Summary of Planning Results Produced by:

Summary
of
Planning Results
Produced by:
Variplan, LLC
Suite 320
19775 Belmont Executive Plaza
Ashburn, VA 20147
VARIPLAN.COM
VARIPLAN, LLC CLIENT PLANNING REPORT
CLIENT:
PLANNER:
John and Jane Sample
Mike Miles
DATE:
VERSION:
August 1, 2008
Approved
All amounts are in today’s dollars unless otherwise specified. BT = before taxes, AT = after taxes.
BLUE TEXT = updated since last version RED TEXT = requires special attention
I.
PLAN END
RANDOMIZED VARIABLES
METHOD
TAX STATUS
EMPLOYMENT INCOME
CURRENT SAVINGS
PLANNING ASSUMPTIONS
Last death
Mortality, investment returns
Monte Carlo simulation
Married, Filing Jointly, Virginia Residents
$141,000 / year BT – John
$75,525 / year BT – Jane
Taxable
$286,000 Joint TD Ameritrade account
$38,500 Joint Wachovia savings account
$1,200 Jane’s Bank of America CD
$1,200 Jane’s Bank of America CD
Tax-deferred
$247,400 John’s TSP account
$72,500 John’s TD Ameritrade IRA
$15,100 Jane’s TD Ameritrade IRA
$21,000 Jane’s Hartford variable annuity
$10,300 John’s BB&T 401K
AMOUNTS EXCLUDED
FROM INVESTMENT
STRATEGY
NET AMOUNT INCLUDED
IN INVESTMENT STRATEGY
RETIREMENT SYSTEM(S)
Variplan, LLC
Total taxable: $326,900
Total tax-deferred: $366,300
-----------------------------------------------------------------------------------------------$693,200 Total
$50,000 emergency cash reserve
$643,200
John – CSRS
Jane – ERFC, VRS, Social Security
2
Client 8/20/2008
RETIREMENT INCOME
(NON-INVESTMENT)
DEFAULT INFLATION RATE
Variplan, LLC
John
 $87,060 / year, BT, CSRS annuity, now to John’s death (actual)
 $53,028 / year, BT, CSRS survivor annuity, John’s death to plan end
(Variplan estimate)
Jane
 $13,850 / year, BT, VRS annuity, Jane’s retirement to her death
($16,061 benefit for 7/2011 retirement, discounted to for inflation,
assumes COLA and no survivor benefit)
 $5,835 / year, BT, ERFC benefit, Jane’s retirement to her death, no
COLA (client estimate)
 $9,600 / year, BT, Social Security, Jane’s age 62 to her death (Variplan
estimate)
3.0% per year
3
Sample 8/1/2008
II.
RETIREMENT AGE
PLANNED
CONTRIBUTIONS TO
SAVINGS
KEY PLANNING VARIABLES
John – 63 (6/14/2011)
Jane - 59 (11/8/2011)
To taxable accounts
$60,000 / year, AT, John’s savings, now to his retirement
$82,000, AT, proceeds from MA home sale, John’s age 62
To tax-deferred accounts
 $20,500 / year, BT, John’s BB&T 401K contribution from now to his
retirement
 $2,664 / year, BT, Jane’s Hartford annuity contribution from now to
her retirement
INVESTMENT STRATEGY
RETIREMENT SPENDING
ALLOWANCE (RSA)
PLANNED WITHDRAWALS
AND ADDITIONAL
RETIREMENT SPENDING
MINIMUM INVESTED
BALANCE (MIB)
Variplan, LLC
Note: Term life insurance benefits are ignored
Balanced Income: 45% stocks / 50% bonds / 5% cash
Expected gross annual return: 9.17%
Estimated Standard Deviation: 9.34%
Expected worst year (2.5% probability): -9.5%
Investment expenses: -0.30%
$120,000 / year, AT, from Jane’s retirement to first death
$85,000 / year, AT , from first death to plan end
 $10,000 / year, AT, for new cars, from now to plan end
 $2,748 / year, AT, long-term care insurance premiums, now to first
death, no inflation
 $1,400 / year, AT, long-term care insurance premiums, first death to
plan end, no inflation
 $20,000 AT, home remodeling at John’s age 59 (2008)
 $40,000 AT, weddings at John’s age 60 (2009)
 $10,000 AT, grad school child 1, John’s, 2008
 $10,000 / year, AT, grad school child 2, John’s age 61 to 62
 $50,000 / year, AT, mom’s long-term care cost, John’s age 60 to 64
$0
This is the minimum acceptable balance in the invested portfolio
(excluding any reserved amounts) during the planning period. The
Confidence Level indicates the probability of successfully funding all
plan cash flows while maintaining the MIB.
4
Sample 8/1/2008
III.
RESULTS
PLAN STATUS
CONFIDENCE LEVEL
Adequately funded
90% probability of successfully funding the plan.
INVESTED PORTFOLIO
EXPECTED ENDING VALUE
(EEV)
5-YEAR DOWNSIDE PLAN
RISK
IV.
