Financial Planning

Presented byRick & Bob Stites

Stites Financial

Member FINRA

Securities, advisory services and certain insurance products are offered through INVEST Financial

Corporation, member FINRA, SIPC, a registered broker/dealer and registered investment advisor, and its

affiliated insurance agencies and are:

• NOT FDIC or NCUA INSURED

• May lose value

• No bank or credit union guaranteeINVEST Financial Corporation is not affiliated with Pinnacle Investment services or Pinnacle Bank.

This information is general in nature and should not be construed as tax or legal advice. INVEST Financial Corporation does not provide tax or legal advice. Please consult your tax and/or legal adviser for guidance on your particular situation.

Are your finances puzzling?

Estate/Trust Management Retirement

Education Insurance

Consumer/ Business Lending Investments/

Objectives

These are Trying Times…

•Uncertain Economy•Volatile Stock Markets•Inflation•High Debt Loads•Low Savings Rate•Low Interest Rates

Reality….

More than half of American households (56%) are behind where they should be in saving for a comfortable retirement!*

*Federal Reserve Economic Analysis sponsored by the Consumer Federation of America

Reality….

Research shows that people with a financial plan have twice the money saved for retirement as those without*

Of the 44% who say they are prepared for retirement & have a plan....only half expect to retire with the same standard of living!**

*DirectAdvice.com President and CEO Brian L. Hollander / Based on a past Consumer Federation of America survey

**Federal Reserve Economic Analysis sponsored by the Consumer Federation of America

We Believe...Financial Planning Can Bring the pieces Financial Planning Can Bring the pieces together!together!

INVESTAdvantage

Retirement Education Insurance

Trust/Estate Management

Investments/ Objectives

Consumer/ Business Lending

Planned a Vacation Lately?

What did you do first?

Second? Third?

Why Plan for Retirement?

Planning is the process used to help clients reach their financial goals.

• Where do you want to go?

• What method of transportation are you comfortable taking?

Things Have Changed

• Today, 40 isn’t old, it’s young

• A time of health and vigor

• Just starting a family

Retirements

• Lasting 25, 30 or even 40 years

• Outliving income?

• Nobody wants to be dependent upon children, grandchildren, government

How Much Will Retirement Really Cost ?

Factors that affect costs:• Time value of money• Inflation

The Cost of Waiting

Early SavingsEarly Savings$65,505$65,505

Delayed SavingsDelayed Savings$47,045$47,045

65,00060,00055,00050,00045,00040,00035,00030,00025,00020,00015,00010,0005,000

01 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Year

Val

ue

Assuming a hypothetical 10% average annual return and beginning-of-year deposits.

This is a hypothetical example for illustrative purposes only and is not intended to be representative of past or future performance of any particular investment. The information contained here is based on information we believe reliable but we do not guarantee its accuracy. The determinations made by this calculation should not be construed as guarantees or projections. The reasonableness of certain information may change over time due to changes in investment trends, your personal situation and/or tax law. You should keep in mind that actual investment results can vary considerably depending on the type of securities involved, general market conditions and other factors.

Investor saving $2,000 per year for seven years.

Investor waiting seven years then investing $2,000 per year for 12 years.

Effect of Inflation

$.25

$800

$9,000

1940s

$2.89

$30,000

$257,000

Today

* Source: Ibbotson & Associates - SBBI - 2004 Yearbook

Retirement Income Sources

Source: Social Security Administration, 2003

PrivatePensions 18%

Other3%

Earnings

23%

Social Security

38%

Assets

18%

What Does This Mean to You?

1. Don’t wait to begin a retirement program.

2. Inflation will impact your retirement.

3. YOU are the only person responsible.

1. Don’t wait to begin a retirement program.

2. Inflation will impact your retirement.

3. YOU are the only person responsible.

Methods to Save for Retirement

• Dollar-cost averaging or systematic savings program

• Qualified retirement accounts through employer

Dollar-Cost Averaging

Number of Month Share Price Shares Purchased1 $4 1252 $2 2503 $5 1004 $20 255 $10 50Total $41 550

If you were to invest $500 each month for 5 months* (total of $2,500)

Dollar cost averaging does not assure a profit nor protect against loss in a declining market. It involves continuous investments in securities regardless of fluctuating price levels of such securities. Investors should consider their financial ability to continue their purchases through periods of low price levels.

This is a hypothetical example for illustrative purposes only. It is not intended to reflect the actual performance of any security. Investments involve risk and you may incur a profit or a loss.

*Dollar-cost averaging is most effective over a long period of time.

Share’s average market price = $8.20 ($41/5)Your average cost = $4.55 ($2,500/550)

Qualified Retirement Plans

Benefits of employer-sponsored retirement plans• Tax deductible contributions• Potential for:

– possible larger contributions than IRAs• May be eligible for “catch-up” contributions if age 50+• Tax-deferred growth potential*• Ability to roll proceeds into IRA

*Withdrawals are subject to income tax and prior to age 59 ½ a 10% federal penalty tax may apply.

A Savings Comparison

With a401(k) Plan

No 401(k)Plan

Gross Pay401(k) Savings

$40,000$3,000

$40,000$0

Taxable IncomeLess: Income Taxes (25%)

$37,000$9,250

$40,000$10,000

After-Tax SalaryAfter-Tax Savings

$27,750$0

$30,000$3,000

Net Spendable Income $27,750 $27,000

Annual Tax Savings $750You can save this amount per

year by contributing to an employer-sponsored plan!

Retirement Plan Rollover?

New Plan? New Plan? Or IRA? Or IRA?

Review

• Importance of planning• Cost of waiting• Effects of inflation• Who will you depend on?• Methods of saving• Review your goals and investments once a year.

Conclusion

• Seek the advice of professionals to help you make investment decisions

• Understand how new laws and tax legislation impact your portfolio or business

• Regularly review your goals and investments — are they compatible?

How can we help you?

• Review Current Investments • Retirement Planning• Advice and Recommendations• Retirement Income Distribution

Remember…….

Most people don’t Plan to Fail….

they Simply Fail to Plan!