2013-10237 1 What’s Your Retirement Income Plan 2013-10237 GO ON A JOURNEY TOWARDS RETIREMENT.
Transcript of 2013-10237 1 What’s Your Retirement Income Plan 2013-10237 GO ON A JOURNEY TOWARDS RETIREMENT.
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What’s Your Retirement Income Plan
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GO ON A JOURNEY TOWARDS RETIREMENT
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Agenda
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The Retirement RiskThe Retirement Risk
The Retirement RealitiesThe Retirement Realities
Retirement Planning OptionsRetirement Planning Options
The Way Forward:Plan, Act, ReviewThe Way Forward:Plan, Act, Review
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The Retirement Realities
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Planning for Retirement Raises Many Questions
How will I spend my time?
Will I outlive my savings?
How much will things really cost?
How long will I live?
Will I have enough money to leave my family protected?
Will I have enough income to maintain my lifestyle?
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What’s your Retirement Income Gap?
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AMERICAN
ARE PROJECTED TO BE
WORKERS
$6.6 TRILLION
SHORT OFTHEIR NEEDS
Source: Boston College's Center for Retirement Research, 2010 – Retirement USA study.
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Expected Retirement Age
%
%
Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2013 Retirement Confidence Survey.
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Top Reasons for Retirement Age Change
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Worker Retirement Confidence: By Debt Level
8Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2013 Retirement Confidence Survey.
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Retirement Crisis: Financial Realities
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Source: The Retirement Savings Crisis: Is It Worse Than We Think?, Nari Rhee, PhD, National Institute on Retirement Security, June 2013.Source: The 2013 Retirement Confidence Survey, Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., March 2013.Source: Getting Paid In America Survey, American Payroll Association, September 2012. Source: A Summary of the 2013 Annual Social Security and Medicare Trust Fund Reports
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“Strategy without tactics is the slowest route to victory. Tactics
without strategy is the noise before defeat.”
― Sun Tzu
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Retirement Reflection
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The Retirement Risk
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Retirement Risks For Consideration
Market Risk
Longevity Risk
Inflation Risk
Healthcare Risk
Sequence of Returns Risk
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Longevity Risk: The risk of outliving your assets
Average Life Expectancy at Age 65 and Age 75
83
87
82
8684
88
70
75
80
85
90
Age 65
All
Chart Source: Centers for Disease Control, “Life Expectancy at Birth, at 65 and 75 Years of Age by Race and Sex” (Table 26). Health, United States 2010.
Age 75
Males Females
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Market Risk: Keep a Long Term Perspective with Retirement
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About the data This is for illustrative purposes only and not indicative of any investment. Stocks in this example are represented by the S&P 500® index, which is an unmanaged group of securities and considered to be representative of the U.S. stock market in general. An investment cannot be made directly in an index.Bonds are represented by the Bank of America Merrill Lynch 3-month U.S Treasury bill. Government bonds and Treasury bills are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest, while stocks are not guaranteed and have been more volatile than the otherasset classes. Source: Zephyr STYLEAdvisor
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Inflation Risk: The inevitable increase of costs of goods and services
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Ford Mustang
Nursing Home
(annual cost)
Average Home Price
$2,814
$31,395
$2,983
$83,585
$14,950
$271,600
1968
2010
Chart Source: Ford Motor Company; ElderWeb; U.S. Census Bureau (Average Home Price)
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*Source: Say Goodbye to the 4% Rule for Retirement, The Wall Street Journal, March 1, 2013
Withdrawal Risk
According to a Wall Street Journal article* you may
Withdrawal Risk: What’s your income distribution strategy?
Retirement Cash Machine
Retirement Cash MachineSay
Goodbye to the 4%
Rule
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Healthcare Care Risk: Medical costs are on the rise
Present Value of Savings Needed to Fund Out-of-Pocket Health Care Costs for Retirees With Employer Medical Coverage
Men WomenRetire in 2010
Men WomenRetire in 2020
Source: Employee Benefit Research Institute. Issue Brief No. 351, December 2010. This analysis uses a Monte Carlo simulation model to cover health insurance premiums and out-of-pocket expenses in retirement. These observations were used to determine asset targets for having adequate savings to cover retiree health costs 50 percent, 75 percent and 90 percent of the time. Estimates are also jointly presented for a stylized couple both of whom are assumed to retire simultaneously at age 65.
