Retirement Sixtyfive

8/2/2019 Retirement Sixtyfive

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Are you prepared to lead the

retirement revolution?

When Im Sixty-Five


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Table of contents

Leading the retirement revolution

Introduction 1

The advent of the retirement revolution

From counter culture to counter retirement 2

Getting what you want and what you need 3

Confronting the five challenges

of the new retirement

Retirement challenges are a-changin, too 4

Planning to lead the retirement revolution

A time to sow, a time to reap 8

Finding potential solutions 10

Get together with your financial advisor 12

Conclusion

Volunteer for the revolution 13

The thing the Sixties did was to show us

the possibilities and the responsibility that

we all had. It wasnt the answer. It just

gave us a glimpse of the possibility.

John Lennon

Die Cut


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Are you prepared to lead the

retirement revolution?

Retirement, as such, is at an end. Its replacement focuses on activity, not rest;

on opportunity, not limits; and on beginnings, not endings. It provides the

rebirth of your dreams, the reforging of your career, the redesign of your life.

However, the ability to realize these changes to their fullest requires a renovation

of how income is created and maintained so that as a retiree, if that word still

applies, you can transform your life and the world around you.

Preparing for the next generation

of retirement

Lincoln Financial Group wants to

help you plan a retirement that defies

traditional notions, a retirement that

inspires others, a retirement that

allows you to chase your ideal of a

more carefree lifestyle.

When Im Sixty-Five is in the spirit of

the Sixties and its legacy, for people

who have lived revolutionary lives

of passion, of self-determination,

of conscience, and who dont want

their retirement to be any different.

This brochure is designed to help

you prepare for the new retirement,

overcome its new challenges, and

ultimately implement an income stream

for a new life as individual as yourself.

1


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The transformation of

retirement over the decades

In 1950, retirement lasted

on average less than three

and a half years, because life

expectancy was only 68.2 years!

Today, a retirement revolution is

taking place as millions confront

the possibility of living for over

25 years in retirement. What

will you do? What do you have

planned? More importantly, will

you be ready?

Retirement is about new

possibilities, new opportunities,

new experiences with a sense

of personal freedom and

potential spend it well!

2000

2002 Americans age 65 and

older spent an average of $3,586

on healthcare, representing about

12% of their total out-of-pocket

expenses, according to the U.S.

Bureau of Labor Statistics. That

share is expected only to increase

as healthcare costs rise faster

than benefits.

Source: U.S. Dept. of Labor Stat istics, 4/05.

2007 Sir Paul McCartney

turns 65.

1940

1941 Workers reaching the

age of 65 begin to receive a

guaranteed federal pension.To pay for Social Security, the

United States would build up a

reserve fund financed by new

payroll taxes on employers and

workers a combined 2% in

1937, rising to 6% in 1949.

Source: Soc. Sec. Admin., 4/05.

1946 First Baby Boomers born.

Source: U.S. Census Bureau, 4/05.

1950

1950 Sixteen workers paying

into Social Security for every

one retiree drawing benefits.With technological innovations

such advancements in room

and central air conditioning,

development of Sun Belt cities

such as Houston, Atlanta, Miami,

and Phoenix in the southern and

southwestern states was spurred,

leading to the snowbird.

Source: Soc. Sec. Admin., 4/05; Demographic Trendof the 20th Century, U.S. Census Bureau, 4/05.

1957 While Baby Boom peakswith 4.3 million babies born,

highest ever, diaper industry

revenues soar more than 50%.

Source: U.S. News and World Report, 3/86.

1990

1990 Oldies radio stations

start playing Beatles, Supremes,

and Beach Boys songs.

1998 33% of labor force is

age 45 and older.


1999 3.3 workers pay into the

Social Security system for every

person drawing benefits. The Dow

Jones Industrial Average, which

had stood at just 1,000 in the

late 1970s, hit the 11,000 mark

in 1999, adding substantially to

the wealth of many though not

all Americans, allowing many to

consider a retirement earlier than

they may have planned.

Source: Lipper Inc., 4/05; Soc. Sec. Admin., 4/05.


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2010

2011 First baby boomers will

turn 65, and the connection

between age and retirement

may continue to erode.


