A Roadmap to Retirement

         
         
         
                          A Roadmap to Retirement
         
         
               Whatever your age, it is never too soon to look
          ahead and begin giving thought to your retirement.
          When the time finally comes, if you've done the proper
          planning, the transition will be smooth and you will
          feel comfortable and secure about it.
               Today, more than ever, as the society we live in
          becomes more demanding, planning for retirement is a
          necessity.  You must plan ahead by setting goals and
          deciding how they will be met.  Retirement planning
          also means getting ready for a lifestyle change as well
          as a changing financial picture.
               You may be faced with some hard choices.  If it
          has been difficult to accumulate the essential funds
          necessary to enjoy a truly "worry-free" retirement, you
          may find yourself choosing between dining out more
          frequently or preparing more meals at home.  You may
          find yourself having to choose whether to put your
          spouse, the man or woman with whom you've spent the
          last 50 years, into a no-frills nursing home or a
          nursing home with big bay windows, a view of the ocean
          and a private sitter.  Many retirees find themselves
          balancing between having a sufficient life style and
          lacking some of the comforts that make life easier.  In
          addition, you may find yourself considering just how
          much or how little you want to leave to your children.
          These difficult decisions can be made easier, with
          proper planning, savings, and investing done ahead of time.
         
          Investing for a future lifestyle
         
               Although pre-retirement and post-retirement
          investment portfolios should each have both income and
          accumulation aspects, your pre-retirement portfolio
          should be more heavily weighted toward accumulation for
          later use.  A post-retirement portfolio should show a
          greater allocation of investment resources toward
          income-producing vehicles, with a portion allocated for
          accumulation, in order to be able to create a greater
          income in the future; inflation will erode some of the
          purchasing power of current income-producing
          investments.
               You can use different investment management
          techniques as you create your own portfolio and
          consider the different investment alternatives
          available to you.
         
          Tailor make your investment portfolio
         
               Diversification, or spreading your investible
          assets among a group of different investments, is
          insurance against a severe crisis every few years and
          avoidance of the old "feast or famine" characteristic
          of investment markets.  Diversification is used to
          create a margin of safety in the portfolio by spreading
          you investible assets among various groups, including
          mutual funds, variable annuities, life insurance and
          fixed-return savings accounts, such as money market
          funds.  Today the majority of all retirement assets are
          contributed to tax-deferred retirement plans through
          employers or through individual retirement accounts.
               The fact that Uncle Sam allows contributions to be
          made on a tax-deductible basis, as well as allowing
          tax-free accumulation, is the ideal stimulus for
          increasing the amounts which go into the above
          retirement choices.
               At the top of most lists are mutual funds.
          Choosing a family of funds is the wisest approach.
          Under this arrangement you will be able to take the
          amount allocated for mutual funds and break it down
          further by positioning a specific percentage to either
          income funds, growth funds, or a mixture of both.  In
          addition, these same families of funds can provide
          municipal bond funds, which distribute tax-free income
          when you want it most -- at retirement.
               While mutual funds represent the largest source of
          retirement funds, in order to maintain a diversified
          portfolio, you must include annuities, fixed or
          variable, as well as life insurance.  The latter will
          also establish a basis for a sound estate plan.
               If you are financially independent at retirement,
          it can become a time of new opportunities, a time to
          try a second career, to develop a new lifestyle or to
          pursue new dreams and goals.  Instead of a period of
          boredom and disenchantment, retirement can be your most
          stimulating, fulfilling time ever -- your true golden
          years.
         
