1. Smooth Sailing on Uncertain Waters
Managing Your Retirement Resources
GE (11/16) (Exp. 11/18)

2. Smooth Sailing on Uncertain Waters
The pessimist complains about the wind,
the optimist expects it to change,
the realist adjusts the sails.
- William Arthur Ward, American Author

3. AGENDA
Retirement Landscape
Maximizing Retirement by Minimizing Losses

4. Retirement Landscape Typical client profile Life insurance need exists
Maximizing retirement by minimizing losses
Typical client profile
Life insurance need exists
Age: 40’s and 50’s and saving for retirement
Traditional savings options such as IRA’s and 401k’s may not be adequate
Concerned about:
Retirement assets given the market instability on recent years and what may happen if the market drops during retirement years
The future tax impact at retirement
As you near retirement, you may have a common concern when you watch the stock market fluctuate – will the market’s instability erode my retirement savings. It’s a reasonable concern given increasing longevity and increasing dependency on personal savings over government and employer benefits. Bonds and their low interest rates don’t offer a complete safety net.
The Wall Street Journal also echoes these concerns. It’s what they call the Sequence of Returns – noting that market losses, particularly early in retirement, can erode the overall portfolio and affect long term retirement funds. They recommend bonds and other fixed income early in retirement. However, with bonds at an all-time low, they present their own risks. Is there another way?

5. Retirement Landscape Text level 01
Increasing Dependence on Savings
The higher one’s income, the greater the reliance on personal savings
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As you near retirement, you may have a common concern when you watch the stock market fluctuate – will the market’s instability erode my retirement savings. It’s a reasonable concern given increasing longevity and increasing dependency on personal savings over government and employer benefits. Bonds and their low interest rates don’t offer a complete safety net.
The Wall Street Journal also echoes these concerns. It’s what they call the Sequence of Returns – noting that market losses, particularly early in retirement, can erode the overall portfolio and affect long term retirement funds. They recommend bonds and other fixed income early in retirement. However, with bonds at an all-time low, they present their own risks. Is there another way?
Employee Benefit Research Institute, Social Security Administration. March Survey, Web.

6. Timing is Everything in Retirement
The S & P 500’s 5 Year Average – For the Years Ending 2006 to 2015*
Timing of asset sales and realizing losses can impact available future asset values
Stability of the stock market may have an impact
Life Insurance may fill this gap
Read the Slide and Speak to the Bullet points.
Use this as a lead in to the discussion about the sequence of returns making a tremendous difference once a client hits retirement and that one never knows what direction the market will go.
*Past performance is not indicative of future results. Clients cannot invest directly in an index.
Source: AXA Equitable Funds Management Group

7. Sequence of Returns Scenarios
The sequence of returns on a client’s portfolio may not make a big difference while the client is in accumulation mode. As an example, here we see in the first column a series of hypothetical returns that averages 6% over 25 years. We started with $100,000 and we ended with over $429,000.
In the second series, we flipped the sequence of returns. Although we lost 25% in the first year, over time, the returns end up in the same place as with the first scenario.
Not coincidentally, if the return was the average 6% return each year, you end up with the same result: about $429,000.
But this is the accumulation years. What happens during the distribution years after the client retires? Let’s take a look.
These numbers are hypothetical and do not represent actual returns.

8. Impact of Distributions and Early Year Losses
Think 2008
Here we start out with a hypothetical account balance of $500,000 for each of the return sequences. Now at retirement, the client starts to take out $50,000 a year. In the first sequence of hypothetical returns, the client has about $373,000 at age 90.
But if we again flip the sequence – because we’re locking in the early losses from the first three years, the client would run out of money in less than eight years.
Even the average return doesn’t work out well, running out of retirement assets in 17 years at age 81, which most people would be expected to outlive.
The market will fluctuate over time. What can you do if your client retires at the wrong time when the sequence of their returns works against them. It makes sense to have a plan in place to avoid locking in losses. How? Life insurance. Let’s use an example to show how this can work.

9. Timing is Everything in Retirement
Sequence of returns
Mid 1960’s – Retirement assets eroded
Early 1970’s – Retirement assets eroded
Early 1980’s – Retirement assets would grow
Early 1990’s – Retirement assets would grow
Early 2000’s – Retirement assets eroded
To show how the sequence of returns would have made a significant different, see how the markets reacted in these various periods. Most recently the market crashed after the dot.com bust in 2000 and 2001, and then again in In both instances individuals who thought they retired well off had to struggle, prompting many articles about retirees returning to work part time (for example with the frequent picture of a Walmart Greeter).

10. AGENDA
Retirement Landscape
Maximizing Retirement by Minimizing Losses

11. Don’t Let Losses Bring You Down
Tom is 65 and planning to retire
Accumulated $1,000,000 toward his retirement goal
Needs annual income of pre-tax $100,000 during retirement
Little income from other sources:
Social Security - $20,000
Pension - $10,000
Tom’s savings – needed to make up the other $70,000
Can Tom meet his objective?

