Retirement Planning Agency Name Presenter’s Name Agency Phone number Contact email Agency Street Address City, State, Zip Code ALR2101 (2/16)

TAKE CHARGE OF YOUR FUTURE This is Not Your Parents’ Retirement Years ago, it was common for employees to spend their career at one company. When they retired a gold pocket watch was given to them to signify respect, value, and a gracious thank-you for the years of service they contributed to the company. The watch could even have been accompanied by a generous pension. Pension and Social Security provided lifetime income and met most income needs in retirement. Now, times have changed and unfortunately the changes may mean you will face more risks – more challenges – in your retirement years. It is no longer common for an employer to provide a Defined Benefit Pension or even a gold watch. Employees change jobs more frequently and their primary retirement plan is likely to be a defined contribution plan such as a 401(k). Retirement planning is now more than ever in the hands of the employee. The employee must secure his own future, her own gold watch. Lets take a look at what’s changed over time and see how different your retirement will be from your parents’ retirement.

The Silent Generation Drove the same car for years Dined out only for special occasions Only made purchases with cash Took road trips for vacations Paid off home prior to retirement Infrequently changed jobs & welcomed retirement Reluctant to touch retirement savings Let’s look at the priorities, attitudes and habits of two generations – First the silent generation. Your parents are probably part of a group more commonly know as “the silent generation”. Read Slide: Doesn't this sound like your parents? Now let’s contrast to the baby boomer generation.

The Baby Boomers Trades in car for newer model every few years Dines out weekly Often uses credit cards Loves to travel abroad May carry a mortgage into retirement Many jobs, working into retirement May have cashed out 401(k) or IRA before retirement Read Slide: Does this sound like someone you know? You can see how the generational priorities, attitudes, and habits can start to set you up for a different retirement than your parents. Not only are the priorities, attitudes, and habits different but so are the employer’s role, the economic environment, and the risks you will face in your retirement.

WHAT WORRIES YOU ABOUT RETIREMENT? Speaking of retirement risks – What risks worry you? Now let’s talk about some of the risks you may experience in retirement

What Worries You About Retirement? Will I outlive my money? Will my investments provide me enough income in retirement? How will inflation affect my nest egg? How will I take care of my debt when I retire? How will fluctuations in the market affect my retirement savings? Can I depend on Social Security? What happens if I need Long- Term care? Will I be able to afford health care? Speaking of retirement risks – What risks worry you? Now let’s talk about some of the risks you may experience in retirement

Diminishing Sources of Traditional Guaranteed Lifetime Income Guaranteed lifetime income traditionally came from two sources: 1 Traditional employer-offered Defined Benefit (DB) Pension Plans 2 Social Security Traditionally, guaranteed lifetime income generally came from two sources. Defined Benefit Pension Retirement and Social Security.

Diminishing Sources of Traditional Guaranteed Lifetime Income They are not “guaranteed” anymore: 1 Traditional employer-offered Defined Benefit (DB) Pension Plans are disappearing 2 Social Security is projected to run out of money These sources of income are becoming less dependable

Diminishing Sources of Traditional Guaranteed Lifetime Income They are not “guaranteed” anymore: 1 Participants in a Defined Benefits Pension Plan* 2 In the absence of policy changes, Social Security’s combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds will be exhausted in 2033. After 2033, Social Security could pay three-fourths of scheduled benefits using its tax income through 2088. A lot has changed since 1979… *Among those who have a retirement plan in the private sector www.ebri.org, “FAQs About Benefits—Retirement Issues” 2014 Annual Report”, US Social Security and Medicare Board of Trustees, July, 2014

Longevity: “But, What if I Live?...” For a couple age 65, there is roughly a one in three chance that at least one of them will live to age 95 To put that into perspective, this is 20-times more likely than that same couple losing their home in a fire Good News / Bad News Good News is baby boomers are living longer than previous generations. Bad News is this creates additional risks when it comes to your retirement. Let me demonstrate. Read slide