          You can retire rich
         
               What is the idyllic way to spend your retirement
          years?  Travel to all the exotic places you never had
          time to before?  A beach home where the sun always
          shines?  A cozy mountain retreat?  However you picture
          it for yourself, it's going to be a lot harder to
          achieve than it was for your parents' generation.
               With Social Security cuts and rising health care
          costs clouding the future, most Americans are worried
          about funding their retirement.  But sticking to a few
          simple strategies, you should be able to retire
          comfortably, or with a little luck, lavishly.
               Your company's retirement plans may be more than
          enough to feather your nest, especially if your firm
          offers a 401(k) plan.  These plans allow you to deduct
          up to nearly $9,000 annually from your pre-tax income
          and place it in a managed investment fund.  Often,
          matching funds are pitched in by your employer.  Put
          away the maximum amount, and you could find yourself
          with $500,000 in savings after 25 years.
               If you're successfully self-employed, you can set
          aside an even higher percentage of your income as
          savings.  Keogh plans and SEPs (simplified employee
          pensions) allow you to save up to 13 percent of your
          income tax-free, and you can salt away up to 20 percent
          of your income in a Keogh (to a maximum of $30,000) if
          you agree to put away the same percentage of your
          income each year.  Most such plans offer productive
          interest yields.
               A growing number of two-income families are
          tightening their belts for the future by undertaking to
          save or invest one spouse's entire earnings.  Doing so
          may require you to forego some luxuries in the present,
          but prudent investment of the "extra" income in savings
          plans, mutual funds, and insurance can pay off big in
          your golden years.
               The road to retirement comfort can also be paved
          with real-estate investment.  Some families have put
          their savings into the purchase of one or two multi-
          family rental units.  Once your units are paid for, you
          can turn profit on them through rental revenues and tax
          breaks for homeowners.  You can then plow the profits
          back into savings and investment, giving yourself more
          padding for a plush future.
         
          IRAs are still one of the best wealth-builders around
         
               Nobody likes to pay taxes, and nearly everybody is
          concerned about retirement.  Yet many investors neglect
          or underutilize one of the best ways to escape the
          taxman's clutches -- the individual retirement account.
               IRAs have declined in popularity since Congress
          disallowed tax deductions on IRA contributions for most
          individuals with employer-sponsored pension plans.  But
          the biggest advantage of an IRA, the ability to shield
          investment earnings from income taxes, remains intact.
               To utilize IRAs fully, you must know both how to
          exploit their tax advantages and what investments to
          put in an IRA.  In many respects these objectives are
          interrelated.  IRAs should be viewed as part of your
          overall portfolio.  If income stocks, bonds, or income
          funds have a place in your portfolio, place those
          securities in an IRA.  That way, dividends and interest
          payments, normally taxed each year, can compound tax
          free.
               All else equal, your lowest-yielding stocks should
          be held outside an IRA.  Taxes on capital gains are
          deferred until a stock is sold, so an IRA's tax shield
          is not as valuable.  In fact, by putting a capital-
          gains vehicle in an IRA, you forever lose the ability
          to pay lower capital gains taxes on the gains.  All
          gains are taxed at ordinary rates upon withdrawal from
          an IRA.
               If you plan to sell a stock after a couple of
          years, however, holding it in an IRA may be worthwhile.
          But losses on assets held within an IRA are not tax
          deductible, so highly speculative investments should be
          kept outside your IRA.  Whatever you do, don't put
          variable annuities, municipal bonds, or other tax-
          advantaged vehicles in an IRA.  Municipal bonds pay
          lower yields because the interest they pay is tax-
          exempt, but that interest will be taxable when
          withdrawn from an IRA.
         
         
                  Seeking the Ideal Retirement Investment
         
               There are many possible investments available
          today which can be accumulated for one's "retirement
          nest egg."  Some examples include:
         
                   Certificates of Deposit       Mutual Funds
                   Stocks and Bonds              Municipal Bonds
                   Deferred Annuities            Real Estate
         
             . . . plus many others, including Qualified
          Retirement Plans.
         
               However, the complexity of today's tax laws and
          government regulations which pertain to Qualified
          Retirement Plans has prompted many people to seek
          alternative ways to provide for their retirement years.
         
         
               DESIRABLE FEATURES IN A RETIREMENT INVESTMENT
         
               1. No legal, accounting, or actuarial costs.
               2. No annual administration costs.
               3. No complex rules regarding discrimination.
               4. A provision for automatic withdrawal of money
          from one's checking account or paycheck.
               5. A conservative investment policy.
               6. A death benefit which is income tax free.
               7. Contribution of pre-taxed dollars.
               8. Tax-free accumulation of funds.
               9. Withdrawal of funds without penalties or
          taxation.
         