12. Don’t Let Losses Bring You Down
Problem
Without life insurance, Tom is forced to take funds for retirement each year and lock in losses during down market years.
Possible Solution
Plan ahead to avoid selling in down years and locking in losses by adding life insurance to his asset portfolio.
Draw retirement income from traditional retirement funds AND withdrawals from life insurance policy cash values when appropriate.
Access policy cash values during years when there is a market loss to help preserve the traditional retirement funds so they may recover.

13. Impact of Selling Into A Loss
Retiring in Down Market
Selling into losses has a significant impact on account value
7% withdrawal; 1% inflation
Balance in 20 years $444,791
56% erosion over 20 years
The results presented here are hypothetical and your results will be different. These are based on the S & P returns from Past performance is not a guarantee of future results.

14. Impact of Selling Into A Loss

15. Power of Not Selling into a Loss
By simply turning off withdrawals from his retirement funds in only 5 years, Tom has a dramatic change in his retirement assets.
Tom’s policy cash values offer a source of funds for those 5 years. He takes selective withdrawals from his life insurance policy only in years that follow market losses. This avoids selling into losses.
Maximizing Retirement by Minimizing Losses
Balance in 20 years $3,587,396
360% growth over 20 years
The results presented here are hypothetical and your results will be different. These are based on the S & P returns from Past performance is not a guarantee of future results. Clients cannot invest directly in the S&P 500 Index.

16. Power of Not Selling into a Loss
BrightLife® Grow
45-year-old male, preferred no tobacco
$7,500 Premium for 20 years an assumed rate of 5.50*
Strategically timed policy withdrawals
$50,000 out of policy at 28% tax bracket = $70,000 taxable income
Later years are increased for inflation
*This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. The basic illustration contains values using the same underwriting assumptions as this supplemental at both guaranteed charges and guaranteed interest rates and contains other important information. The values represented here are for a $500,000 policy on a 45 year old male preferred non-smoker. The values reflect the cost of 20 years of premiums. The values represented here are non-guaranteed and assume current charges and a an interest rate of 5.50%. If guaranteed rates and charges are used, the policy would fail in year 21. Your values will be different based on your gender, age and health.
Work with your Financial Professional/ licensed insurance agent to create an illustration that is tailored to your specific situation.

17. Smooth Sailing on Uncertain Waters

18. When More Income Is Needed
What is the appropriate withdrawal rate for retirement assets?
What if Tom increases his annual pre-tax account withdrawals from $70,000 to $100,000 and again uses his life insurance cash values to supplement in market down years?

19. Power of Not Selling into a Loss
Removing Just 5 Down Years
$1,000,000 at start
$100,000 level withdrawals
Balance in 20 years $1,679,551
170% growth over 20 years
The results presented here are hypothetical and your results for your clients will be different. These are based on the S & P returns from Past performance is not a guarantee of future results.

20. Power of Not Selling into a Loss
BrightLife® Grow
45-year-old male, preferred no tobacco
$9,983 premium for 20 years at default rate of 5.50% which of course is not guaranteed
Strategically timed policy withdrawals
After-tax $70,000 out of policy
This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. The basic illustration contains values using the same underwriting assumptions as this supplemental at both guaranteed charges and guaranteed interest rates and contains other important information. The values represented here are for a $560,974 policy on a 45 year old male preferred non-smoker. The values reflect the cost of 20 years of premiums. The values represented here are non-guaranteed and assume current charges and a an interest rate of 5.50%. If guaranteed rates and charges are used, the policy would fail in year 21. Your values will be different based on your gender, age and health. Work with your Financial Professional/ licensed insurance agent to create an illustration that is tailored to your specific situation.
Smooth Sailing differs from the traditional accumulation sale in that clients don’t need to maximum fund their life insurance policy for annual retirement income. Instead, they need to adequately fund their life insurance policy to generate cash values that can be selectively tapped in retirement. Under the Smooth Sailing approach, a client only draws on the policy cash values via withdrawals or loans in years after there is a down stock market.
Smooth Sailing is designed for clients that are concerned about market losses and want some protection against those loss years. In this instance Indexed Universal Life (IUL) may be attractive and AXA’s BrightLife Grow product is designed to potentially generate strong cash values and retirement income for the premium dollars.

21. Take Control of Retirement Income
There are two key items that can impact retirement income:
Selling into losses
High marginal income taxes
Smooth Sailing focuses on making selective withdrawals from policy cash values to manage portfolio losses
Dialing Your Tax Bracket focuses on making selective withdrawals from policy cash values to manage income taxes
Manage and control BOTH Losses and Taxes During Retirement Years
Dialing your Tax Bracket - you are making selective/timed withdrawals to manage your taxes. 
With Smooth Sailing you are making selective/timed withdrawals to manage overall retirement assets.