The Effect of Inflation on Purchasing Power The cost of daily living has increased over time Retirees will have to plan for increased prices in the future 1990 2015 2030 Gallon of Gas $1.16 $2.17 $4.20 Gallon of Milk $1.18 $3.75 $7.80 The effects of inflation can also diminish a customer’s retirement nest egg. This hypothetical example shows the effects of inflation from 1990 to 2030 on common everyday expenses. You can see over the years these costs have increased dramatically. We applied the historical rates of inflation; 4.5% on gas, 5% for milk and a 2.1% inflation rate on a Toyota Camry. The resulting prices in 2030 may look as unbelievable to us as the 2010 numbers would have looked to someone in 1990. Toyota Camry $12,258 $26,623 $36,360 US Energy and Information Administration American Farm Bureau Federation AutoTrader.com * 2030 gas cost inflation assumed at 4.5% * 2030 milk cost inflation assumed at 5% * 2030 Camry cost inflation assumed at 2.1% www.buyupside.com

What is the Average Annual Cost of Healthcare? Average Monthly Health Care Costs vs. Social Security Benefit Average Healthcare costs have increased by 6.9% per year since 1960 An average 65-year old couple will need $250,000 to cover healthcare costs in retirement Health care is another area that is of major concern to retirees, and with good reason. Health care costs can be a significant burden, even with Medicare coverage. Here I have more Good News / Bad News! Good News is health care for our generation has improved dramatically. Advances in medical treatments unthinkable thirty years ago are available today. Bad News is the cost of health care has gone up astronomically. This slide shows that the average health care cost per month for an average retiree. This is after Medicare coverage and includes out of pocket costs like deductibles, co pays, premiums, etc. This shows that average monthly cost is significant and can be more than 55% of the average monthly Social Security benefit payment. This leaves you less than 45% of Social Security benefit for other living expenses. The average monthly Social Security benefit for a retired couple is $2,140. Sources: www.ssa.gov and www.cms.gov, 2014

What Happens if You Need Long-Term Care? 2 out of 3 people, age 65, will need Long-Term Care in their lifetimes Health care is another area that is of major concern to retirees, and with good reason. Health care costs can be a significant burden, even with Medicare coverage. Here I have more Good News / Bad News! Good News is health care for our generation has improved dramatically. Advances in medical treatments unthinkable thirty years ago are available today. Bad News is the cost of health care has gone up astronomically. This slide shows that the average health care cost per month for an average retiree. This is after Medicare coverage and includes out of pocket costs like deductibles, co pays, premiums, etc. This shows that average monthly cost is significant and can be more than 55% of the average monthly Social Security benefit payment. This leaves you less than 45% of Social Security benefit for other living expenses. Genworth 2014 Cost of Care Study www.homecarechicagoil.org

DEBT IN RETIREMENT A NEW REALITY

Debt in Retirement – A New Reality 34% of couples ENTER RETIREMENT with more than $50,000 of debt 2 of 5 RETIREE HOMEOWNERS still have mortgages CARRYING DEBT into retirement is the reality for most retirees “The Positioning of Assets in Retirement”, LIMRA, December 2010

What is a Safe, Sustainable Withdrawal Rate? “2% is bullet proof, 3% is probably safe, 4% is pushing it and, at 5%, you’re eating Alpo in your old age.” 1 – William Bernstein Fiction 40% of consumers mistakenly believe that 7%, 10%, or even 15% is a safe, sustainable withdrawal rate from their retirement nest egg.2 Fact According to William Bernstein, author of The Four Pillars of Investing, the oft-used 4% rule for systematic withdrawals may not even be sustainable. If a customer does not have a retirement pension plan or other sources of guaranteed lifetime income, they may just be winging it!! (In other words, taking withdrawals from their accumulated assets). MetLife preformed a study in 2011. They surveyed several customers on what a safe, sustainable withdrawal rate would be in their opinion. 69% of the group believed that 7%, 10% or even 15% is a safe number. The fact is, a lot of research has been done on what a sustainable withdrawal rate is. According to William Bernstein, author of The Four Pillars of Investing, the oft-used 4% rule for systematic withdrawals may not even be sustainable. He was quoted in the Wall Street journal saying, "Two percent is bullet-proof, 3% is probably safe, 4% is pushing it and, at 5%, you're eating Alpo in your old age." 2 -- By William Bernstein 1. William Bernstein, quoted in “How to Survive Retirement — Even if You're Short on Savings”, WSJ, January 2007 2. Q2 2011 MetLife Retirement Income IQ Test