         
                         The Accumulation Process
         
         
               There are three basic phases to accumulating one's
          "retirement nest egg."  Those phases are:
         
               1. The Contribution Period
         
               2. The Accumulation Period, and
         
               3. The Withdrawal Period
         
         
          PERIODIC
        CONTRIBUTIONS
         
        ³     ³    ³
        ³ $   ³    ³ $          ÉÍÍÍÍÍÍÍÍÍÍÍÍ»
        ³     ³$   ³         ÉÍͼ            ÈÍÍ»
        $  $  ³    v      ÉÍͼ  ÚÄÄÄÄÄÄÄÄÄÄÄÄ¿  ÈÍÍ»
        ³     ³  $     ÉÍͼ     ³    YOUR    ³     ÈÍÍ»
        ³     v     ÉÍͼ        ³ RETIREMENT ³        ÈÍÍ»
        ³ $      ÉÍͼ           ³  NEST EGG  ³           ÈÍÍ»
        v     ÉÍͼ        $     ÀÄÄÄÄÄÄÄÄÄÄÄÄÙ     $        ÈÍÍ»
           ÉÍͼ       $                                $       ÈÍÍ»
        ÉÍͼ                 $                  $                 ÈÍÍ»
        º                                                            º
     ÉÍͼ                     ACCUMULATION YEARS                     ÈÍÍ»
     ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍËÍÍÍÍËÍÍÍÍËÍÍÍÍÍÍÍËÍÍÍËÍÍÍËÍÍÍËÍÍÍÍÍÍÍͼ
     TODAY                       º    º    º       º$  º   º   º    DEATH
                                  ³ $  ³ $  ³       ³ $ ³   ³   ³
                                 ³  $ ³  $ ³       ³   ³$  ³   ³
                                 v    v    v       ³   ³ $ ³   ³
                              CHILDREN'S NEEDS     ³   ³   ³$  ³
                               - College           ³   ³   ³ $ ³
                               - Weddings          v   v   v   v
                                  etc.              RETIREMENT
                                                    WITHDRAWALS
         
         
         
               WILL THERE BE ENOUGH IN YOUR RETIREMENT NEST EGG?
         
         
                   Taxation While Accumulating The Nest Egg
         
               In comparing various types of investments, one
          must consider the question of income taxes.  Most
          investments are taxed during one or more of the three
          phases of building the retirement nest egg.
         
         
           ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ»
           º 1. TAXATION DURING THE         º
           º    CONTRIBUTION PERIOD         º
           ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄĶ
           º  Are Contributions made with:  º
           º                                º
           º  1. Pre-tax dollars, or        º
           º                                º
           º  2. After-tax dollars          º
           ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ
         
         
         
                            ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ»
                            º 2. TAXATION DURING THE         º
                            º    ACCUMULATION PERIOD         º
                            ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄĶ
                            º  Are Earnings Taxed:           º
                            º                                º
                            º  1. As Income is Earned,       º
                            º                                º
                            º  2. As Assets are Sold, or     º
                            º                                º
                            º  3. Not Taxed During           º
                            º     Accumulation Period        º
                            ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ
         
         
         
          ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ»
          º 3. TAXATION DURING THE        º
          º    WITHDRAWAL PERIOD          º
          ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄĶ
          º  When Withdrawn, Are Funds:   º
          º                               º
          º  1. Fully Taxable,            º
          º                               º
          º  2. Partially Taxable, or     º
          º                               º
          º  3. Not Taxable               º
          ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ
         
         
               Proper tax deferral or avoidance will result in a
          larger retirement benefit.
         
