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Point of Point of ChoiceChoice
TTMM
The Point of Choice TM
Point of Choice Point of Choice TMTM
The day you have the choiceThe day you have the choice
whether or not to work for incomewhether or not to work for income
because your financial assetsbecause your financial assets
will provide more income than you’ll will provide more income than you’ll needneed
The Point of Choice TM
Point of Point of Choice Choice ©©
Financial AssetsFinancial Assets
Unearned IncomeUnearned Income
Assets That Increase In Assets That Increase In ValueValueStocksStocksRealizedRealized
Capital Capital GainGain
- - InterInterestest
- - DivideDividendndReal EstateReal Estate
Bonds/CD/Bonds/CD/SavingsSavings
What Are Financial Assets?What Are Financial Assets?
Living Expenses Forever!Living Expenses Forever!(Capital Assets)(Capital Assets)
- - ReRentnt
NotesNotes - Income- IncomeThe Point of Choice TM
AgeAgeYearsYears
to POCto POCRequired Required
AssetsAssetsat POCat POC
BeginniBeginningng
IncomeIncome
$50,000 a Year Income$50,000 a Year Income
Inflation Assumption Inflation Assumption = 4%= 4%
$1,250,00$1,250,0000
6565 00 $50,0$50,00000
Inflation– 4%$ 50,000 $ 2,000
1 $ 52,000 $ 2,0802 $ 54,080 $ 2,1633 $ 56,243 $ 2,2494 $ 58,492 $ 2,3395 $ 60,832
Year
Point of ChoicePoint of Choice©©
The Point of Choice TM
$1,500,00$1,500,0000
AgeAge
5500
6060
4040
3030
2020
55
1515
2525
3535
4545
$2,300,$2,300,000000
$3,300,00$3,300,0000
$4,900,00$4,900,0000
$7,300,00$7,300,0000
$60,0$60,00000
$90,0$90,00000
$133,0$133,00000
$197,00$197,0000
$292,000$292,000
YearsYearsto POCto POC
Required Required AssetsAssetsat POCat POC
BeginniBeginningng
IncomeIncome
$50,000 a Year Income$50,000 a Year Income
Inflation Assumption Inflation Assumption = 4%= 4%
$1,250,00$1,250,0000
6565 00 $50,0$50,00000
Point of ChoicePoint of Choice©©
The Point of Choice TM
$3,000,00$3,000,0000
AgeAge
5500
6060
4040
3030
2020
55
1515
2525
3535
4545
$4,600,$4,600,000000
$6,600,00$6,600,0000
$9,800,00$9,800,0000
$14,600,0$14,600,00000
$120,0$120,00000
$180,0$180,00000
$266,00$266,0000
$394,00$394,0000
$584,000$584,000
YearsYearsto POCto POC
Required Required AssetsAssetsat POCat POC
BeginniBeginningng
IncomeIncome
$100,000 a Year Income$100,000 a Year Income
Inflation Assumption Inflation Assumption = 4%= 4%
$2,500,00$2,500,0000
6565 00 $100,0$100,00000
Point of ChoicePoint of Choice©©
The Point of Choice TM
4 Point Of Choice Steps For 4 Point Of Choice Steps For ANYONEANYONE
Point of Point of Choice ©Choice ©Point of Choice ©Point of Choice ©
The Point of Choice TM
$250,0$250,00000
Median Home Median Home PricePrice
$24,30$24,3066
$2,571,$2,571,429429
40 Years From 40 Years From NowNow
40 Years 40 Years AgoAgo
Point of Point of Choice ©Choice ©Option 1 – HomeOption 1 – Home
The Point of Choice TM
Home CompoundingHome CompoundingAssumptions: Assumptions: Home Value = $ 250,000 Annual Growth = 6%Home Value = $ 250,000 Annual Growth = 6%
The Point of Choice TM
Home Home CompoundingCompounding
Assumptions: Assumptions: Home Value = $ 250,000 Annual Home Value = $ 250,000 Annual Growth = 6%Growth = 6%
1.1. 265,00265,0000