The optimal range for confidence is 75% - 90%. Confidence levels below
75% indicate an unacceptable likelihood of plan failure. Confidence
levels above 90% may be subjecting the investor to undue sacrifice in
lifestyle or estate objectives.
$1.18 Million
This is most likely ending value for the invested portfolio, in today’s
dollars, based on the Monte Carlo simulation results.
12.9%
This is the probability that poor investment results will cause plan
confidence to fall below 75% during the next five years. This risk tends
to increase with the expected volatility of the investment strategy.
ALTERNATIVE TEST RESULTS
SCENARIO CHANGE
V.
CONFIDENCE
EEV
5-YR RISK
ACTION ITEMS
WHO
Client
Variplan, LLC
WHAT
Please provide copies of life insurance policy terms and premiums for review
5
Sample 8/1/2008
VI.
RESERVES
SPENDING
ASSUMPTIONS
INSURANCE
ESTATE
PLANNING
INVESTMENT
ACCOUNTS
ONLINE
DOCUMENT
ACCESS
ENGAGEMENT
INFORMATION
Variplan, LLC
NOTES & NOTICES
The plan ignores the value of the emergency reserve at the plan’s conclusion.
PREThe modeling assumes that, except for what may be specified in the
RETIREMENT “Withdrawals/Additional Retirement Spending” section for the
period, the sum of all spending, saving and taxes are exactly equal to
and covered by employment income.
POSTThe modeling assumes that the specified spending/withdrawals and
RETIREMENT the Retirement Spending Allowance are funded first from retirement
income streams and then, as needed, from withdrawals from the
portfolio. Any retirement income in excess of spending
requirements is assumed to be contributed to the portfolio as
additional savings.
HEALTH
Clients are covered by FEHB
DISABILITY
Clients carry adequate disability insurance
PROPERTY
Clients carry adequate property and casualty insurance
AND
CASUALTY
LONG-TERM Clients are covered by JH LTCI
CARE
LIFE
Review pending
Clients work with an estate planning attorney and have an estate plan in place
Account structure has been optimized
You can access important information about Variplan and our services, including
downloadable forms, brochures and our regulatory disclosure document, Form ADV
Part II, by visiting www.variplan.com, clicking on Client Resources and entering
username: “intro” and password: “welcome”.
Engagement type:
Vantage Founding Client
Client since:
2005
Renewal date:
August 8
Review cycle:
2x per year
Payment frequency:
Annual, credit card, automatic
6
Sample 8/1/2008
VII.
CLIENT PRIORITIES
Please rank the following list according to how important each option is to you, compared to the
others. Please circle one number for each option, using each number only once. The option with the
highest priority will be ranked 1, and the option with the lowest priority will be ranked 6. You may
circle NA if the option is not available to you. For example, if you are already retired the “Retire
Earlier” and “Save Less” options may no longer be available.
Spend more in retirement
Most Important
1
2
3
4
5
6
NA
Least Important
Reduce investment volatility
Most Important
1
2
3
4
5
6
NA
Least Important
Avoid working after retirement
Most Important
1
2
3
4
5
6
NA
Least Important
Leave a larger estate
Most Important
1
2
3
4
5
6
NA
Least Important
Save less while still working
Most Important
1
2
3
4
5
6
NA
Least Important
Retire earlier
Most Important
1
2
3
4
5
6
NA
Least Important
Variplan, LLC
7
Sample 8/1/2008
VIII.
VANTAGE INVESTMENT STRATEGIES
CONSERVATIVE
MODERATE
AGGRESSIVE
Variplan, LLC
Risk Averse: 30% stocks / 60% bonds / 10% cash
Expected gross annual return: 7.99%
Estimated Standard Deviation: 7.19%
Expected worst year (2.5% probability): -6.4%
Investment expenses: -0.15%
Balanced Income: 45% stocks / 50% bonds / 5% cash
Expected gross annual return: 9.17%
Estimated Standard Deviation: 9.34%
Expected worst year (2.5% probability): -9.5%
Investment expenses: -0.17%
Balanced: 60% stocks / 37% bonds / 3% cash
Expected gross annual return: 10.30%
Estimated Standard Deviation: 11.65%
Expected worst year (2.5% probability): -13.0%
Investment expenses: -0.18%
Balanced Growth: 80% stocks / 18% bonds / 2% cash
Expected gross annual return: 11.73%
Estimated Standard Deviation: 14.85%
Expected worst year (2.5% probability): -18.0%
Investment expenses: -0.19%
Growth: 90% stocks / 10% bonds / 0% cash
Expected gross annual return: 12.69%
Estimated Standard Deviation: 16.79%
Expected worst year (2.5% probability): -20.9%
Investment expenses: -0.21%
Aggressive Growth: 100% stocks / 0% bonds / 0% cash
Expected gross annual return: 13.47%
Estimated Standard Deviation: 18.56%
Expected worst year (2.5% probability): -23.7%
Investment expenses: -0.22%
Ultra Growth: 100% stocks / 0% bonds / 0% cash
Expected gross annual return: 14.95%
Estimated Standard Deviation: 21.55%
Expected worst year (2.5% probability): -28.2%
Investment expenses: -0.24%
8
Sample 8/1/2008