               Potential Problems When Comparing Investments
         
               There are four basic methods of taxing an
          investment as illustrated in the following chart:
         
         
     ÉÍÍÍÍÍÍËÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍËÍÍÍÍÍÍÍÍÍÍÍÑÍÍÍÍÍÍÍÍÍÍÍÍÍÑÍÍÍÍÍÍÍÍÍÍÍÍ»
     º      º  EXAMPLE OF THIS  º PRE-TAX or³   TAXABLE   ³ TAXABLE AT º
     º TAX  º    METHOD OF      º AFTER TAX ³    DURING   ³  DISTRI-   º
     ºMETHODº     TAXATION      º  DEPOSITS ³ ACCUMULATION³  BUTION    º
     ÇÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄĶ
     º   1  º CERT. OF DEPOSIT  º AFTER TAX ³     YES     ³ PARTIALLY  º
     ÇÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄĶ
     º   2  º QUALIFIED PLAN    º  PRE-TAX  ³     NO      ³   FULLY    º
     ÇÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄĶ
     º   3  º MUNICIPAL BONDS   º AFTER TAX ³     NO      ³    NO      º
     ÇÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ×ÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄĶ
     º   4  º DEFERRED ANNUITY  º AFTER TAX ³     NO      ³ PARTIALLY  º
     ÈÍÍÍÍÍÍÊÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÊÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍͼ
         
         
               It is somewhat difficult to compare investments
          when each of them is taxed by a different method.
               For example, additional pre-tax dollars would be
          available for investment in a qualified retirement plan
          over an after-tax investment like personally owned
          stocks, bonds, mutual funds, etc.
               On the other hand, the qualified retirement plan
          generally has a much higher annual maintenance fee to
          cover accounting and actuarial fees, the cost of
          including other employees and potential tax penalties
          upon distribution.  Even the thought of further
          government involvement has its own "emotional costs"
          for many people.
               Also, more and more people today are considering
          the value of life insurance as a supplemental
          retirement plan.  These plans generally take the form
          of a cash value life insurance policy, where the
          balance of the premium (after certain charges and
          expenses) is credited to the account and interest is
          allowed to accumulate.  (For details, refer to the
          complete insurance company illustration.)  Comparing
          only the cash value account to the other investments
          does not take into consideration that a portion of each
          deposit pays for the death benefit as well, an
          advantage which is not found in the other planning
          vehicles.
               These factors should all be taken into account in
          reviewing this comparison.
         
         
                  The Value of Tax-free Compound Interest
         
               Much of the discussion of the growing value of a
          retirement fund or annuity investment depends upon the
          tax free compounding of the earnings.
               Everyone knows about the "miracle of compound
          interest."  It is such a cliche that almost everyone
          ignores the powerful, fundamental truth underlying the
          concept.  And few people understand how to make
          compound interest work for them. 
               Compounding is a two-way street.  Debts compound,
          too.  That is why so many "wealthy" people are going
          bankrupt, for example.  Back in the 1970s and 1980s,
          the fashion of the time was to buy real estate
          leveraged with debt, and roll over the debt, counting
          on an increase in the value of the property to pay off
          the debt and make a profit.
               And in much of the United States, real estate
          values did increase at a rate that enabled a lot of
          people to make a lot of money purely on debt financing.
          They would buy a property.  And they would pay for it
          with borrowed money, sometimes 90% or more of the total
          value.  (The banks played along with this game. They
          made money too as long as prices were rising.)
               Instead of paying off the loan, they would allow
          the principal and interest to build.  At 10%
          interest...after a year the principal on a $100,000
          loan would grow to $110,000.  In five years it would be
          a monstrous $161,000, and so on.
               The trouble is, real estate values don't go in one
          direction only.  They also go down, as is they are now
          in many parts of the world.  All that built-up,
          compounded debt eventually has to be paid.  And very
          often, real estate investors do not have the means to
          actually pay off the debt they contracted.  They never
          expected to have to do so.
               The secret of compound interest is to be on the
          right side of it. Debts compound and so do costs.
          Being on the right side of compounding means
          positioning investments so that time works for them,
          rather than against them.  When investments are
          positioned properly, each passing day adds to their
          value, free from taxes and inflation.
               More than 2,000 years ago the philosopher
          Aristotle explained that the secret of success in
          anything was habit.  Aristotle used the word "ethos."
          To him it was the crucial ingredient of all genius.
          And it was nothing more than a recognition of the
          concept of compound interest applied to life itself.
               Aristotle recognized that people do not simply
          wake up one day with the idea for a great
          invention...or jump to the command of a great army...or
          write down a marvelous essay...or get rich.
               All progress is made by small increments
          compounding over time.  A great thinker thinks hard for
          a long time and, over time, comes up with great
          thoughts.
               A great builder lays one brick at a time and, over
          time, builds great monuments.
               A great artist works day after day and, over time,
          produces great works of art.
               So too, a man builds his wealth a little each
          day...and over time...becomes very rich.
               The idea of building wealth over time has a kind
          of tedious ring to it, but it leaves out the entire
          power of compounding.  With compounding, time adds to
          value.  Instead of being tedious, the passage of time
          in the investment plan becomes an important ingredient
          that turns the capital into more.
               Thus the "miracle of compound interest."  It is
          based upon a powerful, fundamental truth, although too
          few people understand how to make compound interest
          work for them.
               The results are incredible.  As we showed earlier,
          a 20% annual free of tax compounds to a sum 1200%
          larger over a lifetime than the same sum with tax.  It
          is the difference between $8 million and $100 million
          over 40 years.  And the same magic applies when you
          start with smaller amounts.
               But we do want to stress that just because money
          is offshore does not automatically mean it is tax-free.
          It is important that a proper and legal structure be
          used to keep the money tax-free, either through
          annuities, trusts, or other structures that you choose
          only after proper accounting and legal advice.
               $2,000 a year into a tax-free account investing in
          stocks that pay 10% dividends, means $35,062.31 after
          10 years -- not including any capital gains.
         
