term and prolonged, followed by market recoveries. Suppose you owned a well-diversified portfolio that fell by 20% (i.e. $1,000 initial investment would now be worth $800) over a short period, consistent with the overall market. Assuming you still have 10 years until you begin withdrawals, how would you react? Portfolio Unlinked Assets Retirement Emergency Fund Tasha's Education Goal Fifth-Wheel Trailer James' Education Goal I would not change my portfolio I would wait at least one year before changing to options that are more conservative X X X X X X I would wait at least three months before changing to options that are more conservative I would immediately change to options that are more conservative Page 90 of 138

91 7. The following graph shows the hypothetical results of four sample portfolios over a one-year holding period. The best potential and worst potential gains and losses are presented. Note that the portfolio with the best potential gain also has the largest potential loss. Which of these portfolios would you prefer to hold? Portfolio Portfolio A Portfolio B Portfolio C Portfolio D Unlinked Assets X Retirement X Emergency Fund X Tasha's Education Goal X Fifth-Wheel Trailer X James' Education Goal X 8. I am comfortable with investments that may frequently experience large declines in value if there is a potential for higher returns. Portfolio Agree Disagree Strongly disagree Unlinked Assets X Retirement X Emergency Fund X Tasha's Education Goal X Fifth-Wheel Trailer X James' Education Goal X Page 91 of 138

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