approach piece with ppa

PLAN WISELY.LIVE CONFIDENTLY.CREATE A LIFETIME OF FINANCIAL SECURITY.

LIVE THE LIFE YOU ENVISION

Whether you’re fresh out of college, well on your way to living your dream or eagerly approaching retirement, make sure you’re financially prepared to achieve a lifetime of goals.

Of course, your goals for your future are unique. You may envision a house full of kids or grandchildren. A vacation home in the mountains. A meaningful career. Maybe even a business of your own. Whatever you imagine for you and your family, let us help you reach your goals with a personalized financial plan.

We’ll apply time-tested strategies, provide expert advice and make recommendations based on your priorities. And as your circumstances and priorities change over time, we’ll work with you to revise your plan so you can meet each of life’s challenges head on, and celebrate your accomplishments along the way.

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GETTING STARTED

You’ve launched your career. You’ve got big dreams. Lofty goals. You need to ensure you can achieve them. By taking the first steps now, you’ll be setting yourself up for a lifetime of financial security.

REFINING YOUR GOALS

As your wealth and your family grow, evaluate your financial plan. Make certain it’s designed to meet your changing priorities, so you can protect the financial well-being of your family and your ability to reach your goals.

BALANCING PRIORITIES

If you’re like many people, the “nest” may never be empty. And while you may be supporting a business, helping your children become established or caring for aging family members, make sure it’s also a priority to meet your own goals for retirement.

APPROACHING RETIREMENT

As you zero in on retirement, know that it’s never too late to improve your financial situation. We’ll share strategies you can use to make the most of what you’re bringing to the table.

ENSURING YOUR MONEY LASTS

The strategies you use to accumulate your nest egg aren’t the same ones you’ll need to make sure your money lasts a lifetime. Take steps to maximize your income so you can be free to live the life you envision in retirement.

We’ll help to ensure your financial plan meets your needs—and the needs of those you love— throughout life.

CREATING YOUR VISION

As you embark on life, the picture of your ideal future is coming into focus— a job in the city, a house full of kids, maybe a start-up business of your own. Make sure you have a financial plan in place that can make today’s vision tomorrow’s reality.

PLAN FOR LIFE CELEBRATE THE MILESTONES ALONG YOUR UNIQUE JOURNEY.

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1. IDENTIFY YOUR GOALS

First, we’ll make sure we understand what’s important to you and your loved ones, where you are today and where you want to be in the future.

2. DEVELOP YOUR PERSONALIZED PLAN

We’ll analyze your financial situation, and develop recommendations that can help you and your family achieve financial security.

3. IMPLEMENT YOUR STRATEGIES

We’ll bring your financial plan to life with quality products and solutions.

4. REVIEW YOUR PLAN

Throughout life, even small changes can impact your financial plan. We’ll help you adjust your plan as needed to stay on track.

RISK MANAGEMENT:

Be financially prepared to weather life’s storms. We’ll help to ensure you, your family and your income are adequately protected against risk.

WEALTH ACCUMULATION:

Make the most of your money. Our financial planning process and investment advisory services are designed to help you achieve your goals.

WEALTH PRESERVATION AND DISTRIBUTION:

Ensure your money lasts as long as you live. We’ll help you transition your wealth into predictable income in retirement and leave the legacy you desire.

Although your financial strategy will be one of a kind, we’ll ensure that it’s built on a solid foundation to help you protect against the unexpected, accumulate wealth and preserve what you’re working so hard to achieve.

WE’LL WORK WITH YOU TO:

WEALTHPRESERVATION & DISTRIBUTION

WEALTHACCUMULATION

FINANCIALSECURITY

RISKMANAGEMENT

1. IDENTIFY GOALS

2. PERSONALIZEDPLAN4. REVIEW

3. IMPLEMENTATION

DESIGN YOUR STRATEGY

CREATE YOUR FINANCIAL FUTURE ON OUR SOLID FOUNDATION.

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CONTROL YOUR FUTURE

COMPREHENSIVE PLANNING PUTS YOU IN COMMAND. With a broad, clear picture of your financial situation you’ll be empowered to make decisions that are right for you and those you love, utilizing a full spectrum of financial planning solutions. We offer:

WEALTH AND INCOME PROTECTIONAssets that take years to accumulate can be consumed in a fraction of that time. Imagine the impact if a breadwinner in your family became sick, disabled, was unable to work or died. What if a loved one required specialized care on an extended basis? A solid financial plan should be designed to protect you and your family against potentially unforeseen and devastating events in life.

