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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. Fill out feedback cards Fill out request cards Questions?