          YEAR                        TAX-FREE            INCLUDING
                                      TOTAL               DIVIDENDS       
                                               
          1 starting capital            $2,000.00          $2,200.00
          2 add US$2,000                $4,200.00          $4,620.00
          3 each year                   $6,620.00          $7,282.00
          4                             $9,282.00         $10,210.20
          5                            $12,210.20         $13,431.22
          6                            $15,431.22         $16,974.34
          7                            $18,974.34         $20,871.77
          8                            $22,871.77         $25,158.94
          9                            $27,158.94         $29,874.83
          10                           $31,874.83         $35,062.31
         
               After 25 years, he'd have $216,363.29 -- just by putting
          $2,000 a year into his IRA, with its $2,000 contribution limit.
          An annuity has no such limit.
         
          11               $37,062.31     $40,768.54
          12               $42,768.54     $47,045.39
          13               $49,045.39     $53,949.92
          14               $55,949.92     $61,544.91
          15               $63,544.91     $69,899.40
          16               $71,899.40     $79,089.34
          17               $81,089.34     $89,198.27
          18               $91,198.27    $100,318.09
          19              $102,318.09    $112,549.89
          20              $114,549.89    $126,004.87
          21              $128,004.87    $140,805.35
          22              $142,805.35    $157,085.88
          23              $159,085.88    $174,994.46
          24              $176,994.46    $194,693.90
          25              $196,693.90    $216,363.29
         
         
               Compounding this kind of income from investments,
          in a tax-free annuity, is a guaranteed way to build
          wealth.  There weren't any extra risks, or any extra
          effort.  Once the wealth-building strategy was in
          place, it was just a matter of time.  Most investors
          are looking for extraordinary capital gains -- and most
          fail to realize how hard it is to achieve that.
          Wealth-building investors should seek investments
          offering decent dividends or interest, and let that
          yield compound.  Think of it another way:
         
         
         
                       Amounts at Compound Interest
         
         
             Multiply the Principal by the Factor in the Table
         
     Years   1%         2%      3%      4%      5%      6%      7%
       1  1.0100     1.0200  1.0300  1.0400  1.0500  1.0600  1.0700 
       2  1.0201     1.0404  1.0609  1.0816  1.1025  1.1236  1.1449 
       3  1.0303     1.0612  1.0927  1.1249  1.1576  1.1910  1.2250 
       4  1.0406     1.0824  1.1255  1.1699  1.2155  1.2625  1.3108 
         
       5  1.0510     1.1041  1.1593  1.2167  1.2763  1.3382  1.4026 
       6  1.0615     1.1262  1.1941  1.2653  1.3401  1.4185  1.5007 
       7  1.0721     1.1487  1.2299  1.3159  1.4071  1.5036  1.6058 
       8  1.0829     1.1717  1.2668  1.3686  1.4775  1.5938  1.7182 
       9  1.0937     1.1951  1.3048  1.4233  1.5513  1.6895  1.8385 
       10 1.1046     1.2190  1.3439  1.4802  1.6289  1.7908  1.9672 
         
