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Getting the most from the retirement you deserve

Getting the most from the retirement you deserve. Enjoying your retirement: Wealth-management solutions tailored to your needs Income generation Estate planning Charitable giving [FA’s name, address, date]. Preparation.

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Getting the most from the retirement you deserve

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  1. Getting the most from the retirement you deserve • Enjoying your retirement: • Wealth-management solutions tailored to your needs • Income generation • Estate planning • Charitable giving • [FA’s name, address, date]

  2. Preparation • Will your investments grow to protect you, your family and your estate?

  3. It’s all connected. • Retirement strategies affect investment, income and estate planning: • Generate income. • Increase wealth. • Manage taxes. • Protect estate assets. • Transfer assets efficiently to beneficiaries.

  4. What are your financial concerns? • Achieving asset growth and safety of principal • Ensuring a reliable income stream • Reducing taxes • Managing retirement-plan distributions • Preserving estate assets • Charitable giving • Providing for grandchildren’s education • Meeting long-term health-care costs

  5. Portfolio diversification • Diversify your retirement portfolio to: • Reduce risk (useful for equities). • Buffer market volatility. • Ensure balance and flexibility.

  6. Merrill Lynch has identified five typical investor profiles: • Capital Preservation • Income • Income and Growth • Growth • Aggressive Growth

  7. Capital Preservation Income and Growth Stocks 15% 45% Bonds 60% 45% Cash 25% 10% Each profile works as a plan: Investor • Re-allocating assets inside retirement and nonretirement accounts may be important. Conservative Moderate Aggressive Asset-Allocation Mix AggressiveGrowth Income Growth 30% 65% 80% 50% 30% 15% 20% 5% 5%

  8. Investing for income • Government bonds • Corporate bonds • Municipal bonds • Defined asset funds • Convertible bonds • High-yielding stock • REITs • Fixed and variable annuities

  9. Managing your taxes during retirement • Tax-deferred versus taxable investments • Managing capital gains • Tax-free investments

  10. Concentrated company stock positions Consider the following strategies: • Portfolio diversification. • Volatility management. • Wealth transfer.

  11. Strategies for managing retirement-plan assets • Roll over to traditional IRA. • Roll over to traditional IRA, then convert to Roth IRA.

  12. $150/share $50/sharegrowth afterdistribution $50/sharegrowth afterdistribution Long- or short- term capital gains Step-up in basis $100/share at distribution LTCG when sold LTCG when sold $80/shareNUA $80/shareNUA Tax was paid at distribution Ordinary income tax $20 costbasis $20 costbasis Net unrealized appreciation (NUA) After distribution from an employer’s retirement plan After the security ispassed on Remember: Distributions from an IRA are subject to ordinary income tax.

  13. Withdrawing assets from your retirement accounts • Should I sell portfolio assets or make withdrawals from my IRA to meet expenses? • When should I start withdrawals? • How much should I take out? • Whom should I name as beneficiary of my IRA?

  14. Simpler rules for required minimum distributions • Easier calculations • Smaller required withdrawals • Extended tax-deferral period • More flexibility in naming or changing beneficiaries • Enhanced stretch-out capabilities for beneficiaries Note: The new regulations become effective for distributions in 2002, but IRA owners (and sponsors of qualified plans) can choose to apply the new regulations for RMDs in 2001.

  15. Estate-planning concerns • Transferring wealth • Reducing estate shrinkage • Providing liquidity

  16. Giving that grows • A trust can meet a specific planning goal: • Unified credit shelter trust. • Qualified terminable interest property (QTIP) trust. • Qualified domestic trust. • Charitable remainder trust.

  17. Will your beneficiaries need a fire sale? • Provide liquid assets for estate/income taxes and settlement costs: • Life insurance proceeds. • Life insurance trusts.

  18. 529 plans: Qualified tuition programs • Receive tax-deferred earnings growth. • Get tax-favored withdrawals. • Pay for the college of your choice. • Contribute up to $100,000 in a single year with no gift-tax consequences. • Remove assets from your taxable estate. • Retain control of the use of the assets.

  19. Other concerns: Long-term care • How to meet the costs: Out-of-pocket, savings plan, insurance • Nursing Care Costs In 1999, the average cost of a nursing home exceeded $50,000* per year. * National Average Source: AARP 2000

  20. The foundations of financial and investment planning • Create a plan that can: • Maximize growth potential, provide income and protect wealth. • Maximize tax advantages. • Minimize effects of inflation. • Maximize the value of your estate.

  21. Merrill Lynch can help. • Investing your money, protecting your assets and meeting your needs: • Model portfolios. • Managed money relationships. • Financial Advisor relationship.

  22. At Merrill Lynch, client needs come first. • Premier wealth-management firm • World-class research • Unparalleled resources and planning tools • Global capabilities

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