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Entaire Program Overview

Entaire Program Overview . Jon A. Scaman Manager, Business Development. NetworkingMFG.com Meeting December 16, 2008. Today’s Agenda. Who are Entaire Programs for: Business Owners What the Programs are: Personal Retirement Planning How the Programs work: Overview of the Program

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Entaire Program Overview

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  1. Entaire Program Overview Jon A. Scaman Manager, Business Development NetworkingMFG.com Meeting December 16, 2008

  2. Today’s Agenda Who are Entaire Programs for: Business Owners What the Programs are: Personal Retirement Planning How the Programs work: Overview of the Program Case Study: Paul Smith Not for use with the public - for education and training purposes only

  3. Who are Entaire Programs for:Business Owners Not for use with the public - for education and training purposes only

  4. The Business Owners’ Challenge 47% of Business Owners surveyed indicated that they do not believe that they are financially prepared for their retirement1 68% of Business Owners believe that they will live below their current lifestyle when they retire2 So, what’s the challenge? 1 Harris Interactive on behalf of Sharebuilder 401(k) 2 LIMRA, 2006 Not for use with the public - for education and training purposes only

  5. Phases of the Entrepreneurial Business Maturity Expansion Growth Startup Excess Funds Available Limited Excess Money Excess Money Reinvested Cashing Out Phase Not for use with the public - for education and training purposes only

  6. Selling the Business: The Perception Most Business Owners believe that they will sell their business to fund their retirement – if they retire, that is Unfortunately………… Not for use with the public - for education and training purposes only

  7. Selling the Business: The Reality Approximately 1.2 million viable businesses go on the market for sale each year Nearly 3/4 of these fail in their efforts to sell Most of the businesses sold end up selling for much less than their expected Market Value, and in many cases, below their Asset Value Source: 2005 Business Reference Guide, 13th Edition (West) Not for use with the public - for education and training purposes only

  8. The Entrepreneur’s Dilemma: Restrictions Government Mandated Restrictions Retirement Health Not for use with the public - for education and training purposes only

  9. The Answer • A program designed solely for the Business Owner • A program that uses the business checkbook • A program that allows for large sums of money to grow tax deferred • A program that is tax efficient and cost effective • A program that will create less risk and more stability in their portfolio Not for use with the public - for education and training purposes only

  10. What the Programs are:Personal Retirement Planning Not for use with the public - for education and training purposes only

  11. Rule of 72 $4M $2M $1M $500K The Rule of 72 How long does money take to double? Divide 72 by the assumed rate, the result is the number of years until a sum doubles. $500K 0 Years $500K 10 Years $500K 20 Years $500K 30 Years Assumptions: Net Book Value of Business - $500K Interest Rate – 7.2% Note: Hypothetical results for illustrative purposes only and not a representation of past or future results. Not for use with the public - for education and training purposes only

  12. Compressed Time Frame Concept Accelerated Funding Choice 1 - $ 16,667 per year X 30 years = $500,000 Choice 2 - $ 50,000 per year X 10 years = $500,000 Choice 3 - $500,000 only once X Today = $500,000 $16,667 $1,684,584 $50,000 $2,860,393 $500,000 $3,808,127 30 Years Today Note: A hypothetical crediting rate of 7%. Represents approximations and should not be relied upon as tax or investment advice. The performance of financial products fluctuate over time. The actual time to achieve any result cannot be predicted with certainty. Not for use with the public - for education and training purposes only

  13. Compounding with Real Estate 7% average annual growth over 20 years Asset Value = $500,000 Asset Value = $1,934,842 7% Interest-Only $35,000 annual cost $500k Mortgage $500k Mortgage Point B Point A $1,434,842 gross gain - $700,000 interest cost = $734,842 Net Gain This is a hypothetical example, not indicative of actual results. Actual results will vary.

  14. The Stability of Equity Indexed Products • Allows client to participate in market upside • Limited downside risk Annual Crediting 5% $1,134,000 Annual Crediting 0% $1,080,000 Annual Crediting 8% Needed to Catch Up 14.12% Market Down Turn - 8% $1,000,000 $993,660 Keep in mind… If you received the 5% as shown in this example on the $993,660, you would have a total of $1,043,343. That is a $90,657 difference because of the guaranteed floor. Not for use with the public - for education and training purposes only

  15. How the Programs Work:An Overview of the Entaire Programs Not for use with the public - for education and training purposes only

  16. Program Structure Step 1 Commercial Loan Client Business Global One Financial Step 2 Step 3 Transfer Strategy Asset Funding Universal Life and/or Annuity Products Client Business

  17. Global Gateway Not for use with the public - for education and training purposes only

  18. Recent Manufacturing Cases Furniture $200,000 Machining $600,000 Plastics $2,400,000 Nuts & Bolts $1,000,000 Industry Case Size

  19. Case Study: Paul Smith

  20. Case Study – Paul Smith Manufacturing Company 25 Years in Business Current Age – 50 Desired Retirement Age - 63 Annual Budget to Fund Personal Retirement Plan - $41,000

  21. Summary – Paul Smith Age: 50 Years Until Retirement: 13 Desired Annual Income: $115,000 Number of Payout Years: 25 Personal Tax Bracket: 35% Company Budget: $41,000 Paul needs a lump sum of at least $1,340,162 at retirement to support an income of $115,000 per year for 25 years.

  22. Solution – Paul Smith Paul’s company implements a leveraged program in the amount of $600,000. The $600,000 is placed into an Equity Indexed Annuity, hypothetically earning 7% per year. Paul’s company makes interest payments of approximately $40,500 annually (assumed Interest rate of 6.75%). After 13 years, Paul’s annuity value has grown to $1,445,907, which gives Paul an income in the amount of $115,957 per year for 25 years. (This example assumes that the loan is repaid at retirement using assets that are not part of the program’s financed product, preferably assets with the then-current lowest yielding performance.)

  23. Equivalent Yield – Paul Smith Paul’s company makes interest payments for the Entaire Program of approximately $40,500 annually. If the company were to distribute this amount to Paul directly, he would have to pay income tax at 35%, leaving him with $26,325 per year to invest. Paul’s investment of $26,325 per year for 13 years would have to earn an annual rate of return of 19.26% in order to provide the same annual income of $115,957 for 25 years.

  24. Entaire’s Value Proposition • Provides Alternative to Traditional Retirement Plans • Allows Catching up on Retirement Planning • Provides Asset Protection Opportunities Not for use with the public - for education and training purposes only

  25. Q & A Not for use with the public - for education and training purposes only

  26. The Next Step For more information, Jon Scaman 678-218-1225 jascaman@entaire.com www.financedplanning.com

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