Financial Planning Assignment (lines 6-10 recommendation) and Information are attached below. Thank you

CLIENT INFORMATION Update: 2011 Personal Client: Tyler Bedo Co-client: Mia Bedo Tyler Bedo Mia Bedo DOB: 1/1/1974 Age: 42 DOB: 1/1/1974 Age: SSN: 555-55-5555 SSN: 555-55-4444 Social Security "full" retirement age: 67 Social Security "full" retirement age: Assumed age at death: 95 Assumed age at death: Home Ph: Home Ph: Office Ph: Office Ph: Mobile Ph: Mobile Ph: Street: City: 727 Success Lane Springfield Address Apt # : State: MO 42 67 95 Zip Code: Children: DOB 1/1/2011 1 Becky Bedo Age 5 2 3 Client's Employer: Sales Consultant Golden Tee Golf Association Street: City: State: Address: 6282 Star Drive Springfield MO Zip Code: Duration: 12 Position: Sales Consultant Ann Salary: $68,467 Client Information Occupation Co-client's Employer: Street: City: State: Career counselor The Family and Care Institute Address: 5600 Cedar Lane Road Springfield MO Zip Code: Duration: 3 Position: Career counselor Ann Salary: $32,496 1 Client Information 2 CLIENT INFORMATION NOTES and REMINDERS Client Information 3 Client Information 4 ANNUAL INCOME STATEMENT 2011 Potentially Taxable Income Client Earned Income (before salary deduction) Wages, Salaries, and Tips $68,467 Bonuses and Commissions $34,233 Other Earned Income Subtotal = $102,700 Unearned Income Taxable Interest $600 Ordinary Dividends $3,521 Tax Refunds and Credits 0 Alimony $0 Business Income (Loss) $0 Realized Capital Gains (Losses) $0 IRA and Pension Distributions $0 Rental / Royalty / Trust Income $0 Other $0 Unearned Income Subtotal = $4,121 Total Potentially Taxable Income Non-taxable Income Allowances Child Support Gifts Qualified Roth IRA Distributions Grants / Loans / Scholarships Other Non-taxable Income Subtotal = Total Income (before salary reduction) Income Statement Co-client $32,496 $32,496 $0 $106,821 $32,496 $0 $0 $0 $0 $0 $0 $0 $0 $106,821 $32,496 5 Income Statement 6 INCOME STATEMENT NOTES & REMINDERS Income Statement 7 Income Statement 8 ANNUAL DEDICATED EXPENSE STATEMENT 2011 POTENTIALLY TAXABLE INCOME Client $106,821 Salary Reduction for Employer-Provided Benefits Employer-Sponsored Health Care Premiums $0 Sec. 125 "Cafeteria Plan" Contribution $3,600 Other Pretax Benefit Expenses $0 Tax-Sheltered Retirement Contribution $4,108 Adjusted Potentially Taxable Income = $99,113 Total Nontaxable Income + $0 Total Income $99,113 TAXES PAYABLE * Social Security / FICA Estimate Actual Social Security Withholding $10,286 * Federal Income Tax Estimate + Actual Federal Tax Withholding $22,178 * State Income Tax Estimate + Actual State Tax Withholding $6,266 * Can use estimates from the Income Tax Estimator. (Total Taxes Estimated) DISPOSABLE INCOME (Available to spend, save, or invest) DEBT SERVICE Housing Payment (Rent / Mortgage / HOA Dues) Home Equity Payment(s) Auto Payment(s) / Lease(s) Student Loan Payment(s) Secured Consumer Debt (furniture, etc.) Unsecured Credit Payment(s) Credit Card Payment(s) Other Payment(s) Co-client $32,496 $0 $300 $0 $3,250 $28,946 $0 $28,946 Dedicated Expenses $128,059 $10,286 Possible Overpayment of $22,178 Possible Overpayment of $6,266 $0 $128,059 $13,056 $0 $5,412 $0 $0 $0 $5,100 $0 $23,568 $2,000 $700 $2,064 $300 $0 $0 $0 * Only include these amount if not paid through a salary reduction agreement SAVINGS / INVESTMENTS Emergency Fund Savings * Specified Short-Term Goal(s) * Specified Intermediate-Term Goal(s) * Specified Long-Term Goal(s) Optional Retirement / IRA Specified Education Goal(s) Special Needs Savings Other Non-specified Goals Reinvestment of Capital Gains & Dividends $128,059 Possible Overpayment of (Total Debt Management) INSURANCE PREMIUMS Auto Homeowner's/Renter's (if not included in mortgage) * Life * Disability * Health * Long-Term Care Other Insurance Combined $139,317 (Total Insurance) $5,064 $1,800 $0 $0 $3,000 $0 $0 $9,000 $0 9 * Amounts should come from bottom of the Goal Cost Estimator. Total "Dedicated" Expenses Income Available for "Discretionary" Expenses Dedicated Expenses (Total Saving / Investment) $13,800 $42,432 $85,627 10 ANNUAL DEDICATED EXPENSE STATEMENT NOTES & REMINDERS Line 9 - Tyler's 401k contribution IS NOT 9,724! Please refer to Appendix A. This affects' all of the remaining pages in the facilitator! Savings/Investments - Lines 42 - 50. Use p. 37 in Appendix A ONLY! Please omit Goals because they affect this section as well. Dedicated Expenses 11 Dedicated Expenses 12 SPECIFIED GOAL FUTURE COST ESTIMATOR Name Goal #1: Current cost of goal Estimated inflation rate Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Years until goal achievement = $0 Estimated tax-adjusted rate of return = $0 Name Goal #2: Art Gallery Current cost of goal Estimated inflation rate 3.00% Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = 10.00% Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Estimate falls short of goal $80,000 Years until goal achievement = $144,489 $5,000 Yes Estimated tax-adjusted rate of return = 20 10.00% $142 $142 $144,489 $144,471 -$18 Name Goal #3: Home Current cost of goal Estimated inflation rate 3.00% Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = 10.00% Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Goal Cost Estimator $20,000 Years until goal achievement = $36,122 $0 Yes Estimated tax-adjusted rate of return = 20 10.00% $48 $48 $36,122 $36,450 $327 Estimate exceeds goal 13 Name Goal #4: Current cost of goal Estimated inflation rate Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Years until goal achievement = $0 Estimated tax-adjusted rate of return = $0 Name Goal #5: Current cost of goal Estimated inflation rate Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Years until goal achievement = $0 Estimated tax-adjusted rate of return = $0 Name Goal #6: Current cost of goal Estimated inflation rate Estimated future cost of goal Value of current savings Are you saving for this goal using tax-deferred accounts? Anticipated pre tax rate of return = Monthly savings requirement Current monthly savings Future value of suggested savings Future value of actual savings Short-term = Intermediate-term = Long-term = Goal Cost Estimator Years until goal achievement = $0 Estimated tax-adjusted rate of return = $0 Planning Period Goal Cost Summator $0 These amounts should be entered in rows 43, 44, and/or 45 of $0 the Dedicated Expense Sheet. Be careful not to double count $2,280 the savings goal expense by entering the same amount for the client and co-client. 14 These amounts should be entered in rows 43, 44, and/or 45 of the Dedicated Expense Sheet. Be careful not to double count the savings goal expense by entering the same amount for the client and co-client. Goal Cost Estimator 15 SPECIFIED GOAL FUTURE COST ESTIMATOR NOTES & REMINDERS Goal Cost Estimator 16 Goal Cost Estimator 17 Goal Cost Estimator 18 ANNUAL DISCRETIONARY EXPENSE STATEMENT 2011 Disposable Income Total Expenses from Dedicated Expense Statement Client UNCOMMITTED EXPENSES Communication Subscriptions (newspapers, magazines, etc.) Telephone (cell, landline, etc.) Alarm System Monitoring Entertainment Media Networks (internet or cable/satellite TV) Hobbies (model building, reading, sewing, etc.) Entertainment and Recreation (movies, etc.) Club Dues (health, music, sports, etc.) Education Lessons (music, sports, etc.) Primary School Secondary School Post-secondary/College Tuition Room & Board Books & Fees Travel Professional (cont ed, professional dues, etc.) Food Groceries Away From Home Housing Real Estate Tax (if not included with mortgage) Private Mortgage Insurance (if not in mortgage) Household Maintenance & Repairs Utilities (water, sewer, gas, oil, trash, electric) Household & Personal Care Clothing and Accessories Laundry/Drycleaning Personal Care & Grooming (hairdresser, etc.) Household Furnishings & Equipment Domestic Help (maids, baby-sitters, etc) Allowances Child Care / Elder Care Lawn/Yard (maintenance and service) Medical Health (medical, dental and eye care) Deductibles and Co-pays Prescriptions Unreimbursed Expenses Transportation Discretionary Expenses Co-client Enter Co-client specific data only if expenses are kept seperately. $960 $1,500 $0 $600 $1,800 $2,700 $1,800 $0 $0 $0 $128,059 $42,432 Combined $2,460 (sub-total) $6,900 (sub-total) $0 (sub-total) $0 $0 $0 $0 $5,100 $3,300 $1,675 $0 $400 $4,200 $2,800 $0 $1,200 $0 $0 $0 $0 $400 $3,900 $240 $8,400 (sub-total) $6,275 (sub-total) $4,400 (sub-total) $4,740 (sub-total) $600 $1,950 19 ANNUAL DISCRETIONARY EXPENSE STATEMENT Personal (gas, maintenance, inspection, etc.) $1,500 Personal (licensing, registration, etc.) $450 Parking & Tolls $0 Public (trains, buses, taxis, etc.) $0 Personal Property Tax $0 Banking and Investment User Fees (safe deposit box, etc.) Annual or Monthly Fees IRA Maintenance Fees Commissions Legal & Accounting Service Fees Miscellaneous Contributions (religious, charitable, etc.) Travel Personal Vacations / Long Weekends Business Tobacco / Gambling / Alcohol Child Support Alimony Postage / Shipping Gifts Other Total "Discretionary" Expenses (sub-total) $520 (sub-total) $120 $0 $0 $0 $400 $11,980 (sub-total) $5,800 $3,000 $0 $0 $0 $0 $0 $1,800 $1,380 $47,625 $0 $47,625 Total Annual Income Remaining = $38,002 Congratulations, you have income