1. 11/13/2012
Jarod and Juanita Ramirez
REDRAIDER
FINANCIAL
RETIREMENT PLAN PROPOSAL
Prepared by: Roddy Warren | Financial Advisor

2. Thank you for completing the “Retirement Lifestyle Plan” with the MoneyGuidePro software in
such a timely manner. By doing so, we were able to effectively analyze your current status concerning
retirement funding using MoneyGuidePro analysis. RedRaider Financial concludes that you do not have
enough savings to withstand your current retirement goals. This document will explain why your
current situation cannot satisfy all of your goals, your alternatives, and RedRaider Financial’s
recommended proposal.
Your Goals
You inputted your goals, investments, and personal information in the client workbook. Our
analysis assumes that this information is correct and the results only represent the information given.
You selected and ranked your goals on a scale of 1 thru 10 (recall the sections – need, wants, and
wishes). Your goals are as follows:
NEEDS:
10 – Retirement retire together when Jarod is 67 (Juanita, 65)
= Living expense of $9,000 per month or $108,000 per year
8 – College Ralphie starts 4 years of college in 2028 at GA Institute of Tech.
= $8,716 per year (tuition only)
8 – Health Care = extra $10,000 a year when both retire
8 – Charity = give $6,000 a year when both retire
WANTS:
7 – Travel = $15,000 a year for ten years (when both retire)
7 – Car new car every 5 years
= $30,000 (including trade-in value)
4 – Bequest = give $100,000 to GA Institute of Tech. at Juanita’s death
WISHES:
3 – RV = costs $40,000 (when both retire)
Total Spending = $3,804,064

3. Analysis Assumptions
Before the results were calculated, the following assumptions were used:
Asset Class Projected Return
Cash/Cash Alt. 3.5%
--- Tax-Free 3.0%
Short Term Bonds 4.5%
--- Tax-Free 3.4%
Intermediate Term Bonds 5.5%
--- Tax-Free 4.1%
Long Term Bonds 5.5%
--- Tax-Free 4.0%
Large Cap Value Stocks 10.0%
Large Cap Growth Stocks 8.0%
Mid Cap Stocks 9.5%
Small Cap Stocks 10.0%
International Developed Stocks 9.0%
International Emerging Stocks 11.0%
In order to compensate for inflation, the following inflation rates are expected:
Base Inflation Rate 3.5%
Additional Increase for Tuition + 2.5%
Additional Increase for Medical + 2.5%

4. Results – Current Scenario
Using all of your goal information, risk assessment, current investments, all of your retirement
savings, and expected retirement income --- the results proved that your family will most likely not be
able to accomplish all of your retirement goals. Look at the information below:
Average Return Bad Timing
Estimated % of Goals Funded 87% 81%
40-69%
70-90%
> 90%
< 40% Likelihood of Funding All Goals
Let me explain all three results in detail. ‘Average Returns’ is calculated by using one average
return before and after retirement. In reality, the returns will vary widely from year to year. Thus, the
current plan will only fund 87% of your goals if returns duplicate the estimated average return. ‘Bad
Timing’ assumes average returns as well, but it has the two bad return years at the worst time – Jarod’s
retirement. Currently, your plan would only fund 81% of your goals if bad timing actually happened.
The scale is separate from the other calculations. It is not a percentage of goals that will be
funded, but a probability of success (fund all goals). In order to feel comfortable about your plan, we set
a confidence zone of 70-90% for our clients to be in. Greater than 90% is not necessary because you
have a significant amount of time to prepare for retirement (those closer to retirement might be better
off in the >90% zone). This probability result comes from a simulation that uses thousands of different
return sequences to generate multiple outcomes, which is called a Monte Carlo Simulation. The
percentage of outcomes that would be successful is the probability number in your plan. Currently, the
plan has a less than 40% chance of success.
Likelihood of Funding All Goals
40-69%
70-90%
> 90%
Confidence Zone is 70-90% (green zone)

5. Alternatives/Options
Obviously, some form of retirement planning is needed. There are multiple routes you and your
wife could take to improve your retirement outlook. Here are a few examples:
Retire later – allow more time to save and reduce amount needed to save
Work part-time – both or one spouse can choose to continue working
Cut or reduce goals – current goals may not be feasible, might be best option if do not want to
postpone retirement
Buy an annuity or life insurance – boost your retirement income, help fund goals
Save more now – pension plans, IRAs, or just general savings
In your case, I advise multiple changes must be made to improve your retirement plan to a
comfortable level. In my proposal, I elected to mainly decrease your goal amounts and postpone
retirement until Jarod is 70 (Juanita retires at 68). However, the choice of action is in your hands.
Acknowledging that changes must be made, you and your wife might wish to eliminate some goals
rather than reducing some of the more important goals. For example, you might decide to eliminate the
dream of a RV in order to keep your traveling expenses at $15,000 a year. As your advisor, I tried to
keep all your goals intact, but you might have different ideas.
Risk Tolerance
Included in my proposal is a portfolio that is based on your risk assessment that you took in the
information gathering process. The resulting risk scores differed between you and your wife (Jarod is
more of a risk taker). The household score between the two of you was 60. The appropriate risk-based
portfolio for individuals with a risk score of 60 is ‘Total Return I’. This proposed portfolio differs from
your current portfolio in the following ways:
Average Standard
Cash Bonds Stocks
Return Deviation
Current 9% 33% 57% 7.52% 11.79%
Total Return I 4% 35% 61% 7.62% 13.25%
Looking at the table, you can see the main difference is the 4% increase in stocks with ‘Total
Return I’. Therefore, the return and standard deviation increase. Do not be confused by the standard
deviation column, it refers to the amount of relative risk in your portfolio – stocks have more volatility
risk (frequent stock market fluctuations), so standard deviation is higher.
*Note: This risk-based portfolio is just a good starting point in determining the right portfolio for your
plan. The balance between risk-return is usually created over time to the clients liking.