       11 1.1157     1 2434  1.3842  1.5395  1.7103  1.8983  2.1049 
       12 1.1268     1 2682  1.4258  1.6010  1.7959  2.0122  2.2522 
       13 1.1381     1.2936  1.4685  1.6651  1.8856  2.1329  2.4098 
       14 1.1495     1.3195  1.5126  1.7317  1.9799  2.2609  2.5785 
       15 1.1610     1.3459  1.5580  1.8009  2.0789  2.3966  2.7590 
       16 1.1726     1.3728  1.6047  1.8730  2.1829  2.5404  2.9522 
       17 1.1843     1.4002  1.6528  1.9479  2.2920  2.6928  3.1588 
       19 1.2081     1.4568  1.7535  2.1068  2.5270  3.0256  3.6165 
       20 1.2202     1.4859  1.8061  2.1911  2.6533  3.2071  3.8697 
         
       21 1.2324     1.5157  1.8603  2.2788  2.7860  3.3996  4.1406 
       22 1.2447     1.5460  1.9161  2.3699  2.9253  3.6035  4.4304 
       23 1.2572     1.5769  1.9736  2.4647  3.0715  3.8197  4.7405 
       24 1.2697     1.6084  2.0328  2.5633  3.2251  4.0489  5.0724 
       25 1.2824     1.6406  2.0938  2.6658  3.3864  4.2919  5.4274 
         
       26 1.2953     1.6734  2.1566  2.7725  3.5557  4.5494  5.8074 
       27 1.3082     1.7069  2.2213  2.8834  3.7335  4.8223  6.2139 
       28 1.3213     1.7410  2.2213  2.9987  3.9201  5.1117  6.6488 
       29 1.3345     1.7758  2.3566  3.1187  4.1161  5.4184  7.1143 
       30 1.3476     1.8114  2.4773  3.7434  4.3219  5.7435  7.6123 
         
         
         
         
     Years   8%         9%     10%     11%     12%    13%
         
       1  1.0800     1.0900  1.1000  1.1100  1.1200  1.1300
       2  1.1664     1.1881  1.2100  1.2321  1.2544  1.2769
       3  1.2597     1.2950  1.3310  1.3676  1.4049  1.4429
       4  1.3605     1.4116  1.4641  1.5181  1.5735  1.6305
   
       5  1.4693     1.5386  1.6105  1.6851  1.7623  1.8424
       6  1.5869     1.6771  1.7716  1.8704  1.9738  2.0820
   
       7  1.7138     1.8280  1.9487  2.0762  2.2107  2.3526
       8  1.8509     1.9926  2.1436  2.3045  2.4760  2.6584
       9  1.9990     2.1719  2.3579  2.5580  2.7731  3.0040
       10 2.1589     2.3674  2.5937  2.8394  3.1058  3.3946
       
       11 2.3316     2.5804  2.8531  3.1518  3.4785  3.8359
       12 2.5182     2.8127  3.1384  3.4985  3.8960  4.3345
       13 2.7196     3.0658  3.4523  3.8833  4.3635  4.8980
       14 2.9372     3.3417  3.7975  4.3104  4.8871  5.5348
       15 3.1722     3.6425  4.1772  4.7846  5.4736  6.2543
         
       16 3.4259     3.9703  4.5950  5.3109  6.1304  7.0673
       17 3.7000     4.3276  5.0545  5.8951  6.8660  7.9861
       18 3.9960     4.7171  5.5599  6.5436  7.6900  9.0243
       19 4.3157     5.1417  6.1159  7.2633  8.6128  10.0197
       20 4.6610     5.6044  6.7275  8.0623  9.6463  11.5231
         
       21 5.0338     6.1088  7.4002  8.9492  10.8038 13.0211
       22 5.4365     6.6586  8.1403  9.9336  12.1003 14.7138
       23 5.8715     7.2579  8.9543  11.0263 13.5523 16.6266
       24 6.3412     7.9111  9.8497  12.2392 15.1786 18.7881
       25 6.8485     8.6231  10.8347 13.5855 17.0001 21.2305
       
