OBJECTIVE

The primary objective of the Gustin Financial Planning Retirement Score is to help provide education on how current and future savings can impact your retirement goals. Through a few basic questions, we gather general information about a hypothetical scenario and roughly estimate how that scenario may perform over time. The results are not intended to be investment advice or recommendations regarding your retirement planning based on your personal situation, and you should not rely on the results to make your retirement planning decisions. This is not a substitute for a retirement plan. These results are based on assumptions, since we cannot predict future results.

We encourage you to take control of your own retirement planning situation and expectations by building a sound plan based on details of your personal situation, time horizon, risk tolerance, and goals.

Any data you have included will not be stored or used in any way by Gustin Financial Planning, LLC.

LIMITATIONS OF THE GUSTIN FINANCIAL PLANNING RETIREMENT SCORE

It is important to remember that the Gustin Financial Planning Retirement Score is not intended to project or predict the present or future value of actual investments or actual holdings in your portfolio (or a selected allocation) or actual lifetime income. Also, the calculator should not be used as the PRIMARY basis for any investment or tax-planning decisions. The retirement income estimates provided by the calculator are generated through extrapolations of data YOU input. For example, the total value of your current savings of your savings is based on the number of years from your current age to your desired retirement age. 7% is then compounded on a yearly basis. If your actual retirement occurs before your desired retirement, this will give an inaccurate result. If your portfolio rates do not average exactly 7%, you will get different results. These results will probably NOT be exact. Your results can and probably WILL differ from the results generated in this tool. It is our intention that this tool generates results that will be approximate, because EXACT results are very unlikely.

It is important to understand; this retirement score tool is based on LIMITED data. While no retirement tool can give you and EXACT picture of the future, software programs that take into account more variables will tend to be more accurate. This tool only takes into account 10 variables. As such, the results of this tool will be less accurate than some other professional financial planning tools, where more accurate account values, and more variables are taken into account.

It is our belief that this report will give you an ESTIMATE regarding whether you are SUBSTANTIALLY under or over your goal. It is our hope that with this information, you then go seek a professional opinion from a qualified financial adviser who can then take into account your detailed situation, and take you through the entire financial planning process. It is our belief that only by going through the ENTIRE planning process, can you maximize your ability to meet your long term goals.

HOW THE CALCULATIONS WORK

The program takes into account your current age and age until retirement that you input. If you are married, it takes into account the years until retirement for EACH spouse.

The program then takes into account your inputted total current savings and monthly savings. For total current savings, (total years until retirement) * (.07) = Total savings extrapolated into the future. This is determined for each spouse. This has the effect of estimating a 7% assumed portfolio growth rate for total current savings.

For monthly savings, a similar extrapolation is made. Monthly savings are annualized, and extended by the number of years until retirement, and compounded annually by 7% (for each spouse, if married).

These totals are then reduced by adjusting by an estimated inflationary amount of 3% per year. This gives what we believe will be an ESTIMATE of portfolio savings growth, adjusted for inflation, over the lifetime of these accounts, until the retirement phase begins for each spouse. This is by NO MEANS implied to be an exact amount, as individual accounts will vary based on individual investments, and different economic environments over time.

Life Insurance, Long-Term Medical Care, and College Savings deductions are calculated in the following way:

For each question answered "NO," a 10% deduction is taken from the savings total. (For college, savings you should input "Yes" if you have no children, or do not plan on having children).

If savings are not being made for these items, it may likely impact your savings total in the future.

For example: The cost of long term care is high and increasing over time. If long-term care is not in place, you will likely have to deplete savings for any long-term medical care needs.

No program can predict the exact costs for these items or your future needs. However, we believe that a reduction in your savings to account for these costs is needed in order to calculate reasonable projections.

If you are married, and there is a difference of years between the years in retirement, then the "((desired retirement income) / 2)* (retirement years difference) is deducted from this total. This is a rough estimate to account for the fact that one spouse may be retired before the other, and pulling from savings. Your actual amounts will vary.

This total equals "Total Projected Retirement Savings, Day one of Retirement".

This total is then multiplied by 4% (this is the assumed "sustainability" withdrawal rate for the investment portfolio). This "sustainable" withdrawal rate is then added to "projected household Social Security income" to calculate "projected annual retirement income." This projected annual household retirement income is then compared to "desired retirement income," and a percentage difference is calculated. This percentage difference is then used to determine the grading scale, which in turn is your "Retirement Score (Retirement score details explained below).

SOCIAL SECURITY CALCULATIONS

Social Security amounts are projected for each spouse. Social Security rates for each spouse are based on the current income you input. Current income is then compared to the amount of Social Security "Bankrate.com" says you will have in the future. Actual Social Security will likely be different than the amounts projected by Bankrate.com. Actual rates will vary based on 1) How and when Social Security is filed 2) Any changes to Social Security legislation and 3) Changes in your income between now and when you retire.

For repeatable results, current age was set to "50," retirement age was set to "65." Income was rounded up to the nearest 1000. The table was created using Bankrate.com data output on approximately June of 2016.

More accurate Social Security projections are possible. A qualified financial professional can use your ACTUAL current Social Security savings, and take into account more detailed information to derive a more accurate Social Security estimate.

It was the goal of this program to provide a realistic and repeatable projections based on limited data.

GUSTIN FINANCIAL PLANNING RETIREMENT SCORE

Retirement scores are a standard letter grading system based on the percentage difference between the: "Sustainable Rate" + "Combined Projected Social Security" vs. "Desired Retirement Income.