EDUCATION PLANNINGWith the cost of higher education rising, many families wonder how to prepare for this expense. Your customized plan may include saving and investment strategies to help put your mind at ease.

RETIREMENT PLANNINGTwo of the greatest financial challenges you’ll face are accumulating enough assets for retirement and making those assets last a lifetime. Your retirement income plan should quantify your needs, identify your sources of income, allocate your assets appropriately and help guard against outliving those assets.

INVESTMENT ADVISORY SERVICES, TRUST AND PRIVATE CLIENT SERVICESOur investment and advisory services can help you manage your assets and assess your short, intermediate and long-term needs. Our trust and private client services are designed to give you control over the distribution of your assets, to help preserve wealth across generations, and ensure that your beneficiaries will get the most out of what you wish to leave them.

ESTATE PLANNINGBuilding a lasting legacy takes more than simply accumulating a large portfolio. An estate plan should provide details to help you efficiently transfer your assets during your life, as well as meet your end-of-life desires and obligations. We’ll help you develop a plan to ensure your wishes are honored today and in the event of your incapacity or death.

BUSINESS PLANNINGIf you own a closely held business, we understand that business and personal needs are intertwined. That’s why we’ll take an integrated approach to helping you prioritize needs as your business and personal life evolves. From risk management and employee benefits to business succession and estate planning, we’ll help you create, grow and protect your business’ value, so you can enjoy the rewards of your hard work.

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MAP THE JOURNEYYour path to financial security will be supported by a host of powerful tools including Northwestern Mutual’s Personal Planning Analysis, or PPA.

The PPA is a comprehensive plan created with your financial representative that offers a view of your current situation, illustrates your financial future, identifies gaps that may exist, and offers recommendations on how to address them.

On the following pages, you’ll see excerpts from a sample PPA developed for a hypothetical couple. The samples are designed to give you an idea of what to expect as you engage in our planning process, and illustrate the ways in which we can help you manage risk, accumulate wealth and preserve what you’re working so hard to achieve.

Discovery Agreement

David Perez and Christina Feeley-Perez

Your Planning Objectives

• To develop a plan to maintain your family’s lifestyle in the event of a premature death.

• To develop a plan to maintain your family’s lifestyle in the event of a long-term disability.

• To develop a plan to fund Daniel's and Julia's college educations.

• To develop a retirement income strategy that is specially designed for your situation.Having a specific asset distribution plan that is regularly monitored can eliminate any fearsyou many have of running out of money during retirement.

• To accumulate sufficient resources to retire comfortably.

• To allocate your investments consistent with your goals and objectives.

• To provide for the efficient and appropriate distribution of your estate assets in the event ofyour death and make sure your children have access to professional financial guidance (Trustservices, Financial Planner, etc.).

• To develop a plan to provide funding if needed for long-term care.

• To ensure implementation of all goals and objectives detailed above is in alignment withyour core values. We understand those values to be: enjoy life, support your family throughboth time and money, integrity, being able to financially help Daniel and Julia without themasking, and hard work.

Because your situation will change, this analysis must be part of an ongoing process; importantdevelopments need to be incorporated into the analysis as they arise. The analysis includesassumptions that are noted in the report. Any references to legal or tax matters should be discussedwith your attorney or tax advisor.

SAMPLE PERSONAL PLANNING ANALYSISPLANNING OBJECTIVESYour financial representative will begin the planning process by asking thought-provoking questions about your current financial situation and where you want to be in the future. Once your goals are clearly identified, a discovery agreement will be drafted that documents your objectives based on what’s most important to you.

In the sample below, you’ll see the objectives identified by our hypothetical couple. On the pages that follow, you’ll see detailed illustrations from the sample plan about how the couple might achieve their objectives.

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PLAN FOR SURVIVOR’S INCOMEOne of the risks to a family’s financial security is planning for income needs upon the loss of a provider. In planning survivorship needs, your financial representative will work with you to understand your objectives and help you identify what may be needed to protect your loved ones against a potentially unforeseen and devastating event.

PLAN FOR DISABILITY INCOMEYour greatest asset is your ability to earn an income. Your financial representative will help you develop a plan to protect your goals and dreams for your loved ones in the event of illness or injury.


S u r v i v o r I n c o me - Da v i d

Current

41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Earned IncomeSocial SecurityNon-Qual & Educ Liquidation

Qualified Retire LiquidationRoth LiquidationShortage

Before-Tax Income NeedAfter-Tax Income Need

With $272,829 of Additional Life Insurance

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$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Earned IncomeSocial SecurityNon-Qual & Educ Liquidation

Qualified Retire LiquidationRoth LiquidationBefore-Tax Income Need

After-Tax Income Need

Values above the before-tax need line represent a surplus. Return rates used for the growth of investments arehypothetical assumptions you believe are reasonable for this plan and are not guarantees or projections.

