2

The analysis examines the capital needed versus available based on retirement plan deferrals. With current savings, $1.1 million will be available, but $3.1 million is needed. This leaves a $1.9 million shortfall. Two alternatives are considered: A suggests increasing deferrals, while B is more viable due to financial constraints. Alternative B requires deferring an additional $7,112 monthly. In analyzing your current course of action, we're looking at a formula that says how much total capital is required minus how much total capital is available will equal any additional capital needed. Based on the fact that Dr. Franklin is deferring maximum into his 401K plan and Mrs. Franklin is deferring 6% of her compensation in the full 3D plan, the figures are saying that number one, to live a pre-tax income for the first year, you're going to need $109,177. Let's put that figure right there, per year, first year. On your current course of action, with the deferrals into your 401K and full 3D, you're going to have a total of $1,136,799. What the need is, the retirement capital need, is $3,115,699. Remember, the total capital required minus the total capital available is additional capital needed. Thinking about the $3 million, $3.1 million that you need, the $1.1 million that you're on course to have, there is a funding shortfall of approximately $1.9 million. We have some possible alternatives, so it's not all bad news. Part of what we're going to do is look at Alternative A and Alternative B. Alternative A is based upon the assumption that you would be able to increase your deferrals, so put more money in your 401K and 403B, and make no other changes or investment decisions. We have determined that that particular alternative would require another $7,112 to be deferred monthly. When looking at your cash flow, available cash flow, we don't see that as a true viable alternative, so we have Alternative B.