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