Detailed Cash Flow at David's Death with Addition of Life Insurance

The couple’s goal is to maintain their current lifestyle in the event Christina is disabled by illness or injury.The top graph illustrates how the gap in cash flow (shown in red) will impact the family’s financial future. The bottom graph demonstrates how filling the gap with the recommended amount of life insurance eliminates the shortage.

Goal Coverage during Christina's Disability

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Goa

l Cov

erag

e

Needs Covered Shortage

Description Total Covered ShortagePercent

CoveredIncome Needs $5,951,092 $5,217,609 $733,483 87%

Values are reflected in today’s dollars by discounting at a 3.00% inflation rate.

Average Monthly Shortage to Age 65 in Today’s Dollars $1,092

You may qualify for a different amount of disability insurance (DI) than the shortage shown. While it isimportant to obtain as much DI coverage as possible, you may also need to consider additional strategies tohelp you build and preserve equity to fund future needs:

• Continuing (or increasing) saving strategies• Maintaining a suitable emergency fund• Repositioning current assets

• Reducing expenses• Including waiver of premium benefits in your

disability and life insurance policies

Return rates used for the growth of investments are hypothetical assumptions you believe are reasonable for this planand are not guarantees or projections.


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RETIREMENT PLANFor most individuals, saving for retirement is one of their most important financial planning priorities. Your financial representative will evaluate your current savings strategies to determine if you are on track to meet your retirement income needs. In addition, your financial representative can use a sophisticated analysis to test your plan against a wide range of outcomes in the market and the economy to project the likelihood of achieving your goals.


Detailed Cash Flow during Retirement

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$1,000,000

Social SecurityPensionAnnuity PaymentsWithdrawal from Life Ins

Non-Qual & Educ LiquidationQualified Retire LiquidationRoth LiquidationShortage



The graph depicts the couple’s year-by-year income and asset liquidation strategy. The red identifies where and when the plan falls short. While the primary purpose of life insurance is to provide a death benefit for survivors’ needs, the graph shows how cash value life insurance can be used as a supplemental source of retirement income.

PLAN FOR EDUCATION FUNDINGProviding for your children’s or grandchildren’s education is an important goal for many people. Today the cost of primary and secondary education continues to rise. Your financial representative will help you develop a plan to fund your family’s education goals.


Education Objectives

Ed u c a t i o n

Description Individual

Age atEnd ofYear

Starts atAge

AnnualAmount

(in today'sdollars)

Number ofYears

AnnualIncrease

RateResources

NeededDaniel's College Daniel 4 18 $25,000 4 7.0% $286,214Julia's College Julia 2 18 $25,000 4 7.0% $327,686

Resources Needed

Year(in today's

dollars)(in future

dollars)2027 $25,000 $64,4632028 $25,000 $68,9762029 $50,000 $147,6082030 $50,000 $157,9412031 $25,000 $84,4982032 $25,000 $90,413Total Resources Needed $613,900

The amounts and dates above are based on information provided by you. Annual increase rates used are hypotheticalrates at which you are assuming an amount will grow over time due to inflation or other reasons.

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PLAN TO OPTIMIZE RETIREMENT INCOMEAs you approach retirement, you’ll begin to think about how to turn your retirement assets into a steady paycheck. The Northwestern Mutual Retirement Strategy will help you optimize your retirement assets to provide income throughout retirement with a high probability of success.

PLAN FOR LONG-TERM CAREA long-term care need is one of the primary risks that could physically, emotionally and financially upset your retirement plans.


Retirement Allocation Strategy - Your Retirement Income

Your Retirement IncomeThe chart illustrates the ability to meet your total annual income goal with a 90% probability of success. The chart alsocompares how your essential needs could be covered with sources of lifetime income.

