Frank and Kathy, now that you have completed the first step in the financial planning process, you are ready to move on to the second step. Before we continue, let’s summarize our activity to date. So far we have: · collected all of your relevant personal and financial data · identified your financial goals and established priorities · identified the strengths and weaknesses of your current financial situation In the next phase, we will: · examine strategies that may enhance your current financial position · compare the strengths and weaknesses of alternatives · revise your goals, if necessary · help you select the scenario that is best for you The significance of this report is that it compares the differences between two plan scenarios from many aspects (listed below). The plan scenarios are identified as Alternative 1 and Alternative 2. Alternative 1 is based on the proposed plan named Copy of Base Plan. Alternative 2 is based on the proposed plan named Copy of Revised Plan. At the end of this report there is a Plan Difference report that highlights key differences between the plans. Some of the key factors that should be considered in this process are the following: · Net Worth – The total of all your assets (less your liabilities) is a key measure of your financial position and may be measured at various times over your lifetime. Your investment strategies may affect this part of the analysis. · Cash Flow – The ability to have sufficient income to meet all your cash outflows over your lifetime is an important consideration. Analyze any excess cash flows to determine whether there is an opportunity to invest or whether the excess represents expenses that have been overlooked. · Income Tax – Managing the tax you pay is an important consideration in the planning process. Reduced taxes means there are more funds available to meet other objectives. · Achieving Goals – It is important to set realistic goals and prioritize them. We need to determine if your current savings pattern and growth objective meet the goals you have identified within the time frame you have selected. · Estate Planning – At the end of your expected lifetime, all assets that have not been used to fund other objectives become part of your estate. In the estate planning process you want to ensure that this residual is effectively passed on as you choose. Without proper planning, as much as 50% of your assets could pass to the government in taxes and fees. Estate planning is a delicate balance of estate and transfer tax reduction strategies, funding your financial goals and maintaining control of your assets. Produced using NaviPlan Extended Version 9.0a, Emerging Information Systems Inc. Projections are based on assumptions that are believed to be reasonable. Actual results may vary, perhaps to a material degree. 4 Net Worth Comparison Over and above social security and pensions, your accumulated wealth or net worth will fund much of your retirement years. Once you have retired, your goals will likely shift to preserving net worth in order to carry you through retirement and possibly leave a legacy for loved ones. There are several strategies that can be implemented immediately to enhance your net worth. These strategies include · analyzing and implementing the proper asset allocation · making effective use of your current income and channeling excess funds to appropriate savings plans
Table of Contents
Introduction............................................... 4 Net Worth Comparison............................. 5 Cash Flow Comparison..............................6 Income Tax Comparison.......................... 7 Asset Allocation Comparison................... 8 Retirement Goal Comparison.................. 10 Emergency Fund Goal Comparison......... 12 Education Goal Comparison......................13 Major Purchase Goal Comparison.......... 15 Monte Carlo Analysis Comparison......... 17 Disability Insurance Comparison............ 21 Life Insurance Comparison...................... 24 Long-Term Care Planning Comparison.... 26 Stock Option Planning Comparison......... 28 Estate Planning Comparison.....................29 Conclusion................................................ 30 Appendix A: Plan Difference Report....... 31 Delivery Acknowledgement..................... 32