remaining for additional savings Discretionary Expenses 20 ANNUAL DISCRETIONARY EXPENSE STATEMENT NOTES & REMINDERS Discretionary Expenses 21 ANNUAL DISCRETIONARY EXPENSE STATEMENT Discretionary Expenses 22 BALANCE SHEET 2011 ASSETS Allocation Classification cash cash bond other $3,500 $10,000 $10,000 $5,000 joint joint joint joint Yes Yes Yes Yes Investment Assets EE bonds Haley G&I Fund Konza Fund Ruth Fund Segebrush Fund bond other other other other $25,000 $69,000 $43,000 $13,000 $8,000 joint joint joint joint joint Yes Yes Yes Yes Yes Retirement Assets Tyler's 401(k) Consumer Fund Tyler's 401(k) Graham Fund Tyler's traditional IRA COD Mia's 401 (k) Rocket Fund Mia's Rollover IRA Ruth Fund Mia's traditional IRA COD Conservative annuity other other other other other other other $69,000 $134,000 $52,000 $15,250 $32,500 $52,000 $125,000 Client Client Client Co-client Co-client Co-client Co-client No No No No No No No 401(k) 401(k) Trad IRA 401(k) Trad IRA Trad IRA 457 Plan Cash Value $8,350 $8,450 Co-client Client No No Whole life Whole life Insurance Assets Whole Life Whole Life Balance Sheet Face Value $8,350 $8,450 Value Ownership TaxShelter Name / Type of Holding Monetary / Liquid Assets Checking Savings Money Market 2nd Checking Account 23 Education / Special Funding Assets Name / Type of Holding Real Assets Primary Residence Secondary Residence Vacation Home Personal/Collectible Assets Auto 1 Auto 2 Auto 3 Watercraft (Boat/Jet-ski) Golf Artwork Jewelry/Collectibles Golf Club Sporting equipment Allocation Classification Value Ownership Value Ownership TaxShelter $250,000 $20,000 $15,500 $0 $5,800 $5,000 $10,000 $5,000 $2,500 joint joint joint joint joint joint joint joint Use/Lifestyle Assets Balance Sheet 24 Furniture Electronics $45,000 $8,000 joint joint joint joint joint joint LIABILITIES Name of Holding Current Liabilities Credit Card Credit Card Credit Card Short-term Installment Long-term Liabilities First Mortgage (Primary Residence) Second Mortgage / Home Equity Automobile 1 Automobile 2 Balance Sheet Interest Rate Amount Ownership Tax-Advantage Account Type 18.25% 16.75% $3,500 $2,000 joint joint No No Visa MasterCard 7.88% $130,332 joint No Mortgage 3.90% $10,824 Client No Mortgage 25 Balance Sheet 26 Summary Net Worth Statement* ASSETS Monetary / Liquid Investment Retirement Insurance (cash value only) Education / Special Needs Real Personal / Collectible Use / Lifestyle Total LIABILITIES Current Long-term Total + + $28,500 $158,000 $479,750 $16,800 $0 $250,000 $63,800 $53,000 $1,049,850 $5,500 $141,156 $146,656 NET WORTH $903,194 *Includes 100% of all values listed above, regardless of ownership designation. Balance Sheet 0 27 BALANCE SHEET NOTES & REMINDERS Balance Sheet 28 BALANCE SHEET NOTES & REMINDERS Balance Sheet 29 Balance Sheet 30 Balance Sheet 31 Balance Sheet 32 TAX ESTIMATOR WORKSHEET 2011 Federal Income Tax Estimator Potentially Taxable Inccome Filing Status Client $99,113 Co-client $28,946 Married Filing Jointly Combined $128,059 2 Federal Adjustment $0 Estimated Federal Adjusted Gross Income Federal Deduction Standard $11,600 Federal Exemption(s) $128,059 Itemized $24,892 number: 3 Estimated Federal Taxable Income $92,067 Gross Estimated Federal Tax Liability $15,267 Tax Credits $8,413 Net Estimated Federal Tax Liability $6,854 amount: $11,100 Marginal Tax Rate 25.00% Average Tax Rate 5.35% *Estimate of income tax does not consider special tax rates, such as for capital gains and qualified dividends. Alternative minimum tax is not estimated. Social Security / FICA Tax Estimator FICA Tax Eligible Income Social Security Tax Liability Client Co-client Combined $94,992 $28,946 $123,938 $7,267 $2,214 $9,481 *Estimation of social security tax does not include extra tax on self-employed. State Income Tax Estimator State of Residence MO State Gross Taxable Income Marginal Tax Bracket Client $99,113 Income Tax Estimator Co-client $28,946 25.00% Combined $128,059 33 State Deduction(s) number: 1 amount: $24,892 State Exemption(s) number: 2 amount: $12,000 State Adjustments $0 Estimated State Taxable Income $79,167 Gross Estimated State Tax Liability $19,792 Miscellaneous Tax Adjustments or Credits Net Estimated State Tax Liability Income Tax Estimator $0 $19,792 Average Tax Rate 15.46% 34 TAX ESTIMATOR WORKSHEET NOTES & REMINDERS Ekaterina - Line 5 is not correct. This is carried forward from Dedicated Expenses. You MUST correct ALL prior pages first! Income Tax Estimator 35 Income Tax Estimator 36 FUTURE COST OF EDUCATION ESTIMATOR Costs for 1st Child Current Annual Cost of College $20,000 Anticipated Inflation Rate Years to Complete College 4 Years