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The Centennial Group
Presents
“Life & Wealth Solutions”
Forrest Bouyer & Kirk Sempsrott
Financial Advisors
The headlines are scary…
Mass Layoffs
Recession
2
Spend
Save
96%
4%
Save
Spend
Home
Education
Vacation
Own Bus.
Retirement
AARP
• 10,000 AARP members surveyed who have
been retired 5 yrs. Or more.
• Financially speaking are you happy with
your retirement lifestyle?
• What percentage of these do you think
responded with, YES??
3.2%
96%
Save
4%
Spend
Spend
Save
Which circle do you want to be a part of?
What do the 4% Exercise?
Discipline/Plan
Words From the Wise
“The wise have wealth & luxury,
fools spend everything they get”
– Solomon
“Don’t try to keep up with the Jones’s,
the Jones’s can’t do math”
-Dave Ramsey
“Don’t try to keep up with the Jones’s,
the Jones’s can afford it”
- Forrest & Kirk
Bank
Bank
Investment
Investments
Insurance
Insurance
BANK
3-6 Month
Fixed
Expenses
Emergency
Fund
$0.00
Credit
Card Debt
“Snowball Your Debt”
 From my experience, I find that my average client
can find 10% wiggle room in their monthly cash flow.
 One can use these savings to help reduce the debt
they owe and, potentially, save in interest.
Auto
Disability
Health
Insurance
LongTerm
Life
Home
Match the odds
• 1 in 133
• Disabled
• 1 in 90
• Injury in car accident
• 1 in 8
• Home burns down
Worth Protecting:
• Your Home is Worth = $200,000
– Homeowners insurance cost = $800/yr
(odds of a fire 1 in 133, Natl Safety Council)
• Your Car is Worth = $20,000
– Auto insurance cost = $1000/yr
(odds of injury in an accident 1 in 90, Natl Safety Council)
• Your Earning Power is Worth = $1,500,000
– What would you pay to protect this?
(odds of becoming disabled during working years 1 in 8,
Commissioner’s Individual Disability Table A)
96%
Spend
Discipline/Plan
Save
4%
Save
Spend
$0.00 Credit Card
Debt
Home
Auto
Life
Bank
Investments
Insurance
Disability
Health
LTC
3-6 months
Fixed
Expenses
Safety Net
Tic Tac Toe
√
√ √ √√ √ √ √ √ √ √ √ √ √
Accumulation Stage
Three Buckets of Money
Post Tax $
Pre Tax $
Post Tax $
Taxable
Tax Deferred
Tax Favored
 Contributions Taxed at
 Withdrawals Generally Taxed at
Ordinary Rates
 Ordinary Income Tax on
Dividends/Interest
 Capital Gains Tax on
Realized Gains
Ordinary Income Rate
 Generally, no Pre 59 ½
Distributions
 10% Penalty for Early
withdrawals
 Tax Deferred Growth
 Tax-Deferred Growth
 Tax-Free Withdrawals
 Contributions Taxed at
Ordinary Rates
Accumulation Stage
Three Buckets of Money
Taxable
Example:
Stocks or bonds
PROS
 No rules/limitations surround
the sale of this type of
investment
 Liquid/control
CONS
 Opportunity cost/taxes
 (i.e.. Penny doubling)
$ The Million Dollar Penny $
Start with a penny and double the amount every day for a month.
After 30 days, your penny is worth:
$5.37 million dollars!
But, if the gains were taxed at 28% every time the amount doubles, the
penny would only be worth $67,000.
Taxes are only part of the problem. The total paid in taxes came to
$1,500,000.
Where did the rest of the money go?
Accumulation Stage
Three Buckets of Money
PROS
Tax Deferred
•Minimize tax today
CONS
Examples:
IRAs
401Ks
•Lack of control
•Penalties, rules, and limits as
to contributions and
distributions
Accumulation Stage
Three Buckets of Money
PROS
Tax Favored
Examples:
Cash value life insurance
Roth IRAs
•
Tax deferred growth
• Tax free withdrawals
CONS
• May have rules and limits as to
contributions and distributions
• Insurability
*Policy loans and withdrawals may create an adverse tax result in the
event of a lapse or policy surrender and will reduce both the cash
value and death benefit.
Please keep in mind that the primary reason to purchase a life
insurance policy is the death benefit.
Life insurance products contain fees, such as mortality and expense
charges, and may contain restrictions, such as surrender periods.
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