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Entaire Program Overview Jon A. Scaman Manager, Business Development NetworkingMFG.com Meeting December 16, 2008.

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Presentation on theme: "Entaire Program Overview Jon A. Scaman Manager, Business Development NetworkingMFG.com Meeting December 16, 2008."— Presentation transcript:

1 Entaire Program Overview Jon A. Scaman Manager, Business Development NetworkingMFG.com Meeting December 16, 2008

2 Who are Entaire Programs for: Business Owners What the Programs are: Personal Retirement Planning How the Programs work: Overview of the Program Case Study: Paul Smith Not for use with the public - for education and training purposes only Today’s Agenda

3 Not for use with the public - for education and training purposes only Who are Entaire Programs for: Business Owners

4 47% of Business Owners surveyed indicated that they do not believe that they are financially prepared for their retirement 1 68% of Business Owners believe that they will live below their current lifestyle when they retire 2 1 Harris Interactive on behalf of Sharebuilder 401(k) 2 LIMRA, 2006 Not for use with the public - for education and training purposes only So, what’s the challenge? The Business Owners’ Challenge

5 Startup Growth Expansion Maturity Limited Excess Money Excess Money Reinvested Excess Funds Available Cashing Out Phase Not for use with the public - for education and training purposes only Phases of the Entrepreneurial Business

6 Most Business Owners believe that they will sell their business to fund their retirement – if they retire, that is Unfortunately………… Not for use with the public - for education and training purposes only Selling the Business: The Perception

7 Approximately 1.2 million viable businesses go on the market for sale each year Nearly 3/4 of these fail in their efforts to sell Most of the businesses sold end up selling for much less than their expected Market Value, and in many cases, below their Asset Value Not for use with the public - for education and training purposes only Source: 2005 Business Reference Guide, 13 th Edition (West) Selling the Business: The Reality

8 Government Mandated Restrictions Retirement Health Not for use with the public - for education and training purposes only The Entrepreneur’s Dilemma: Restrictions

9 A program designed solely for the Business Owner A program that uses the business checkbook A program that allows for large sums of money to grow tax deferred A program that is tax efficient and cost effective A program that will create less risk and more stability in their portfolio Not for use with the public - for education and training purposes only The Answer

10 Not for use with the public - for education and training purposes only What the Programs are: Personal Retirement Planning

11 Note: Hypothetical results for illustrative purposes only and not a representation of past or future results. $500K 0 Years $500K 10 Years $500K 20 Years $500K 30 Years $500K $1M $2M $4M The Rule of 72 How long does money take to double? Divide 72 by the assumed rate, the result is the number of years until a sum doubles. Assumptions: Net Book Value of Business - $500K Rule of 72 Not for use with the public - for education and training purposes only Interest Rate – 7.2%

12 Note: A hypothetical crediting rate of 7%. Represents approximations and should not be relied upon as tax or investment advice. The performance of financial products fluctuate over time. The actual time to achieve any result cannot be predicted with certainty. Choice 3 - $500,000 only once X Today = $500,000 Choice 2 - $ 50,000 per year X 10 years = $500,000 Choice 1 - $ 16,667 per year X 30 years = $500,000 Accelerated Funding $2,860,393$50,000 $3,808,127$500,000 $1,684,584$16,667 Today 30 Years Compressed Time Frame Concept Not for use with the public - for education and training purposes only

13 Compounding with Real Estate Asset Value = $500,000 $500k Mortgage 7% Interest-Only $35,000 annual cost 7% average annual growth over 20 years $500k Mortgage Asset Value = $1,934,842 $1,434,842 gross gain - $700,000 interest cost = $734,842 Net Gain This is a hypothetical example, not indicative of actual results. Actual results will vary. Point A Point B

14 Allows client to participate in market upside Limited downside risk $1,000,000 Annual Crediting 8% $1,080,000 Market Down Turn - 8% $993,660 Annual Crediting 5% Annual Crediting 0% $1,134,000 Needed to Catch Up 14.12% Not for use with the public - for education and training purposes only The Stability of Equity Indexed Products Keep in mind… If you received the 5% as shown in this example on the $993,660, you would have a total of $1,043,343. That is a $90,657 difference because of the guaranteed floor.

15 Not for use with the public - for education and training purposes only How the Programs Work: An Overview of the Entaire Programs

16 Program Structure Client Business Global One Financial Commercial Loan Step 1 Asset Funding Universal Life and/or Annuity Products Step 3 Transfer Strategy Client Business Step 2

17 Not for use with the public - for education and training purposes only Global Gateway

18 Recent Manufacturing Cases Furniture $200,000 Machining $600,000 Plastics$2,400,000 Nuts & Bolts$1,000,000 IndustryCase Size

19 Case Study: Paul Smith

20 Case Study – Paul Smith Manufacturing Company 25 Years in Business Current Age – 50 Desired Retirement Age - 63 Annual Budget to Fund Personal Retirement Plan - $41,000

21 Summary – Paul Smith Age:50 Years Until Retirement:13 Desired Annual Income:$115,000 Number of Payout Years:25 Personal Tax Bracket:35% Company Budget:$41,000 Paul needs a lump sum of at least $1,340,162 at retirement to support an income of $115,000 per year for 25 years.

22 Solution – Paul Smith Paul’s company implements a leveraged program in the amount of $600,000. The $600,000 is placed into an Equity Indexed Annuity, hypothetically earning 7% per year. Paul’s company makes interest payments of approximately $40,500 annually (assumed Interest rate of 6.75%). After 13 years, Paul’s annuity value has grown to $1,445,907, which gives Paul an income in the amount of $115,957 per year for 25 years. (This example assumes that the loan is repaid at retirement using assets that are not part of the program’s financed product, preferably assets with the then-current lowest yielding performance.)

23 Equivalent Yield – Paul Smith Paul’s company makes interest payments for the Entaire Program of approximately $40,500 annually. If the company were to distribute this amount to Paul directly, he would have to pay income tax at 35%, leaving him with $26,325 per year to invest. Paul’s investment of $26,325 per year for 13 years would have to earn an annual rate of return of 19.26% in order to provide the same annual income of $115,957 for 25 years.

24 Provides Alternative to Traditional Retirement Plans Allows Catching up on Retirement Planning Provides Asset Protection Opportunities Not for use with the public - for education and training purposes only Entaire’s Value Proposition

25 Not for use with the public - for education and training purposes only Q & A

26 For more information, Jon Scaman The Next Step


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