1 / 106

CRC I - Review Fundamentals of Retirement Planning Chapters 1 and 2

CRC I - Review Fundamentals of Retirement Planning Chapters 1 and 2. Chapter 1 Retirement Planning Across the Life Cycle. Life Cycle. Lifecycle Predictable Unpredictable Relationship between lifecycle and expenses and income Relationship of life cycle to retirement. 1/1-7.

audrey-holman
Download Presentation

CRC I - Review Fundamentals of Retirement Planning Chapters 1 and 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CRC I - Review Fundamentals of Retirement Planning Chapters 1 and 2

  2. Chapter 1 Retirement Planning Across the Life Cycle

  3. Life Cycle • Lifecycle • Predictable • Unpredictable • Relationship between lifecycle and expenses and income • Relationship of life cycle to retirement 1/1-7

  4. Retirement and the Life Cycle • While working • Early-, mid-, late-career • End of formal career/full-time work • Early-, mid-, late-retirement • Transition between stages 1/7-8

  5. Challenges to Retirement Education Initiatives/ • Diverse audience at various stages—all at the same time! • Age • Gender • Educational level • Earning power • Culture 1/9-15

  6. Challenges—Generation X • “Always a tomorrow” • Postpone current consumption in return for a secure retirement • Strategy: • Develop and use good savings habits • Living beneath one’s income • Treasure of time • Biggest enemy to success: procrastination 1/10-11

  7. Challenges: Mid-Generation • Biggest issue: competing goals • Strategy: • Saving even small amounts • Concretize goals • Acknowledgement of multiple financial demands • Importance of setting multiple financial goals 1/12-15

  8. Planning for the Unexpected • Unexpected events prior to retirement impact planning for retirement • Caveat: loans from qualified plans • Insurance protects against many of the unexpected events • Elder care • Disability • Natural disaster 1/16-20

  9. Planning for the Unexpected • Financial challenges of divorce • Value of distributed assets • Cash flow/income of parties after a divorce • Issues with defined benefit plan • Use of a QDRO (Qualified Domestic Relations Order) 1/17

  10. Planning for the Unexpected • Termination of employment • Vesting of retirement assets • Disposition of company-sponsored retirement plans • Insurances • COBRA • Continuation as a personal policy 1/21-23

  11. Life Cycle Comparison Chart • Compare and contrast across categories and life cycles • Note specific financial tasks at each stage • Identify key challenges at each stage 1/24-37

  12. Chapter 2 Retirement Readiness: It’s Not Just About Money 2/1

  13. Retirement—Myth and Fact • Myth of the leisure retirement • Economic life hypothesis • Three phases of the life cycle • Retirement signified by shift of living from earnings to savings • Expanding definition of the retirement • Interdisciplinary • Trans life cycles 2/4-9

  14. Financial Planning/Retirement Planning • Relationship offinancial planning--retirement planning--retirement counseling-- • Distinctions among the three 2/10-11

  15. Retirement Readiness • Diverse meanings of “readiness” • Traditional: retirement income adequacy • What is relationship of money to retirement readiness? • Link to gerontology 2/12

  16. Retirement Readiness = Well-Being • Cross disciplines • Strengths-based approach • Beyond “survival” to maximizing well-being in retirement • Geo-financial • Bio-medical • Psycho-social • Best practice approach • Why use an approach based on an integrative model? 2/13-18

  17. Career Stage Retirement Readiness • Usefulness of retirement information • Application of knowledge • Difference between “wanting” to retire and being “prepared” to retire involves non-financial criteria 2/19

  18. Worksheets and Checklists • Identify various distinctions among each type • Geographical readiness • Financial readiness • Biological readiness • Medical readiness • Psychological readiness • Social readiness • Complete each worksheet for yourself 2/20-31

  19. CRC I - Review Fundamentals of Retirement Planning Chapters 3 and 4

  20. Chapter 3 Basic Principles of Effective Counseling and Communication

  21. Effective Communication • Understand the generational zeitgeist • “Silent generation” • Born before 1946 • “Baby boomers” • Early – born between 1946-1955 • Late – born between 1956-1964 • Identify personal style of communication • Yours • Client’s 3/4-5