until Start of College 13 Anticipated Annual Pre-tax Return 5.00% 10.00% Effective Rate = 10.00% Is the primary education funding account taxable or tax-advantaged? Tax-advantaged Savings Need for 1st Child Total Present Cost of Education = Total Future Cost of Education = $40,806 $140,875 Current Value of Savings = $0 Additional Immediate Funding Needed = $40,806 Fixed Monthly Savings = $468.40 Serial Monthly Savings = $357.32 Costs for 2nd Child Current Annual Cost of College Years to Complete College Anticipated Inflation Rate Years until Start of College Anticipated Annual Pre-tax Return Effective Rate = Is the primary education funding account taxable or tax-advantaged? Savings Need for 2nd Child Total Present Cost of Education = Total Future Cost of Education = Current Value of Savings = Additional Immediate Funding Needed = Fixed Monthly Savings = Serial Monthly Savings = Costs for 3rd Child Current Annual Cost of College Years to Complete College Anticipated Inflation Rate Years until Start of College Anticipated Annual Pre-tax Return Effective Rate = Is the primary education funding account taxable or tax-advantaged? Savings Need for 3rd Child Total Present Cost of Education = Total Future Cost of Education = Current Value of Savings = Additional Immediate Funding Needed = Fixed Monthly Savings = Serial Monthly Savings = Education Cost Estimator 37 Education Cost Estimator 38 FUTURE COST OF EDUCATION ESTIMATOR NOTES & REMINDERS Education Cost Estimator 39 Education Cost Estimator 40 Education Cost Estimator 41 Education Cost Estimator 42 LIFE INSURANCE ESTIMATION WORKSHEET Client's Age = 42 Client's Total Income = $106,820 42 Co-client's Age = Co-client's Total Income = $32,496 Total Household Expenses = $139,316 Childrens' Ages 5 1 2 0 3 0 Co-client's Death Client's Death Needs-Based Analysis "Net" Total = $156,804 = $0 Final Expenses Final Expenses (medical, funeral, burial, etc.) Estate Administration (legal, executor, etc.) Federal Estate Taxes (from Estate Tax Estimator) State Estate Taxes (if any) Other Immediate Needs (income taxes, etc.) Total Final Expenses + + + + = $15,000 $2,500 $0 $0 $7,500 $25,000 + + + + = $15,000 $2,500 $0 $0 $7,500 $25,000 s Debt Elimination Expenses (not paid from estate) Credit Card and Consumer/Installment Debt Automobile Debt Desired Mortgage Reduction Other Debt to be Paid Off at Death Total Debt Elimination Expenses + + + = $5,220 $5,412 $13,056 $0 $23,688 + + + = $0 $0 $0 $0 $0 Transitional Expenses (total estimated cost amounts) Education/Re-training Expenses for Survivor Child Care and Homemaker Services + Other Transitional Needs + Total Transitional Expenses = $0 $420 $50,000 $50,420 + + = $0 $0 $50,000 $50,000 Anticipated Household Expenses Which expenses should be used for calculations? User-defined User-defined If "user defined" was choosen, enter new expenses => $81,217 Selected expenses $81,217 Determine Real Rate of Return on Investments Until Survivor's Retirement Assumed gross investment return 9.00% Combined (fed, state, & local) marginal tax bracket 25.00% Projected inflation rate 3.00% Projected real rate of return 3.64% Household Expenses during Dependency Period Number of people remaining in household Household Expense Ratio (assumed to be 70% or greater of previous income) Anticipated Annual Family Expenses Eligible Soc. Sec. Dependent Survivor's Benefit Anticipated Annual Survivor Earned Income Pension Benefits and Income Life Insurance Estimator $81,217 $81,217 9.00% 25.00% 3.00% 3.64% (needs while children are at home) 2 x = - 74.00% $60,101 $0 $32,496 $0 x = - 2 74.00% $60,101 $0 $106,820 $0 43 Income to be Replaced Until Children/Dependents are Self-Supporting = Years until youngest child reaches age 18 = Total Dependency Period Expenses = Household Expenses during Survivor's Life Number of people remaining in household Household Expense Ratio (assumed to be 70% or greater of previous income) Anticipated Annual Family Expenses Anticipated Annual Survivor Earned Income Pension Benefits and Income Income to be Replaced Until Spouse Retires $27,605 13 $281,897 = = = -$46,719 13 -$477,097 (needs after children leave home) 1 1 x = = 70.00% $56,852 $32,496 $0 $24,356 x = = 70.00% $56,852 $106,820 $0 -$49,968 Years from when youngest child reaches 18 until survivor reaches age 60 = Total Survivor Life Expenses = 5 $48,561 = = 5 -$99,626 $40,806 = $140,875 Educational Expenses for Your children Total Educational Expenses (private grade school and/or college) = Determine Real Rate of Return on Investments After Survivor's Retirement Assumed gross investment return 7.75% Combined (Fed, state & local) marginal tax