1960

1961 The age at which men are

first eligible for old-age insurance

was lowered to 62, with reducedbenefits (women previously were

given this option in 1956), ultimately

leading to a lowering of the average

retirement age. The number of

people receiving disability benefits

more than doubled from 1961

to 1969, increasing from 742,000

to 1.7 million.


1965 Health coverage is extended

to almost all Americans aged 65 or

older. Nearly 20 million beneficiaries

enrolled in Medicare in the first

three years of the program.

Source: History of Medicare, Soc. Sec. Admin., 4/05.

1968 VW sells 423,000 Beetles in

the U.S.

1970

1970 University enrollment up

400% since 1945 thanks to Baby

Boomers and the GI Bill.Source: National Center for Educational Studies,4/05.

1977 It became apparent that

Social Security faced a funding

shortfall, both in the short-term

and in the long-term. The short-

term problem was caused by the

bad economy, and the long-term

problem by the demographics

associated with the baby boom.

In a 1975 report trustees said theTrust Funds would be exhausted

by 1979. This financing shortfall

was addressed by the 1977 Social

Security Amendments.


1980

1982 Last of the Boomers

complete high school; graduation

rate of 88.8% highest to date ofany generation.

Source: National Center for Education Statistics, 4/

1985 Workforce participation

increases slightly for older Americ

men, and dramatically for older

women, and the average age of

retirement begins to rise.

Source: Harvard School of Public Health, 4/05.

1987 Dow drops 22% in Octobe

Source: Lipper Inc., 4/05.

The new retirement isnt

about rest, but about finding new

paths for yourself and others.


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From counter culture to

counter retirement

The old notions of retirement have largely been thrown out as an

increasing number of retirees enjoy a more active life than ever before.

While people are certainly approaching retirement differently, several of

the fundamentals of retirement have changed too life expectancies are

significantly higher than for previous generations, the overall health of

retirees is better than ever, and Social Security cannot be depended upon

as a primary source of future income.

2

What are your chances at age 65 of your retirement

lasting longer than 25 years?

You have an almost 40% chance of reaching 90, and eitheryou or your spouse has a better than 60% chance. Have you

planned for 25 years or longer in retirement?

Data source: 2000 Annuity Tables, 4/05.

0%

20%

40%

At least one spouse

60%

80%

100%

Age80 85 90 95 100 105

Individual

Why only vacation at your

favorite spot? Retirement allows

you to build a new life there.


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Is there a second career youd like to

pursue? An idea you never had time

to follow up?

Do you want to devote yourself to

a hobby, such as finally writing your

first book?

Have you decided to go back to school

to master a new subject?

Are you planning to volunteer for a

cause you believe in, such as working

with children, a foundation, or a

nonprofit group?

What about travel? Where do you

want to go? For how long?

Getting what you want and getting what you need

Greater longevity and assets, combined with your own creativity, have opened the doors

of a new perception about what retirement can truly be. The ability to be independent,

to be in control of your schedule and plans, also requires the ability to control your

assets so that you can help create the level of income that you need with the level of

risk you feel is appropriate. You also need the freedom to pursue your retirement goals,

requiring greater flexibility than previous retirees in structuring your investment portfolio.

The opportunity to get back to your dreams or create new ones

Potential plans are as individual as each future retiree. What do you have planned?

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Challenge: Changing sources of income

Retirement challenges

are a-changin, too

Greater freedom in retirement requires greater stability of income, and

the control and flexibility to adjust to your evolving needs. The changes

in retirement have intensified the challenges future retirees will face,

demanding a financial and retirement plan that accounts for them. What

are the five most pressing challenges for the Retirement Revolution?

The pensions of past generations are

gone, Social Security will be diminished.

Also, current retirees are finding their

retirement spending is declining less

than they expected, limiting the

opportunities open to them. That

means your personal plan must assume

greater responsibility for your retirement

income, and new sources of income for

retirement planning must evolve.

Furthermore, you need to use those

assets in the most efficient manner

possible, while considering additional

factors, such as taxes, accessibility,

and portfolio allocation.

Ultimately, you have to find other

sources of income that give you the

flexibility you need to pursue your

retirement your way.

1

Where will all your income come from?

With 58% of current retirees income

based on pensions and Social Security,

future retirees must reconsider how they

may need to make up any potential gap.

Data source: Social Security Fast Facts, 2004, Social SecurityAdministration, 4/05.