Annual Total NeedsAnnual Essential Needs

$0K

$25K

$50K

$75K

$100K

$125K

$150K

$175K

$200K

$225K

Sources of Retirement Income Option 1 Option 2 Option 3 Option 4 Option 5 Option 6Investments/Cash Reserve $90,300 $78,400 $65,450 $53,900 $40,600 $26,600Variable Payout Annuity $0 $0 $0 $0 $0 $17,766Fixed Payout Annuity $0 $17,304 $34,608 $51,912 $69,216 $69,216Other Expected Lifetime Income $55,885 $55,885 $55,885 $55,885 $55,885 $55,885Total Annual Income $146,185 $151,589 $155,943 $161,697 $165,701 $169,467

Coverage of Essential Needs with Lifetime Income

Annual Essential Needs: $166,667Total Annual Lifetime Income* $55,885 $73,189 $90,493 $107,797 $125,101 $142,867Shortage / Covered $110,782 $93,478 $76,174 $58,870 $41,566 $23,800

Coverage of All Needs with All Income

Annual Total Needs: $222,222Total Annual Income $146,185 $151,589 $155,943 $161,697 $165,701 $169,467Shortage / Covered $76,038 $70,634 $66,280 $60,526 $56,522 $52,756

*Annual lifetime income includes other expected lifetime income and income from fixed and variable payout annuities.

Supplemental Annual Income:Beginning at retirement, you stated you will receive $15,000 of annual income for 4 years. This is in addition to theTotal Annual Income shown.

IMPORTANT: The projections or other information generated by this Retirement Allocation regarding the likelihood of various investment outcomesare hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and overtime. Other investments not considered may have characteristics that are similar to or superior to those being analyzed.


Lo n g - Te r m Ca r e – Da v i d

Without Long-Term Care expenses

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$1,000,000




With Long-Term Care expenses starting at $250 per day (in today's dollars),beginning at age 83

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$0$200,000$400,000$600,000$800,000

$1,000,000$1,200,000$1,400,000$1,600,000$1,800,000





Effect on Detailed Retirement Cash Flow due to David's Long-Term Care

This graph depicts how long-term care expenses could dramatically change your retirement picture. As you start thinking about retirement income, the question is not what return you get “on” your assets, but what income you get “from” your assets.

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Current Portfolio to Proposed Asset Allocation Comparison for Retirement

The chart below shows the percentage and dollar amount differences at an asset class level between your CurrentPortfolio and the Proposed Asset Allocation. The Proposed Asset Allocation is consistent with an Aggressive riskprofile. Investors with an Aggressive risk profile are primarily interested in long-term growth and are willing to takereasonable risks of volatility and losses to achieve it. These investors are comfortable with the volatility and risk oflosses that accompanies higher risk investments. This Proposed Asset Allocation is within the range of the risk profileassigned to you based on the answers you provided to the Investor Profile. This comparison does not consider specificsecurities. All percentages are approximate due to rounding.

Current Portfolio Proposed Asset AllocationEquity 79%Fixed Income 4%Other 0%Cash 17%

Equity 80%Fixed Income 20%

Current Portfolio Proposed Asset Mix Difference

Asset ClassPercentageof Portfolio

DollarAmount

Percentageof Portfolio

DollarAmount

Percentageof Portfolio

DollarAmount

EquityUS Equity - Large Cap 74% $223,000 32% $96,640 -42% -$126,360US Equity - Mid Cap 1% $3,000 8% $24,160 +7% +$21,160US Equity - Small Cap 1% $3,000 3% $9,060 +2% +$6,060Int'l Developed Markets 1% $3,000 20% $60,400 +19% +$57,400Int'l Emerging Markets 1% $3,000 7% $21,140 +6% +$18,140Real Estate Securities 1% $3,000 5% $15,100 +4% +$12,100Commodities 0% $0 5% $15,100 +5% +$15,100Total Equity 79% $238,000 80% $241,600 +1% +$3,600

Fixed Income 4% $12,000 20% $60,400 +16% +$48,400

Other 0% $0 0% $0

Cash 17% $52,000 0% $0 -17% -$52,000

Total Portfolio 100% $302,000 100% $302,000


Recommendations

Re c o mme n d a t i o n s

Cash Flow Recommendations:

• Establish (or revise) and maintain a budget.

• Increase saving and investing to a target of 20% of earned income.

• Systematically pay down debt.

Income and Lifestyle Protection Recommendations:

• Build and maintain an Emergency fund (6 months' income).

• Supplement your group disability income insurance with additional disability incomeinsurance.

• Protect income and lifestyle with purchase of life insurance with combination of termand permanent life insurance.

• Consider conversion of current term life insurance to permanent insurance policies.

Education, Retirement and Investment Recommendations:

• Increase retirement savings into 401(k) to maximize company match.

• Establish Roth IRAs for savings beyond your contributions to 401(k).

• Rebalance assets according to risk tolerance.

• Consider asset diversification, including increasing non-qualified savings, deferredannuities, and permanent insurance.