2.2. 280,90280,9000
3.3. 297,75297,7500
4.4. 315,62315,6200
5.5. 334,56334,5600
6.6. 354,63354,6300
7.7. 375,91375,9100
8.8. 398,46398,4600
9.9. 422,37422,3700
10.10. 447,71447,7100
11.11. 474,57474,5700
12.12. 503,05503,0500
13.13. 533,23533,2300
14.14. 565,23565,2300
15.15. 599,14599,1400
16.16. 635,09635,0900
17.17. 673,19673,1900
18.18. 713,58713,5800
19.19. 756,40756,4000
20.20. 801,78801,7800
21.21. 849,89849,8900
22.22. 900,88900,8800
23.23. 954,94954,9400
24.24. 1,012,1,012,230230
25.25. 1,072,1,072,960960
26.26. 1,137,1,137,340340
27.27. 1,205,1,205,580580
28.28. 1,277,1,277,920920
29.29. 1,354,1,354,590590
30.30. 1,435,1,435,870870
31.31. 1,522,1,522,020020
32.32. 1,613,1,613,340340
33.33. 1,710,1,710,140140
34.34. 1,812,1,812,750750
35.35. 1,921,1,921,520520
36.36. 2,036,2,036,810810
37.37. 2,159,2,159,022022
38.38. 2,288,2,288,560560
39.39. 2,425,2,425,870870
40.40. 2,571,2,571,430430
41.41. 2,725,2,725,715715
42.42. 2,889,2,889,258258
43.43. 3,062,3,062,614614
44.44. 3,246,3,246,370370
45.45. 3,441,3,441,153153
The Point of Choice TM
Simple vs. Compound Simple vs. Compound InterestInterest
SimplSimpleeYeaYea
rr 11
CompouCompoundnd
22
33
44
55
BalanBalancece
BalanBalancece
InterInterestest
InterInterestest$1,0$1,0
0000$1,0$1,00000$1,1$1,1
0000
$100$100
10%10%
$100$100
$100$100
$100$100
$100$100
$100$100
$1,2$1,20000$1,3$1,30000$1,4$1,40000
$1,1$1,10000$1,2$1,21010
$110$110
$121$121
$133$133
$146$146$1,3$1,33131$1,4$1,46464
The Point of Choice TM
$5,4$5,40000
$66,26$66,2644
After 45 YearsAfter 45 Years
Simple vs. Compound Simple vs. Compound InterestInterest
The Point of Choice TM
Compound Compound InterestInterest
ALBERT EINSTEINALBERT EINSTEIN "There is no greater power known to man "There is no greater power known to man
than compounding interest." than compounding interest." ““Compound interest is the greatest Compound interest is the greatest
mathematical discovery of all time.”mathematical discovery of all time.” ““Compounding is the 8th Wonder of The Compounding is the 8th Wonder of The
World!”World!” ““Compounding is mankind’s greatest Compounding is mankind’s greatest
invention because it allows for the reliable, invention because it allows for the reliable, systematic accumulation of wealth.”systematic accumulation of wealth.”
The Point of Choice TM
Option 1 – HomeOption 1 – Home 1. 1. HomHomee
AgeAge AmountAmount
2020 $3,500,000$3,500,000
3030 $2,000,000$2,000,000
4040 $1,500,000$1,500,000
5050 $600,000$600,000
6060 $350,000$350,000
AssumptionsAssumptionsBeginning Home Beginning Home
ValueValue$250,0$250,0
0000Growth AssumptionGrowth Assumption 6%6%
Point of Point of Choice ©Choice ©
The Point of Choice TM
$0 $0 $0 $0$0
The Point of Choice TM
3.5 M
2 M 600 K
350 K
1.1 M
The Point of Choice TM
What is a 401K?
1. 1. HomHomee
Point of Point of Choice Choice
TTMM
Set up by employer Investment contribution withheld
from paycheck Contribution often matched by
employer Several investment options No tax paid on contributions No tax paid annually on income Taxes paid on distributions
Option 2 – 401(K)Option 2 – 401(K)
The Point of Choice TM
How does a 401K work?1. 1.
