AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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BY TOM HEGNA
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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The information in this presentation is for general use and, while we believe the information is reliable and accurate, it is important to remember individual situations may be entirely different. Therefore, information should be relied upon only when coordinated with professional tax and financial advice. You need to take into account your health and legacy goals. Neither the information presented or any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any insurance or securities products and services.
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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The information provided is not intended as tax or legal advice and may not be relied on for the purposes of avoiding any Federal or State tax penalties. Tom Hegna, his employees or representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax and legal counsel. They are also encouraged to seek advice from their own financial advisor and their family. The examples shown are hypothetical. Rates can and do change often. Rates may depend on your age, health, and gender. Please ask your financial advisor to run an illustration based on your information.
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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BY TOM HEGNA
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Best-selling author, international speaker and economist: • Paychecks and Playchecks: Retirement Solutions for Life • Retirement Income Masters: Secrets of the Pros • Don’t Worry, Retire Happy! Seven Steps to Retirement Security • As seen on national Public Television • Featured in Forbes, Fox Business, Money Rate and numerous
industry publications Former First Vice President with New York Life and Financial Advisor with Met Life
• Qualified for Million Dollar Round Table, National Quality Award and National Sales Achievement Award
22 years US Army • 6 years active duty and 16 years Reserve • Retired as a Lieutenant Colonel with numerous awards and
decorations North Dakota State University • Honors Graduate • 3 Majors in 4 years • Distinguished Military Grad
Resides in Fountain Hills, AZ Married for 31 years 4 children
Tom Hegna CLU, ChFC, CASL
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Do you Believe in Free Speech?
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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When You Retire, Everyday Is Saturday!
RETIREMENT
When Everyday is Saturday!
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Don’t Worry, Retire Happy! Seven Steps to Retirement Security
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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“Life begins at retirement”
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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BY TOM HEGNA
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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7 Steps to Retirement Security Have a plan for retirement Maximize social security benefits Consider a hybrid retirement Protect savings from inflation Secure guaranteed retirement income Plan for long-term medical costs Use home equity wisely
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Step 1
Have A Plan!
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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“Those who have planned for retirement are three times more likely to be
confident they will have sufficient income in retirement as compared to those who have not planned.”
Source: The Hartford Investments and Retirement Survey, December 2009
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Retirement Income – Your Parents vs. You
NEST EGG
SOCIAL SECURITY
PENSION
NEST EGG
SOCIAL SECURITY
PENSION
1983 2013
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Two Key Questions What do I NEED my retirement income to do?
What do I WANT my
retirement income to do?
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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How Much Income Do I Need to Replace?
80%
70% 50%
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100%
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Join the Country Club Buy a Boat See the world!
Have you done that yet?
In retirement, you may want to…
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Don’t Live A
Just In Case Retirement!
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Step 2
Maximize Social Security Benefits
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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© 2014 Tom Hegna • All Rights Reserved www.TomHegna.com
What Is Your Largest Retirement Asset?
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Lifetime Social Security Benefit (single)
up to: $500,000 Lifetime Social Security Benefit-Married/Combined
up to: $1,000,000
Source: Social Security Administration
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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How Benefits are Funded Benefits are wage driven
Employee and employer each pay • 6.2% for Social Security (OASDI)
- $118,500 cal on taxable earnings for Social Security (2014 limit)
• 1.45% for Medicare Hospital Insurance (HI)
- Affordable Care Act increase
Source: www.ssa.gov/cola/Oct2015
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Earning Benefits
40 quarters (10 years) of wages that were subject to Social Security payroll taxes
Quarters do not need to be consecutive - Quarters do not expire
and will remain on Social Security record
Becoming eligible
$0 used in all years less than 35
Will result in lower benefit
Benefits calculated based on average of the 35 highest years of earnings
Source: SSA Publication No. 15-10003, ICN 451385. February 2012
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Difference in Benefit Amounts
Age You Choose to Start Receiving Benefits
$750 $800 $866
$933 $1,000
$1,080 $1,160
$1,240 $1,320
$0
$300
$600
$900
$1,200
$1,500
62 63 64 65 66 67 68 69 70
Source: Social Security Administration
Monthly Benefit Amounts Differ Based on the Age You Decide to Start Receiving Benefits
This example assumes a benefit of $1,000 at a full retirement age of 66
MO
NTH
LY B
ENEF
IT A
MO
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Difference in Benefit Amounts
Age You Choose to Start Receiving Benefits
$750
$1,320
$0
$300
$600
$900
$1,200
$1,500
62 63 64 65 66 67 68 69 70
Source: Social Security Administration
Monthly Benefit Amounts Differ Based on the Age You Decide to Start Receiving Benefits
This example assumes a benefit of $1,000 at a full retirement age of 66
MO
NTH
LY B
ENEF
IT A
MO
UN
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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What is my Breakeven Point?
