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

Will your investments grow to protect you, your family and your estate?

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.

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

Portfolio diversification

Diversify your retirement portfolio to:

• Reduce risk (useful for equities).

• Buffer market volatility.

• Ensure balance and flexibility.

Merrill Lynch has identified five typical investor profiles:

• Capital Preservation

• Income

• Income and Growth

• Growth

• Aggressive Growth

Each profile works as a plan:

Re-allocating assets inside retirement and nonretirement accounts may be important.

Investor

Conservative AggressiveModerate

Capital Preservation

15%

60%

25%

AggressiveGrowth

80%

15%

5%

Income and Growth

45%

45%

10%

Income

30%

50%

20%

Growth

65%

30%

5%

Asset-Allocation Mix

Stocks

Bonds

Cash

Investing for income• Government bonds

• Corporate bonds

• Municipal bonds

• Defined asset funds

• Convertible bonds

• High-yielding stock

• REITs

• Fixed and variable annuities

Managing your taxes during retirement

• Tax-deferred versus taxable investments

• Managing capital gains

• Tax-free investments

Concentrated company stock positions

Consider the following strategies:

• Portfolio diversification.• Volatility management.• Wealth transfer.

Strategies for managing retirement-plan assets

• Roll over to traditional IRA.

• Roll over to traditional IRA, then convert to Roth IRA.

Net unrealized appreciation (NUA)After distribution from an employer’s retirement plan

After the security ispassed on

$150/share$50/share

growth afterdistribution

$80/shareNUA

$20 costbasis

$100/share at distribution

$50/sharegrowth afterdistribution

$80/shareNUA

$20 costbasis

Long- or short- term capital

gains

LTCG when sold

Ordinary income tax

Step-up in basis

LTCG when sold

Tax was paid at

distribution

Remember: Distributions from an IRA are subject to ordinary income tax.

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?

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.

Estate-planning concerns

• Transferring wealth

• Reducing estate shrinkage

• Providing liquidity

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.

Will your beneficiaries need a fire sale?

Provide liquid assets for estate/income taxes and settlement costs:

• Life insurance proceeds.

• Life insurance trusts.

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.

Other concerns: Long-term care

How to meet the costs: Out-of-pocket, savings plan, insurance

$0

$40,000

$80,000

$120,000

2000 2005 2010 2015

In 1999, the average cost of a nursing home exceeded $50,000* per year.Nursing Care Costs

* National Average Source: AARP 2000

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.

Merrill Lynch can help.

Investing your money, protecting your assets and meeting your needs:

• Model portfolios.

• Managed money relationships.

• Financial Advisor relationship.

At Merrill Lynch, client needs come first.

• Premier wealth-management firm

• World-class research

• Unparalleled resources and planning tools

• Global capabilities