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Allianz Life Insurance Company of North America Allianz Life Insurance Company of New York When to Retire? A closer look at financial factors that impact retirement Presented by [Producer Name] [Producer Title] [Producer Company] ENT-1528 -N (R-3/2016)

Please note [Producer name, producer company name] is not an employee of Allianz Life Insurance Company of North America (Allianz), Allianz Life Insurance Company of New York (Allianz Life® of NY), or their subsidiaries or affiliated companies. This material is prepared by Allianz Life Insurance Company of North America and its affiliate, Allianz Life Insurance Company of New York, for use by financial professionals. This material is prepared by Allianz Life Insurance Company of North America (Allianz) and its affiliate, Allianz Life Insurance Company of New York (Allianz Life® of NY), for use by their financial professionals. 2

Before we begin This presentation is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America (Allianz), Allianz Life Insurance Company of New York (Allianz Life® of NY), and Allianz Life Financial Services, LLC, their affiliated companies, and their representatives and employees do not give legal or tax advice. Allianz, Allianz Life of NY, and Allianz Life Financial Services, LLC, are affiliated companies. • Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government agency or NCUA/NCUSIF 3

Retirement age EXPECTATIONS Nearly two thirds (57%) of Americans expect to retire at age 65 or older 1 Mean Retirement age expectations 2 65 64 60 2015 2005 1995 and are planning to retire later 1“The 2015 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, ” Employee Benefit Research Institute Issue Brief, April 2015, N. 384, p. 26 2 Gallup Annual Economy and Personal Finance Survey, April, 2015 4

Retirement age REALITIES HALF retired EARLIER than 60% Health issues 1“The 27% Downsizing planned 1 ACTUAL mean retirement age 2 22% Family needs People are retiring earlier than planned due to circumstances beyond their control. 60 2015 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, ” Employee Benefit Research Institute Issue Brief, April 2015, N. 384, p. 26 2 Gallup Annual Economy and Personal Finance Survey, April, 2015 5

Agenda 1. Retiring before age 62 2. Retiring at ages 62 -64 3. Delaying retirement – age 65 or older 4. Next steps 6

1 Retiring early – before age 62 7

EARLY retirement RETIRED 36% late 50 s or younger 1 Only 9% of workers plan to retire before age 60 down from 19% in 19912 1 Gallup AIMING TO RETIRE 14% late 50 s or younger 1 EARLY RETIREMENT Poll Social Series: Economy and Personal Finance, April, 2015 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, ” Employee Benefit Research Institute Issue Brief, April 2015, N. 384, p. 26. 2“The 8

Occupations and benefits Teachers Civil service employees Military members Other government jobs § Generally defined benefit pension plans or civil service pension plans § Full benefits could apply based on age + years of service § “Rule of 90” RULE OF 90 EXAMPLE: Current age + years of service = 90 (or greater) for full benefits 9

Early retirees must consider very long-term financial needs Accumulation Income Years prior to retirement X years? Potentially 35 to 40 years 10

Financial concerns § Income issues due to potentially more years ahead § Need for health insurance – too young for Medicare (age 65) § Potential loss of other employer-provided benefits 11 - Life insurance benefits - Employer contributions to health savings accounts (HSAs) - Other

Personal concerns What will an early retiree do with all of their time? 12

Health insurance needs Consolidated Omnibus Budget Reconciliation Act (COBRA) § Provides for 18 or 36 months of continued health insurance coverage, depending upon the qualifying event § Typically will be required to pay full cost (employee plus employer portions) § Plans that are continued through COBRA may not offer coverage in other states § May benefit more from having own individual policy 13 The Health Insurance Marketplace is a helpful resource when seeking individual coverage – even outside of the open enrollment period

Minimum standards for qualifying plans Patient Protection and Affordable Care Act (PPACA) § § § Focuses on provisions to expand coverage, control health care costs, and improve health care delivery system § § § § 14 Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse disorder services (including behavioral) Prescription drugs Rehabilitative/habilitative services and devices Laboratory services Preventive, wellness services, and chronic disease management Pediatric services, including oral and vision No annual or lifetime limits Cannot exclude individuals due to pre-existing conditions

Health Insurance Marketplace www. healthcare. gov § Some states utilize the website for enrollment while other states have their own sites that customers are routed to § Factors that impact pricing: - State of residence Plan category selected Age Family situation Smoking (depending upon the state) Subsidies are available to those with lower incomes § Pre-existing conditions cannot impact coverage options or costs 15