4

Pursuing your passions full-time may

take you to places that would surprise

not only previous generations of

retirees but also yourself.


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Challenge: Your income must last your lifetime

2Compared to previous generations, you

can expect to live a longer, healthier life

in retirement. This great benefit also

means that you could potentially outlive

your income. A longer retirement

magnifies the impact on your savings

at even low withdrawal rates.

The table below shows your chances

of your retirement savings lasting

through a 25 year retirement. The

table takes into account the effect of

inflation by increasing the withdrawal

rate by inflations rate to create a truly

stable income.

Chances of your income lasting throughout a 25-year retirement

Simulation estimates the range of possible outcomes by using the historical 19262004 annual average return and standard deviationfigures for the asset classes and inflation. These figures assume that a person retires at year zero and withdraws a required income needeach year beginning in year one, the initial annual withdrawal is adjusted by the historical 19262004 inflation rate of 3.1% each year,and the reinvestment of income and does not account for taxes or transaction costs.

Indices used: Stocks, S&P 500 Index; Bonds, 5-year U.S. Government Bond Index. Government bonds are guaranteed by the full faith andcredit of the United States government as to the timely payment of principal and interest if held to maturity, while returns and principalinvested in stocks are not guaranteed. The above indices are unmanaged and unavailable for direct investment. Index past performancecannot guarantee future returns.

These projections do not take into account other variables such as fluctuating principal and changing tax consequences. No assurance canbe given that the assumptions will prove to be correct, and the difference between assumptions and actual results could vary materially.

5

With a 100% stock portfolio, you only have a 49% chance of your incomelasting, but also have considerably higher risk. More importantly, in almost

every instance, simply investing in stocks and bonds still falls short more

complex strategies or products may be necessary to maintain your income goals.

Data source: Ibbotson Associates, 4/05.


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Challenge: Maintaining your standard of living

3Inflation constantly erodes what your

current savings can buy through increased

costs and diminished purchasing power,

while taxes reduce your savings returns.

Additionally, taking a flat 5% annual

income from your investment portfolio

can create problems over the years,

as the buying power of that amount

is reduced by inflation. And if that

portfolio is only returning 5% after

taxes as well, then your investment

base ultimately wont be able to keep

up with inflation either.

Your retirement plans must now include

ways for your income and portfolio to

keep pace with inflation and the impact

of taxes.

Cost of inflation

Data source: U.S. Bureau of Labor Statistics, 3/05.

Expense Time periodAvg. annualinflation rate

$1 Equals(2003)

Hotel stay 19662004 6.22% $0.09

Dining out 19522004 4.28% $0.11

Admissions to movies,theater, concerts, andsporting events

19772004 5.05% $0.26

Sunday drives can extend into Monday,

Tuesday, or even another continent.

6


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Challenge: Market volatility

4Investing in the equity markets can

potentially help you outpace inflation

and help make your savings last for your

lifetime; however, it creates another

significant challenge market volatility.

Your income strategy must account

for how much of your portfolio is

in the market and which tactics you

use to help reduce volatility, creating

implications for which investments and

financial products you should include in

your overall portfolio.

Challenge: Rising healthcare costs

5While healthcare costs are

increasing overall, they have risen

disproportionately higher for retirees.

Further, unexpected emergencies and

the cost of long-term medical care can

easily exhaust your savings faster than

expected or eliminate your ability to

leave a financial legacy.

While Medicare and Medicaid may

help somewhat, maintaining an

independent lifestyle requires a strategy

for addressing day-to-day healthcare,

medical emergencies, and the possibility

of long-term care.

Rising costs for retirees

medical coverage

90% of employers are likely to

increase retiree contributions to

healthcare premiums1

20% of employers are likely to terminate

retired employee health benefits1

The numbers of employers offering

retiree health benefits has declined42% from 1988 to 2003

1

Annual medical spending for

consumers age 65+ rose 22.3%

over consumers age 45552

Annual medical spending for

consumers age 75+ rose 26.1%

over consumers age 45552

Positive and negative years of the

S&P 500 Index (19262004)

-40

-20

0

20

40

60

80

Positive

70.9%

Negative

29.1%

From 19262004, the market was down

29% of those years an important fact

to consider when planning.