  22. Individualistic Anti-institution Work thru retirement Personal meaning Role of leisure Financial savvy Zeitgeist of the Generation Silent Generation Baby Boomers • Financial help • Leisure • Housing • Duty/obligation • Role of leisure • Work hard, get ahead 3/5-10

  23. Institutional mistrust Skepticism of institutions Need to control More savvy about investments Zeitgeist of the Generation Silent Generation Baby Boomers • Disappointment in mythof getting ahead/hard work • Widowhood • Label of “aging” • Problems associated withlongevity 3/5-10

  24. Effective Communication • Generational traits combine with personal traits • Impacts both listening and speaking 3/11-12

  25. Effective Communication • Build trust and receptivity with clients • Two-way nature of communication • Understand your own style • Understand the style of the other • Ability to adapt your communication style to the listening style of the other 3/11

  26. Effective Communication • Communication strengths are the flip side of communication weaknesses • Staying “on task” vs. Addressing spontaneous issues as they arise • Warm, welcoming vs. Responding to a problem 3/12-17

  27. Effective Communication • Assessing the style of the other person and matching your style to their pattern • Determine the pace of the other person • Speak, listen, respond • Be aware of the other person’s priorities • Balance between relationship-oriented and task-oriented • Be willing to adjust your communication style—not vice versa! 3/17-22

  28. Chapter 4 Retirement Mindsets and Behavioral Finance

  29. Money Personalities • Various ways of dealing with money—spending, saving, planning • Awareness of the personality types may provide direction for planning and communication 4/3-4

  30. Role of Behavioral Finance • Attempt to understand the investor and financial markets from a psychological perspective • How clients think about their money • How they behave with their money • How to deal with irrational investor behavior • Use of behavioral investor types • Help professionals make rapid, insightful judgments about clients 4/4-17

  31. Retirement Mindset • Permeates an individual’s life and career and evidenced by the choices made during that life • Retirement stages • Based on proximity to actual date of retirement • Changing priorities • Background vs. Foreground 4/18-19

  32. Communication Paper Trail • Updated and detailed record keeping of client/counselor interactions • Clarify when education-related duties create a fiduciary responsibilities 4/19-20

  33. Communication Paper Trail • Documentation is part of professional self-care • Time; date of interaction • Who was present • Reason for interaction • Topics discussed • Recommendations • Responsibilities for implementation • Exchange of written information 4/20

  34. Safe Harbors • Information that is generallyregarded as NOT creatingfiduciary responsibility • Plan information • General financial and investment information • Asset allocation models • Interactive investment materials 4/20, 22

  35. ERISA 404(c) and You • What must a fiduciary do to be protected by 404(c)? • Exercise prudence in selecting and monitoring advisors and educators • Same prudence as exercised with any other plan function • Must act solely on behalf of plan participants and beneficiaries • Determine whether education, advice, counseling 4/21

  36. ERISA 404(c) and You • Can a fiduciary offer investment advice and still be protected from liability? • 404(c) does not require that investment advice be provided • Question: How do employees make competent decisions without advice? • Difference between education and advice? • Guidance found in the Department of Labor Interpretive Bulletin 96-1 4/21

  37. 404(c) and Safe Harbors • “Education” not “Advice” • No liability if certain rules are met • Safe harbors protect counselors and employers and provide scope of “education” activities • General plan information • General financial concepts • Asset allocation information • Interactive investment materials 4/22-23

  38. Nature of “Advice” • Advice is specific to individuals • Telling someone what they should do with their investments 4/23

  39. Ongoing Discussion • Some individual rulings given for companies who provide investments to plans can also provide advice for those investments • Exception rather than the rule • Important to stay current • Older view: Providing education was a liability • Recent view: Not to provide education is a liability 4/23-25

  40. Caveat for Counselors • Counselor/employee relationship different from planner/client • Complete facts may not be available • One-side representation (employee) • Insufficient time to gather adequate information 4/23-25

  41. Regulations Proposed in 2008 for 401(k) Plans and IRAs • Certified unbiased computer model may be used • Information delivered via an adviser compensated on a “level fee” basis with fees disclosed 4/23-25

  42. CRC I - Review Fundamentals of Retirement Planning Chapters 5, 6, and 7

  43. Chapter 5 Budgeting

More Related