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Nucor Corporation Retire Ready

Presented by: CalmWater Financial Group

100 N. 13th St, Ste 310, Norfolk, NE 68701 Chuck Olsen, CFP®

402-371-5511

Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered by CalmWater

Financial Group are separate and unrelated to Commonwealth. This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should

consult a tax or legal professional regarding their individual situation.

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Local CalmWater Advisors

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Unprepared… Nearly one in three working Americans (32%) are unable to project when they will be able to retire (i.e., their answer to the question “when will you retire” is “I have no idea”). Source: Hartford Retirement Survey, BTN Research Can’t Retire… 47% of Americans currently between the ages of 56-62 would run out of the funds necessary to pay for basic retirement expenditures if they retire at age 65. Source: Employee Benefit Research Institute, BTN Research Scared To Death… More than three out of every five Americans questioned (61%) between the ages of 44 to 75 admit they fear the prospect of depleting their accumulated assets during retirement more than they fear death. More than 3,200 Americans were surveyed for the poll. Source: Allianz Life Insurance Company, BTN Research

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Unbalanced & Unprepared

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Balanced & Prepared

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Common Misconceptions & Errors Made

• Misconceptions: • I need $1 Million to retire • Quit at a certain age (59 1/2 , 62, 65, etc. vs. saving $XX) • Can’t get money out of 401(k) until age 59 ½ • My friend retired so I can too / My friends aren’t retired so I can’t • I won’t live to be 85

• Errors Made • Spend more than you think • No budget ahead of time • Don’t budget for health insurance costs • Don’t think about LTC insurance until it’s too late • Too much risk taken with investments when unnecessary • No Tax Planning • Not enough in Roth IRAs • Try to pay off all debt immediately upon retirement from 401(k) • Social Security considerations – draw early at age 62 or delay until age 66 • Too much exposure to one stock • Placing all my money in bank accounts or CD’s means I’m taking no risk

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Pre-Retirement RedZone • Retirement Outline & Income Plan

• How much do I need to retire? • How much should you be saving? • Where will my income come from? • ESOP – NUA distributions

• Maximize Nucor Benefits • Reduce/Eliminate Debt • Review & Rebalance 401(k)/investment allocation • Insurance Planning

• Long Term Care (LTC) Planning • Determine Life Insurance Needs • Health Insurance

• Estate Planning • Will – Living Will – Durable POA – Healthcare POA

• Tax Planning • Understand The Tax Code

• Assemble Your Financial Team • CFP® (Financial Planner) • CPA® (Accountant)

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Maximize Nucor Benefits • Insurance

• Health/Flex Spending Account • Life • Disability

• Investing • Employee Stock Purchase Plan (EMSIP) • Profit Sharing/401(k) Plan

• Retirement Planning • Early Retiree Health Plan and COBRA Health Options • www.401(k).com Online Tools • On-site Financial Education

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Retirement Outline & Income Plan

• When would I like to retire? (Age)

• How much income will I need in retirement? (Spending)

• Where will my income come from? (Income)

• How much should I have saved? (Investments)

• What hazards jeopardize my plan? (Risks)

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Age: When Will It Start? • 55

• 401(k) Distributions (Separation of Service) • 59.5

• IRA Distributions Penalty Free • 60

• Surviving Spouse Social Security Benefits • 62

• Early Social Security • 65+

• Medicare • 66

• Full Social Security (Born 1943-1959) • 67

• Full Social Security (Born 1960+) • 70

• Maximum Social Security Accrual • 70.5

• Required Minimum Distributions *Please consult with a financial advisor regarding your individual situation.

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How Much Will I Spend? • Most people need between 65%-85% of their current income

to maintain their lifestyle in retirement.

Health CareFoodUtilitiesPersonalInsuranceTransportationRecreationGivingTaxes

Social Security Administration, Understanding the Benefits, SSA Publication No. 05-10024 (2012), available at http://www.ssa.gov/pubs/10024.html#a0=0; Government Accountability Office, Retirement Income: Ensuring Income Throughout Retirement Requires Difficult Choices, pg.9 (2011), available at http://www.gao.gov/new.items/d11400.pdf.

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Spending Patterns

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Spending Changes Work-related expenses Family-related expenses Home mortgage costs Income taxes

Healthcare expenses

Cost of living

Leisure activities

Some types of insurance

Pay Off Your Debt! Lighten Your Load!

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Income: Where Will It Come From?

