When I

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When Im 65
The transformation, challenges and solutions to
the new retirement.
Name Title Date Hello Future.SM
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Important information

• You should consider the investment objectives,
  risks, charges and expense of any investment
  carefully before investing. The prospectus
  contains this and other important information
  about the investment. Please request a prospectus
  from your advisor.
• Any tax information contained in this seminar is
  not intended or written to be used, and it may
  not be used by any taxpayer, for the purpose of
  avoiding penalties under the Internal Revenue
  Code that may be imposed on the taxpayer. This
  seminar was created to support the promotion or
  marketing of the transaction(s) or matter(s)
  addressed in the seminar. A taxpayer should be
  advised to seek advice based on the taxpayer's
  particular circumstances from an independent tax
  advisor.

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Retirement is being revolutionized
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Agenda
The transformation of retirement The five
challenges Solutions to the revolution
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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The retirement generation gap

• Longer retirement
• In 1950, retirement lasted less than 3.5 years.
• Today, retirement is lasting 20, 30, even 40
  years!

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Chances of a 65-year-old living to age 90
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The retirement generation gap

• Healthier, more active lifestyles
• More flexibility
• Greater control
• Lifetime income

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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The retirement generation gap

• Decline of traditional retirement income sources
• Social Security
• Corporate pensions
• Medicare

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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The retirement generation gap

• Portfolio management structuring
• In the past, income management was sufficient.
• Now we need continued accumulation and protection
  of retirement assets

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Retirement challenges are a-changin, too

• Greater freedom in retirement requires
• Greater stability of income
• Control
• Flexibility

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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The five retirement challenges

• Changing sources of income

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Where will all your income come from?
Earnings
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Unaccounted income for future retirees
?
?
14
Asset income
3
Other
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The five retirement challenges
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Your income must last your lifetime
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Chances of your income lasting throughout a
25-year retirement
100
100
98
98
96
95
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Simulation estimates the range of possible
outcomes by using the historical 1926-2004 annual
average return and standard deviation figures for
the asset classes and inflation. These
projections do not take into account other
variables such as fluctuating principal and
changing tax consequences. No assurance can be
given that the assumptions will prove to be
correct, and the difference between assumptions
and actual results could vary materially. Indices
used Stocks, SP 500 Index Bonds, 5-year U.S.
Government Bond Index. Government bonds are
guaranteed by the full faith and credit of the
United States government as to the timely payment
of principal and interest if held to maturity,
while returns and principal invested in stocks
are not guaranteed. The above indices are
unmanaged and unavailable for direct investment.
Index past performance cannot guarantee future
returns.
75
74
74
72
65
50
49
43
42
31
25
13
11
1
0
0
100
80
60
40
20
0
Stocks
0
20
40
60
80
100
Bonds
Withdrawal rate of income
4
6
8
Higher risk/return
Lower risk/return
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The five retirement challenges

• Maintaining your standard of living

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Cost of inflation
Avg. annual 1 Equals Expense Time
Period inflation rate (2003)
Hotel stay 19502004 6.22 0.09 Dining
out 19502004 4.28 0.11 Admissions to
movies, theater, concerts, and 19502004 5.05
0.26 sporting events
Source U. S. Census Bureau of Labor Statistics,
3/05
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The five retirement challenges

• Managing market volatility

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Positive and negative years of the SP 500 Index
(19262004)
80
70
Positive 70.9
60
50
40
30
20
10
0
-10
Negative 29.1
-20
-30
-40
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The five retirement challenges

• Rising healthcare costs
• 90 of employers are likely to increase retiree
  contributions to healthcare premiums.
• 20 of employers are likely to terminate employee
  health benefits.
• The number of employers offering retiree health
  benefits has declined 42 from 1988 to 2003.
• Annual medical spending for consumers age 65
  rose 22.3 over consumers 4555.
• Annual medical spending for consumers age 75
  rose 26.1 over consumers 4555.

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Sources The State of Retiree Health Benefits,
Henry J. Kaiser Family Foundation,
2004 Consumer expenditure survey 2003, U.S.
Bureau of Labor Statistics, 2004
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A time to sow, a time to reap
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Revolutionary income management
Variable expenses travel, leisure activities,
gifts, etc. Fixed expenses mortgage, utilities,
monthly healthcare and prescription costs, and
other recurring bills Wealth transfer assets
designated for your heirs Healthcare assets
cover expenses beyond routine prescription and
doctors bills, such as those for emergency and
long-term care Emergency/Opportunity funds
immediate cash for emergencies or financial
opportunities
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Finding potential solutions
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
A shifting income portfolio for your evolving
retirement needs
Variable expenses Fixed expenses Wealth transfer
Healthcare Emergency/Opportunity funds
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Finding potential solutions
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion

• Income strategy allocation
• Growth
• Fixed
• Insured
• Liquid
• Miscellaneous

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Finding potential solutions

• Growth
• Greater return potential higher risk
• Help maintain accumulation potential
• Greater growth potential
• Tax advantages

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Fixed
• Provide fixed, stable income and returns
• Subject to some risk
• Good for fixed expenses
• May be appropriate for conservative investors
  seeking wealth transfer
• Tax advantages

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Insured
• Fixed and growth orientation
• Insurance component with protection
• Generally cost more
• Tax advantages

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Any payments or benefits due on the annuity are
backed by the claims-paying ability of the
issuing insurance company. Such payments and
benefits are subject to the financial condition
of the issuing insurance company.
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Finding potential solutions

• Liquid
• Easy and quick access to your money
• Lower risks and returns
• Traditionally used for emergency funding

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Miscellaneous
• Provide regular income
• Growth and wealth transfer potential
• Estate benefits

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Several solutions do exist!

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Changing sources of income
• Create diversified portfolio
• Flexibility in how you take income
• Steady income from sources of income with
  protection benefits

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Any payments or benefits due on the annuity are
backed by the claims-paying ability of the
issuing insurance company. Such payments and
benefits are subject to the financial condition
of the issuing insurance company.
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Finding potential solutions

• Income longevity
• Protection benefits for lifetime income streams
  from annuities
• Stable income
• Potential for higher returns

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Any payments or benefits due on the annuity are
backed by the claims-paying ability of the
issuing insurance company. Such payments and
benefits are subject to the financial condition
of the issuing insurance company.
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Finding potential solutions

• Maintaining your lifestyle
• Use equity-oriented investments
• Plan how to spend down assets
• Consider tax-advantaged investments and financial
  products
• Shift 401(k) and other tax-deferred assets to IRA

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Finding potential solutions

• Managing market volatility
• Protect a portion of your portfolio
• Design a more conservative portfolio

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Any payments or benefits due on the annuity are
backed by the claims-paying ability of the
issuing insurance company. Such payments and
benefits are subject to the financial condition
of the issuing insurance company.
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Finding potential solutions

• Containing medical costs
• Long-term care insurance

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Get together with your advisor

• Types of investment and financial products
• Life Insurance
• Long-term Care Insurance
• Annuities
• Mutual Funds
• Individual Stocks
• Individual Bonds
• Qualified Plans 401(k), 403(b), etc.

Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
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Summary
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Retirement is being revolutionized 5 retirement
challenges Solutions
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Whats next?
Introduction Transformation of retirement Retireme
nt challenges Solutions Conclusion
Start planning now Talk to your financial
advisor