Putting the Keys to a Successful Financial Plan Within Your Grasp

Slide 1: Title

Hello, and welcome everyone! Our topic for today’s webinar is: “Put the Keys to a Successful Financial Plan Within Your Grasp.” Let's get started.

Slide 2: Mission Statement

A quick background on the company. This webinar series is brought to you by AAFMAA Wealth Management & Trust. Our vision is to ensure the financial security and independence of members of the armed forces community - active, retired, and honorably discharged service members and their families. We accomplish this as the premier provider of financial planning, investment management, and trust services – for all branches of the military.

Slide 3: About Us

We achieve that by acting as a wholly owned subsidiary of the American Armed Forces Mutual Aid Association. Proudly serving America’s Armed Forces since 1879, AAFMAA is a non-profit, Tax Exempt (501[c](23)), member-owned Mutual Aid Association offering Life Insurance, and open to all branches of the U.S. Armed Forces and their families (children age 23 and under)

AAFMAA has two fully owned subsidiaries: AAFMAA Wealth Management & Trust offers financial planning, investment management, and trust services, while AAFMAA Mortgage Services provide mortgages, home construction and financing.

Slide 4: Disclaimer

Also a few disclosures. This presentation is educational. It is for general information only and is not specific investment, legal, or tax advice for any of you individually. Do not rely on this presentation alone to guide your financial planning decisions. Since each individual situation is unique, your needs for financial services will differ. For individual advice, please contact us directly. We produce this webinar series in house with our own professional staff as a service to our members and to help them better understand the resources that are available to them. We have highlighted here two distinct characteristics that separate AAFMAA Wealth Management & Trust from other service providers. Our fiduciary standard to what is in the best interest of the client and exclusively serving the US Armed Forces Community.

Slide 5: Agenda

Everyone needs a financial plan, regardless of your stage in life. A good financial plan establishes a roadmap to success. I recommend a written FP so you can reference it often to

ensure you are on track. Also, as your circumstances change, you can update your plan, reaffirming, or establishing new goals.

A solid FP will include the components shown on this slide. An effective financial planner will establish a rapport with the client(s), understanding where they are today and where they want to be years down the road. Regardless of your age, a good rule of thumb is not to spend more than you make. This seems obvious, but many people repeatedly make this mistake. One tell-tale sign: if a client is carrying credit debt, they are likely spending in excess of their income.

During this webinar, I’ll discuss each of these components in detail.

Slide 6: Benefits of a Financial Plan

A financial plan can be extremely beneficial. First, you must understand what you spend each month. Keeping track of your routine expenses is particularly important. Almost everyone realizes the cost of a vacation (e.g., airfare, hotel, rental car, and sightseeing), but many people don’t keep track of commuting costs, meals at the office, clothing purchases, gifts, and more. An FP will reveal the obvious and not-so-obvious expenses.

Slide 7: Benefits of a Financial Plan (cont’d)

Second, you must understand your income and deductions. What is my net take-home pay? Am I withholding enough for taxes? Third, you must save and invest. A good goal for saving and investing is at least 10% of your income. During your peak earning years, this percentage should be much higher. What is your risk tolerance? How are your investments performing relative to your risk? A good financial planner will assess your risk tolerance and evaluate your investments to ensure they comport with your risk tolerance.

Lastly, when is the last time you reviewed your insurance policies? Adequately protecting your assets if the unexpected occurs is essential if you are to achieve financial success.

Slide 8: Components of a Financial Plan: Expenses

We have already discussed the importance of understanding and tracking your routine expenses. Another aspect is major life events: purchasing a house, college expenses, weddings, family crises, skills training, and don’t forget retirement.

Step one: establish an emergency fund equivalent to three months of essential expenses (e.g., rent, food, insurance, transportation) if you are single, and six months if you are married.

Step two: for at least one month, keep track of every expense. At the end of the month, review your costs. How much was spent on essential items? How much was frivolous and subject to reduction?

Step three: map out a strategy to save. If you have a significant purchase within two years, save for it in a money market or CD. Basically, a liquid investment that is not subject to loss. If your major purchase is over two years away, you should invest in mutual funds, ETFs, and stocks. In short, investments that are likely to yield returns over CDs and money market funds.

