CFA CFP CPE

1. Important Reminder!!! Be sure to sign the “Sign-In/Sign-Out” sheet outside of the room when applying for Continuing Education Credits for the following certifications. (Check the appropriate certification) • CFA • CFP • CPE

2. Payout Counseling Moderator: Rick Rodgers, Innovest Portfolio Solutions Panel: Charles Osborne, Iron Capitol Advisors Mary Willett, Willett Consulting Kandi Hicks Winters, State of Florida

3. Payout Counseling

4. Free Dinner:You will not be asked to buy anything. Kandi Winters State of Florida Bureau of Deferred Compensation

5. Plan Sponsors Responsibilities • Service by vendors • Investment Policy Statement • Workshops for State Employees • Surveys • Website • State Publications • Limitations

6. Setting Expectations: Service by Vendors

7. Workshops for State Employees

8. Rollout Survey

9. Payee Annual Survey

13. Questions?

14. Payout / Retirement Counseling The “Softer” Side Mary Willett Willett Consulting

15. How do you know how much income you need? If you don’t know how (or how long) you will live? More than “Payouts”

16. Think About Your Retirement • What will you do? • Will you work or volunteer? • Where will you live? • How healthy will you be? • Will you have an active lifestyle? • Have you thought about how long your money needs to last?

17. Retirement Goal • To attain: Total Well-Being

18. What is Retirement Well-Being? HAPPY HEALTHY PROSPEROUS

19. Today’s Retirement Counseling • Portfolio management • Rollovers • Retirement income management Focuses on Prosperity

20. Planning for Well-Being • Also includes: • Health • Happiness

21. Health: Counseling Topics How does health impact: • Longevity or years money must last • Activities and expenses in retirement • Potential for employment in retirement • Likelihood of long-term/nursing home care

22. Health Health Planning • Recognize current health status • Understand family history • Take actions for healthy lifestyle • Monitor health factors • Estimate reasonable life expectancy

23. Happiness: Counseling Topics • How lifestyle will change: • Activities and hobbies • Meaning and fulfillment • Social networks • Spouse / family • Location

24. Happy Happiness Planning • Plan for activities beyond leisure • Develop social networks outside of work • Identify retirement lifestyle and location • Discuss plans with spouse or partner

25. Opportunities • Health and wellness fairs • Retirement workshops and seminars • Newsletter articles • Broadcast e-mails • Web sites

26. Counseling for Prosperity Planning for happiness + Understanding health issues = Information needed to plan for Prosperity

27. Questions?

28. Payout / Retirement Counseling The Cold Hard Truth Chuck Osborne, CFA | Iron Capital Advisors

29. Retirement Income • When you retire, you stop working for money and your money goes to work for you. In other words, you must live off the income produced by your retirement portfolio. • The question is, how much does your money need to make before you can retire?

30. Congratulations You’ve Retired!! Now what are you going to do? Jane Smith is 65. Let’s help her through the decisions she’ll need to make about her portfolio.

31. Jane’s Situation • Age : 65 • Husband: No longer married. (this keeps the illustration simple – of course if you are married you have to combine your retirement portfolio with your spouse’s and go through the same exercise together) • Children: Married - On their own. • House: Owns house but wishes to stay there so we will not consider home equity. • Retirement Plan: $350,000 in her retirement plan • Other Investment Accounts: $15,000 in an IRA • Savings Account: $35,000 • Last Year’s Earned Income: $40,000

32. Jane’s Retirement Income Need • How much income does Jane need in retirement? • Most experts estimate she will need anywhere from 60% - 100% of her pre-retirement earned income. For our illustration we will use 70%. • $40,000 x 70% = $28,000

33. Jane’s Retirement Income Sources • Jane needs $28,000 a year to live on in retirement. • Social Security will provide $12,228 a year. • Her income shortfall is $15,772 a year. • Jane needs her portfolio to produce an annual income of $15,772 to meet her needs.

34. Jane’s Required Rate of Return • Jane does not want to outlive her money, so she must get a rate of return on her portfolio that is sufficient to take care of her income shortfall. • She needs $15,772 per year from her portfolio. • Her portfolio = $350,000 + $15,000 + $35,000 = $400,000 • Her required rate of return = $15,772 / $400,000 = 0.04 or 4% • But don’t forget inflation, Jane needs to add another 3 – 4% for long term inflation. • Her total Required Rate of Return is 7%.

35. How to Invest • How can Jane get a 7% rate of return on her portfolio? • Jane must invest in a combination of assets that gives her the highest probability of achieving that return, with the least amount of risk possible.

36. Tools to Help Within the Plan • Annuities • Longevity Insurance • Pay Out Funds • Target Date Funds • Hybrid Target Date Funds with Annuity imbedded

37. Seeking Professional Help • Retirement is not the finish line, it is a starting line. As you can see this is when it starts getting complicated. • Most retirees will seek professional help. Here are a few things to keep in mind. • How do they get paid? In our opinion, one should NEVER take advice from someone who makes a commission for selling you a product, or trading a security. • What is their background? Have they ever had a job where they were judged by how well they made investment decisions, as opposed to being judged by how many clients they can acquire? • Do they have a fiduciary relationship with their clients? • Get these answers In Writing!!

38. Questions?