Income issues § Lose ability to make 401(k) contributions, including catch-up contributions otherwise available if employed at age 50 or older § Fewer years for accumulation § More years of distributions § Potential for greater long-term impact of inflation § Too young for Social Security retirement benefits (age 62) § Drawing Social Security benefits earlier reduces the benefit amount 16

Special rules Separated from service during the year turning age 55 or older § No 10% federal additional tax for amounts received from employer’s retirement plan: - 401(k) plan - Profit-sharing plan - Defined benefit plan § 10% federal additional tax does apply even if separated from service for amounts received from: - Traditional IRAs - SEP IRAs - SIMPLE IRAs 17

Special rules continued Distributions from IRAs, 403(b) plans, and qualified plans after age 59½ § No 10% federal additional tax § Generally these distributions are taxable § Applies to distributions after age 59½ from: - Traditional IRAs SEP IRAs SIMPLE IRAs 401(k) plans - Profit-sharing plans - Defined benefit plans - 403(b) plans This is not intended to be a complete list. 18

I can help you with … § Understanding how you might fund your health care options § Addressing the loss of other employer benefits § Ways of helping to address the impact of inflation § What to consider regarding sources of retirement income and timing in which to utilize them Retirement Pre-Medicare and Social Security 19 Social Security Medicare and Social Security

2 Retiring at ages 62 -64 20

Percentage The percentage of men and women claiming Social Security retirement benefits at age 62 is declining Year of birth Note: The sample is restricted to men and women with 40 or more quarters of Social Security-covered earnings who did not claim benefits before age 62 and never received Social Security disability benefits Center for Retirement Research at Boston College, May 2015, Number 15 -8. p. 3. 21

Financial concerns § Income issues § Need for health insurance – too young for Medicare (age 65) § Potential loss of other employer provided benefits - Life insurance benefits - Employer contributions to HSAs - Other 22

Good news but at reduced rates Social Security Administration, Retirement planner: Benefits by year of birth, 2014. Bad news Social Security benefits available

Working in retirement EXPECTATIONS 16% REALITIES 57% 17% 8% Major source Minor source WORKING IN RETIREMENT 1 1 “The Minor Major Age 60 or older source SENIOR EMPLOYMENT 1 2015 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, ” Employee Benefit Research Institute Issue Brief, April 2015, N. 384, p. 28. 24

8 Social Security reduction Working in retirement If you work in 2015 … Age 62 Full retirement sge (FRA) FRA up to birthday month Reduced $1 for every $2 every $3 above $15, 720/year above $41, 880/year Social Security Administration, Fact Sheet, 2015 Social Security Changes. 25 After FRA No reduction

8 Working in retirement Age 62 FRA Give up $1 for every $2 above $15, 720/yr Any SS income given up by working in early retirement will result in positive adjustment to monthly benefit when reaching FRA After At monthly benefits increase up FRA to birthday FRA as ifmonth they had started retirement that many months later than they actually did. The Social Security Administration Give up $1 for No and penalty checks records every year notifies every $3 if additional earnings will increase above $38, 880 monthly payment. Social Security Administration, Fact Sheet, 2015 Social Security Changes 26

PHASED retirement 65% of human resource professionals polled consider the retirement of talented older workers to be a problem or a potential problem. 1 PHASED RETIREMENT POSSIBILITIES § A part-time or flexible work arrangement - Fewer hours each day Or perhaps you will - Fewer days per week - Full-time hours for only certain weeks in thechoose year a whole new career path or a part§ Subject to current employer’s flexibility time job in a different field 1 Society of Human Resource Management (SHRM)/AARP Poll, September, 2014.

PHASED retirement checklist Is health insurance provided under the arrangement? Can you make contributions to your employer-sponsored 401(k) plan? 1 Does your employer 401(k) match (if any) still apply? 1 Are group life insurance benefits provided under a part time arrangement? 1 What other benefits are available or lost – vacation, vision coverage, dental coverage, long-term disability, short term disability, bonus plans? 1 Generally requires working at least 1, 000 hours/year.