bracket 25.00% Projected inflation rate 3.00% Projected real rate of return 2.73% Intermediate Retirement Expenses (Age 60 to "Full Retirement") Survivor's Age at "Full Retirement" = 67 Survivor's Desired Annual Income at Retirement $100,000 Anticipated Annual Social Security Spousal Survivor's Benefit at Age 60 $23,448 Income to be Replaced During Retirement = $76,552 Total Intermediate Retirement Expenses = $152,744 Retirement Expenses ("Full Retirement Age" to Death) Survivor's Age at Death = Survivor's Desired Annual Income at Retirement Anticipated Annual Social Security Retirement Income at Full Retirement Age Anticipated Annual Pension Income at Full Retirement Age Income to be Replaced During Retirement = Total Retirement Expenses = Total Present Value of Funds Needed to Cover Needs Total Expenses = Life Insurance Estimator 7.75% 25.00% 3.00% 2.73% = 67 $100,000 = = $23,448 $76,552 $152,744 95 $100,000 = 95 $100,000 $23,448 - $23,448 $0 $76,552 $316,973 = = $0 $76,552 $316,973 $940,088 = $108,868 If a lumpsum a here, be sure t estimated livin the appropriate savings amoun will be complet 44 Assets and Insurance Available to Cover Needs Death Benefit from Current Insurance Policies Retirement Savings and Investments + Other Assets + Total Assets = $229,984 $186,500 $366,800 $783,284 + + = $168,467 $186,500 $366,800 $721,767 Needs-Based Analysis "Net" Total $156,804 = $0 = ADDITIONAL METHODS for ESTIMATING "NET" LIFE INSURANCE NEEDS Co-client's Death Client's Death Human-Life Value (HLV) Approach Total After-tax Rate of Return Years until survivor reaches full retirement age Current income of decedent Inflation Adjusted HLV Approach Total After-tax Rate of Return Inflation Rate Serial Rate of Return Years until retirement of survivor Current income of decedent Capital Retention (CR) Approach Total After-tax Rate of Return Years until retirement of survivor Current income of decedent Replacement Ratio Adjusted CR Approach Total After-tax Rate of Return Years until retirement of survivor Current income of decedent Replacement Ratio Current income of survivor Income Retention Approach Total After-tax Rate of Return Inflation Rate Serial Rate of Return Years until retirement of survivor Annual survivor income need Replacement Ratio Current income of survivor Life Insurance Estimator = = = = $1,241,010 5.81% 25 $106,820 = = = = $279,028 5.81% 25 $32,496 = = = = = = $1,739,533 5.81% 3.00% 2.73% 25 $106,820 = = = = = = $430,685 5.81% 3.00% 2.73% 25 $32,496 = = = = = $936,766 5.81% 25 $106,820 60.00% = = = = = $186,473 5.81% 25 $32,496 60.00% = = = = = = $1,291,706 5.81% 25 $106,820 60.00% $32,496 = = = = = = $1,353,223 5.81% 25 $32,496 60.00% $106,820 = = = = = $69,338 5.81% 3.00% 2.73% 25 $81,217 60.00% $32,496 = = = = = $0 5.81% 3.00% 2.73% 25 $81,217 60.00% $106,820 = = 45 Income Multiplier Approach Total = $1,051,856 12 $106,820 Average "Gross" Total Need Assets and Insurance Available to Cover Needs Average "Net" Total Need = $1,038,614 $783,284 $255,330 Desired multiplier (range: 5 - 15) Current income of decedent Life Insurance Estimator = = $0 5 $32,496 $336,897 $721,767 -$384,870 46 LIFE INSURANCE ESTIMATION WORKSHEET NOTE & REMINDERS 1) Tyler Bedo and Mia Bedo do not willing to keep any debt after their retirement year. There will be no loan balance at their death. 2) Aniticipated Annual Survivor Earned Income will be same as the current annual income level. Line 46 - Please compute. See App A for data. Line 69 - This figure comes from the Educ Cost Estimator Line 82 - Please compute. See App A for data Line 100 - I think you have these reversed. Line 101 - This is for retirement plans. Please include all retirement savings here. Line 102 - This is the total of all their savings/investment assets. Page 40 pg 40 Life Insurance Estimator 47 Client's Net Life Insurance Need Based on Different Analysis Methods $2,000,000 $1,800,000 $1,739,533 $1,600,000 $1,400,000 $1,200,000 $1,241,010 $1,000,000 $1,051,856 $936,766 $800,000 $600,000 If a lumpsum amount is entered here,$400,000 be sure to adjust estimated living expenses by $200,000 periodic the appropriate savings amount since the$156,804 goal $0 will be completely funded. $255,330 $69,338 Needs-Based Analysis "Net" Total Human-Life Value (HLV) Approac h Total Inflation Adjusted HLV Approac h Total Capital Retention (CR) Approac h Total Inc ome Retention Approac h Total Inc ome Multiplier Approac h Total Average "Net" Total Need $500,000 Co-client's Net Life Insurance Need Based on Different Analysis Methods $400,000 $430,685 $300,000 $279,028 $200,000 $100,000 $0 $186,473 $0 $0 $0 -$100,000 -$200,000 -$300,000 -$384,870 -$400,000 -$500,000 Needs-Based Analysis "Net" Total Human-Life Value (HLV) Approac h Total Inflation Adjusted HLV Approac h Total Capital Retention (CR) Approac h Total Inc ome Retention Approac h Total Inc ome Multiplier Approac h Total Life Insurance Estimator Average "Net" Total Need 48 -$200,000 -$300,000 -$384,870 -$400,000 -$500,000 Needs-Based Analysis "Net" Total Human-Life Value (HLV) Approac h Total Inflation Adjusted HLV Approac h Total Capital Retention (CR) Approac h Total Inc ome Retention Approac h Total Inc ome Multiplier Approac h Total Average "Net" Total Need Life Insurance Estimator 49 Life Insurance Estimator 50 SHORT- and LONG-TERM DISABILITY ESTIMATOR Client Co-client Projected length of disability (in months) 270 270 Assume disabled person qualifies for Social Security benefits No No Elimination Period (in months) Short-term policy = 0 0 Long-term policy = 3 3 Social Security = N/A N/A Benefit Period (in months) Short-term policy = 3 3 Long-term policy = 270 270 Social Security = N/A N/A Monthly Expenses Will saving continue during disability period? Dedicated Discretionary Total $2,386 + $3,969 = $6,355 Pre-disability Monthly Income (For comparison purposes) Client Earned $8,558 Unearned + $343 Gross Income Total = $8,902 Estimated After-tax "Net" Total = $6,593 Pre-disability expense coverage ratio = 103.75% From this point forward assume => Scenario 1: Client Disability Co-client $2,708 $0 $2,708 $2,006 31.56% Scenario 2: Co-client Disability No Joint $11,266 $343 $11,610 $8,599 135.32% Scenario 3: Simultaneous Disability Post-disability Monthly Income Continuing after-tax income Net earned income from disabled client + Total = Disability Insurance Estimator Client $2,260 $0 $2,260 Co-client $6,593 $0 $6,593 Simultaneous $254 $0 $254 51 Short-term Disability Need Elimination Period Need Total monthly income Total monthly expenses Monthly shortfall during elimination period = Total S/T elimination period shortfall = S/T Disability Ins. Monthly Benefit Policy purchased with "after-tax" dollars Tax-free Social Security benefits Total taxfree benefits Policy purchased with "pre-tax" dollars Taxable Social Security benefits Other taxable benefits or income Total taxable benefits Client Disability $2,260 $6,355 -$4,095 $0 Co-client Disability $6,593 $6,355 $239 $0 Simultaneous Disability $254 $6,355 -$6,100 $0 + = $0 $0 + = $0 $0 $0 $0 $0 $0 $0 $0 $0 Estimated Taxes on Short-term Benefits* Federal Income Tax State Income Tax + Social Security (FICA) Tax + Total = $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Client $2,260 35.57% Co-client $6,593 103.75% Simultaneous $254 4.00% Co-client Disability $6,593 $6,355 $239 0 $0 Simultaneous Disability $254 $6,355 -$6,100 N/A $0 Total Net Income During Short-term Disability Short-term disability expense coverage ratio = = Long-term Disability Need Elimination Period Need Total monthly income Total monthly expenses Monthly shortfall during elimination period = Effective elimination period (months) Total L/T elimination period shortfall = L/T Disability Ins. Monthly Benefit Policy purchased with "after-tax" dollars Tax-free Social Security benefits Total taxfree benefits Policy purchased with "pre-tax" dollars Taxable Social Security benefits Other taxable benefits or income Total taxable benefits Client Disability $2,260 $6,355 -$4,095 0 $0 + = $0 $0 + = $0 $0 $0 $0 $0 $0 $0 $0 $0 Estimated Taxes on Long-term Benefits* Federal Income Tax State Income Tax + Social Security (FICA) Tax + Total = $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Disability Insurance Estimator 52 Total Net Income During Long-term Disability Long-term disability expense coverage ratio = = Client $2,260 35.57% Results Total emergency fund savings need to cover all elimination periods Client Short-term elimination period coverage $0 Long-term elimination period coverage + $0 Total elimination period coverage = $0 Co-client $6,593 103.75% Simultaneous $254 4.00% Co-client Simultaneous $0 $0 $0 $0 $0 $0 Monthly surplus or shortfall during short-term disability (after elimination period) If the primary client becomes disabled, there is an income shortfall = ($4,095) If the co-client becomes disabled, there is an income surplus = $239 If both clients become disabled, there is an income shortfall = ($6,100) Monthly surplus or shortfall during long-term disability (after elimination period) If the primary client becomes disabled, there is an income shortfall = ($4,095) If the co-client becomes disabled, there is an income surplus = $239 If both clients become disabled, there is an income shortfall = ($6,100) Disability Insurance