RETIREMENT SOLUTIONS Help with your planning to make sure that your retirement income and expenses stay in balance Ways to turn retirement savings into guaranteed income you cannot outlive Grow your retirement savings for future income without being exposed to market losses

Retirement Solutions BUT The risks you may face in retirement may be greater than the ones your parents faced BUT You have Access to Solutions your parents did not have Help with your planning to make sure that your retirement income and expenses stay in balance Ways to turn retirement savings into guaranteed income you cannot outlive Grow your retirement savings for future income without being exposed to market losses

Evaluate Your Retirement Needs Meet with an Allstate Personal Financial Representative to: Identify your Retirement Income Gap – the difference between your guaranteed lifetime income and essential retirement expenses Discuss options that will help you fill the gap with lifetime income and maximize your retirement income Assess discretionary spending in retirement to make sure it’s sustainable Annually review the plan and determine if any changes are needed

If You Are In or Near Retirement Things to Consider: Guaranteed income that you cannot outlive Flexibility to access your money if unexpected financial needs arise Read Slide:

If You Are a Few Years From Retiring Things to Consider: Put some of your retirement savings to work for future needs Minimize risk of losing principal due to market declines Read Slide:

Working with You TO HELP YOU TAKE CHARGE OF YOUR FUTURE

Helping You Take Charge of Your Future With Allstate, you can feel better prepared and more in control of your future than ever before. For more than 75 years, the Allstate family of companies has been there when people needed us. Schedule an appointment for a needs analysis Today...

NEXT STEPS No this is not your parents retirement but with the right help and solutions it could be even better. Thank you. The first step is to talk with your spouse. The second step is to Meet with your Allstate Personal Financial Representative for a Retirement Review and Determine How to Reach your Retirement Goals The third step is to Enjoy Your Retirement

Next Steps STEP NO. 1 Talk to your significant other Commit to establishing goals and building a plan for financial security in retirement No this is not your parents retirement but with the right help and solutions it could be even better. Thank you. The first step is to talk with your spouse. The second step is to Meet with your Allstate Personal Financial Representative for a Retirement Review and Determine How to Reach your Retirement Goals The third step is to Enjoy Your Retirement

Next Steps STEP NO. 2 Meet with your Allstate Personal Financial Representative for a Retirement Review Let Allstate help you build a plan to fulfill your commitment Start the plan right away Stick with the plan, review annually No this is not your parents retirement but with the right help and solutions it could be even better. Thank you. The first step is to talk with your spouse. The second step is to Meet with your Allstate Personal Financial Representative for a Retirement Review and Determine How to Reach your Retirement Goals The third step is to Enjoy Your Retirement

Next Steps STEP NO. 3 Enjoy your Retirement! No this is not your parents retirement but with the right help and solutions it could be even better. Thank you. The first step is to talk with your spouse. The second step is to Meet with your Allstate Personal Financial Representative for a Retirement Review and Determine How to Reach your Retirement Goals The third step is to Enjoy Your Retirement

Disclaimers Guarantees are based on the claims-paying ability of the issuer. This presentation is intended for general consumer education purposes and is not intended to provide legal, tax or investment advice Life insurance offered through Allstate Life Ins. Co. & Allstate Assurance Co., 3075 Sanders Rd, Northbrook IL 60062; Lincoln Benefit Life Co., 1221 N St. Ste 200, Lincoln NE 68508; American Heritage Life Ins. Co., 1776 American Heritage Life Dr., Jacksonville FL 32224.  In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge NY. Securities offered by Personal Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA).  Registered Broker-Dealer. Member FINRA, SIPC. Main Office: 2920 South 84th Street, Lincoln, NE 68506. (877) 525-5727.  Check the background of this firm on FINRA's BrokerCheck website http://brokercheck.finra.org. © 2015 Allstate Insurance Company ALR2101 (2/16)