       26 7.3964     9.3992  11.9182 15.0797 19.0401 23.9905
       27 7.9881     10.2451 13.1100 16.7386 21.3249 27.1093
       28 8.6271     11.1671 14.4210 18.5799 23.8839 30.6335
       29 9.3173     12.1722 15.8631 20.6237 26.7499 34.6158
       30 10.0627    13.2677 17.4494 22.8923 29.9599 39.1159
       
         
         
               Does It Matter When You Contribute to an IRA?
         
         
               When contributions to an IRA are consistently made
          at the beginning of the year rather than at the end,
          the funds have an extra 12 months in which to grow.
               Over a period of years there is a substantial
          difference in the amount accumulated.
         
         
          $2,000 PER YEAR ACCUMULATED AT VARIOUS RATES OF RETURN*
         
           ÉÍÍÍÍÍÍÍÍÍÍÍÍËÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ»
           º NUMBER OF  º                  5% RETURN                º
           º YEARS FROM ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄĶ
           º BEGINNING  º              ³ CONTRIBUTION ³  INCREASE   º
           º   OF THE   º     MADE     ³     MADE     ³ IN  AMOUNT  º
           º FIRST YEAR º    JAN. 1    ³    DEC. 31   ³ ACCUMULATED º
           ÌÍÍÍÍÍÍÍÍÍÍÍÍÎÍÍÍÍÍÍÍÍÍÍÍÍÍÍØÍÍÍÍÍÍÍÍÍÍÍÍÍÍØÍÍÍÍÍÍÍÍÍÍÍÍ͹
           º      5     º   $ 11,604   ³   $ 11,051   ³   $   553   º
           º     10     º     26,414   ³     25,156   ³     1,258   º
           º     15     º     45,315   ³     43,157   ³     2,158   º
           º     20     º     69,439   ³     66,132   ³     3,307   º
           º     25     º    100,227   ³     95,454   ³     4,773   º
           º     30     º    139,522   ³    132,878   ³     6,644   º
           º     35     º    189,673   ³    180,641   ³     9,032   º
           º     40     º    253,680   ³    241,600   ³    12,080   º
           ÈÍÍÍÍÍÍÍÍÍÍÍÍÊÍÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÍͼ
         
           ÉÍÍÍÍÍÍÍÍÍÍÍÍËÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ»
           º NUMBER OF  º                 10% RETURN                º
           º YEARS FROM ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄĶ
           º BEGINNING  º CONTRIBUTION ³ CONTRIBUTION ³  INCREASE   º
           º   OF THE   º     MADE     ³     MADE     ³ IN  AMOUNT  º
           º FIRST YEAR º    JAN. 1    ³    DEC. 31   ³ ACCUMULATED º
           ÌÍÍÍÍÍÍÍÍÍÍÍÍÎÍÍÍÍÍÍÍÍÍÍÍÍÍÍØÍÍÍÍÍÍÍÍÍÍÍÍÍÍØÍÍÍÍÍÍÍÍÍÍÍÍ͹
           º       5    º   $ 13,431   ³   $ 12,210   ³  $ 1,221    º
           º      10    º     35,062   ³     31,874   ³    3,188    º
           º      15    º     69,899   ³     63,544   ³    6,355    º
           º      20    º    126,004   ³    114,549   ³   11,455    º
           º      25    º    216,363   ³    196,694   ³   19,669    º
           º      30    º    361,886   ³    328,988   ³   32,898    º
           º      35    º    596,253   ³    542,048   ³   54,205    º
           º      40    º    973,702   ³    885,186   ³   88,516    º
           ÈÍÍÍÍÍÍÍÍÍÍÍÍÊÍÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÍͼ
     
         
          * Assumes compounding annually - amounts would be
          higher if compounded quarterly, monthly, daily, etc.
         
               The overall effect is that you have one full extra
          year of growth when you make the contribution at the
          beginning of the tax year.
         