• Fund 529 Plans for Daniel and Julia utilizing the state issued 529 plan to takeadvantage of the tax deduction.

Other Recommendations:

• Seek advice of an attorney to create or update wills, trusts, health and financialpowers of attorney, healthcare directives, create trusts for children, and appointguardians.

• Coordinate beneficiary designations with what you would show in your will.

• Maintain adequate property, liability and health insurance coverage.

• Encourage parents to consider funding for long-term care needs.

• Consider buying life insurance on each child.

PLAN FOR YOUR INVESTMENT ASSETSOne of the most important decisions you will make as an investor is how to divide your funds among different types of investments. Your financial representative will help you understand whether your portfolio’s allocation aligns with your goals and propose adjustments for you to consider, if needed. A portfolio should be reviewed periodically and your financial representative can help with this analysis.

SUMMARY RECOMMENDATIONSWhile your Personal Planning Analysis may include dozens of pages of detail, you will receive a concise and clear set of recommendations as part of your plan.

The planning process doesn’t end here. As part of your financial security journey, it’s important to monitor how well the plan is progressing. You’ll be able to access your accounts online at your convenience. And during regular meetings, you and your financial representative can review your progress together. And throughout your life, as your circumstances and priorities change, your financial representative will work with you to adjust your plan accordingly.

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TAKE THE FIRST STEPWE’LL LEAD THE WAY.At Northwestern Mutual, we’ve been helping clients take control of their financial futures for nearly 160 years. Through the Civil War, the Great Depression, two world wars and a number of recessions, we’ve stood strong alongside our clients, helping them manage financial risk and achieve financial security. And today, as the world’s economic environment continues to evolve, clients trust Northwestern Mutual to lead the way.

We put clients first and have built a long, rich history of doing the right thing for the people we serve. We don’t have shareholders or report to Wall Street. We’re not driven by the need to achieve short-term gains. Instead, as a mutual company, we’re able to focus on achieving long-term financial security for our clients and making personal connections with them that last a lifetime.

Through the Northwestern Mutual Foundation, we’re making our communities stronger, too. Across the country, our giving and volunteerism are focused on improving education, revitalizing neighborhoods, curing childhood cancer and helping families fighting the disease find happiness.

FINANCIAL STRENGTH RATINGSNORTHWESTERN MUTUAL HAS THE HIGHEST FINANCIAL STRENGTH RATINGS AWARDED TO ANY LIFE INSURER BY ALL FOUR OF THE MAJOR CREDIT RATING AGENCIES.

Ratings are for Northwestern Mutual Life Insurance Company and Northwestern Long Term Care Insurance Company, as of the most recent review and report by each rating agency. Northwestern Mutual’s ratings: Moody’s Investors Service Aaa (highest), 6/2014; A.M. Best Company A++ (highest), 4/2014; Fitch Ratings AAA (highest), 1/2014; Standard & Poor’s AA+ (second highest), 7/2014. Ratings are subject to change.

Aaa A++ AAA AA+

Moody’s Investors Service

A.M. Best Company Fitch Ratings Standard

& Poor’s

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LEVERAGE OUR EXPERTISEWhen you work with Northwestern Mutual, you’ll benefit from a wide range of financial planning expertise developed over nearly 160 years in the industry.

Your Financial Representative has access to a team of experts within Northwestern Mutual who offer the targeted expertise you may need to achieve your financial goals. From those who specialize in retirement and estate planning to long-term care, disability income insurance or employee benefits, our specialists work in partnership with you and your Financial Representative to develop, implement and monitor your personalized financial plan.

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Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI and its subsidiaries.

Life and disability insurance and annuities available through insurance agents of NM.

Long-term care insurance available through insurance agents of Northwestern Long Term Care Insurance Company, a subsidiary of NM.

Securities offered through registered representatives of Northwestern Mutual Investment Services, LLC (NMIS), a subsidiary of NM, broker-dealer and registered investment adviser. NMIS also offers investment advisory services through investment adviser representatives of NMIS.

Investment advisory services, trust and private client services and fee-based financial planning offered through representatives of Northwestern Mutual Wealth Management Company®, Milwaukee, WI, a subsidiary of NM and a limited purpose federal savings bank, member FDIC.

Investment products and trust services are not insured by the FDIC. Refer to appropriate product and service disclosure brochures for information about NMIS or NMWMC services before investing.

Northwestern Mutual financial representatives represent one or more but not necessarily all of the entities listed here. Many Northwestern Mutual financial representatives are qualified to offer some but not all of the products and services described in this brochure.

(29-5135) (Rev. 0714)

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