Today’s Topics

IntroductionEmergency FundLife InsuranceCollege FundingRetirement PlanningQuestions & Answers

Entails these topics during 1st 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 ExpensesIncome = Wages, rental, investmentExpenses = 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-goGrants (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 growthParent/Grandparent asset, not the child’s assetCan be transferred to another child, scholarshipMoney can be used at any qualified higher

education institution in any stateTaxed as ordinary income, plus 10% penalty, if

not used for higher educationCHET 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!