Income Planning Using FIA’s for Safe Money Case Study Income Protection How PCN Can Assist

Total Portfolio Investments Capital Preservation $800,000 $200,000 $1,000,000 Age 55 Age 65 7.20% Yield $800,000 Annual Income $64,000 4.00% Withdrawal Investments Value after 10 Years $1,600,000 Age 55 Age 65 4.00% Withdrawal 3.00%Yield $200,000 Annual Income $10,750 Capital Preservation Value after 10 Years $268,783

Income value after 10 years $400,000 Total Portfolio $1,000,000 7.20% Yield Age 55 $800,000 Annual Income $64,000 4.00% Withdrawal Investments Value after 10 Years $1,600,000 4.00% Withdrawal Necessary Yield: 9.59% Annual Income $20,000 Capital Preservation Value after 10 Years $500,000 Age 55 $200,000 5.00% Withdrawal Annual Income $20,000 Income value after 10 years $400,000 Age 55 $200,000 GMWB

Case Study At 57, Nolan weathered the storm in 2007 & 2008. He maintained $1,000,000 of investable assets in June 2009. Today Nolan is 63 and wants to retire at age 67. Nolan’s Retirement Income Gap: $75,000 Nolan’s goal: Maximize income in retirement Nolan’s Concerns: Running out of income. How would another market “correction” effect his retirement income?

The Goal in June 2009 4.00% WD = $75,977 $1,899,434 Age End Year Investments Savings (4%) Portfolio Value 57 $800,000 $200,000 $1,000,000 58 1 $857,600 $208,000 $1,065,600 59 2 $919,347 $216,320 $1,135,667 60 3 $985,540 $224,973 $1,210,513 61 4 $1,056,499 $233,972 $1,290,471 62 5 $1,132,567 $243,331 $1,375,898 63 6 $1,214,112 $253,064 $1,467,176 64 7 $1,301,528 $263,186 $1,564,714 65 8 $1,395,238 $273,714 $1,668,952 66 9 $1,495,695 $284,662 $1,780,357 67 10 $1,603,385 $296,049 $1,899,434 4.00% WD = $75,977

Nolan’s Assets in June 2015 S&P500 Index on June 1, 2009: 943 Age End Year Investments Savings (4%) Portfolio Value 57 $800,000 $200,000 $1,000,000 S&P500 Index on June 1, 2009: 943 S&P500 Index on June 1, 2015: 2111 124% Increase 63 6 $1,600,00 $253,064 $1,853,064 4.00% WD = $74,123

4% Portfolio Withdrawal Option 1: Stay the Course End Year 6 Total Portfolio Value = $1,853,064 Investments $1,600,000 Savings $253,064 4% Portfolio Withdrawal $74,123

4% Portfolio Withdrawal 4% Portfolio Withdrawal Option 1: Stay the Course End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $2,364,826 Market continues to grow at 30% Savings = 3% growth Investments $1,600,000 Savings $253,064 Investments $2,080,000 Savings $284,826 4% Portfolio Withdrawal $74,123 4% Portfolio Withdrawal $94,593

4% Portfolio Withdrawal 4% Portfolio Withdrawal Option 1: Stay the Course End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $1,884,826 Market remains flat – No growth Savings = 3% growth Investments $1,600,000 Savings $253,064 Investments $1,600,000 Savings $284,826 4% Portfolio Withdrawal $74,123 4% Portfolio Withdrawal $75,393

4% Portfolio Withdrawal 4% Portfolio Withdrawal Option 1: Stay the Course End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $1,404,826 Market declines (-30%) Savings = 3% growth Investments $1,600,000 Savings $253,064 Investments $1,120,000 Investments $1,120,000 Savings $284,826 Savings $284,826 4% Portfolio Withdrawal $74,123 4% Portfolio Withdrawal $56,193

Investments and Other Savings Option 2: Add GMBW End Year 6 Total Portfolio Value = $1,853,064 End Year 6 Total Portfolio Value = $1,853,064 Move $800,000 into an indexed Annuity with a GMWB Rider Investments $1,600,000 Savings $253,064 Investments and Other Savings $1,053,064 Investments $1,120,000 FIA w/GMWB $800,000 Savings $284,826 ($600,000 from Investments and 200,000 from savings)

Option 2: Add GMBW Market continues to grow at 30% End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $2,223,112 Market continues to grow at 30% Investments and Other Savings $1,053,064 FIA w/GMWB $800,000 Investments and Other Savings $1,359,724 FIA w/GMWB $863,388 Annual Income $54,388 (4% Withdrawal) Annual Income $56,576 (Guaranteed from GMWB) 4% Portfolio Withdrawal $56,193

Option 2: Add GMBW Market remains flat – No growth End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $1,859,724 Market remains flat – No growth Investments and Other Savings $1,053,064 FIA w/GMWB $800,000 Investments and Other Savings $1,359,724 FIA w/GMWB $800,000 Annual Income $42,389 (4% Withdrawal) Annual Income $56,576 (Guaranteed from GMWB) 4% Portfolio Withdrawal $98,965

Investments and Other Savings Investments and Other Savings Option 2: Add GMBW End Year 6 Total Portfolio Value = $1,853,064 End Year 10 Total Portfolio Value = $1,525,220 Market declines (-30%) Investments and Other Savings $1,053,064 FIA w/GMWB $800,000 Investments and Other Savings $759,724 FIA w/GMWB $765,496 Annual Income $30,388 (4% Withdrawal) Annual Income $56,576 (Guaranteed from GMWB) Total Annual Income $86,964

Hypothetical Income after 10 Years Add Indexed Annuity with GMWB Rider Summary: End Year 10 Hypothetical Income after 10 Years Stay the Course Add Indexed Annuity with GMWB Rider Market Gains (+30%) $94,593 $110,964 ($56,576 Guaranteed) Market is Flat $75,393 $98,965 ($56,576 Guaranteed) Market Declines (-30%) $56,193 $86,964 ($56,576 Guaranteed)

Hypothetical Income after 10 Years Add Indexed Annuity with GMWB Rider Summary: End Year 10 Hypothetical Income after 10 Years Stay the Course Add Indexed Annuity with GMWB Rider Market Gains (+30%) $2,364,825 $94,593 $2,223,112 $110,964 Market is Flat $1,859,724 $75,393 $1,859,220 $98,965 Market Declines (-30%) $1,404,825 $56,193 $1,525,220 $86,964

Case Study At 57, Nolan weathered the storm in 2007 & 2008. He maintained $1,000,000 of investable assets in June 2009. Today Nolan is 63 and wants to retire at age 67. Nolan’s Retirement Income Gap: $75,000 Nolan’s goal: Receive $75,000 of annual income from portfolio for life Nolan’s Concern: The impact of how another market “correction” would effect his retirement income.

Hypothetical Results After 10 Years Summary: Assuming $75,000 Withdrawal Hypothetical Results After 10 Years Stay the Course Add Indexed Annuity with GMWB Rider Value Income W/D % Value Investments Income W/D % Market Gains (+30%) $2,364,825 $75,000 3.17% $2,223,112 $1,359,724 1.35% Market is Flat $1,859,724 4.03% $1,059,724 1.74% Market Declines (-30%) $1,404,825 5.34% $1,525,220 $759,724 2.42%

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