Re Re Short Client Version Ent657

USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.

Retirement readiness with the 3-7-5 strategy

Re-Engineering RetirementSM

Insurance and annuities are issued by Allianz Life Insurance Company of North AmericaNeither Allianz, its agents, or representatives offer tax or legal advice. Clients should always consultwith qualified tax/legal advisors concerning their own situation.

© Copyright 2008 Allianz. All rights reserved.

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USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.

Transition from accumulation to income

Types of retirementexpenses

Sources ofincome

Options for makingincome cover expenses

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Important retirement questions

Will I have enough to retire when I want to retire?

Will I run out of income in retirement?

How will inflation affect my retirement income?

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Retirement readiness?

- Don’t have formal retirement strategies- Assume they have limited options for improving their

financial situation once they reach retirement- Confused about the complexity of financial issues - Limited knowledge of and/or help in the retirement

income strategies process- Think retirement is simply the reverse of accumulation

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The retirement income strategy

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Agenda: Re-Engineering Retirement

The 3-7-5 retirement strategy / Case study

Next steps

Difference between accumulation and income

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Retirement accumulation stage

Retirement Accumulation

Stage

Retirement Income Stage

Financial Objective

Have enough money to retire

Asset Allocation Portfolio allocation

Time Horizon

Known to retirement

Thinking differently

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How much will we have?

How much money will we need?

Will we have enough to get by?

Will there be enough for extras?

Will there be something for our heirs?

Thinking differently

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Retirement income stage

Retirement Accumulation

Stage

Retirement Income Stage

Financial Objective

Have enough money to retire Not outlive assets

Asset Allocation Portfolio allocation Withdrawal

allocation

Time Horizon

Known to retirement

Thinking differently

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The “Lost Decade”

6,000

8,000

10,000

$12,000

The S&P 500: 1999 through February 2008. Total return on $10,000 investment adjusted for inflation. Note: Not possible to invest directly in the index.Standard & Poor’s 500® index (S&P 500®) is comprised of 500 stocks representing major U.S. industrial sectors. “Standard & Poor’s®,” “S&P®,” “S&P 500,” “Standard & Poor’s 500,” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Allianz Life Insurance Company of North America. The product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the product.

Thinking differently

The Wall Street Journal, March 26, 2008

11 ENT-657 (R-12/2008)

250000

750000

1250000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Sequence of returnsBad returns later / sooner

Year

$500,000

$3,000,000

0 5 10 15 20 25 30

Hypothetical valueHypothetical value at 0%

Year 1: -17.9%Year 2: - 0.8%Year 3: -19.7%Year 4: 3.7%Year 5: 11.0%

Year 26: 22.2%Year 27: 5.2%Year 28: 14.3%Year 29: 24.6%Year 30: 12.1%

Year 1: 12.1%Year 2: 24.6%Year 3: 14.3%Year 4: 5.2%Year 5: 22.2%

Year 26: 11.0%Year 27: 3.7%Year 28: - 19.7%Year 29: - 0.8%Year 30: - 17.9%

This example is shown for illustrative purposes only and is not intended to predict or project future results. It is not intendedto represent any specific product or investment, and does not reflect the deduction of taxes or product fees or expenses.

Thinking differently

12 ENT-657 (R-12/2008)

Retirement income stage

Retirement Accumulation

Stage

Retirement Income Stage

Financial Objective

Have enough money to retire Not outlive assets

Asset Allocation Portfolio allocation Withdrawal

allocation

Time Horizon

Known to retirement

Unknown to date of death

Thinking differently

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How can we make the most of my retirement income sources?

What should we reposition in consideration of tax and transfer issues?

What should we spend first, next, last?

What should we hold?

Thinking differently

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Transition to:

Maximize sources of income

Retirement income strategies

Retirement Accumulation

Stage

Financial Objective

Have enough money to retire

Asset Allocation Portfolio allocation

Time Horizon

Known to retirement

Thinking differently

Reposition assets to meet needs

and goals

Retirement strategies transition

Re-EngineeringRetirement

Retirement Income Stage

Not outlive assets

Withdrawalallocation

Unknown to dateof death

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The 3-7-5 Strategy

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3-7-5 Strategy

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Three levels of retirement expenses

Expenses

Legacy

Desired

Survival

3-7-5 Strategy

Expenses to cover your most basic needs

Lifestyle “extras”

Funds remaining for your heirs

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Seven sources of income for retirement

Sources of Income

Welfare - charity

Nonqualified Assets (NQA)

Roth IRA

Traditional IRA

Qualified ERISA

Social Security

Continued Employment

Expenses

Legacy

Desired

Survival

3-7-5 Strategy

The base

Employer sponsored plans

ERISA contributions and rollovers

Tax deferred / tax free

Mutual funds, CDs, stocks, bonds

Phase into retirement gradually

Not desirable

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Hypothetical story

Ken and Patty at retirement

3-7-5 Story

Note: This example is shown for illustrative purposes only and does not represent actual Allianz clients..

