Charting Your Course - A Financial Guide for Women
-
Upload
marlon-castillones-manalo -
Category
Documents
-
view
216 -
download
2
Transcript of Charting Your Course - A Financial Guide for Women
CHARTING YOUR FINANCIAL COURSE: A GUIDE FOR WOMEN
C49257
OUR FOCUS TODAY
> EVALUATE YOUR FINANCIAL HEALTH
> SET FINANCIAL GOALS
> MAKE YOUR MONEY WORK FOR YOU
> MANAGING BEING SINGLE AGAIN
> PUT IT ALL TOGETHER – YOUR FINANCIAL PLAN
2
KEY FINANCIAL CHALLENGES FOR WOMEN
3
DID YOU KNOW?*
> Women still earn only 77 cents to a full-time working man’s dollar.
> Two-thirds of all working women earn less than $30,000 a year in jobs without pensions.
> Over a lifetime, women will spend 27 years in the workforce, while men will spend almost 40 years.
* “What People Need to Know About Retirement”, National Center for Women and Retirement Research (WISER), 2008.
4
SAVINGS CHALLENGES WOMEN MAY FACE
1. May need to save more money due to longevity
2. May have fewer years to save the necessary amount
3. May not be able to save as much from year to year
5
COMMON MYTHS ABOUT MONEY
> I need to have a lot of money before I can start investing
> If my spouse has a health and pension plan, then I don’t need to worry about having my own
> Women and men have the same investment goals
6
COMMON MYTHS ABOUT MONEY (continued)
> Women and men receive the same retirement benefits
> Medicare will take care of my long-term care needs
7
EVALUATE YOUR FINANCIAL HEALTH
WHERE DO YOU STAND?
> Organize your financial records
> Check your credit rating
> Review your cash flow
> Review your net worth
> Consider what goals you need to save for
8
CASH FLOW AND NET WORTH – WHAT ARE THEY?
CASH FLOW = THE PATH YOUR MONEY TAKES
NET WORTH = RATIO OF WHAT YOU OWN TO WHAT YOU OWE
– =INCOME EXPENSES POSITIVE OR
NEGATIVE?
– =ASSETS LIABILITIES POSITIVE OR
NEGATIVE?
EVALUATE YOUR FINANCIAL HEALTH
9
SET FINANCIAL GOALS
WHAT DO YOU WANT TO ACHIEVE?
PLAN FOR YOUR…• Short-term financial goals
• Long-term financial goals
10
SHORT-TERM FINANCIAL GOALS
> Reduce unnecessary expenditures– Use cash flow information– Reduce debt and increase net worth
> Determine savings priorities– Emergency account, auto purchase, other
> Begin or increase savings for goals– Pay yourself first– Check your tax withholding– Start today
SET FINANCIAL GOALS
11
LONG-TERM FINANCIAL GOALS
> Retirement
> Paying off your mortgage
> Protecting your assets
> Building a financial legacy
SET FINANCIAL GOALS
12
INSURANCE – STRATEGIES TO PROTECT YOUR ASSETS
> Life insurance
> Property/casualty and liability insurance
> Disability income insurance
> Long-term care insurance
SET FINANCIAL GOALS
13
INCOME REPLACEMENT
Disability Insurance
• Pays a portion of your income if you become disabled
• Additional tool to use to try and protect your assets
• Group disability insurance sometimes available through your employer via long-term and/or short-term policies
SET FINANCIAL GOALS
14
LONG-TERM CARE INSURANCE
> Helps:
> you afford appropriate care
> protect your savings and assets
> preserve your freedom of choice in choosing care
SET FINANCIAL GOALS
15
SAVING AND INVESTING BASICS
> Pay yourself first!
> Continue making payments to savings when debt is eliminated
> Increase contributions when you get a raise
> Take advantage of your company match
> Understand the concepts of compounding and tax-deferred growth
MAKE YOUR MONEY WORK FOR YOU
16
* Based upon your salary, you may contribute up to the maximum amount under each scenario represented by the different bars.**You must be an employee of an eligible teaching institution, hospital, church, home health agency or health and welfare service agency to
be eligible for these contribution limits.
CONTRIBUTING MORELOOKING FOR OPPORTUNITIES IN A DOWNTURN
17
2011 LIMITS FOR SALARY DEFERRAL RETIREMENT PLANS*
403(b) Plans Only
* Based upon your salary, you may contribute up to the maximum amount under each scenario represented by the different bars.**You must be an employee of an eligible teaching institution, hospital, church, home health agency or health and welfare service agency to
be eligible for these contribution limits.