         
         
                          IRAs vs. Life Insurance
         
               Life insurance in a IRA may sound like a great way
          to plan for one's retirement.  However, the law does
          not allow IRAs to purchase life insurance contracts.
               After comparing cash value life insurance to the
          benefits of an IRA, many people are choosing the life
          insurance method as a better alternative.  The
          following chart compares the two methods:
         
         
                            OVERVIEW COMPARISON
         
     ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÑÍÍÍÍÍÍÍÍÍÍÍÑÍÍÍÍÍÍÍÍÍÍÍ»
     º                                            ³           ³   LIFE    º
     º             DESIRED FEATURE                ³    IRA    ³ INSURANCE º
     º                                            ³   METHOD  ³   METHOD  º
     ÇÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄĶ
     º 1. Can you contribute as much as you want? ³     NO    ³    YES    º
     º                                            ³           ³           º
     º 2. Is the contribution deductible?         ³ SOMETIMES ³    NO     º
     º                                            ³           ³           º
     º 3. Is the accumulation tax-deferred?       ³    YES    ³    YES    º
     º                                            ³           ³           º
     º 4. Can participants borrow funds?          ³     NO    ³    YES    º
     º                                            ³           ³           º
     º 5. Are withdrawals before 59 1/2 free      ³   MAYBE   ³    YES    º
     º    of the 10% penalty tax?                 ³           ³           º
     º                                            ³           ³           º
     º 6. Can forced withdrawals at age 70 1/2    ³     NO    ³    YES    º
     º    be avoided?                             ³           ³           º
     º                                            ³           ³           º
     º 7. Does the death benefit exceed the       ³     NO    ³    YES    º
     º    accumulated cash?                       ³           ³           º
     º                                            ³           ³           º
     º 8. Do heirs of a participant receive the   ³     NO    ³    YES    º
     º    funds income tax-free?                  ³           ³           º
     º                                            ³           ³           º
     º 9. Can provisions be made to continue      ³ SOMETIMES ³    YES    º
     º    contributions if disability occurs?     ³           ³           º
     º                                            ³           ³           º
     º10. Can death benefits be estate tax free?  ³     NO    ³    YES    º
     ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍÍÏÍÍÍÍÍÍÍÍÍÍͼ
         
         
         
               1. IRA contributions are limited to $2,000 per
          year (or $2,250 if non-employed spouse).  Contributions
          to an insurance policy are limited only by financial
          means and health of participant.
               2. Life insurance premiums are not deducible.
          Contributions to IRAs are deductible unless participant
          is also covered by an employer's qualified plan, in
          which case, the contributions are not deductible for
          married couples earning over $50,000 (or single
          taxpayers earning over $35,000); and they are only
          partially deductible if salaries are between $40,000
          and $50,000 (or $25,000 and $35,000 for single
          taxpayers).
               3. Accumulation of funds in both methods is
          tax-deferred.
               4. Funds may not be borrowed from an IRA nor can
          they be used as collateral for a loan.  Life insurance
          cash values are readily available at rates below
          market.
               5. There is a tax penalty on IRA withdrawals made
          prior to age 59 1/2 unless the participant dies, is
          disabled or elects to begin distribution of equal
          payments over his or her life expectancy.
               6. Persons with IRAs must begin taking withdrawals
          (and begin paying the income tax due) after they reach
          age 70 1/2 years.  There is no such rule for life
          insurance.
               7. Whatever has been accumulated in an IRA will be
          paid at the death of the participant to his or her
          named beneficiaries.  Life insurance generally has a
          death benefit which greatly exceeds the accumulated
          cash values.
               8. Heirs who receive a death benefit from an IRA
          must pay income tax on the amount received.  If the
          amount in all Qualified Plans and IRAs exceed certain
          limits, there will also be a 15% penalty tax.  Heirs
          who receive the death benefit of life insurance
          policies are not required to pay any income tax.
               9. Life insurance contracts often provide for a
          disability waiver rider which guarantees the premium
          will continue to be paid even if the insured becomes
          disabled.  Disabled IRA participants would  not be able
          to contribute to an IRA unless they received earned
          income for the year.
               10. Life insurance owned by an irrevocable trust
          can be free of estate taxes.