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$1,200,000
$1,400,000
$1,600,000
$1,800,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
Monthly Payment Claim at 62: $1,500 Claim at 66: $2,000
Claim at 70: $2,640
$1,531,112
$1,285,117
$1,039,143
62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94
Breakeven Points:
Age 70 vs. 66: Age 81
Age 66 vs. 62 vs. Age 76
Age 70 vs. 62: Age 79
This is a hypothetical example for illustrative purposes only. This assumes a Full Retirement Age Benefit of $24,000 a year, an annual cost of living adjustment of 3%, and the client living to age 95.
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Three Benefits to Understand
Source: SSA.gov as of October 2014
YOUR Benefit
Personal Earnings record, or Spouses earnings record
Spousal Benefit
Spousal benefit is up to 50% of their spouse’s Social Security benefit Cannot claim spousal benefit until
spouse files for benefits
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Survivor Benefits Surviving spouse can receive or step up to the benefit of the deceased spouse
Survivor benefits generally begin at age 60
Survivor benefits reduced if received before full retirement age – up to 28.5%
Exceptions for widowers with children who are under 16
Survivor can switch to his or her own benefits
Advantageous if greater when full retirement age reached
Source: SSA.gov as of October 2014
If survivor is full retirement age, 100% of spouse’s benefit
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Important Strategies to Know
File and Suspend
File a Restricted Application
Collect on your Ex
This is a hypothetical example for Illustrative purposes only
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Step 3
Consider A Hybrid Retirement
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“Retirement at 65 is ridiculous. When I was 65, I still had pimples.” George Burns
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Benefits of A Hybrid Retirement • Increased earnings
• Increased savings
• Increased Social Security benefits
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Step 4
Protect Your Savings From Inflation
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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What might $10,000 buy in the future? Hypothetical Inflation Rate
Retirement Income Concerns - Inflation
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Years From Now 0% 1% 2% 4% 6% 8% 10%
1 $10,000 $9,901 $9,804 $9,615 $9,434 $9,259 $9,091
5 $10,000 $9,515 $9,057 $8,219 $7,473 $6,806 $6,209
10 $10,000 $9,053 $8,203 $6,756 $5,584 $4,632 $3,855
15 $10,000 $8,613 $7,430 $5,553 $4,173 $3,152 $2,394
20 $10,000 $8,195 $6,730 $4,564 $3,118 $2,145 $1,486
25 $10,000 $7,798 $6,095 $3,751 $2,330 $1,460 $923
30 $10,000 $7,419 $5,521 $3,083 $1,741 $994 $573
35 $10,000 $7,059 $5,000 $2,534 $1,301 $676 $356
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Step 5
Secure More Guaranteed Income
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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“Securing at least a base level of lifetime income should be every retiree’s priority - at least if they want to live happily ever after.”
Source: TIME magazine - Lifetime Income Stream Key to Retirement Happiness, July 2012
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Sources of Guaranteed Income During Retirement
Social Security
Pensions
Annuities
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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The Success of your Retirement is really NOT about your assets…
Assets can be lost, stolen, swindled, sued, divorced or decimated in a market crash.
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Why do YOU need to Secure Guaranteed Income? Longevity Risk Deflation Risk Market Risk Withdrawal Rate Risk Sequence of Returns Risk
Long Term Care Risk Mortality Risk (Death) Inflation Risk
Regulatory Risk Taxation Risk
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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So which RISK is #1? Longevity Risk is HANDS DOWN the #1 Risk in Retirement!
Why? Because it is NOT just a Risk. It is a RISK MULTIPLIER of the other Risks!
Longevity Risk Deflation Risk Market Risk Withdrawal Rate Risk Sequence of Returns Risk
Long Term Care Risk Mortality Risk (Death) Inflation Risk
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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How do you take Longevity Risk OFF the table?
Traditional Investments such as Managed Money, Real Estate, and CD’s CANNOT Do It!
A Lifetime Income Annuity, a Deferred Income Annuity or an Income/Withdrawal Benefit Rider from
a Fixed or Variable Annuity CAN Do It!
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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What Is A Lifetime Income Annuity?
A personal “pension-like” stream of guaranteed lifetime income from a financial institution.
A GUARANTEED Paycheck for Life!
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Annuity Payout Rates
Age Life Only Life w/Guarantee
65 7.1% 6.45%
75 9.73% 8.02%
85 14.57% 10.46% Source: www.immediateannuities.com (January 2015)
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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OK, What are Longevity Credits?