2011 LIMITS FOR SALARY DEFERRAL RETIREMENT PLANS*
403(b) Plans Only
CONTRIBUTING MORELOOKING FOR OPPORTUNITIES IN A DOWNTURN
18
TRADITIONAL AND ROTH IRAs –GREAT FOR ADDITIONALRETIREMENT SAVINGS!
MAKE YOUR MONEY WORK FOR YOU
* After 2010, indexing may be in $500 increments, subject to inflation.IRA contribution limits rise for deductible and nondeductible. Traditional and Roth IRAs. Eligibility to participate in a Roth IRA is subject to income limits.
YEAR IRA* 50+ CATCH UP
TOTAL $ YEARLY
19
2011* $5,000 $1,000 $6,000
INVESTMENT CONSIDERATIONS
> Investment Risk
> Volatility
> Diversification and Asset Allocation
> Expenses Matter
MAKE YOUR MONEY WORK FOR YOU
There is no account fee to own a TIAA-CREF IRA; however, brokerage transaction fees may apply. In addition, investors are subject to the underlying funds’ portfolio management fees and expenses.
20
21
IMPORTANCE OF ASSET ALLOCATION AND DIVERSIFICATION
DIVERSIFICATION CAN HELP REDUCE PORTFOLIO VOLATILITY*
* Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income. Past performance is no guarantee of future results.Source: © Ibbotson Associates, a wholly owned subsidiary of Morningstar, Inc. Hypothetical value of $1 invested at year-end 1925. Assumes reinvestment of income and no transaction costs or taxes. Chart illustrates returns from 1/1/1926 to 12/31/2010. Benchmarks: S&P 500 Index, Ibbotson U.S. Long Term Corporate Bonds, Ibbotson U.S. Long Term Government Bonds, Ibbotson U.S. 30-Day Treasury Bills, U.S. Consumer Price Index for All Urban Consumers (CPI-U). You cannot invest directly in an index.
1926 TO 2010 Average Return
3.62%
5.48%5.93%
9.87%
Ending Wealth
$21
$93$133
$2,976
$.10
$1
$10
$100
$1,000
$10,000
1926 1934 1943 1952 1961 1970 1979 1988 2010
$12 2.99%
StocksCorporate BondsGovernment BondsTreasury BillsInflation
TYPES OF RISK
> Interest-Rate Risk
> Inflation Risk
> Market Risk
> Foreign Investment Risk
> Market-Timing Risk
MAKE YOUR MONEY WORK FOR YOU
22
SIGNIFICANT DOWNTURNS ARE NOT UNCOMMON
MAKE YOUR MONEY WORK FOR YOU
Source: Ibbotson Associates, Inc.; Final Period Source: CREF Investments. Both Sources: Large Company Stocks – Standard & Poor’s 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general. The data assumes reinvestment of all income and does not account for taxes or transaction costs. The average return represents a compound annual return. An investment cannot be made directly in an index. Past performance is not a guarantee of future results.
Next?
PERIOD9/29-6/326/46-4/478/56-2/578/57-12/571/62-6/622/66-9/6612/68-6/701/73-9/741/77-2/7812/80-7/829/87-11/876/90-10/907/98-8/989/00-9/0211/07 – 2/09
LENGTH34 months11 months 7 months
5 months6 months8 months
19 months21 months14 months20 months
3 months5 months2 months
25 months16 months
DECLINE IN S&P 500® -83.4%-21.0%-10.2%-15.0%-22.3%-15.6%-29.3%-42.6%-14.1%-16.9%-29.5%-14.7%-15.4%-44.7%-50.9%
23
UNDERSTANDING EQUITY MARKET VOLATILITY
Equity markets
• Constantly react to events and conditions
• Small changes in equity assumptions often equate to large changes in equity values
• Changes in equity assumptions often include reactions to events
MAKE YOUR MONEY WORK FOR YOU
24
LOOK FOR THE SILVER LINING IN VOLATILE TIMES
> When share prices are lower– Dollar cost averaging*– Systematic transfers*
> When interest rates are declining– Refinance your mortgage– Transfer credit card balance to lower rates
> Take advantage of new tax laws– Increased investment opportunities
* Please be advised that systematic investing does not assure a profit, and does not protect against loss in declining markets. In addition, such a plan involves continuous investment in securities regardless of fluctuating prices, and the investor should consider his/her financial ability to continue purchases through periods of low price levels.