Estimator 53 SHORT- and LONG-TERM DISABILITY ESTIMATOR NOTE & REMINDERS Disability Insurance Estimator 54 SHORT- and LONG-TERM DISABILITY ESTIMATOR NOTE & REMINDERS Disability Insurance Estimator 55 Disability Insurance Estimator 56 RETIREMENT NEED ESTIMATOR Current Household Earned Income = $135,196 Estimated Future Marginal Tax Bracket = 33% Primary Earner Target Retirement Age = Years until primary earner retirement = 0 Annual Anticipated Inflation Rate = Annual Anticipated Salary Growth Rate = $135,196 Projected Salary (Earned Income) at Retirement Your Preretirement Allocation Total Domestic Equities = 0.00% Large-Cap Large-Cap Current Allocation 0.00% Mid-Cap Mid-Cap 0.00% Small-Cap Small-Cap 0.00% Total Domestic Bonds = 0.00% Government 0.00% Government (1999-2004) Corporate 0.00% Corporate (1995-2004) High-Yield 0.00%Large-Cap High-Yield (1985-2004) Real-Estate 0.00%Mid-Cap Total International Equities= 0.00% EAFE 0.00%Small-Cap EAFE Gold 0.00%Government Total Hedges = 0.00% Cash 100.00%Corporate High-Yield 100% Real-Estate Real-Estate Gold EAFE Cash = 100.00% Gold Cash 100.00% Cash Portfolio Tax-Deferred Rate of Return Equivalent After-Tax Rate of Return Your portfolio allocation is 1: Income Total Domestic Equities = Large-Cap Mid-Cap Small-Cap Total Domestic Bonds = Government Corporate High-Yield Total International Equities= EAFE Total Hedges = Real-Estate Gold Cash = Cash 100.00% 0.00% 0.00% Past performance is no guarantee of future results. Your Post-retirement Allocation 0.00% Retirement Allocation 0.00% 0.00% 0.00% 100.00% Large-Cap Mid-Cap Small-Cap Government Corporate High-Yield Real-Estate EAFE Gold Cash 100% 0.00% 0.00% 0.00% 0.00% 0.00%Large-Cap 0.00%Mid-Cap 0.00%Small-Cap 0.00%Government 0.00%Corporate 100.00%High-Yield Real-Estate EAFE Gold Cash Retirement Need Estimator 57 High-Yield 100% Real-Estate EAFE Gold Cash Portfolio Tax-Deferred Rate of Return Equivalent After-Tax Rate of Return Your portfolio allocation is 1: Income Retirement Need Estimator 0.00% 0.00% Past performance is no guarantee of future results. 58 Your Projected Retirement Savings Need Current Retirement Assets 401(k) / 403(b) Projected salary replacement SEP / Simple / Keogh Age to begin Soc. Sec. benefit Def. Cont. Plan / VUL Soc. Sec. annual benefit Trad / Roth IRA Primary earner age at death Non-Qualified Total years in retirement Total = $0 Current Percentage of Retirement Assets in Tax-sheltered Accounts = Projected Returns Data Which set of returns should be used for projections? Portfolio Ave User-defined Pre-retirement return 0.00% 7.75% Post-retirement return 0.00% 5.25% 0 Portfolio Average Selected 0.00% 0.00% Current Additional Annual Retirement Funding (assumes end-of-year deposits) Annual Account 401(k) / 403(b) SEP / Simple / Keogh Def. Cont. Plan / VUL Trad / Roth IRA Non-Qualified Total annual contribution = Amount ($) $7,358 $3,000 Employer Contribution Match ($) Growth Rate $3,029 3.00% N/A 0.00% N/A N/A N/A N/A $10,358 Early Retirement Funding (assumes beginning-of-year withdrawals) Years in "early" retirement First year need = $0 Value of current savings $0 Total savings need $0 $0.00 The Client May Fall Short the Goal By $0 Normal Retirement Funding (assumes beginning-of-year withdrawals) Years in "normal" retirement First year need = $0 Value of current savings $0 Total savings need $0 $0.00 The Client May Fall Short the Goal By $0 Additional Funding Requirement Average Tax-Deferred Monthly Savings to Achieve Goal But, if you wait years to start saving, you need Retirement Need Estimator Value at Retirement $0 $0 $0 $0 $0 0 0 Monthly $0.00 N/A Annually or or $0.00 N/A 59 RETIREMENT NEED ESTIMATOR NOTES & REMINDERS Retirement Need Estimator 60 Retirement Need Estimator 61 Retirement Need Estimator 62 FEDERAL ESTATE TAX ESTIMATOR First Death Tax Liability 2011 Client Death Balance Sheet Assets Financial (Non-retirement) Retirement Education Real Personal/Collectible Use Life Insurance The decedent is NOT the insured. (Cash-value only) The decedent was the insured. (Death benefit amount) Trust Assets (includable in estate) QTIP property Revocable trust property Gross Estate Gift taxes paid during most recent three years prior to 1st death. "Grossed-up" Estate Co-client Death ### ### ### ### ### ### ### $0 $0 $0 $0 Expenses (paid from estate) Funeral / burial expenses Estate admin / legal expenses Outstanding liabilities Income taxes Executor fee (approx 2%) Charitable contributions Total expenses $0 $0 Reductions (prior to or at first death) Qualified marital transfer Planned tax-free gifts Additional ssets to be irrevocably removed prior to date of first death