• Social Security • Pension Plans/Retirement Accounts • Personal Savings/Investments

• Part-time Work www.investortrip.com Grace Chen 2008

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Income: Part-Time Work

• A great way to stay active, contribute, and to supplement your retirement income

• Avoids drawing down your nest egg

• *Reminder- Income Reduction Levels with Social Security

• Early Retirement Age: $15,720/yr ($1,310/mo) • Full Retirement Age: $41,880/yr ($3,490/mo)

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Income: Social Security • Social Security

• When To Start? • Early Retirement (Age 62-66) • Full Retirement (Age 66-67) • Delayed Retirement (Age 67-70)

• Key Numbers • Reduction - “Earned Income”

• Early Retirement Age: $15,720/yr ($1,310/mo) • Full Retirement Age: $41,880/yr ($3,490/mo)

• Is it Taxed? - “Combined Income” (see IRS formula) • Indiv: $25,000-$34,000 • Joint: $32,000-$44,000

• Strategies • Survivor Benefits • Divorcee Benefits • Hybrid Approach/Spousal Benefits

• File & Suspend • Restricted Claim

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Social Security: Claiming

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Social Security: Breakeven

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Social Security: Analysis • Hypothetical example of a plan:

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Social Security: Analysis

This is a hypothetical example and is for illustrative purposes only. No specific investments were used in this example. Actual results will vary. Past performance does not guarantee future results.

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• John retired from Nucor. John and Carol have joint earned income of $48,000, $4,000 of interest income, and $3,000 of dividends. Their combined Social Security benefits come to $20,000.

($48,000 + $4,000 + $3,000 + $10,000 [50% SS] = $65,000)

• Their MAGI is therefore $65,000. They may have to pay tax on up to 85% of their Social Security benefits due to being over the $44,000 Provisional Income Threshold

• Hypothetical example of a plan:

Social Security: Taxes

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• Retirement Quick Check - www.401(k).com • MoneyGuidePro - CalmWater Financial Network Advisor • Back of The Envelope - BOTE

$4,000 $4,000 $2,000 $2,000 $2,000 $2,000 $0 $0 $2,000 $2,000 $24,000 $24,000 .04 .06 $600,000 $400,000 Retention Depletion

For Illustrative Purposes Only

Income From Investments: How Much Do I Need?

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What Percentage to Take Out?

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The Impact of Inflation • Inflation and the Rule of 72.

• 3% doubles in ______ years • 4% doubles in ______ years

• $3,000 per month needed at age 55 is $6,000 per month at age 73 and $12,000 per month at age 91 assuming 4% inflation.

24 18

For Illustrative Purposes Only

The formula used for the Rule of 72 approximates the time it will take for a given amount of money to double at a given compound interest rate. Compound illustrations are not predictions of investment performance, and investment

principal and interest are not guaranteed and are subject to market fluctuation.

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Investment Planning • How & Where To Invest • Understand What You Own • Determine Suitable Approach

• Time frame? • Goal – what is purpose of investments? • Volatility Tolerance

• Diversify • Rebalance

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What are these numbers? 1994 – 2013

9.2%?

2.5%?

Answer: The return in the S&P 500

Answer: The Return of the Average Equity Investor Source: JPMorgan “Guide to the Markets”

All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future result. The S&P 500 Index is a broad- based measurement of changes in stock market conditions based on the average

performance of 500 widely held common stocks.

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What is the significance? $100,000 starting value and 25 years growth:

2.5% 9.2% Difference

(No deposits) $185,394 $902,747 $717,353

For illustrative purposes only. Not indicative of any actual investing result.

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The Cycle of Market Emotions

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Consider A More Diverse Portfolio

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Insurance Options • Types

• Life Insurance

• Disability Insurance

• Health insurance

• Long-Term Care Insurance

• Do you have a need for insurance?

• Does your need for insurance extend into retirement?

• What types of insurance should you have?

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Insurance Planning and Strategies

Insurance Needs Health Long Term Care (age 50-60) Life – Who has financial loss in the event of your passing?

How much do you need? Single Married Married with kids No children at home and have accumulated assets

Disability - Insuring your income times working years (ie. $50k X 20 years = $1,000,000)

Continuously Review & Update

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Health Insurance • Group Plan while employed • Options In Retirement?

1. COBRA • 18 Months – 102% Premium

2. Early Retiree Medical Plan • Age 50 – Rule 70 - Cost Shared But Still Expensive

3. Individual Policy - The Affordable Care Act (ObamaCare) • No longer Underwritten • Health Savings Account Options – High Deductible

4. Medicare at Age 65+ with Supplement (i.e. “Plan F”)

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Health Insurance • Medicare – Age 65

• Part A – Hospital • No Premium

• Part B – Doctor • Approximately $105/mo Premium

• Supplement - Medigap • Plan G - Approximately $95/mo Premium (priced per county)

• One time annual deductible of $147 for Part B • If enroll in Plan F – Same as Plan G but no deductible (~$35/m more than G)

• Part D – Drug Coverage • Plan Premium Approximately $35/mo

• Approximate Total = $235/mo Per Person

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Nucor Retiree Expected Health Ins. Premiums ~ age 62

Health Insurance Coverage Options As of 1/1/2015 - Subject To Change

Spouse #1

Spouse #2

Total Monthly Cost (‘income’ >62k)

If show ‘income’ at $40k

*Option 1: Individual Bronze (HSA $5,000 Deductible - $12,700 out of pocket max) 68701

$630 $630 $1,260 $113

Option 2: COBRA (18 month coverage) $508 $508 $1,016

Option 3: Nucor Early Retiree (ages 60-64)

$777 $818 $1,595

*Please review options and potential tax credits with the Affordable Care Act at www.healthcare.gov

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Long-Term Care Insurance • Final 5 years, 50% of expenses. • Who will go? • How long will they be there? • What about Home Care or Assisted Living? • Medicare, Medicare supplement and Medicaid. • Partnership program. • Premiums range $4,000 - $6,000 per year for a couple. • Current LTC costs are ~$7,000 -$14,000 per month. • Recently popular option: Life/LTC Hybrid Policy

“Will you be providing care or depending on it?”

