The Recipe for Financial Wel l-Being Setting your Goals Today for Tomorrow

Securities offered through Sentinel Securities, Inc. 781-914-1400. Member FINRA & SIPC. Advisory services offered through Sentinel Pension Advisors, Inc., a SEC-registered investment advisory company. Sentinel does not give tax advice, please consult a tax advisor for more information. WEB-050-11052014

Presenters

Ross James joined Sentinel Benefits & Financial Group in 2011 as a Registered Representative of Sentinel Securities and an Investment Advisor Representative of Sentinel Pension Advisors. ► Connecticut College – B.A. in Government with a

concentration in International Political Economy ► Commonwealth of Massachusetts – Life Insurance

license ► Currently enrolled in the College for Financial

Planning Certified Financial Planner (CFP) program ► FINRA Licenses: Series 7 & 66. ► Qualified Plan Financial Consultant, QPFC ► Accredited Investment Fiduciary, AIF

Ryan Ransford joined Sentinel Benefits & Financial Group in 2011 as a Registered Representative of Sentinel Securities and an Investment Advisor Representative of Sentinel Pension Advisors. ► University of Rhode Island – B.S. in Finance ► Qualified Plan Financial Consultant, QPFC - ASPPA ► FINRA Licenses: Series 7, and 66

As part of the Personal Investment Services group, Ross and Ryan offer fee-based investment management and financial planning services to businesses, individuals and their families. As Investment Advisor Representatives with Sentinel Pension Advisors they provide education and guidance to plan participants to help maximize their retirement benefits in an effort to become retirement ready. For institutions, they work closely with plan sponsors to help implement custom retirement programs and employee benefits package as well as fiduciary governance.

Recipe Ingredients: What We C overed in Part 1

• Setting goals

• Budgeting

• Emergency fund

• Insurance

• Using credit

• Retirement planning

Recipe Ingredients: Part 2

• Investing

• Tax Planning

• Estate Planning

• Risk Management

• Best Practices

Investing Categories & Investment Stages

What is a Mutual Fund?

• Your plan most likely has these

• Your money is pooled with that of other investors

• Fund invests dollars according to stated investment strategy

• You own a portion of the securities held by the fund (instant diversification)

*Diversification neither assures a profit nor guarantees against a loss in a declining market.

Mutual Fund Categories: Risk vs. Return

• Three major investment categories: – Money market funds – Bond funds – Stock funds

• Mutual funds fall all along the

risk-return spectrum

• Index vs. Active Funds – Passive Investment Strategy – Human decision making

Investment Options—Cash Alternatives

Disadvantages • Relatively low returns • May not keep up with

inflation

Advantages • Predictable earnings • Highly liquid • Little risk to principal

Investment Options—Bonds

Advantages • Steady and predictable

stream of income • Income typically higher

than cash alternatives • Relatively lower-risk

(compared to options such as stock)

• Low correlation to stock market

Disadvantages • Risk of default • Value of bond will

fluctuate with interest rates

• Lower risk means lower potential returns (than stock, for example)

Investment Options—Stocks Advantages

• Historically, have provided highest long-term total returns

• Can provide income through dividends as well as capital appreciation

• Easy to buy and sell

Disadvantages • Subject to market

volatility • Greater risk to principal • May not be appropriate

for short term

Life’s Investment Stages

Long Time Horizon

Low Liquidity needs

Starting to save

Able to save more

Looking for good returns with some downside protection

Building retirement transition plan

Saving most efficiently in remaining working years

High liquidity needs

Protect retirement nest egg

Returns to outpace inflation

Aggressive Investor 90/10

Moderate Growth 70/30

Balanced/Conservative 50/50

Conservative Investor 30/70

► Don’t put off planning and investing for retirement

► Playing “catch-up” later can be difficult and expensive

$3,000 annual investment at a hypothetical 6% annual growth, assuming reinvestment of all earnings and no tax

*This is a hypothetical example and is not intended to reflect the actual performance of any investment.

$679,500

$254,400

$120,000

“Rule of 72” 72 ÷ Rate of Return = Years Needed to Double in Value

Investing: The Sooner the Better

Asset Al location How to Build a Portfolio What to C onsider?

Factors: • Diversification • Risk tolerance • Time frames • Personal financial situation • Liquidity needs

*Diversification neither assures a profit nor guarantees against a loss in a declining market.

Tax P lanning Using & Understanding Tax-Sheltered Accounts

Understanding the Tax Schedule

• Earned Income is taxed

at different levels

• Not backward looking

• Blended percentage

• Pre-tax deferrals lower taxable income

Impact of Taxes • Ordinary income tax (e.g., interest)

• Special tax rates for long-term

capital gains and qualifying dividends

• Tax-free income (e.g., certain municipal bonds)

• Special rules for tax-advantaged accounts

Roth vs. Traditional Tax C omparison - A Unique Estate Planning Tool

Estate P lanning Not just for the Wealthy

What Is an Estate P lan?

• An estate plan is a map

• This map reflects the way you want your personal and financial affairs to be handled in case of incapacity or death

Who Needs an Estate P lan? Chances are, you do • Not just for the wealthy • Without an estate plan, you

can’t control what happens to your property if you die or become incapacitated

• An estate plan makes your wishes clear and helps avoid family disputes

• Proper estate planning can preserve assets and provide for loved ones

Especially needed if: • Your spouse isn’t comfortable

with financial matters • You have minor children • Your net worth exceeds the

federal transfer tax exemption amount ($5,340,000 in 2014) or, if less, your state’s exemption amount

• You own property in more than one state

• Financial privacy is a concern • You own a business

What happens if you die without an estate plan?

• Some property passes automatically to a joint owner or to a designated beneficiary (e.g., IRAs, retirement plans, life insurance, trusts)

• All other property generally passes according to state intestacy laws

Lifetime Gifting—Transfers Excluded from Gift Tax • You can give $14,000 to as many

individuals as you want federal gift tax free ($28,000 if you and your spouse make the gift together)

• If you’re contributing to a Section 529 plan, you can give $70,000 ($140,000 with spouse) gift tax free

• No gift tax on amounts paid directly to a school for an individual’s tuition

• No gift tax on amounts paid directly to a medical care provider for an individual’s medical care

Trusts • Versatile estate planning tool

• Can protect against incapacity, avoid probate, minimize taxes

• Allow professional management of assets

• Provide safeguards for minor children, elderly parents, other beneficiaries

• Can protect assets from future creditors

• Control over property

• Can provide instant estate

• Can provide needed estate liquidity

• Life insurance proceeds are included in your estate for federal estate tax purposes unless your estate plan addresses this issue

• Key issue is ownership of policy

Risk Management : Life Insurance

Accounting for the C ost of Long-Term Care

• What is long-term care?

• 40% of individuals over age 65 will need long-term care*

• Average cost of nursing home = $74,820*

*Source: National Clearinghouse for Long-term Care Information, 2011

Options

• Pay out-of-pocket • Rely on Medicaid • Long-term care insurance

• Review accounts once or twice each year to ensure the investment strategy in place suits your time horizon and risk tolerance.

• Review appropriate tax strategies.

• Update estate plan as life events occur. Once every five years is appropriate

• Make sure your life insurance and long term care options are adequately funded

• Update listed beneficiaries on all accounts regularly.

Best Practices:

How Sentinel can help • Speak to your Plan’s Investment Advisor (888) 762 – 6088

• Do you need a financial plan?

• College Planning

• Investments Reviews (401k, IRA’s, taxable)