Slide 9: Components of a Financial Plan: Income

Income includes money from work, investments, retirement (if you are receiving funds from a Defined Benefit Program), Social Security, rental income, and gifts. In short, income can come from a variety of sources. You need to understand where your funds come from and how much you receive.

Slide 10: Components of a Financial Plan: Cash Flow

A good financial plan has cash flow as the core element. Cash flow is essential in every scenario. After you deduct expenses from your income, are you in a positive or negative position? If you are negative, you must transfer funds from another source (i.e., investments) so you are break-even. How many months (or years) can you transfer funds before your assets are depleted?

Slide 11: Components of a Financial Plan: Major Purchases

An effective financial plan will include planned major purchases. For example, if you intend to purchase a home, the downpayment and subsequent monthly payments should be included in the FP. While monthly cash flow doesn't normally cover a downpayment, you should include mortgages in projected cash flows. Do you have sufficient income sources to pay the increased monthly (or perhaps yearly) expenses? Do you need to transfer to a higher paying job? Modify your plan (i.e., buy a $500,000 house via a $750,000 house)? Change your lifestyle (i.e., sell the sports car and buy a more modest vehicle). These are all decision points revealed in a good financial plan.

Slide 12: Components of a Financial Plan: Protect Your Assets

You work hard to provide for your family. Could you financially withstand a major automobile accident, damage to your home from a tornado or other natural disaster, an extended illness, or death of the breadwinner? These are difficult and sensitive issues, but you must address them honestly.

Insurance: you need to have medical, life, homeowners (or renters), automobile, and perhaps long-term care insurance (to name a few).

Slide 13: Components of a Financial Plan: Retirement Planning

At what age would you like to retire? Where will you live when you retire? How much income will you require? When should you take Social Security?

A good financial planner will ask these questions and incorporate the answers in your financial plan. You might be pleasantly surprised at the answers; then again, you might be shocked. An excellent financial advisor won't just sugarcoat the numbers behind your future; they'll help find solutions too.

Slide 14: Components of a Financial Plan: Estate Planning

You have worked for decades, invested wisely, and built a large nest egg. Now what? Do you give your wealth to charities? Establish a foundation? Do you pass it on to your children, grandchildren, other relatives, or friends? How will those inheriting your assets pay the taxes?

A good financial planner will address these issues. Depending on your preference, there is a myriad of ways to transfer your wealth effectively.

Slide 15: Components of a Financial Plan: The Unexpected

Unexpected events occur all the time. Bear markets, slumps in the housing market(s), high unemployment, a sudden job transfer, or perhaps a death in the family. It happens when we least expect it. A thorough financial plan will offer some answers to these questions. For example, a competent financial planner will account for a major event such as the death of the breadwinner when two children are in college. Will the children have to drop out? How will the surviving spouse pay the mortgage and car notes? While the unexpected is not always pleasant, you need to understand what you can do to recover from catastrophic events.

Slide 16: Financial Plan: A Guide for Life

A financial plan is a living document. Once an initial plan is developed, it will undoubtedly change over time. Having access to a financial dashboard will enable you to add and delete expenses, income, major purchases, and other life events as they occur.

Slide 17: Questions?

The Relationship Managers at AAFMAA Wealth Management and Trust are here to help you with your retirement plans and the transition into retirement. We offer a free portfolio review for all military veterans and retirees. A second look will give you a fresh perspective and may help you with the decision to retire.

Slide 18: Disclosures

This presentation is educational. It is for general information only and is not specific investment, legal, or tax advice for any of you Individually. Do not rely on this presentation alone to guide your financial planning decisions. Since each individual situation is unique, your needs for financial services will differ. For individual advice, please contact us directly. We produce this webinar in house with our own professional staff as a service to our members and to help them better understand the resources that are available to them. We have highlighted here two distinct characteristics that separate AAFMAA Wealth Management & Trust from other service providers.Our fiduciary standard to what is in the best interest of the client and exclusively serving the US Armed Forces Community.

The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only and is furnished without responsibility for completeness or accuracy.

Market views are as of the presentation date and are subject to change at any time or reason. Nothing in this presentation should be construed as a recommendation for any specific security or sector. Illustrative charts were obtained from multiple subscription based sources and are subject to provider terms and conditions.

Slide 19: Thank You!

Thanks for watching, we look forward to speaking with you!