  1. When the sustainable rate + combined annual Social Security is projected to be 50% or higher than the desired annual retirement income, a grade of "A" is given.

    STATED REASONING: "You are doing EXCELLENT. It is estimated based on the data you input, you are likely to meet and exceed your retirement income goal by "X%", if you stay on your current course. You received an "A" because at your current savings rate, it is probable that you could withstand serious interruptions to your savings plan (such as forced retirement of loss of job), and still come close to your retirement goal. Remember, this is just an ESTIMATE based on limited data, and meant to be a general guide. Actual results can and probably will be different than these projections. If you would like to hire a professional to help you STAY on track, contact Gustin Financial Planning at 407/536-5220 or through our website at www.GustinFinancialPlanning.com."

  2. When the sustainable rate + combined annual Social Security is projected to be between 10% and 50% higher than the desired annual retirement income, a grade of "B" is given.

    STATED REASONING: "You are doing WELL. It is estimated based on the data you input, that you will meet and even exceed your retirement goals by "X%" if you stay on your current course. You received a "B" because at your current savings rate, it is likely that you could withstand a minor interruption to your savings plan, such as temporary loss of job, and still meet your retirement income goal. HOWEVER, you may NOT be able to withstand a MAJOR interruption to your retirement plan such as forced retirement due to health reasons. If this were to occur, it is possible that you will need to accept a reduction in living standards. Remember, this is just an ESTIMATE based on limited data, and meant to be a general guide. Actual results can and probably will be different than these projections. If you would like to hire a professional to help you STAY on track, contact Gustin Financial Planning at 407/536-5220 or through our website at www.GustinFinancialPlanning.com."

  3. When the sustainable rate + combined annual Social Security is projected to fall between -10% and +10% of the desired annual retirement income, a grade of "C" is given.

    STATED REASONING: "You are doing OKAY. You are projected to fall "X%" above or below your annual desired retirement income goal. It is estimated, based on the data you input, you fall CLOSE to your desired retirement income goal, if you stay on your current course. You received a "C" because ANY interruption to your savings plan (such as loss of job, forced early retirement, a reduction in salary) may have a major impact on your retirement savings. As a result, you may be forced to start saving a higher percentage of your salary, or accept a reduction in standard of living. Remember, this is just an ESTIMATE based on limited data, and meant to be a general guide. Actual results can and probably will be different than these projections. If you would like to hire a professional to help you design a retirement plan that is LESS SUBSEPTIBLE to risk, contact Gustin Financial Planning at 407/536-5220 or through our website at www.GustinFinancialPlanning.com."

  4. When the sustainable rate + combined annual Social Security is projected to fall between -10% and -50% below the desired annual retirement income, a grade of "D" is given.

    STATED REASONING: "You are doing POORLY. You are projected to fall below your annual desired retirement income goal by "X%." It is estimated, based on the data you input, you will fall BELOW your income goals in retirement, if you stay on your current course. You received a "D" because you will have to 1) increase your savings, or 2) accept a lower standard of living if you stay on this course. In addition, any major interruption to your savings, such as forced retirement, permanent injury, or loss of job will make this deficit even more severe. Remember, this is just an ESTIMATE based on limited data, and meant to be a general guide. Actual results can and probably will be different than these projections. If you would like to hire a professional to help you get on track before it is too late, contact Gustin Financial Planning at 407/536-5220 or through our website at www.GustinFinancialPlanning.com."

  5. When the sustainable rate + combined annual Social Security is projected to fall 50% or lower than the desired annual retirement income, a grade of "F" is given.

    STATED REASONING: "You are FAILING to properly save for retirement. You are projected to fall "X%" below your desired retirement income goal. It is estimated, based on the data you input, you will fall WELL BELOW your income goals in in retirement, if you stay on your current course. You received an "F" because you will have to 1) increase your savings substantially, or 2) accept a much lower standard of living in retirement than you are accustomed to, if you stay on your current course. Any major interruptions to your savings, such as forced retirement, permanent injury, or loss of job will make this deficit even more severe. Remember, this is just an ESTIMATE based on limited data, and meant to be a general guide. Actual results can and probably will be different than these projections. If you would like to hire a professional to help you get on track before it is too late, contact Gustin Financial Planning at 407/536-5220 or through our website at www.GustinFinancialPlanning.com."

CHART CALCULATIONS

The chart uses two data sets:

Data set one, is simply the desired annual retirement income goal. This goal is increased each year by 3%, to account for inflation.

Data set two takes (Total Projected Retirement Savings, Day one of Retirement) – ((Desired Annual Retirement Income) + (Projected Annual Social Security)).

In data set two, each year, the remaining "Total Projected Retirement Savings" is multiplied by 1.07 and divided by 1.03. This accounts for projected account interest accumulation, and loss to inflation.

"Projected Annual Social Security" is increased each year by 3%, to project COLA increases that come with Social Security.

IT’S EASY TO IGNORE YOUR RETIREMENT SECURITY

It's easy to wait until it's too late to start saving, or planning for retirement. Is that you? Take the retirement score assessment to get an estimate of how well you are doing with your planning. You can take a quick estimated glance based on a few questions. With your results you can see if you're on the right path to reach your financial retirement goal.

Start planning for your future now! Don't wait until retirement to find out that your savings won't be enough for you to maintain your standard of living. Use the Free Retirement Score as a general guide for your retirement planning. If you would like to hire a professional to help you get on track before it is too late give our retirement specialists a call.

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