Creating Your Own Pension Plan

Creating Your Own Pension

“How to Retire Without Going Broke”

THETHENEXTSTEP

The word “Pension” defined…

1. A fixed amount, other than wages, paid at regular intervals to a person or to the person’s surviving dependents in consideration of past services, age, merit poverty, injury or loss sustained, etc.: a retirement pension

2. An allowance, annuity, or subsidy.

- Dictionary.com

California State Pension Funds Update

Almost two years ago, a Stanford study stirred up discussion statewide with the prediction that the pension funds of California's state workers were headed for a train wreck. The retirement system would eventually not have enough money to pay all that it owes to its retirees.

-Stanford Report, Dec. 14, 2011


The unfunded liabilities of the pension funds have increased by15 to 20 percent.



The big state pension funds at the center of the huge financial problem are the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS), and the University of California Retirement Plan (UCRP).



The combined unfunded liability for the three funds is $290.6 billion, presuming that the funds earn a 6.2 percent return from investments. That figure represents an unfunded amount per California household of nearly $24,000.



The governing board of the California State Teachers Retirement System (CalSTRS) today adopted a new set of accrual assumptions, including the investment returns assumption from 7.75 percent to 7.5 percent.

-February 2, 2012

CalSTRS

www.calstrs.com/newsroom/2012/news020212.aspx

To Be… Or not to Be…

Healthcare (Medical & Dental)?Distributions?Increase in Retirement age?Decreased in benefits for spouse?

Will these deficits affect My Retirement?

Now is the time to Act!!!

401(k),403(b), & TSA PlansDo they Work?

The Good…Contributions can be pre-tax or post-taxMoney grows tax deferred

The Bad…Contribution limits for employees ($16,5000)*Early withdrawals subjected to Federal & State taxes*Tax on Retirement distributions

The Ugly…Money at risk in the Stock Market!!!

401(k),403(b), & TSA PlansDo they Work?

3 Most Common Ways to Save for Retirement

0.5% to 3%(Low Interest Rates)

FIXED PRODUCTS

Safety ofPrincipal


Upside Potential

VARIABLE PRODUCTS

Risk ofPrincipal


FIXED PRODUCTS

Safety ofPrincipal

Safety ofSafety ofPrincipalPrincipal

EARNINGS AND GROWTH

Upside PotentialUpside Potential

IndexedIndexedProductsProducts



FIXED PRODUCTS

VARIABLE PRODUCTS

Risk ofPrincipal

Indexing COMBINES Safety and Potential

Our Strategies for Creating a Pension Index Universal Life & Index Annuity Insurance

Life Insurance Products that Offer:

Index Universal Life insurance and Index Annuities are life products that offer a death benefit and cash value accumulation

Each product uses an interest credit strategy that is based on

the movement of specific market indexes such as the S&P 500, NASDAQ-100, and the Dow Jones Industrial Average

Our Strategies for Creating a Pension

General Characteristics of an Index Universal Life Insurance

• Death benefit• Cash Accumulation (Cap rates up to 14%*)• Protection from stock market crashes (0% floor with a 3% look

back**)• Tax Deferred cash accumulation• Tax Free income during retirement• Tax Free income for life (or until policy holder reaches the age 120*)• No contribution limits (currently $16,500 for employees & $49,500 for

certain business owners in qualified retirement plans)


General Characteristics of an Index Universal Life Insurance

• No impact on existing qualified plans (policy holder may set aside more money for retirement without fear of IRS penalties)

• 0% Floor (with 3% look back)• 12-14% Cape Rate• Terminal Illness Protection**• Critical Illness Protection**• Long Term Care Protection*

*Represents riders that can be attached to specific IUL policies.

**Represents FREE riders attached to specific IUL policies.

Our Strategies for Creating a PensionIUL vs. 401(K)

Indexing COMBINES Safety and Potential

$115,563

$124,230

$124,230

$143,563

$158,775

$170,683

$154,330

$133,547

$107,500

$170,683

$183,484

$150,000

$140,000

$130,000

$120,000

$100,000

$160,000

$170,000

$90,000

$110,000

$100,000 Invested in 1997

Indexed AccountLarge Company Stocks

8/1/97 8/3/98 8/2/99 8/1/00 8/1/01 8/1/02 8/1/03 8/2/04 8/1/05 8/1/06 8/1/07 8/1/08 8/3/09

$151,836

$128,379

$140,217

$93,403

$116,838$117,453

$130,430$134,185

$103,485

$133,065

$109,673

$120,396

$154,762

8/2/10

$180,000

$190,000

$63,088 Difference!

Our Strategies for Creating a Pension Index Annuities

Typically used to transfer or “rollover” from riskier or lower interest baring accounts

Individuals must meet suitable age requirements for productMoney must remain in account for several years (unless

creating a Single Premium Index Annuity “SPIA”) aka “Surrender Period”

Surrender Period can last for up to 12 years (typically 5/10)


Characteristics of Index Annuity Insurance

• Death benefit• Beneficiaries can receive a lump sum upon death of owner or

continue to receive distributions• Protection from stock market crashes • Tax Deferred cash accumulation (cap rates are much lower

than IULs)• Tax Free income for life (if funded with AFTERTAX MONEY

ONLY)


Characteristics of Index Annuity Insurance

*Tax penalties are applicable for withdrawals from money received from qualified PRE-TAXED retirement plans


Recap of the definition of a Pension

A fixed amount (income) other than wages

Paid at regular intervals to a person or to the person's surviving dependents

An allowance, annuity, or subsidy

IUL Index Annuity






IUL Index Annuity






IUL Index Annuity






IUL Index Annuity






IUL Index Annuity






IUL Index Annuity






IUL Index Annuity

Creating Your Own Pension

“How to Retire Without Going Broke”

THETHENEXTSTEPAct Now!!!

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Creating Your Own Pension Plan