LFD Please read This seminar is for informational purposes only. It is intended to be accurate and authoritative in regard to the subject matter covered. Lincoln Financial Distributors, Inc. presents this seminar for informational purposes only. It is presented with the understanding that we are not engaged in rendering legal or tax advice. While this seminar discusses general tax aspects and investment concepts, we make no representation as to suitability for individual clients. Interested parties should seek their own tax and legal advice before implementing a plan of the type described in this presentation.
LFD Agenda items The uncertainty of the future Important things to consider Different investments that could be right for you
LFD Agenda items The uncertainty of the future Traditional sources of income Longevity Inflation Market volatility Healthcare costs
LFD The uncertainty of the future Traditional sources of income Social Security If youre 56 years old now, and earned $40,000 in 2005 and 2006, your Social Security benefit could be just $1,548 per month if you retire in Pension plans 200 FORTUNE 1000 corporations eliminated or froze their defined benefit plans from 2002– Includes inflation. Source: Social Security Administration online calculator. 2 Donald L. Barlett and James B. Steele, The Broken Promise, Time, Oct. 31, 2005, pages 32 – 47.
LFD The uncertainty of the future What are your chances at age 65 of your retirement lasting longer than 25 years? Source: 2000 Annuity Tables, April % 80% 60% 40% 20% 0% Age At least one spouse Individual Longevity
LFD Risks of investing Inflation risk If over 30 years, the value of $1 decreases by 3% per year* *The average rate of inflation is 3% over the past 20 years. Inflation is represented by the Consumer Price Index. $1.50 $3.00 $7.28 $8.00 $19.42 Current average cost Projected cost
LFD $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Jan 56 Dec 80 Dec 90 Dec 2005 Dec 05 Dec 70 Dec 60 The uncertainty of the future Market volatility The S&P 500 Index measures the performance of 500 widely held, mostly large-cap common stocks weighted by market value.Past performance is no guarantee of future results. You cannot invest in an index. Data source: Ibbotson Associated, March 2006 S&P 500 Index total return S&P 500 Index inflation-adjusted total return
LFD The uncertainty of the future Healthcare costs
Agenda items Important things to consider How important is protection? Will I need access to my money? Who do I need to provide for? How much will I need?
LFD Important things to consider How important is protection to me?
LFD Important things to consider Will I need access to my money?
LFD Important things to consider Source: Jim Pavia, Sandwich Generation Supporting Kids and Parents, Investment News, September 19, Who do I need to provide for? 44% of Americans, age 44–55, provide care to aging parents, and to children under 21. College tuition costs are soaring and outpacing inflation.
LFD Important things to consider How much will I need? People who expect personal savings to provide the largest source of their retirement income! 1 The amount youll need to generate today for every $1 you take in retirement income. Thats how much inflation could affect your ability to maintain your lifestyle 20 years from now Retirement Confidence Survey Fact Sheet, EBRI, April Assumes 30 years of income with no interest earned on the principal, and 3.1% inflation.
LFD Agenda items Different investments that could be right for you Cash Bonds Equities Qualified plans Real estate Life insurance Annuities
LFD Different investments that could be right for you Cash A comparison of $1 not invested vs. $1 invested in a Treasury bill and adjusted for inflation over a 30-year period. Source: Ibbotson Associates, 4/06 U.S. Treasury Bill Inflation Adjusted Total Return.
LFD Different investments that could be right for you Bonds Data source: U.S. Long- Term Government Bond Index (Inflation Adjusted). Calculated by Ibbotson Associates based on bonds of approximately 20 years maturity. U.S. Government bonds are backed by the full faith and credit of the U.S. govt. Assumes a $10,000 investment in 10-year U.S. Treasury Bonds with no withdrawals and reinvestment of interest over the 30-year period shown. For return with inflation, the $10,000 principal was adjusted for inflation each year using Ibbotsons U.S. Inflation Index. Bond Return source : Federal Reserve U.S. 10-year Constant Maturity Bond - Indexes are unmanaged and unavailable for direct investment.
LFD Different investments that could be right for you Equities Positive and negative years of the S&P 500 Index 1926– % 60% 40% 20% 0% -20% -40% Positive 71% Negative -29% The S&P 500 Index measures the performance of 500 widely held, mostly large-cap common stocks weighted by market value.Past performance is no guarantee of future results. You cannot invest in an index. Data source: Ibbotson Associated, March 2006
LFD Different investments that could be right for you Qualified plans This hypothetical graph does not include the impact of any fees or sales charges, including mortality and expense risk, asset based administrative, contingent deferred sales charges, or annual contract charge. If these were reflected, results of the tax-deferred account would have been lower. This example assumes taxes were paid from the taxable account at a 35% income tax rate. The actual tax rates will depend on income levels. The lower the tax rate, the more favorable a taxable account will compare, because the difference in performance will be reduced.
LFD Different investments that could be right for you Real estate Assumes 10,000 investment over 30-year period. Inflation source: Housing CPI, Bureau of Labor Statistics. These examples are for illustrative, educational, and informational purposes only. Office of Federal Housing Enterprise Oversight (OFHEO) House Price Index (HPI), The HPI is a measure designed to capture changes in the value of single-family homes in the U.S. as a whole, in various regions of the country, and in the individual states and the District of Columbia. The HPI is published by OFHEO using data provided by Fannie Mae and Freddie Mac.
LFD Different investments that could be right for you Life insurance Assumes the need for $100,000 death benefit and the probability of 65-year-old individual dying before age 70 (based on the 2000 Annuity Mortality Tables, 3/06).
LFD Different investments that could be right for you Annuities Annuities are long-term investment vehicles designed for retirement purposes. Withdrawals may be subject to surrender charges. Withdrawals are subject to ordinary income tax, and if taken prior to age 59½, a 10% IRS penalty may also apply. Fixed Annuities: These provide a guaranteed payment amount. Fixed Indexed Annuities: These offer credited interest based on the performance of an index (such as the S&P 500). Because they are not investments, their values will not fluctuate. As fixed annuities, they typically have a minimum interest rate guarantee. Variable Annuities: The value will fluctuate based on the investment options the owner selects. These are sold by prospectus.
LFD Putting your knowledge to use Jeanies concerns: being able to enjoy life with her children and grandchildren being prepared for retirement Jeanies investments: real estate - Jeanie and Al had grown equity in their house. annuity - Jeanie took Als savings after he passed away and decided to buy an annuity.
LFD Only the beginning Learn to face the future with confidence!
LFD Thank you Questions? For educational and informational purposes only. The United Bank of Philadelphia offers advice independently of Lincoln Financial Group. This seminar and the accompanying materials were created by Lincoln Financial Group in an effort to provide educational services to the United Bank of Philadelphia and its customers. This seminar is not for the purpose of promoting Lincoln Financial products. Any interest in investing is at the discretion of the customer and their financial advisor. Securities and investment advisory services distributed by Lincoln Financial Distributors, Inc., a broker/dealer and registered investment advisor. Insurance products are issued by Lincoln affiliates. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.
LFD Thank you Neither Lincoln nor its representatives provide tax or legal advice. You should contract your tax advisor or attorney regarding your particular situation. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Mutual funds and variable insurance products are sold by prospectus. Investors should consider the investment objectives, risks, and charges and expenses before investing. This and other important information can be found in the prospectus. Read them carefully before investing or sending money. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. This material was prepared to support the promotion and marketing of investments. Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.