7

1The State of Retiree Health Benefits, Henry J. Kaiser Family

Foundation, 2004.2Consumer expenditure survey 2003, U.S. Bureau of Labor

Statistics, 2004.


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A time to sow, a time to reap

Revolutionizing your future. Your retirement is an opportunity to enter a new

phase of your life where you can pursue your dreams as never before. However,

planning has to begin now in order to provide time to determine your financial goals

as well as decide how you really want to spend your time. The following principles of

income management provide guidelines for you to adjust to your individual situation.

8

Revolutionary income management

This pie chart represents the different uses of your assets during retirement. How much of

your portfolio is allocated to each area will be based on your individual needs and goals.

Variable expenses usually include travel,

leisure activities, gifts, etc.

Fixed expenses include mortgage/rent,

utilities, monthly healthcare and prescription

costs, and recurring bills

Wealth transfer is assets designatedfor your family or a foundation

Healthcare assets cover any expenses

beyond routine prescription and doctors bills,

such as an emergency and long-term care

Emergency/opportunity funds are

immediate cash for emergencies you may face

or financial opportunities you want to explore

Income management

A shifting income portfolio for evolving retirement needsPrevious generations of retirees could shift their entire portfolio to income. However,

a 30-year retirement requires you to regularly reevaluate the balance between growth

potential, protection, and actual income, to help your assets outlast you.


13/18

Enjoying yourself is part of retirement,

but the question becomes whether its in

the Rockies or Alps.

9

Income strategic allocation

Building your income portfolio is the process of selecting the products that will both cover your needs

and also work well together. Five overall strategies exist for filling out your income portfolio, with

products generally falling into one of the following categories based on their primary characteristics.

Growth: Provide historically greater

returns, though usually with higher risk, such

as equities. Ultimately, these investments help

you maintain accumulation potential within

your portfolio so that your assets can both

potentially outpace inflation and last longer

than you do. Their more variable nature may

make them better suited to variable expenses

rather than depending on them for your current

fixed expenses. However, their greater growth

potential makes them essential for maintaining

the buying power of your income for your fixed

expenses in the future. Some may have tax

advantages.

Fixed: These types of investments

and products provide fixed, stable returns

overall bonds for example. Although they can

be subject to some risks, they can also include

Social Security and pension payments. Overall,

these products and sources are good for fixed

expenses. They also may be appropriate tools

for more conservative investors seeking wealth

transfer. Some may have tax advantages.

Insured1: While these types

of products may have a growth or fixed

orientation, the primary characteristic is an

insurance component that provides some

form of insurance protection. They generally

cost more because of it and usually have tax

advantages. They include a variety of financial

products including annuities, life insurance,

and long-term care insurance2 each of which

has its own uses in income management.

Liquid: These products provide easy

and quick access to your assets and generally

have lower risk and returns, such as certificates

of deposits, treasury bills, and money markets

funds. They are traditionally used for emergency

funding, whether financial or medical.

Miscellaneous: The products in

this group vary widely and can provided income,

growth potential, or wealth transfer potential.

They not only include real estate, but also

products and strategies, such as IRAs, 401(k)s,

and trusts, which will contain assets similar to

those in the other four categories.

1Any benefits are backed by the claims-paying ability of and are subject

to the financial condition of the insurer.2Lincoln does not offer long-term care insurance.


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Finding potential solutions

For each of the five retirement challenges discussed Changing sources

of income, Your income must last your lifetime, Maintaining

your standard of living, Market volatility, and Rising healthcare

costs several solutions generally exist, allowing you to choose one

based on your individual goals and profile. In addition to ensuring that

these products and strategies are suitable, you should consider how they

work together to provide the best possible mix for your overall portfolio.

Changing sources of income: A well-

diversified portfolio provides flexibility

in how you can take your income. Also,

guaranteed sources of income can help

provide steady income so you are not

as dependent on Social Security.

Income longevity: Ensure that you

cannot outlive your income by using

insuring income streams, potentially

from annuities. The income these types

of insured products provide can become

your stable income, along with any

pensions and interest from bonds, for

your fixed expenses.

Using investments with higher historical

returns, such as equities, can provide

longevity to your overall portfolio.

When used as income, they may be

more appropriate for your more variable

expenses, due to their inherently

variable nature.