MAKE YOUR MONEY WORK FOR YOU
25
UNDERSTANDING EQUITY MARKET VOLATILITY
Remember…
• The trade-off for higher returns is higher risk in the equity markets
• Diversifying asset allocations can mitigate risk
MAKE YOUR MONEY WORK FOR YOU
Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income..
26
*Diversification does not guarantee against losses
• Spreads risk among different asset classes
• Potentially reduces overall portfolio volatility
• Investment performance for individual asset classes will vary
• To diversify, allocate assets…− Across Asset Classes− Within Asset Classes
Non-EquitiesEquities
UNDERSTANDING DIVERSIFICATIONMAKE YOUR MONEY WORK FOR YOU
27
ASSET CLASSES
> Guaranteed*
> Money Market
> Fixed Income
> Real Estate
> Equities
* Guaranteed by the claims-paying ability of the issuer.
MAKE YOUR MONEY WORK FOR YOU
28
BUILDING YOUR PORTFOLIO WITH TIAA-CREF
> Option A – Create your own allocation– Use our Asset
Allocation Evaluator– Have an allocation
prepared
> Option B – Select one of our model portfolios
MAKE YOUR MONEY WORK FOR YOU
29
?
WE’LL HELP YOU ALLOCATE YOUR PORTFOLIO
MAKE YOUR MONEY WORK FOR YOU
30
* Based on the claims-paying ability of TIAA. The specific asset allocations shown in the model portfolios were generated by Ibbotson Associates, one of the nation’s leading financial advisors. They are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes like the Russell 1000 stock index. This optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. The model portfolios presented here were not created specifically for you and may not take into account your particular retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances.
CONSERVATIVE27%
41%
12%
8%
12%
Guaranteed*
Fixed Income
Equities
Real Estate
Cash/Money Market
WE’LL HELP YOU ALLOCATE YOUR PORTFOLIO
MAKE YOUR MONEY WORK FOR YOU
31
MODERATELYCONSERVATIVE22%
28%32%
8%
10%
Guaranteed*
Fixed Income
Equities
Real Estate
Cash/Money Market* Based on the claims-paying ability of TIAA. The specific asset allocations shown in the model portfolios were generated
by Ibbotson Associates, one of the nation’s leading financial advisors. They are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes like the Russell 1000 stock index. This optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. The model portfolios presented here were not created specifically for you and may not take into account your particular retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances.
WE’LL HELP YOU ALLOCATE YOUR PORTFOLIO
MAKE YOUR MONEY WORK FOR YOU
32
MODERATE15%
20%
53%
7%5%
Guaranteed*
Fixed Income
Equities
Real Estate
Cash/Money Market* Based on the claims-paying ability of TIAA. The specific asset allocations shown in the model portfolios were generated
by Ibbotson Associates, one of the nation’s leading financial advisors. They are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes like the Russell 1000 stock index. This optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. The model portfolios presented here were not created specifically for you and may not take into account your particular retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances.
WE’LL HELP YOU ALLOCATE YOUR PORTFOLIO
MAKE YOUR MONEY WORK FOR YOU
MODERATELYAGGRESSIVE
7%
13%
72%
8%
Guaranteed*
Fixed Income
Equities
Real Estate
Cash/Money Market* Based on the claims-paying ability of TIAA. The specific asset allocations shown in the model portfolios were generated
by Ibbotson Associates, one of the nation’s leading financial advisors. They are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes like the Russell 1000 stock index. This optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. The model portfolios presented here were not created specifically for you and may not take into account your particular retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances.
WE’LL HELP YOU ALLOCATE YOUR PORTFOLIO
MAKE YOUR MONEY WORK FOR YOU
AGGRESSIVE5%
86%
9%
Guaranteed*
Fixed Income
Equities
Real Estate
Cash/Money Market* Based on the claims-paying ability of TIAA. The specific asset allocations shown in the model portfolios were generated
by Ibbotson Associates, one of the nation’s leading financial advisors. They are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes like the Russell 1000 stock index. This optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. The model portfolios presented here were not created specifically for you and may not take into account your particular retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances.
