Financial Literacy

CURRENT CASH NEEDS

A Final Expenses $

B Emergency Funds $

C Mortgage Balance $

D Other Loans $

E Education – Estimated Current College Costs $

F Total Current Cash Needs

(A+B+C+D+E)

$

CURRENT & LONG TERM CASH NEEDS

G Required Monthly Income $

H Cash Reserve Factor $

I Total Cash Reserve Required

(G H)

$

J Total Current & Long Term Cash Needs

(F+I)

$

LIFE INSURANCE NEEDED

K Cash and Savings $

L Securities $

M IRA, Keogh, 401(k) and Pension $

N Life Insurance In Force $

O Other Assets $

P Total Assets

(K+L+M+N+O)

$

Q Total Life Insurance Needed

(J-P)

$

Life Insurance Needs Worksheet

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Life Insurance Needs Worksheet The following Worksheet can help you determine how much life insurance you may need. The letters to the left on the chart correspond with the explanations on the left under Current Cash Needs.

Life Insurance Needs Worksheet continued…

Final Expenses This includes probable costs, funeral expenses (funeral expenses may be $5,000-$10,000) and medical costs for any bills your health policy does not cover (deductible plus any co-insurance).

Emergency Funds Some Financial experts recommend that you have up to six months salary for any household or personal emergency that might arise. Your emergency fund can be larger or smaller, depending on your family’s circumstances.

Mortgage Balance It is a good idea to select a life insurance benefit large enough to pay off the existing mortgage balance.

Other Loans List all your current outstanding debts (principal), such as auto loans, personal loans, credit card balances, etc.

Education Estimated Current College Costs Figure the future total college expenses for your children. On average, the current cost is $22,533 per year per child for a four year in state public school (includes tuition, room, board, supply and transportation costs).*

Current Cash Needs

Current & Long Term Cash Needs

Required Monthly Income To determine how much monthly income you need, take 70 percent of your annual take-home pay and divide it by 12 months. Example: $30,000 x .70 / 12 = $1750 of monthly income.

Cash Reserve Factor Divide the total amount monthly income you require by the appropriate factor listed below. You should select the factor that corresponds to the number of years you will need to provide monthly income for you family. Example: If you determine that your family needs $2,500 per month for the next 20 years, then: $2,500 / .004573 = $546,687. This is a time-value analysis to determine future cash needs assuming a 3 percent annual increase in inflation and a 4 percent return on the lump sum death benefit.

Number of Years 10 15 20 25 30

Factor 0.008744 0.005964 0.004573 0.003747 0.003195

A

B

C

D

E

G

H

Retirement Goal CalculatorThe first step in any retirement plan is to set a goal. Use this worksheet to help you to determine how much money you need for retirement and the percentage you need to save to get there.

Example You

1. Your annual Income……………………………………..…...............$ 40,000 $ ______

2. Annual Income needed in retirement in today’s dollars..................$ 32,000 $ ______

3. Approximate amount of Social Security. Multiply Line 1 by .25 up to a maximum of………………...............$ 10,000 $ ______

4. Income shortfall that will need to be made up from your personal savings Subtract Line 3 from Line 2………………………………..……....…$ 22,000 $ ______

5. Now adjust your shortfall for inflation by . Multiplying Line 4 by the inflation multiplier from the table below. For this example, we assume 25 years remaining until retirement. Therefore, multiply $22,000 by 2.09……………………..……...…..$ 45,000 $ _____

6. Investments already accumulated adjusted for future growth. (Example: $60,000 multiplied by investment multiplier of 6.84)…..$ 410,400 $ _____

7. Amount you will need at retirement to get the amount needed in Line 5? Multiply Line 5 by 12.5 (Assume 3% inflation, 8% investment return, and that you will need 20 years of retirement income)…….……....$ 574,750 $ _____

8. Subtract Line 6 from Line 7 to determine how much you will need to save…………………………………………………………....$ 164,350 $ _____

9. Amount you will need to save each year to achieve a goal of $164,350? Divide Line 8 by the present value multiplier in the table below. (Example: $164,350 divide by 73.11)…………………………….….$ 2,247 $ _____

10. Amount you need to save each month. Divide Line 9 by 12……………………………...….$187 Monthly Investment $ ______

11. The percentage you need to deduct monthly from your paycheck. (Example: $187 divided by $3,333 = 0.056)….....5.6% Monthly Investment $ ______

Number of Years until Retirement 5 10 15 20 25 30 35 40

Inflation Multiplier (3% Inflation) 1.16 1.34 1.56 1.81 2.09 2.43 2.81 3.26

Investment Multiplier (6% Return) 1.46 2.15 3.17 4.66 6.84 10.06 14.78 21.72

Present Value Multiplier (8% Return)

5.87 14.49 27.15 45.76 73.11 113.28 172.32 259.06

How to Choose a Guardian for your Minor Children

7 Things to Consider When Selecting a Guardian for Your Kids

If you have minor children, then probably the most important decision that you'll have to make with regard to your estate plan is who should take care of your children if you die while they're still minors. In legal terms this is called a guardian or conservator of the person. Many of my clients in this situation are at a loss when trying to choose among family members and friends since each person will have pros and cons. Here are 7 things that you should consider when deciding who to name as the guardian of your minor children.

#1 - Where does the potential guardian live?Many clients naively think that if they die, the person they choose as guardian for their children will pack up their bags and move right into the children's home or buy a house in the neighborhood. This is really asking a lot from your guardian. What is more likely to happen is that the children will move in with the guardian if they have room and, if not, then the guardian will buy a larger house in their current location to accommodate their family and yours. So think about where the person you want to name as guardian lives and if you're OK with your children being raised there.