I can help you with … § Understanding how you might fund your health care options § Addressing the loss of other employer benefits § Ways to help reduce the impact of inflation § Understanding your Social Security options § Determining how work may impact your retirement § What to consider regarding sources of retirement income and timing in which to utilize them 29

3 Retiring at age 65 or older 30

Advantages for age 65 MEDICARE § Eligible first day of the month turning age 65 § Must enroll to receive Medicare benefits if not currently receiving Social Security benefits. § When a client enrolls can affect Medicare Part B premiums. § Part B premium is means tested (past two years). Clients should be cautious of increasing Adjusted Gross Income (AGI) via Roth IRA conversions and other increases during retirement that could affect their premium. Medicare & You, Centers for Medicare & Medicaid Services, 2016 31

Monthly Medicare premiums for 2016 PART B monthly premium PART D monthly premium $121. 80 Plan premium Individual >$85, 000 up to $107, 000 Married, filing jointly >$170, 000 up to $214, 000 $170. 50 $12. 70 + plan premium Individual >$107, 000 up to $160, 000 Married, filing jointly >$214, 000 up to $320, 000 $243. 60 $32. 80 + plan premium Individual >$160, 000 up to $214, 000 Married, filing jointly >$320, 000 up to $428, 000 $316. 70 $52. 80 + plan premium Individual >$214, 000 Married, filing jointly >$428, 000 $389. 80 $72. 90 + plan premium Modified adjusted gross income (MAGI) 2016 Individual ≤$85, 000 Married, filing jointly ≤$170, 000 standard premium Centers for Medicare and Medicaid Services, Medicare 2015 & 2016 Costs at a glance. 32

Medigap policy § A policy purchased separately to cover what Medicare does not MEDIGAP POLICY § Covers certain expenses depending on the policy Co-payments § Premiums vary depending on insurance company and extent of coverage Co-insurance 33 Deductibles

Advantages of reaching Social Security FRA 1. Full retirement age (FRA) benefits based on primary insurance amount (PIA) 2. Delayed retirement credits (DRC) Retirement benefits increase 8% per year past FRA until age 70 3. Can work as much as desired and no reduction if receiving Social Security retirement benefits 1 4. Suspension of benefits at FRA or later Earn DRCs of 8% more per year during the suspension years till age 70. Turn retirement benefits back on when ready. 34 2 4 3 5 6

Advantages of reaching FRA continued *If done prior to April 30, 2016 MARRIED COUPLES 5. Only one spouse qualified for retirement benefits File and suspend provides spousal benefits to spouse age 62 or older who did not qualify for benefits, and worker spouse continues working to get DRCs 1 6. Both spouses qualify for retirement benefits File restricted application to get spousal benefits at FRA, earn DRCs, then switch to own benefits at age 70 or sooner *Must be age 62 or older in 2015 to qualify 35 2 4 3 5 6

Required minimum distributions (RMDs) Working at age 70½ or older TYPES OF RETIREMENT ARRANGEMENTS RMD REQUIRED? Traditional IRA Roth IRA Nonqualified annuity SEP IRA SIMPLE IRA Current employer’s 401(k) or other qualified plan Former employer’s 401(k) or other qualified plan Not intended to be a complete list. 36 Depends on plan

I can help you with … § Ways of helping to address the impact of inflation § Understanding how your income affects Medicare premiums § Understanding how Medigap policies may affect your retirement income § Understanding your Social Security options § What to consider regarding sources of retirement income and timing in which to utilize them 37

4 Next steps 38

Let’s discuss … § Your retirement expectations § Your income needs and how you may be impacted by longevity and inflation § How you can better prepare for an early retirement § Your personal needs and income strategy 39 HOPE for the best, PLAN on the worst, ACCEPT whatever comes.

Complete pages 1 -4 to get started 40

Summary 1. Retiring before age 62 2. Retiring at ages 62 -64 3. Delaying retirement – FRA or older 4. Next steps 41

Disclosures This presentation is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America and Allianz Life Insurance Company of New York, their affiliated companies, and their representatives and employees do not give legal or tax advice. Clients are encouraged to seek advice for their personal situations from their tax and legal professionals. Purchasing an annuity within a retirement plan that provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefit. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to purchasing an annuity within a tax-qualified retirement plan. All annuity contract and rider guarantees, or annuity payout rates, are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer from which this annuity is purchased, by the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Allianz Life Insurance Company of North America or Allianz Life Insurance Company of New York. Guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions. • Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government agency or NCUA/NCUSIF Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 554161297. www. allianzlife. com. In New York, products are issued by Allianz Life Insurance Company of New York, 28 Liberty Street, 38 th Floor, New York, NY 10005 -1422. www. allianzlife. com/new-york/. Variable products are distributed by their affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416 -1297. www. allianzlife. com. Only Allianz Life Insurance Company of New York is authorized to offer annuities and life insurance in the state of New York. 42

Thank you. Questions?