HomHomee
Point of Point of Choice Choice
TTMM
EndinEndingg
BalanBalancece
YourYourContributiContributi
onon
CompanyCompanyContributContribut
ionion
10% 10% IncomeIncome
$2,000$2,000 $2,000$2,000
BalanBalancece
$4,000$4,000 $400$400.... $4,400$4,400 2,1002,100 2,1002,100
8,608,6000
860860 9,4609,460
Option 2 – 401(K)Option 2 – 401(K)
2,2052,205 2,2052,205 13,87013,870 1,3871,387 15,25715,257 2,3152,315 2,3152,315 19,88819,888 1,9881,988 21,87621,876 2,4312,431 2,4312,431 26,73826,738 2,6742,674 29,41229,412 2,5532,553 2,5532,553 34,51734,517 3,4523,452 37,96837,968 2,6802,680 2,6802,680 43,32943,329 4,3334,333 47,66247,662 2,8142,814 2,8142,814 53,29153,291 5,3295,329 58,62058,620
2,9552,955 2,9552,955 64,53064,530 6,4536,453 70,98370,9833,1033,103 3,1033,103 77,18877,188 7,7197,719 87,90787,907
3,2583,258 3,2583,258 91,42291,422 9,1429,142 100,564100,564
3,4213,421 3,4213,421 107,406107,406 10,74110,741 118,146118,146
1122
445566778899
1010
1111
33
1212
The Point of Choice TM
Option 2 – 401(K)Option 2 – 401(K)
Behavioral Behavioral IntelligenceIntelligence1. If you don’t see it, you won’t 1. If you don’t see it, you won’t
miss itmiss it2. Substantial penalty for early 2. Substantial penalty for early withdrawalwithdrawal3. Someone else does all the work.3. Someone else does all the work.
The largest liquid The largest liquid investment you will have investment you will have
in your retirementin your retirementNothing Else Will Even Nothing Else Will Even Come Close!Come Close!
1. 1. HomHomee
CONTRIBUTE 10%CONTRIBUTE 10% OF INCOME TO 401KOF INCOME TO 401K
Point of Point of Choice ©Choice ©
The Point of Choice TM
1. 1. HomHomee
AgeAge AmountAmount
2020 $17,000,000$17,000,000
3030 $5,500,000$5,500,000
4040 $1,700,000$1,700,000
5050 $450,000$450,000
6060 $70,000$70,000
AssumptionsAssumptionsIncome IndexIncome Index 5%5%
Beginning IncomeBeginning Income $50,00$50,0000
Percent ContributionPercent Contribution 10%10%Employer MatchEmployer Match 4%4%Investment YieldInvestment Yield 11%11%
2. 2. 401401KK
Option 2 – 401(K) Point of Point of
Choice ©Choice ©
The Point of Choice TM
3.5 M
2 M 600 K
350 K
1.1 M
The Point of Choice TM
20 M
7.5 M
1 M 420 K
2.8 M
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomeeAmerican Debt American Debt
PaymentsPaymentsAmerican Debt American Debt
PaymentsPaymentsAverage American Household - Average American Household -
$2,300 per month$2,300 per monthAverage American Household - Average American Household -
$2,300 per month$2,300 per month800% increase in per capita debt -- 800% increase in per capita debt -- past 30 yearspast 30 years
800% increase in per capita debt -- 800% increase in per capita debt -- past 30 yearspast 30 years % more than 30 days behind on % more than 30 days behind on
any paymentany payment % more than 30 days behind on % more than 30 days behind on
any paymentany payment4.4.
22
THE THE GOALGOALChange Who Gets The Change Who Gets The
PaymentPaymentTO TO YOURSELF!YOURSELF!
??
96% Make Payments 96% Make Payments on Time!on Time!
96% Make Payments 96% Make Payments on Time!on Time!
Point of Point of Choice ©Choice ©
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Accelerated Debt Reduction Accelerated Debt Reduction InvestmentsInvestments
Average American Out of Average American Out of debtdebt
Double the smallest Double the smallest paymentpayment
Roll payment Roll payment upup
Option #3 ADROption #3 ADR
Including Home Including Home MortgageMortgage
IN 6 TO 8 IN 6 TO 8 YEARS!YEARS!
Point of Point of Choice ©Choice ©
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
TTMM
Option #3 ADROption #3 ADR
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
TTMM
Option #3 ADROption #3 ADR
The Point of Choice TM
Option #3 ADROption #3 ADR2. 2.