Presenter
Presentation Notes
LTC costs per morningstar.com article Christine Benz “40 Must Know Stats About LTC”
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Long-Term Care Usage

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Long-Term Care Costs

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Hypothetical Life Insurance Options Assumes cost of $120k Life Insurance (~$40k income x 3)

Age band Weekly Annual 5 year cost 45-49 $ 6.00 $ 312.00 $ 1,560.00 50-54 $ 10.80 $ 561.60 $ 2,808.00 55-59 $ 16.80 $ 873.60 $ 4,368.00 60-64 $ 20.40 $ 1,060.80 $ 5,304.00

Total cost 45-64 $ 14,040.00 Outside option:

Male, Pref Non Tobacco 20 year You save 45-65 $ 5.03 $ 261.80 $ 5,236.00 $ 8,804.00

Preferred Chew Tobacco 45-65 $ 7.88 $ 410.20 $ 8,204.00 $ 5,836.00

Preferred Smoker 45-65 $ 13.23 $ 688.20 $ 13,764.00 $ 276.00

Active Life Insurance Planning

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Disability Insurance

• Cost savings of appropriate company benefit election: “A” versus “B” option • If I work past 65 at the company- should I keep paying

for the company Long-Term Disability benefit?

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Estate Planning • Who will take care of things when I’m gone? • What documents should I have?

• Wills • Power Of Attorney (POA) • Medical Directives • Health Care POAs

See Handout

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Distribution/Rollover Options 401(k)/Profit Sharing Plan 1. Leave in 401(k)/Profit Sharing Plan

- Continue to grow or take installments (distributions at 55) - Withdrawals subject to mandatory 20% fed tax withholding

2. Roll out to an IRA (distributions at 59 ½) ESOP Plan 1. Rollover to an IRA - Taxed at Ordinary Income Rates upon withdrawal 2. Take the distribution in shares (NUA)

- Basis taxed at Ordinary Income Rates - Appreciation taxed at Long-Term Capital Gain Rates *TAX RATES ARE SUBJECT TO CHANGE

Presenter
Presentation Notes
When discussing the ordinary income rates and LT Capital gains rates, please ensure that you explain that these are current rates and that they may change in the future if tax laws change. Also, if there are any fees involved w/the distributions/rollover options, please disclose those as well.
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Fidelity ESOP

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Fidelity ESOP Cont…

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IRA

Investments Flexibility

Q.R.P. 401(k)

Profit Sharing ESOP

YOU Checking Brokerage

Lose NUA & Capital Gain Treatment

Leave? Rollover? Distribute? NUA?

See Special Tax Notice: these publications are available from your local IRS office, on the IRS’s Internet Web Site at www.irs.gov, or by calling 1-800-TAX-FORMS.

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Understand The Tax Code

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The above is for illustrative purposes only. Please consult a tax advisor for your personal situation.

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Tax Bucket Strategy

Social Security

401(k) IRA

Non- Qualified (Nucor)

Savings Roth IRA

Social Security

???? Until $1 Taxed

(~$22,000)

Until $1 Taxed

$0 Taxed

$0 Taxed

Reduce your tax liability

See a tax professional regarding your situation

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Post-Retirement • Tax Planning

• Tax Bracket Utilization • Roth Conversions

• Maximizing Social Security • Breakeven Analysis • Spousal Benefit

• Ongoing Monitoring • Investment Allocation & Performance • Retirement Income Plan

• Have a plan and stay the course!

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What Now? • Organize • Add? Grow? Protect? • Utilize benefit of advisors provided by Nucor • Update benefits • Rebalance all investments to appropriate risk level • Determine monthly income need • Live off desired amount now to prepare for retirement • Determine desired retirement date • Shift/maximize savings to best tax advantages

• Increase 401(k), EMSIP, Roth IRA’s, etc • Determine best long-term Social Security income plan • Choose Retention or Depletion method • Health insurance plan • Long Term Care insurance - decide now • Update/establish estate planning documents • Update beneficiaries

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Questions? Contact one of our advisors at

(402) 371-5511

Chuck Olsen, CFP®

Travis Riggert, CFP®

Terry Heimes, CFP®

Jack Rother, CFP®

Ryan Anderson, CFP®

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Sources/Disclosures

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Sources/Disclosures

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Sources/Disclosures

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Sources/Disclosures

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Sources/Disclosures

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Sources/Disclosures

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Sources/Disclosures