Total reductions $0 $0 Taxable Estate $0 $0 Adjusted taxable gifts Gift-adjusted Taxable Estate $0 $0 $0 $0 $0 ## $0 $0 $0 First Death Estate Tax Liability Gross tax liability Estate tax credit Gift tax on adjusted taxable gifts Estate Tax Estimator 63 First death estate tax liability $0 $0 Congratulations, both Unified Transfer Tax Credits are fully used. Second Death Tax Liability 2011 Original Gross Estate Co-client Death (less expenses and transfers) $0 Assets received from marital transfer upon first death $0 Life insurance proceeds received upon first death, if not received via marital transfer Client Death $0 ### ### ### $0 ### ### ### ### Net estate growth rate after 1st death Gross Estate (after growth) Gift taxes paid during most recent three years prior to 2nd death. "Grossed-up" Estate ### $0 $0 $0 $0 Reductions (subsequent to first death) Planned tax-free gifts Additional assets to be irrevocably removed subsequent to first death Total Reductions $0 $0 Taxable Estate $0 $0 Adjusted taxable gifts Gift-adjusted Taxable Estate $0 $0 $0 $0 $0 ## $0 $0 $0 $0 $0 $0 Second Death Estate Tax Liability Gross tax liability Estate tax credit Carryover Credit Gift tax on adjusted taxable gifts Second death estate tax liability ### Notice: For estates of decedents dying in 2011 and 2012, the unused portion of a deceased spouse's exclusion amount can be used to to increase the applicable exclusion amount (and applicable unified credit) of the second spouse to die. Aggregate estate tax liability If Client dies first $0 If Co-client dies first $0 Estate Tax Estimator 64 FEDERAL ESTATE TAX ESTIMATOR NOTES & REMINDERS ### ### Estate Tax Estimator 65 Estate Tax Estimator 66 Client Information Page Age Retirement Age Salary SUMMARY OF INPUTS and RESULTS Client Co-client 42 42 67 67 $68,467 $32,496 Income Statement (Ded. Exp.*) Page Earned Income (before salary reduction) Unearned Income Salary Reductions for Benefits* Adjusted Potentially Taxable Income* Non-taxable Income Total Income* Client $102,700 $4,121 $7,708 $99,113 $0 $99,113 Co-client $32,496 $0 $3,550 $28,946 $0 $28,946 Dedicated Expense Page Total Taxes Estimated Debt Management Insurance Premiums Savings / Investments Total Dedicated Expenses Client Co-client N/A Discretionary Expense Page Total Discretionary Expenses Client $47,625 Balance Sheet Total Assets Total Liabilites Net Worth $1,049,850 $146,656 $903,194 Income Tax Page Filing Status Deductions Exemptions Estimated Federal Tax Estimated State Tax FICA Tax Education Cost Page Current Annual Cost Inflation Rate Rate of Return Years until Beginning of College Taxable or Tax-advantaged Estimated Future Total Cost Additional Fixed Monthly Funding Additional Serial Monthly Funding Summary of Inputs $0 $23,568 $5,064 $13,800 $42,432 $0 $0 N/A N/A Co-client N/A Married Filing Jointly $24,892 3 $6,854 $19,792 $9,481 Child 1 $20,000 5.00% 10.00% 13 Tax-advantaged $140,875 $468 $357 Child 2 Child 3 $0 0.00% $0 0.00% 0 0 0 0 67 Life Insurance Page (Needs-based) Final Expenses Debt Reduction Transitional Period w/ Dependents Survivor Pre- and Post-retirement Total Life Insurance Page (Other methods) After-tax Rate of Return Inflation Rate Years Until Retirement of Survivor Income Multiplier Client $25,000 $23,688 $50,420 $281,897 $518,277 $940,088 Client 2500.00% 10682000.00% 1,739,533 0 Disability Insurance Page Short-term Elimination Period Long-term Elimination Period Short-term Benefit Period Long-term Benefit Period Client Retirement Estimator Page Primary Earner Retirement Age Estimated Future Tax Bracket Ave. Annual Return (Pre-ret) Ave. Annual Return (Post-ret) Salary Replacement Percentage Primary Earner Age at Death Current Retirement Assets Annual Contributions Total Value of Current Savings Joint Estate Tax Page Gross Estate Total Expensess Gift-Adjusted Taxable Estate First Death Tax Liability Second Death Tax Liability Client Summary of Inputs Co-client $25,000 $0 $50,000 -$477,097 $370,090 $108,868 Co-client 2500.00% 3249600.00% 430,685 0 Co-client 0 3 3 270 0 3 3 270 0 33.00% 0.00% 0.00% 0.00% 0 $0 $10,358 $0 Co-client $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 68 Table of Recommendations for the Bedos Lin e 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Goal Improve Cash Flow Cash Reserve Debt Restructure Lower Income Tax Improve Tax Withholding Tyler's Life Insurance Mia's Life Insurance Tyler's Disability Insurance Mia's Disability Insurance Education Goal Bedos' Health Insurance Bedos' LTC Insurance Prop & Liab Insurance Investments Reallocation Retirement at age 62 Estate Planning Goal Amount Already Accumulated Shortage/Surplu s Strategy