401401KK
1. 1. HomHomee
Point of Point of Choice Choice
TTMM
The Point of Choice TM
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
3. ADR3. ADRTTMM
2. 2. 401401KK
1. 1. HomHomee
www.powerpaywww.powerpay.org.orgUtah State Utah State
UniversityUniversityFreFreeePrints out a debt reduction Prints out a debt reduction calendarcalendar
Point of Point of Choice ©Choice ©
Option #3 ADROption #3 ADR
The Point of Choice TM
Point of Point of Choice ©Choice ©
2. 2. 401401KK
1. 1. HomHomee
Option #3 ADR
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
AgeAge AmountAmount
2020 $12,600,000$12,600,000
3030 $4,300,000$4,300,000
4040 $1,300,000$1,300,000
5050 $300,000$300,000
6060 $0$0
3. ADR3. ADR
AssumptionsAssumptionsMonthly PaymentsMonthly Payments $2,500$2,500
Years to PayoffYears to Payoff 88Investment YieldInvestment Yield 11%11%
Point of Point of Choice ©Choice ©
Option #3 ADROption #3 ADR
The Point of Choice TM
20 M
7.5 M
1 M 420 K
2.8 M
The Point of Choice TM
33 M
12 M
1.4 M
420 K
4.1 M
$50,000 Income $7,300,000 Financial Assets
$33,000,000 Financial Assets$226,000 Income
The Point of Choice TM
POINT OF CHOICE GOALPOINT OF CHOICE GOAL
TODAY’S TODAY’S DOLLARSDOLLARS$ $
50,0050,0000
POINT OF CHOICE DOLLARSPOINT OF CHOICE DOLLARS
$ $ 292,0292,00000
$ $ 226,0226,00000
$ $ 1,025,01,025,00000
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Pension Plans and Social SecurityPension Plans and Social Security
3. ADR3. ADRBeneBenefitfit$ $ 35,035,00000
11$ $ 35,835,87575
22 $ $ 33,233,21818
$ $ 35,035,00000$ $
37,637,69191
33 $ $ 29,929,92020
$ $ 38,638,63333
44 $ $ 28,928,93737
$ $ 39,539,59999
55 $ $ 26,926,95151
$ $ 40,540,58989
66 $ $ 25,525,57878
$ $ 41,641,60404
77 $ $ 24,224,27676
$ $ 42,642,64444
88 $ $ 23,023,03939
$ $ 43,743,71010
99 $ $ 21,821,86666
$ $ 44,844,80303
1100
$ $ 20,720,75252
$ $ 45,945,92323
1111
$ $ 19,619,69595
$ $ 47,047,07171
1122
$ $ 18,618,69393
$ $ 48,248,24848
1133
$ $ 17,717,74141
$ $ 49,449,45454
1144
$ $ 16,816,83737
$ $ 50,650,69090
1155
$ $ 15,915,98080
$ $ 51,951,95858
1166
$ $ 15,115,16666
$ $ 53,253,25757
1177
$ $ 14,314,39494
$ $ 54,554,58888
1188
$ $ 13,613,66161
$ $ 55,955,95353
1199
$ $ 12,912,96565
$ $ 57,357,35252
2200
$ $ 12,312,30505
$ $ 58,758,78585
2211
$ $ 11,611,67878
$ $ 60,260,25555
2222
$ $ 11,011,08383
$ $ 61,761,76161
2233
$ $ 10,510,51919
$ $ 63,363,30505
2244
$ $ 9,989,98
33$ $ 64,864,88888
2255
$ $ 9,479,47
55$ $ 66,566,51010
2266
$ $ 8,998,99
22$ $ 68,168,17373
2277
$ $ 8,538,53
44
$ $ 69,869,87777
2288
$ $ 8,108,10
00$ $ 71,671,62424
2299
$ $ 7,687,68
77$ $ 73,473,41515
3300
$ $ 7,297,29
66$ $ 75,475,45050
3311
$ $ 6,926,92
44$ $ 77,177,13131
3322
$ $ 6,576,57
22$ $ 79,079,06060
3333
$ $ 6,236,23
77$ $ 81,081,03636
3344
$ $ 5,915,91
99$ $ 83,083,06262
3355
$ $ 5,615,61
88$ $ 85,185,13838
3366
$ $ 5,335,33
22$ $ 87,287,26767
3377
$ $ 5,065,06
00$ $ 89,489,44949
3388
$ $ 4,804,80
33$ $ 91,691,68585
3399
$ $ 4,554,55
88$ $ 93,993,97777
4400
$ $ 4,324,32
66$ $ 96,396,32727