Maintaining your lifestyle: Use

equity-oriented investments, as well

as inflation-adjusted bonds and mutual

funds, in suitable proportion to your

overall portfolio, to help keep pace

with inflation and to help maintain

your standard of living.

Manage your taxes by planning the

order you spend down the different

types of assets in your retirement

portfolio. Consider using tax-

advantaged investments and financial

products, such as tax-exempt mutual

funds and life insurance. Also, shifting

401(k) and similar tax-deferred assets to

an IRA will maintain their tax-deferred

status while potentially providingadditional control and flexibility.

1

2

3

10

Any benefits are backed by the claims-paying ability of

and are subject to the financial condition of the insurer.


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Managing market volatility: You

can receive a steadier income by

guaranteeing a portion of your portfolio

using annuities. Also, designing a more

conservative portfolio in line with your

risk tolerances can help reduce volatility.

Containing medical costs: Using

products, such as long-term care

insurance, can help provide you

comfort and independence by helping

ensure resources for medical care

without allocating a significant

amount of your assets.

4 5

The retirement revolution offers you the opportunity to

pursue life, not watch it the rocking chair will always

be there, for only but a brief rest, later.

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Get together with

your advisor

In light of the complexity of retirements challenges and potential

solutions, crafting an overall financial and income strategy may seem

overwhelming. However, your financial advisor has tools and resources

that can help make this process easier and more effective. Additionally,

your advisors understanding of the different types of investments and

financial products can provide possibilities with which you may not be

otherwise familiar.

Types of investment and financial products

Life Insurance

Long-term

Care Insurance

Annuities

Mutual Funds

Individual Stocks

Individual Bonds

Qualified Plans

(401(k), 403(b), etc)

During your retirement, why simply

attend ballets when you can train future

ballet stars? The retirement revolution

is an opportunity to share all of your

wisdom and skills in creating a legacythat isnt merely financial.


17/18

Volunteer for the revolution

Planning for retirement is the first step in a transition that ultimately

will allow you to return to the more carefree days so you can develop

your passions again. Interests that you previously had to enjoy off the

clock will become the clock. And as the basic factors of retirement and

its challenges have changed significantly over the decades, retirementplanning needs to evolve, also. Stronger financial planning can help make

being 65 a time of anticipation, one that looks toward your personal

revolution of retirement.

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Important disclosures. Please read.

Any tax information contained in this brochure is not intended or written to be used, and it may not be used

by any taxpayer, for the purpose of avoiding penalties under the Internal Revenue Code that may be imposedon the taxpayer. This brochure was created to support the promotion or marketing of the transaction(s) or

matter(s) addressed in the brochure. A taxpayer should be advised to seek advise based on the taxpayers

particular circumstances from an independent tax advisor.

Neither Lincoln nor its representatives provide tax or legal advice. You should contact your tax advisor orattorney regarding your particular situation.

You should consider the investment objectives, risks, charges and expense of any investment carefully before

investing. The prospectus contains this and other important information about the investment. Please requesta prospectus from your advisor.

2005 Lincoln Financial Distributors

All rights reserved.

www.LFG.com

Lincoln Financial Group is the marketingname for Lincoln National Corporation

and its affiliates.

LFD0504-0574 W65-0040-05W65-CORE RP 8/05

A century of experienceAt Lincoln Financial Group, we have a 100 year-old heritage of

helping people find solutions to their financial challenges with

the same honesty, integrity, and responsibility that youd expect

from our namesake. Its a legacy that we proudly and respectfully

continue each day.

The strength of Lincoln today

Today, Lincoln Financial is one of the largest financial services

companies in the country. We continue a commitment to strength

and stability to provide our investors with the confidence that we

believe is indispensable to who we are. We are a proven industry

leader in identifying and delivering sophisticated financial planning

and product solutions for the creation, protection, and enjoyment

of wealth.

Helping investors redefine retirement, their way

Lincoln Financial focuses on meeting the needs of investors as they

face both greater freedom in how they retire and greater challenges.

We offer a complete suite of financial products and investments to

help investors find solutions for reaching their goals.

At Lincoln Financial, we dont believe retirement is the end.

On the contrary, it might just be the start of what you were meant

for all along.

Nota deposit

Not

FDIC-insured

Not insured by any federalgovernment agency

Not guaranteed by any bank

or savings association

Retirement Sixtyfive

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