6. My Proposal
The action plan for this proposal is as follows:
1) As mentioned on the previous page, I would suggest altering your portfolio (asset allocation) to be
more in sync with your risk tolerance. Thus, a ‘Total Return I’ portfolio would be best suited for
your score.
2) However, the portfolio should adjust when you enter retirement to a more balanced, less risky,
portfolio. I used the ‘Balanced I’ portfolio (12% less stock, average return of 6.85%).
3) I propose to retire 3 years later than you previously wanted to. More time is needed to fund
your goals and much needed income could be earned in those extra years. Plus, the two of you can
still retire at the same time to enjoy retirement together.
4) Also, I advise that the both of you should not accept Social Security payments until retirement. By
delaying Social Security payments (age 70 and 68), the annual payments received would
increase about $8,000 a year.
5) One way to lower the expense cost during retirement is to pay off your house mortgage
before retirement. By increasing your monthly payment by just $137, the mortgage would be paid
off the same year that you retire. In the questionnaire you completed, you mentioned that you
would be able to increase savings by $3,400 and are somewhat willing to increase that amount. I
suggest using that excess of $3,400 to pay off the mortgage (at least $137 per month).
6) As stated above, I believe that annual savings should be increased by $3,400.
7) By paying off the mortgage before retirement, I deemed that the monthly retirement living
needs could be reduced by $1,000 per month. This adjustment reduces the annual need
by $12,000 and decreases the cost of the plan a great deal.
8) The first goal I had to reduce (I did not eliminate any goals) was the RV goal. I reduced the RV
goal to $25,000 not $40,000. I recommend that if a more expensive RV is highly desired, to use
some of the designated funds for the travel or car goals that year.
9) Next, I lowered the bequest given to the Georgia Institute of Technology to only $10,000
at Juanita’s death. I judged from previous discussions that this goal is less important than some of
the other goals, but you do wish to give back to the institute in some way. I believe that as you
reach closer to retirement (and death), we can increase the bequest if we do better than expected.
10) I had to decrease travel expenses by $5,000 per year. I realize that this goal is
important, but to keep all of your goals intact I had little choice. One alternative you could think
about is to save up to $15,000 and then take a trip (possibly every two years).
11) The new car goal every 5 years had to be reduced to $25,000 from $30,000. I recognize
that this could be a reduction of your desired lifestyle, but I do not believe it is a major decrease.
You must weigh the cost of a more expensive car to your other goals.

7. 12) Finally, I know how much giving to charity means to the both of you. I was forced to reduce
annual charitable gifts to $3,000 (not $6,000). Yet, I think that amount can increase if
returns do better than predicted.
These items were not changed:
College goal
Extra Medical Expenses goal
Teacher’s retirement and Juanita working part-time (for ten years)
Current annual additions to retirement plans
As you can see in the summary below, total expenses decrease by 25%. Plus, the increased
savings and delaying retirement help to form a more comfortable retirement plan.
Current Recommended Change
Retirement Retire when Jarod is 67 Retire when Jarod is 70 Retire 3 years later
(Juanita - 65) (Juanita - 68)
=$9,000/mth, $108,000/yr = $8,000/mth, $96,000/yr $12,000 less
College (Ralphie) = $8,716 per year = $8,716 per year
Health Care = $10,000 per year = $10,000 per year
Charity = $6,000 per year = $3,000 per year $3,000 less a year
Travel = $15,000 per year (x10) = $10,000 per year (x10) $5,000 less per year
Car = $30,000 every 5 years = $25,000 every 5 years $5,000 less per car
Bequest = $100,000 at death = $10,000 at death $90,000 less
RV = $40,000 = $25,000 $15,000 less
Total Spending $3,804,064 $2,866,264 25% less
Notice how all three tests are acceptable and the proposal is with the confidence zone:
Average Return Bad Timing
Estimated % of Goals Funded 100% 100%
40-69%
70-90%
> 90%
Likelihood of Funding All Goals
70%

8. Next Meeting
The best way to proceed with the planning process would be to coordinate a meeting at your
convenience. At that meeting, we can discuss my proposal and/or any ideas you have for a course of
action. We can play with different scenarios (using MoneyGuidePro) to come up with the best option
for your family. Surprisingly, possible small adjustments and tweaks to your plan can create large
differences in future results.