$354,000
$406,000
$187,000
$242,000
$100,000$146,000 $183,000
$245,000
Represents an average chance (50%) of having enough money to cover health care expenses
Represents a higher chance (90%) of having enough money to cover health care expenses
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
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"Obstacles are those frightful things you see when you take
your eyes off your goal."
- Henry Ford (1863-1947)
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Retirement Reflection
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The Retirement Options
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19%19%
12%12%
25%25%2%2%
Chart Source: Sources of Income of Elderly Men and Women (Age 65 and older), Employee Benefit Research Institute, EBRI Notes, September 2010, No. 176
OtherOther
Employment Employment EarningsEarnings
Income fromIncome fromAssetsAssets
Pension & Pension & AnnuitiesAnnuities
Income during Income during retirement retirement takes on a takes on a new meaning.new meaning.
42%42%
Where Will The Income Come From?
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TAKE A HOLISTIC APPROACH
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What Are Sources Of Guaranteed Income?
Social SecurityFederal retirement income program with inflation protection
AnnuitiesIs a long-term financial product designed for retirement planning; provides income that can begin immediately or in the future
Life InsuranceProtection for your future with access during retirement
Pension PlansRetirement income from employer defined benefit plans; guaranteed by the federal Pension Benefit Guaranty Corporation
Certificates of Deposit Time deposits issued by financial institutions insured by up to $250,000 by the Federal Deposit Insurance Corporation
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The Way Forward
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Plan, Act, Review
• Understand what you value most
• Help you design a plan tailored to your goals
• Reach your most important financial objectives, including retirement
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Plan: Uncovering What Matters Most to You
Start thinking about your life goals
Define your income needs
Identify any areas of concern
Talk to your financial professional about tradeoffs:
◦ Retirement vs. Education Funding
◦ Spending vs. Saving
◦ Retirement Lifestyle vs. Legacy Planning
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Step 1
Step 2
Step 3
Step 4
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Take stock of where you are now◦ Review sources of income◦ Estimate budget / Identify gaps
Discuss financial and lifestyle goals with your financial professional ◦ Visit our financial planning and
educational websites:─ MyRetirementWalk.com─ RetirementStyleMatters.com
Implement your plans
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Act: Put Your Plan to Work
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Step 1
Step
Step
3
Step 3
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Act: How Much Retirement Income Will You Need?
Basic Needs Discretionary Needs Legacy Needs
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Act: How Much Retirement Income Will You Need?
Basic Needs Discretionary Needs Legacy Needs• Mortgage/Rent• Insurance• Food• Clothing• Healthcare
• Entertainment• Travel and Hobbies• Gifts for
Grandchildren• New Car
• Provide for Spouse or Family
• Charitable Gifts• Educational
Scholarships
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Act: How Much Retirement Income Will You Need?
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Act: Take Advantage of Educational Resources
Empower Yourself:
• Visit our Retirement Planning Site MyRetirementWalk.com
• Take our animated walk throughout life’s major milestones and learn saving and planning tips for your consideration
• Access valuable resources: articles, calculators, infographics, and videos
• Hear and learn from industry-recognized experts about a wide spectrum of retirement topics on our frequently updated blog
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Act: Leverage Educational Tools
InfographicsInfographics
CalculatorsCalculators
Financial Personality QuizFinancial Personality Quiz
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Review: Communicate Life Changes
Meet regularly with financial professional to track your retirement portfolio
Communicate any life changes to financial professional
◦ Getting married
◦ Purchasing new home
◦ Welcoming a grandchild
Modify portfolio as your situation – and market conditions – shifts
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Step 1
Step 2
Step 3
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Working Togethe
r
Next Steps:A Financial Professional Can Help
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Develop plan that balances competing financial goals
Understand what the numbers really mean
Create your personalized retirement savings strategy
Find ways to increase your retirement savings
Determine when you can retire
Monitor and make adjustments over time
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In Summary
• Retirement Realities
◦ There are many reasons that cause inaction; you’re not alone and there are ways to prepare.
• Retirement Risk
◦ A number of risks exist that you need to consider over time; resist the urge to let your retirement plan go on autopilot.
• Retirement Options
◦ There are action steps you can take today to become better prepared for the retirement income stage of your life.
◦ Work with your financial professional to determine the right strategy; they can be one of your best allies when it comes to retirement planning.
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Discussion
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