1 Preparing for Early Retirement or Preparing Early for RetirementBuilding a Successful Financial Plan WI HFMA January 2017

2 Disclaimer Not for Public DisseminationDisclaimer Not for Public Dissemination. For Financial Advisor use only The material contained in this presentation is for general education purposes only and should not be considered as individual advice or recommendations. We suggest you consult with a licensed MPPL advisor, your own financial advisor and/or other tax and legal counsel to determine if any ideas contained in this presentation make sense in your personal situation. Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, , an SEC-registered investment advisor. Securities products involving commission or transaction based fees are offered through Comprehensive Asset Management and Servicing, Inc. (“CAMAS”), 2001 Hwy 46, Ste. 506, Parsippany, NJ 07054, Member FINRA/SIPC/MSRB. MPPL is independent of CAMAS. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise. If you would like a copy of the Midwest Professional Planners Form ADV Part 2A and 2B, please send a written request to Midwest Professional Planners, Ltd., 2610 Stewart Avenue, Suite 100, Wausau, WI or

3 Presenter Bruce Lorenz, MBA, FHFMA Candidate for CFP® CertificationCertified Financial Planner Board of Standards Inc. owns the certification marks CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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7 Fidelity Couples Retirement Study21% have developed a plan to ensure they do not outlive their savings (only 11% of Gen Xer’s – born 1965 to 1978) 48% have “no idea” how much they need to save to maintain current lifestyle 47% are in disagreement on how much they need 52% also have “no idea” how much they expect to receive in monthly retirement income

8 Issues faced by retireesKnowing if they will have enough to make it last 83% say this is their Greatest fear TAXES Avoiding big portfolio downturns Reducing Volatility in turbulent times Avoiding the biggest mistake Health Insurance costs prior to Medicare Affordable Care Act (ACA) Tax penalties for early withdrawals

9 Do we have enough? 4% safe withdrawal rate Goal based financial plansCash flow based financial Plans Monte Carlo Analysis

10 History of the 4% withdrawal rule

11 What if history doesn’t repeat?4% rule Pitfalls What if history doesn’t repeat? The above graph plots the monthly close for the Nikkei 225 Stock Index. Updated Thursday, May 28,  Click the links below for the forecast and other links related to this stock index.

12 4% rule Pitfalls How long will you live?The above graph plots the monthly close for the Nikkei 225 Stock Index. Updated Thursday, May 28,  Click the links below for the forecast and other links related to this stock index.

13 Financial Planning Goal based vs Cash flow based softwareTaxation is a large factor Variable Spending Estate taxes Monte Carlo analysis

14 How much are you going to spend?

15 Source: Banerjee, 2015 & Employee Benefit Research Institute, HRS Study

16 Spending can vary… However, in the study…45% of households spent more in the early years of retirement! You need to determine your specific situation.

17 The Ant and the Grasshopper

18 Will you have enough?

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20 The three tax buckets

21 Where should we call home?0%

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23 “Modern” Portfolio Theory

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25 Think Tactically

26 Managed Futures vs. StocksSource: LoCorr Fund Management

27 Alternative StrategiesStandard Stock & Bond Portfolio Standard Portfolio w/Managed Futures & Reits

28 Reduce Risks of owning Stocks Protection from downturnsPredictable Income Reduce Risks of owning Stocks Protection from downturns Annuities The Income Funnel

29 Optimal Portfolio Growth M.T. Bonds 3 year Cash Flow S.T. Bonds CashThe Income Funnel Optimal Portfolio Risk Growth 3 year Cash Flow M.T. Bonds S.T. Bonds SSI or Pension Cash Expenses MPPL™

30 Income Funnel FailuresOverspending Greed

31 Optimal Portfolio M.T. Bonds S.T. Bonds Cash The Income FunnelExpenses MPPL™

32 Things to Consider in Your Financial PlanLife expectancy Retirement date Risk Tolerance (optimal portfolio) Specific estate wishes Social Security claiming options (2700 rules) Expense projections for different times in your life Education, car replacements, extra travel expense, health insurance

33 Things to Consider in Your Financial PlanInflation (varies by category) Residency issues Proper insurance coverage (real estate/personal - limits) Power of attorney documents (financial and healthcare) Donor advised funds Health savings accounts

34 Things to Consider in Your Financial PlanTax brackets with Medicare premiums Roth conversions Guaranteed income Three buckets for your money Family strategies with Affordable Care Act Umbrella liability policy

35 Things to Consider in Your Financial PlanRule 72(t) does allow for penalty free withdrawals prior to 59 ½ Age 55 rule can also be helpful with accessing funds penalty free Education savings accounts – 529’s (Make sure you review FAFSA effects) Liquidation strategy What if’s (premature death, disability, long-term care needs) MONTE CARLO ANALYSIS

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44 The Best Chance for a Successful PlanKnow your spending (change expenses by age) Factor in taxation Be specific with inflation (vary by category) Understand your risk tolerance (create optimal portfolio) Cash flow based software Monte Carlo Ongoing updates to plan

45 Failing to plan is planning to fail.----Benjamin Franklin

46 I don’t feel old. I don’t feel anything until noonI don’t feel old. I don’t feel anything until noon. Then it’s time for my nap. ----Bob Hope