22. Alternatives
Investment portfolio allocations generally focus on risk versus reward while income tax issues are often overlooked.
With the tax changes introduced by ATRA there will be more attention directed towards tax considerations.
Tax deferred vehicles may offer an alternative to those that trigger income today. Life insurance is one vehicle that stands out on an objective view.
The chart above highlights the normal tax treated of commonly held assets. It addresses tax issues as well as other planning concerns that can impact the net values of these assets as well as the income they produce.
This chart can be an effective planning tool to guide you and your clients in addressing asset allocations as well as a selection of income sources.
We have a related planning concept called “Dialing Your Tax Bracket” . Let’s take a look at how it might help with tax planning.
Please be advised this chart is based on our general understanding of federal tax rules for U.S. Individuals and is not intended as legal or tax advice. Your clients should consult their own tax advisor. Also your clients should consult with their advisor regarding the individual characteristics of any product or investment purchase. All thee products and investments have different characteristics and levels of risk. Neither AXA Equitable nor AXA Distributors does not provide tax and legal advice. Clients should consult with tax and legal professionals on these matters. 1 Only appropriate if there is a death benefit need.
2 Does Not include ROTH IRAs

23. Dialing a Tax Bracket to Boost Retirement*
Many retirement vehicles limit contributions
IRAs & Roth IRAs - $5,500
401ks - $18,000
Additional amounts for individuals over 50
Limits on contributions to employer sponsored plans
Life Insurance offers an additional approach to place funds
Can avoid limits imposed by other savings options – 401ks, IRAs Policy can become a Roth IRA Alternative or 401k supplement
You can dial how much you want to put into the life insurance policy*
*You must pay the minimum to maintain the life insurance and there is an upper cap on how much can be contributed and still allow the contract to fall within the definition of life insurance under Tax Code Section 7702

24. Calculating the Retirement Income Boost
37.3% Savings of $6,175!
Lower Tax Brackets
Higher Tax Bracket
Social Security, IRA, Pension Distributions and other Taxable Income
Taxable Income or Life Insurance Cash Values, Roth IRAs and Municipal Bond Interest
Total
First $18,550
Next $56,750
Next $24,700
$100,000
Without Life Insurance Planning
Tax Rate
10%
15%
25%
Taxes Due
$1,855
$8,513
$6,175
$16,543
With Life Insurance Planning 0% $0
$10,368
Did you know that you can take advantage of this tax treatment to diversify your client’s tax rate exposure? By diversifying among different financial products you may have the ability to protect against fluctuations in tax rates. Why is this important? During years with high tax rates clients may want to have the option to take funds from tax free investments.
Let’s say we have a middle aged couple getting ready for retirement and they know they’ll need $100,000 each year. They have a number of sources of income, but they’re worried about taxes. Here their available life insurance cash values can also help. Each year they will take non-discretionary payments, such as Social Security and their required distributions from taxable retirement funds. This fills up their lower tax brackets. As they approach the higher tax brackets, they can minimize taxes with life insurance cash values. The added benefit with life insurance is that funds can be pulled out free of income taxes, which means they can borrow less and still meet the same after-tax amount they need to live on or improve their standard of living. That much money could pay for a nice vacation.
Based on a 45-year-old male, preferred underwriting status, a BrightLife® Grow Indexed Universal Life contract with a death benefit of $500,000 and an annual premium of $9,893 would generate 20 years of income of $24,700 starting at age 66. Assumes tax calculations made in 2016, filing jointly. The $26,200 of income from the policy is based on the BrightLife® Grow at default of 5.79%.

25. What Other Materials are Available?
Accumulation Based Planning Approaches
AXA offers a wide array of support for the Smooth Sailing on Uncertain Waters. These include a detailed client marketing piece, a shorter producer focused overview, powerpoints and other collateral material. This Frequently Asked Questions piece helps address some of the commonly asked questions on this marketing approach.
We also offer a range of support for this planning approach, including concepts called the Roth IRA Alternative, Private Reserve, Dialing Your Tax Brack and general Supplemental Income materials.

26. To learn more, contact your Financial Professional.
Disclosure
To learn more, contact your Financial Professional.
BrightLife® Grow is issued in New York and Puerto Rico by AXA Equitable Life Insurance Company (AXA Equitable) New York, NY and in all other jurisdictions by MONY (MLOA) Life Insurance Company of America, an Arizona Stock Corporation with its main administrative office in Jersey City, NJ and is distributed by AXA Network, LLC and AXA Distributors, LLC, 1290 Avenue of the Americas, New York, NY MLOA is not licensed to conduct business in New York and Puerto Rico.
S&P", Standard & Poor's ' , S&P 500 and Standard & Poor's 500 are trademarks of Standard & Poor's and have been licensed for use by AXA Equitable, BrightLife ® Grow is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's does not make any representation regarding the advisability of investing in the product.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this article is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the tax payer. The tax information was written to support the promotion or marketing of the transactions or matters addressed, and you should seek advice based on your particular circumstances from an independent tax advisor. Neither AXA Equitable, AXA Network nor AXA Distributors provide legal or tax advice.
"AXA" is a brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY,NY), MONY Life Insurance Company of America (AZ stock company, administrative office: Jersey City NJ) AXA Advisors, LLC, and AXA Distributors, LLC. AXA S.A. is a French holding company for a group of international insurance and financial services companies, including AXA Equitable Financial Services, LLC This brand name change does not change the legal name of any of the AXA Equitable Financial Services, LLC companies. The obligations of AXA Equitable Life Insurance Company and MONY Life Insurance Company of America are backed solely by their claims paying ability.