Legislative Birthdays A Doorway to Annuity Client Relationship Building

Imagine your client as a house. Most of the times, all the doors and windows are locked. It is very difficult to get inside to build a relationship, identify needs and recommend solutions. But, every once in a while, something comes about that will cause a door to open. Something happens where a client needs to make a financial decision. If you know when that door is going to open, you can walk in and help them identify their need and present your solutions.

Legislative Birthdays Legislative Birthdays are milestones in an individual’s life where legislation has opened a door to a financial decision. This presentation will describe those milestones and the financial decision and opportunities presented to these individuals.

Legislative Milestone Birthdays Age 50 Age 55 Age 59 ½ Age 62 Age 65 Age 70 , 70 1/2

Age 50 : Legislative Event Catch-Up Contributions Can make Catch-Up contributions to IRAs and Qualified plans 2017 Limits: $6,000 for 401(k), 403(b), and 457 plans $3,000 for SIMPLE IRA or 401(k) $1,000 for Traditional or Roth IRA

Age 50 : Life Stage Reaching Peak Earning Years Children in or finished with college Well into home ownership Sharper focus on retirement Need to maximize savings Age 50 – 60 is ideal for Long Term Care May be sandwiched between children and aging parents

Age 50: Opportunities Retirement Income Planning Asset Consolidation May have old 401(k) plans Maximize qualified plan savings Non-Qualified Savings Long Term Care Estate Planning – Asset transfers from parents Referral to parents

Age 55: Legislative Event Age 55 and Separated from Service If separated from service and age 55, may distribute retirement plan assets without incurring the 72(t) 10% premature distribution tax penalty. Federal taxes (and maybe state) still apply

Age 55: Life Stage Peak Earning Years Children in or finished with college Well into home ownership Sharper focus on retirement Need to maximize savings Age 50 – 60 is ideal for Long Term Care May be sandwiched between children and aging parents

Age 55: Opportunities Retirement Income Planning Asset Consolidation May have old 401(k) plans Maximize qualified plan savings Non-Qualified Savings Long Term Care Insurance conversions at retirement Estate Planning – Asset transfers from parents Referral to parents

Age 59 ½: Legislative Event No 10% Pre-59 ½ penalty The 72(t) 10% penalty from annuities and qualified retirement plans no longer exists

Age 59 ½: Life Stage Retirement Approaching Income needs to be estimated and adjusted Subject to sequence of returns risk Long Term Care pricing increases Now or never for retirement savings Estate Planning begins to become a priority Parents may begin to need assisted living

Age 59 ½ : Opportunities Maximize qualified plan savings and supplement with non-qualified Asset Consolidation Retirement Income Planning Begin structuring retirement income stream Begin the Social Security Discussion – When to begin May have old 401(k) plans Long Term Care Group Life conversion if retiring Estate Planning May begin RMD Spend down

Age 62: Legislative Event Can begin taking Social Security At age 62 Individuals that qualify for Social Security can begin taking a reduced income payment.

Age 62: Life Stage The Social Security decision leads to a bigger focus on retirement income planning Income modeling and sequence of returns risk looms Long term care pricing is increasing If working – now or never for retirement saving Estate planning becoming more important Parents may be needing assisted living

Age 62: Opportunities Asset Consolidation Pension Max if working with a Defined Benefit plan Social Security Bridge to delay payment Estate Planning Group life conversion from employer Long term care RMD spend down

Age 65: Legislative Event Eligible to begin Medicare At age 65, individuals are eligible begin Medicare In addition between age 66 and 68 most individuals will hit their full retirement age for Social Security

Age 65: Life Stage Generally retired Concern to maximize income Subject to sequence of returns and inflation risk Estate Planning is critical Last chance to purchase Long term Care before cost is prohibitive

Age 65: Opportunities Asset Consolidation FIAs to address sequence of returns risk and potentially inflation risk Pension Max if a defined benefit plan exists Estate Planning Long Term Care RMD Spend down

Age 70, 70 1/2 RMDs and Social Security Age 70 is the latest you can delay Social Security Each year Social Security is postponed, it represents an 8% increase in growth of assets At age 70 ½, in general you must begin receiving Required Minimum Distributions from qualified plans and IRAs Failure to take sufficient assets can result in a 50% tax penalty on any withdrawal shortfall Some plans – 401(k), 403(b) or other defined contribution plans may allow the RMD to be postponed until April 1 of the year following the year the participant retires

Age 70, 70 ½: Life Stage Focus will be on not outliving assets and estate planning and asset transfer. May begin to need some type of assisted living

Age 70, 70 ½: Opportunities Focus on lifetime income guarantees of income annuities Estate Planning Charitable giving Asset Consolidation, prepare for asset transfer Meet with next generation to begin relationship building

More Door Openers CDs Auto Insurance Homeowner’s Insurance Legislative Birthdays are the only milestones that may open the door to an individual needing to make a financial decision. Here are some more events that you can X-Date: CDs Auto Insurance Homeowner’s Insurance Mortgage Paid off Student Loans paid off Annual or quarterly bonus Children out of college Annuity “Step-Up” Dates Bonds Maturing End of Surrender Charges Annuities Mutual funds Retirement Birth of child or grandchild End of day care Term Conversion dates Life Insurance additional purchase options