MANAGING YOUR INVESTMENTS
TIAA-CREF LIFECYCLE FUNDS*:
* In addition to the fees and expenses associated with the Lifecycle Funds, there is exposure to the fees and expenses associated with the underlying investment options. Please note that TIAA-CREF Lifecycle Funds are actively managed, so their asset allocations are subject to change and may vary from those shown or discussed. Approximately seven to ten years after a Lifecycle Fund’s target date, the fund may merge into the Lifecycle Retirement Income Fund or a similar fund.
2050 FUND
2045 FUND
2040 FUND
2035 FUND
2030 FUND
Fixed-Income Funds Equity Funds
Asset allocations become more conservative as you approach retirement. As with all mutual funds, the principal value isn’t guaranteed. Also, the target date of the Lifecycle Fund is an approximate date when investors may begin withdrawing from the fund.
2025 FUND
2020 FUND
2015 FUND
2010 FUND
Retirement Income Fund
This chart assumes expenses are withdrawn from the account at year-end, based on year-end assets. It is presented for illustrative purposes only and does not reflect actual performance, deduction of taxes or predict future results of any TIAA-CREF account. Before committing money to an account, be sure to check its expenses. Refer to the prospectuses available at this seminar for current expenses. However, lower expenses do not mean higher returns.
$10,000 INVESTED OVER 30 YEARS EARNING 6%
EXPENSES
2.00% 1.50% 0.50%
COMPARE EXPENSESMAKE YOUR MONEY WORK FOR YOU
36
BECOMING SINGLE AGAIN
If you’ve become single as a result of being:
• Widowed
• Divorced
• Separated from a long-term partnership
MANAGING BEING SINGLE AGAIN
37
IMPORTANT STEPS TO TAKE
Address your emotional needs• Take time for yourself to adjust• Seek professional advice as needed• Ask questions
Assess your finances• Gather important documents• Create new cash flow and net worth statements• Review investing and insurance needs• Check your credit rating/score
MANAGING BEING SINGLE AGAIN
38
DIVORCE AND YOUR RETIREMENT PLANS
> Division of retirement accounts
> Social Security benefits
> Review documents– Beneficiary designations– Property title
> Review your asset allocation after accounts are divided
MANAGING BEING SINGLE AGAIN
39
YOUR FINANCIAL PLAN
> Pay off high interest credit card debt
> Have a financial security fund of in case of an emergency like a loss of a job
> Buy or evaluate your existing insurance to protect your family and property
> Have a will and a living will
PUT IT ALL TOGETHER
40
YOUR FINANCIAL PLAN
> If you have a mortgage, understand the rate and options for refinancing to save money
> Maximize your saving through your employer’s retirement plan
> Identify your tolerance for risk for your investments and align with your asset allocation
> Understand asset diversification, market volatility and options for allocating your retirement savings including Lifecycle funds
PUT IT ALL TOGETHER
41
YOUR FINANCIAL PLAN
> Strongly consider opening or contributing to an IRA to supplement your employer sponsored savings plan
> If your asset levels are considerable, consider creating an estate plan for long term security for your family
> See an Individual Consultant if you need help building an financial plan
PUT IT ALL TOGETHER
42
OUR SOCIAL MEDIA PROPERTIES
43
iPhone App
iTunes podcasts
Become a Fan
Facebook.com/TIAA-CREF
Join your peers in
redefining retirement
Follow us on
Twitter.com/TC_Talks
Please note: Neither TIAA-CREF nor its affiliates provide legal or tax advice. Please consult with your advisors. TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www..tiaa-cref.org for details.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY. The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed herein. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. This discussion is general in nature, is intended for informational purposes only and is not intended to provide specific advice or recommendations for any individual or organization. The circumstances surrounding each situation differ.
© 2011 Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY 10017
44
TAKE THE NEXT STEP
Call us at 800 842-2252Visit us at tiaa-cref.org
IMPORTANT INVESTMENT INFORMATION
You should consider the investment objectives, risks, charges and expenses carefully before investing.
Please call 877 518-9161 or visit tiaa-cref.org for a prospectus that contains this and other information.
Please read the prospectus carefully before investing.
TIAA-CREF IS HERE FOR YOUtiaa-cref.org
46
* There is no account fee to own a TIAA-CREF IRA; however, brokerage transaction fees may apply. In addition, investors are subject to the underlying funds’ portfolio management fees and expenses. The products and services referenced above are offered by various entities within the TIAA-CREF group of companies.
LifeInsurance
College savings and
other priorities
Tax-advantaged
saving
No-fee IRAs* Brokerage Services
MutualFunds