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Ken & Patty – age 66

Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

3-7-5 Story

Combined Social Security $2,000 per month

Defined Benefit (Pension) income $500 per month

Home is mortgage free Zero

IRA (including rollover) $500,000

Savings portfolio $400,000

Estimated annual retirement expenses

Survival expenses: $36,000 Desired expenses: $20,000

Desire to leave a legacy

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Survival$36,000

Desired$20,000

Legacy

ExpensesRe-Engineering RetirementSources of Income

Welfare – charity

Nonqualified Assets (NQA)

Roth IRA

Traditional IRA

QualifiedERISA

Social Security

Continued Employment

$400,000

None

$500,000

$24,000

$6,000

3-7-5 Story

Ken & Patty

Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

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Re-Engineering Retirement

Survival$36,000

Desired$20,000

Legacy

ExpensesSources of Income

Welfare – charity

NQA

Roth IRA

Traditional IRA

QualifiedERISA

Social Security

Continued Employment

$6,000

$120,000 annuity

$280,000 (25 years @ 5% return)

$24,000

None

$500,000

Patty’s pension plan$6,000

5% Rate of return is for illustrative purposes only. Guarantees are backed by the financial strength and claims paying ability of the issuing company.

3-7-5 Story

Ken & Patty

$24,000

$6,000

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Re-Engineering Retirement

Survival$36,000

Desired$20,000

Legacy

ExpensesSources of Income

Welfare – charity

NQA

Roth IRA

Traditional IRA

QualifiedERISA

Social Security

Continued Employment

$6,000

$120,000 annuity

$6,000

$24,000

Work part-time until age 70

$24,000

$280,000 (25 years @ 5% return)

None

$500,000

Patty’s pension plan$6,000

3-7-5 Story

Ken & Patty

Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

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Re-Engineering Retirement

Survival$36,000

Desired$20,000

Legacy

ExpensesSources of Income

Welfare – charity

NQA

Roth IRA From IRA

Traditional IRA IRA $500,000

QualifiedERISA

Social Security

Continued Employment

$6,000

$120,000 annuity

$6,000

$24,000

IRA RMD $18,250 From nonqualified $1,750

Roth IRA

$24,000

$280,000 (25 years @ 5% return)

Work part-time until age 70

Patty’s pension plan$6,000

3-7-5 Story

Ken & Patty

Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

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But what if …?

3-7-5 Strategy

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5 Options to improve income

Sources of Income

Welfare – charity

Nonqualified Assets

Roth IRA

Traditional IRA

Company retirement programs

Social Security

Continued Employment

3-7-5 Strategy

Survival

Desired

Legacy

ExpensesOptions

Lower your expectations

Spend less and save more now

Decide to work longer.

Take on more investment risk

Combination (or all) of above

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5 Options at work

3-7-5 Strategy

$ ne

eded

to s

uppl

emen

t inc

ome

$ now (401(k))

$ additional (401(k)) $ more

70?

Conservative 4 - 6%

Moderate 6 - 8%

Aggressive 8 - 10%

Combination of all options

Current standardof living

AgeTime

45 65

Retirement

This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.

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Current standardof living5 Options at work

3-7-5 Strategy

AgeTime

$ ne

eded

to s

uppl

emen

t inc

ome

$ additional (401(k)) $ more

Combination of all options

65 68?

Conservative 4 - 6%Moderate 6 - 8%

AgeTime

45 65

This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.

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Summary

Evaluate how well your retirement expenses match up with your retirement income

Many people approaching retirement are worried about their financial security in retirement

Re-Engineering Retirement can help you successfully transition from accumulation to income

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What is the next step?

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Lets meet for an analysis and recommendations- Analysis and anticipated retirement expenses compared

to anticipated retirement income- Recommendations for positioning resources to help

enhance income- Options (if needed) designed to compensate for an

anticipated shortfall of income

Next steps

Next steps?

This analysis is not a comprehensive financial or retirement plan. Planning services are available at additional cost and offered only by appropriately licensed registered investment advisors.

USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.

Thank you!

© Copyright 2008 Allianz. All rights reserved.

Not FDIC insured May lose value No bank or credit guarantee Not a deposit Not insured by any federal government agency or NCUA/NCUSIF