Today’s Topics Introduction Emergency Fund Life Insurance College Funding Retirement Planning Questions & Answers Entails these topics during 1 st client meeting

Emergency Fund Why is it important?  Money for home/auto repairs, unemployment, etc How much is enough?  Generally, 6 – 9 months of income Where to invest?  Needs to be liquid  Checking, savings, money market

Family Budget Net Income = Income minus Expenses Income = Wages, rental, investment Expenses = Mortgage, rent, taxes, utilities, 401k contributions, food, car payments, clothing, credit card debt, college loans Create a “balance sheet” and “pay cash”

Life Insurance Why is it important?  To provide financial security for the ones you love What type of life insurance?  Term vs whole life How much do you need?  Generally 7 – 10x your annual income How is it taxed?  Tax free, bypasses probate

College Funding College is expensive, but is necessary in today’s competitive environment Pay-as-you-go Grants (based on financial need) Scholarship (based on merit) Loans (home equity or student) Custodial UTMA/UGMA (child owns the asset) Coverdell Accounts (primary, secondary, college) 529 Plans (college only)

529 Plans Tax-free distributions as long as used for qualified higher education expenses Contributions are after-tax, tax-free growth Parent/Grandparent asset, not the child’s asset Can be transferred to another child, scholarship Money can be used at any qualified higher education institution in any state Taxed as ordinary income, plus 10% penalty, if not used for higher education CHET offers state income tax deduction

Retirement Planning When can I retire? When you have enough $$ so you don’t run out of $$ Sources of retirement income  Social Security  Pension/Cash Balance/Annuity  Employer sponsored retirement plans  Individually funded tax-qualified plans  Personal Savings  Inheritance, winning the lottery

Have a Plan It’s all about “what you do” not what your employer or the government is going to do for you. Enroll in your employer sponsored retirement plan, especially if there is a company match 401k, 403b, 457, TSP – pre-tax contributions, tax- deferred growth Anyone can contribute to an Individual Retirement Account (IRA) or Roth IRA

Are you Diversified?

Asset Allocation & Rebalancing Simple Formula  Take 100% - your age = % in stocks  Example: 40 year old should have 60% Stocks & 40% Bonds Annual Rebalancing  Forces you to “Sell High and Buy Low”  Periodic rebalancing can increase your annual return by 1% - 2%

Take It, Leave It or Roll It When you leave your employer, you have options for your retirement account  Take It: Pay taxes and penalties  Leave It: If you employer allows  Roll It: Known as a “direct rollover” to another qualified retirement plan

Questions & Answers THANK YOU!