4411
$ $ 4,104,10
66$ $ 98,798,73535
4422
$ $ 3,893,89
66$ $ 101,101,203203
4433
$ $ 3,693,69
88$ $ 103,103,733733
4444
$ $ 3,513,51
00$ $ 106,106,327327
4455
$ $ 3,333,33
11
$ $ 582,5582,5
7676
COLA COLA 2.5%2.5%
Yield 8%Yield 8%
InvestmInvestmentent InvestmInvestm
entent
Point of Point of Choice ©Choice ©
2. 2. 401401KK
1. 1. HomHomee
Pension Plans and Social SecurityPension Plans and Social Security
3. ADR3. ADR
AgeAge AmountAmount * *
2020 $4,000,000$4,000,000
3030 $2,500,000$2,500,000
4040 $1,600,000$1,600,000
5050 $1,000,000$1,000,000
6060 $650,000$650,000
* Assumes full benefit + * Assumes full benefit + one halfone half
Point of Point of Choice ©Choice ©
The Point of Choice TM
33 M
12 M
1.4 M
420 K
4.1 M
The Point of Choice TM
37 M
14.5 M
2.4 M
1.1 M
5.7 M
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
3. ADR3. ADR
TTMM
Option #4 Million Dollar Option #4 Million Dollar Choices ™Choices ™
What if you made a choice that What if you made a choice that would would
save you $100 a month save you $100 a month
what would that mean to you? what would that mean to you?
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
3. ADR3. ADR
TTMM
RR = = RecurrinRecurringg
E E = = ExpensesExpenses
RR = = RightRight
SS = = SaveSave
VV = = VehicleVehicle
II = = InvestInvest
weweandandin thein the
Life R.E.S.I.R.V.Life R.E.S.I.R.V.
Option #4 Million Dollar Option #4 Million Dollar Choices ™Choices ™
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Point of Point of Choice Choice
AgeAge AmountAmount
2020 $5,600,000$5,600,000
3030 $1,900,000$1,900,000
4040 $600,000$600,000
5050 $170,000$170,000
6060 $30,000$30,000
3. ADR3. ADR
4. Million 4. Million Dollar Dollar Choices ™Choices ™
TTMM
Assumptions
Income Index 5%
Annual Contributions $1,200
Total Tax Rate 22%
Employer Match 4%
Investment Yield 11%
Option #4 Million Dollar Option #4 Million Dollar Choices ™Choices ™
The Point of Choice TM
37 M
14.5 M
2.4 M
1.1 M
5.7 M
The Point of Choice TM
43.6 M
16.4 M
2.6 M
1.2 M
6.3 M
$ 50,000 Income$ 7,300,000 Financial Assets
$ 43,600,000 Financial Assets$ 300,000 Income
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
3. ADR3. ADR
4. Million 4. Million Dollar Dollar Choices ™Choices ™
Point of Point of Choice Choice 2 Choices That Are Not For 2 Choices That Are Not For
Everyone!Everyone!
TTMM
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
3. ADR3. ADR
4. Million 4. Million Dollar Dollar Choices ™Choices ™
Point of Point of Choice Choice Option #5 Income Producing Real EstateOption #5 Income Producing Real Estate
5. Income 5. Income RealRealEstateEstate
TTMM
The Point of Choice TM
2. 2. 401401KK
1. 1. HomHomee
Option #6 Own Your Own BusinessOption #6 Own Your Own Business
3. ADR3. ADR
4. Million 4. Million Dollar Dollar Choices ™Choices ™
5. Income 5. Income Real EstateReal Estate
Point of Point of Choice Choice
6. Business 6. Business OwnershipOwnership
TTMM
The Point of Choice TM
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