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Understanding the Benefits of Risk Pooling and Longevity Credits
= $500 $100 x 5
Suppose five 90 year-old women take a vacation together every year …
This example is hypothetical and intended for illustrative purposes only. It is not an indication of the actual performance of any particular product.
The five women place $100 in a box
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Unfortunately one of the ladies died that year. So, they meet to vacation again. Now the four Ladies split the $500. They now each have $125 That is a 25% rate of return Question: How much was invested in the market? What interest rate did it earn?
Explaining Longevity Credits
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Explaining Longevity Credits They decide to “let it ride”
The next year one more lady dies
Now the 3 ladies split the $500
They each get $167
That is a 67% return
All of this is based on longevity credits
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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…but only an insurance company can
manufacture a mortality pool.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Age
Payo
ut
Investment Growth Return of Principal Mortality Credits
Longevity credits are a new form of “Alpha” – Retirement Alpha!
Components of Lifetime Income Payout Male age 65, $100,000 investment
Lifetime income annuities deliver higher payouts because, in addition to distributing gains and principal, they subsidize those who die late with the capital of those who die early.
Source: New York Life, 2009
Investment Advisors Can
Manufacture This Payout…
…but only a life insurance company can manufacture mortality credits
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Source: New York Life Insurance Company and Financial Research Corporation 2011 disclosure for FRC whitepaper: this information is provided as general information and is not intended to be specific financial guidance. before you make decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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“There is no other vehicle in the marketplace that can convert assets
into income as efficiently as the income annuity.”
“Our analysis shows that no other investment vehicle can rival the income annuity for retirement
security.”
“Income Annuities offer features others can’t – High cash flow, uncorrelated to market returns; retirement alpha in the form of mortality credits, which only life insurance companies can manufacture; longevity hedging and liquidity features…
Source: FRC White Paper, “Income Annuities Improve Portfolio Outcomes in Retirement”
Whitepaper from FRC
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Longevity Credits (Mortality Credits) are a NEW form of Alpha –
Retirement Alpha!
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The Happy Factor
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You’ve Read it in the Papers
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Providing Investment Solutions Lifetime Income Stream Key to Retirement Happiness A new study in a land of grumps reveals that retirees with a guaranteed lifetime income stream can find true happiness. By Dan Kadlec July 30, 2012 “securing at least a base level of lifetime income should be every retiree’s priority—at least if they want to live happily ever after.”
Read more: Retirement: Lifetime Income Streams Can Bring About Happiness. Study Says | TIME.com http://business.time.com/2012/07/30/lifetime-income-stream-key-to-retirement-happiness/#ixzz2kIuZujsZ
What Are Others Saying?
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Annuities and Retirement Happiness By Steve Nyce and Billie Jean Quade September 2012
Retirement satisfaction has steadily declined over the last decade.
Satisfaction is highest among those with high levels of wealth and income who are very healthy and annuitize their income.
Among retirees with similar wealth and health characteristics, those with annuitized incomes are happiest.
Annuities provide the biggest satisfaction boost to retirees with less wealth and those in poor health
What Are Others Saying? Providing Investment Solutions
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Dick Austin
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Step 6
Plan for Long Term Medical Costs
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GO-GO years
SLOW-GO years
NO-GO years
The 3 phases of Retirement
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The odds of your home burning down are about 3%
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Barry Rand, "Challenges of Long-Term Care," AARP Bulletin, November 2013.
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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The odds of you totaling your car are about 18%
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Barry Rand, "Challenges of Long-Term Care," AARP Bulletin, November 2013.
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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The odds of someone 65 or older needing some form of long-term care are about 72%
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Barry Rand, "Challenges of Long-Term Care," AARP Bulletin, November 2013.
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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LTCi is a shield of protection to help preserve assets and income for a long life. – Investments and savings may be kept
intact. – Assets can be preserved to pass over
to a spouse or to children. – Funds can be used as wanted not as
needed
Hypothetical example for illustrative purposes only.
Long-Term Care Insurance Risk Management Tool
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Step 7 Use Your Home Equity Wisely
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Accessing the Equity in Your Home • Sell the home and downsize
• Take a loan against the equity
• A reverse mortgage
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Don’t Worry, Retire Happy Have a retirement plan Work a little longer and save a little more Cover your basic expenses with guaranteed
lifetime income Optimize the rest of your savings to address
inflation Maximize your social security benefits Use you home equity wisely
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AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Order from www.tomhegna.com and www.retirehappynow.com
Additional Tools Developed to Help!
AUGUST 5-7, 2015 THE VENETIAN | LAS VEGAS
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Don’t Worry, Retire Happy! Seven Steps to Retirement Security
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