#2- What are the personal beliefs of the guardians you have chosen?First think about your own religious, political and moral beliefs and then think about what you know about the potential guardian's religious, political and moral beliefs. If you don't know much about the potential guardian's beliefs, then you'll need to ask because this is the person who you'll be trusting to shape your children's beliefs if you're not around. And while it will be impossible to find a guardian who follows 100% of your personal beliefs, someone who follows 70%-80% is certainly a better choice than someone who only follows 30%-40%.

#3 - What do you know about the potential guardian's parenting skills?If the potential guardian is already a parent, then consider their parenting skills. Is the potential guardian hands on with raising their own children or do they rely on outside help? Do you know the potential guardian's views on child discipline, education, sports, and other school activities? Or, if the potential guardian isn't already a parent, then consider what you know about how the potential guardian was raised since this will greatly influence how they will act as a parent.

#4 - How old is the potential guardian?

The age of a potential guardian can cut both ways. On the one hand an older guardian may be in a better position financially and have more time to be hands on with raising your children, but on the other an older guardian may be out of touch with current trends in education and parenting and what kids today want and like. And there's always the possibility that an older guardian may become ill or die before the children become adults. With a younger guardian, they may be too involved in getting their own career and family in order to worry about raising your children. This is also true for an adult sibling of a minor child - the sibling may be in college or beginning their career and not in the position to raise their younger sibling.

#5 - What is the potential guardian's family situation?

Is the potential guardian married with minor children, married with adult children, a single parent, married without children, or single without children? If married, then how stable is the marriage? If single, then is there a potential spouse or significant other on the scene? If the potential guardian doesn't have any children, then is there the possibility of children in the future? If the potential guardian already has children, then how many do they have and what are their ages in comparison to your children? Considering the potential guardian's family situation is the key to understanding how this can and will influence the upbringing of your children.

#6 - What is the potential guardian's financial situation?

Do you know if the potential guardian is good with managing money, has a stable job, has a spouse or significant other with a stable job, or where the potential guardian gets their money to pay the bills and put food on the table? Do you think that the potential guardian would have to quit their job or take on a second job to raise your children? As with considering the potential guardian's family situation, considering the potential guardian's financial situation is the key to understanding how this can and will influence the upbringing of your children.

How to Choose a Guardian for your Minor Children continued…

#7 - Have you asked the potential guardian if they're willing to serve?

All of the other 6 things you'll need to consider pale in comparison to this one. If you don't take the time to ask the potential guardian if they'll be willing to act as your children's guardian, then you may be setting your children and family up for a court battle if the person you've chosen doesn't want to or simply can't serve. This is not the time to be shy - your children's lives are at stake, so you need to be upfront with the potential guardian and your other family members or friends. And if you're worried about hurting someone's feelings, don't. What's best for your children is on the line, so your choice of their guardian needs to be based on what's really best for them, not what will make your family or friends happy.

What's the bottom line when deciding who to choose as guardian?

While these 7 factors may seem like an overwhelming amount of things to consider when trying to decide who to name as your children's guardian, the bottom line is that you'll need to put the 7 in order of priority for you and your children and then narrow down your selection from there. In fact, making an old fashioned "pros and cons" list should help in choosing the right person to act as your children's guardian. And don't overlook the importance of naming a backup guardian to your initial choice just in case they can't or won't serve. Otherwise it will be left up to a judge to decide who will be your children's guardian.

How to Choose a Guardian for your Minor Children continued…

Saving for College: Top things to know

1. Saving for your own retirement is more important than saving for college.

Your children will have more sources of money for college than you will have for your golden years, so don't sacrifice your retirement savings.

2. The sooner you start saving, the better.

Even modest savings can pack a punch if you give them enough time to grow. Investing just $100 a month for 18 years will yield $48,000, assuming an 8% average annual return.

3. Stocks are best for your college savings portfolio.

With tuition costs rising faster than inflation, a portfolio tilted toward stocks is the best way to build enough savings in the long term. As your child approaches college age, you can shelter your returns by switching more money into bonds and cash.

4. You don't have to save the entire cost of four years of college.

Federal, state, and private grants and loans can bridge the gap between your savings and tuition bills, even if you think you make too much to qualify.

5. With mutual funds, investing for college is simple.

Investing in mutual funds puts a professional in charge of your savings so that you don't have to watch the markets daily.

6. 529 savings plans are a good way to save for college and they offer great tax breaks.

Qualified withdrawals are now free of federal tax and most plans let you save in excess of $200,000 per beneficiary. Plus, there are no income limitations or age restrictions, which means you can start a 529 no matter how much you make or how old your beneficiary is.

7. Tax breaks are almost as good as grants.

You may be able to take two federal tax credits -- the American Opportunity Tax Credit and Lifetime Learning Credit -- in the years you pay tuition.

8. The approval process for college loans is more lenient than for other loans.Late payments on your credit record aren't automatic grounds for refusal of a college

loan.

9. Lenders can be flexible when it's time to repay.There are still ways to cut costs after you graduate and begin repaying your student

loans. For instance, there is often a one-quarter percentage point interest rate decrease if you set up automatic debit, in which monthly payments are automatically taken from your account.

10. Taxpayers with student loans get a tax break.You may deduct the interest you pay up to $2,500 a year if your modified adjusted gross

income is less than $70,000 if you're single or less than $145,000 if you're married filing jointly. The deduction can be taken for the life of the loan.

Saving for College: Top things to know continued…