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Planning Over the Years Managing Your Savings on Your Roadway to Retirement. Powerpoint Templates. The economy is on the upswing. Unemployment is improving, the market has shown signs of recovery, credit requirements are relaxing. Consumer confidence is up.

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  1. Planning Over the Years Managing Your Savings on Your Roadway to Retirement Powerpoint Templates

  2. The economy is on the upswing. Unemployment is improving, the market has shown signs of recovery, credit requirements are relaxing. Consumer confidence is up. Pre-recession sentiment has returned on many levels. Where Are We Now?

  3. The number of individuals aged 100and older has grown from 2,300in 1950 to nearly 80,000in 2010 It’s projected that by 2050, this number will be near 600,000! According to the Society of Actuaries, a 65-year-old couple now has a 31% chance of at least one spouse living past age 95. Are You Aware ? Source: US Census Bureau

  4. 3 out of 4 Surveyed Respondents Not Yet Retired View Retirement as a “Second Act” During Which They Intend to Work Part-time or Full-time Source: Merrill Lynch Retirement Income survey

  5. During your working years, you are paying FICA (Social Security) taxes, incurring work-related expenses, commuting and (hopefully) setting aside money for retirement. After retirement, obligations shift, and so do expenditures….therefore well-being may be defined with different income levels. You will need to think about what expenses may be unique to retirement. On average, retired households spend about 80% of what working households spend, and earnings are about 57% that of working households. Considerations Source: Expenditure Patterns of Older Americans, 2001-2009, Sudipto Banerjee, Employee Benefit Research Institute Issue Brief, February 2012

  6. What’s Your Plan? Source: Annual national survey assessing household saving—sponsored by Consumer Federation of America, the American Savings Education Council and the Employee Benefit Research Institute

  7. Ask Yourself Some Important Questions… Should you (could you) increase your retirement savings rate? Are you saving enough? Should you invest more aggressively? More conservatively? How far are you from your goal? Have you determined how much you need to save? How many years until you retire?

  8. Suggested Benchmarks over the YearsThese suggestions are based on the following target: households of people aged 65 or older; spending on average $36,802/year. On average, this household has individuals collecting $11,249 per person in Social Security—leaving the balance of the spending target coming from individual savings. If you don’t have at least $500,000, you may need to consider working longer! Homestretch! Add $10,000/year By now, you should be adding $7,000/year Up your annual contributions to $4,500/year With no accumulated savings, aim to save $3,000/year AGE Source: www.money-rates.com/research-center, Bureau of Labor Statistics, Employee Benefit Research Institute, Richard Barrington, Senior Financial Analyst, CFA, 2/24/2012

  9. Set Big Goals! Source: www.arielinvestments.com. The image above represents monthly and lump-sum savings necessary using an assumed rate equal to the historical annual compound return (9.12%) of a 75% stock/25% bond portfolio (compounded monthly and rebalanced annually) over the time period January 1926 to November 2009. Government bonds are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest, while stocks are not guaranteed and have been more volatile than other asset classes.

  10. Let’s Break this Down…

  11. Your 20s: Getting Started

  12. Educate Yourself! What are your plan’s eligibility requirements? How much can you defer? Is there a Pre-Tax deferral option? ROTH? Does the employer contribute? If so, how? What is the vesting schedule? What investments are offered? Is there a way to receive assistance in understanding and choosing investments? What is your individual risk tolerance? It’s in your best interest to plan on an initial contribution of 3% of your salary and increase it by 1% every year for at least the first 10 years… Understanding Retirement Plan Basics

  13. You may feel as though retirement is too far away to worry about right now, but some say that 75 is the new 65! Starting now will enable you to choose your own retirement age, instead of not being able to afford to do so. You may also be able to defer taxes over the course of your lifetime. Social Security as a factor will be changing….be prepared for this! Why save?

  14. When surveyed, 74% consider themselves conservative spenders and have no personal debt. 85% say they are “pretty sure” they will have enough money to live through retirement. What they don’t realize: average life expectancy could mean that their “retirement” will last 20 years….. How do you foresee your answer to these statistics when you are retired? Think about your future!! Where today’s Retirees Stand Source: The Financial Recovery for Retirees Continues, Society of Actuaries, LIMRA, International Foundation for Retirement Education

  15. Your 30s and 40s: Life Transitioning

  16. At this time in your life, you may go through big life changes--marriage, having children, career changes, taking care of elder relatives, etc. It’s important to stay the course of your savings and not allow life’s obstacles get in the way of your goals. More importantly, it’s important to be aware of potential changes to your investment objectives. Take advantage of resources in your retirement planning to assess your progress. Life Events

  17. You may still feel like retirement is very far away, but it’s important to evaluate your plan and be sure to keep your focus on knowing that continued planning for retirement is crucial during these years. 49% (almost half) of working American adults find it difficult to meet household expenses on time. 38% of the same working Americans are saving less overall this year compared to last year. 32% (almost one third) believe they will need to “tap into” their retirement plans to pay for expenses other than retirement. 24% say they use credit cards to buy monthly necessities because they can’t afford them otherwise. 50% (half!) say they consistently carry balances on credit cards. Of these same individuals, only 33% of them are CONFIDENT they will be able to retire when they WANT TO…..and 46% already feel as though they will have to work longer than they previously planned…. How do we combat these statistics becoming our reality? Day-to-Day Expenses vs. Saving for Retirement Source: Pricewaterhouse Coopers Financial Wellness Survey, 2011

  18. Hands off Retirement Funds! Do not borrow unless it’s a dire emergency! More often than not, loans from retirement plans never get repaid. Cut Expenses and Ramp up Your Savings. Know the Right Time to start Taking Social Security Benefits! Pay attention to what is happening to the fund….your age and working status will be a factor in how much you receive. 7 Rules for a Secure Retirement Source: www.foxbusiness.com; Ken and Daria Dolan, March 2011

  19. Forget the Old Rule of Thumb: It has been said for years that you will need to plan to have 70-80% of your pre-retirement income to maintain the same standard of living in retirement… THINK 100%!!! Don’t Forget About Inflation! Standard inflation assumption has been 3% for decades….consider more like 4%! Pay Yourself First! In other words, make sure your retirement savings comes out of your paycheck before you receive it—that way you don’t miss it! Contribute the Maximum to Qualified Retirement Plans Here’s your best way to save the most possible money! Small sacrifices today, increasing all the time, will reward you with big payoffs tomorrow! (and don’t forget about their tax benefits) 7 Rules for a Secure Retirement (cont’d.) Source: www.foxbusiness.com; Ken and Daria Dolan, March 2011

  20. 48% of Retirement Plan participants say they are uncomfortable selecting investments The variety of investments and the pressure surrounding their performance causes hesitation in joining plans as well as selecting funds. If you have resources available to you to assist in this, take advantage of it! Ask questions! Now is the time! www.bpas.com--Resources Learn the importance of Asset Allocation-it is your friend! 90% of a portfolio’s return is dictated by asset allocation. Understand Your Investment Selections Source: Pricewaterhouse Coopers Financial Wellness Survey, 2011

  21. Your 50s: Buckling Down

  22. Also known as TRI, this is the amount of income you will need during retirement. Identifying this will help assess what percentage of income you need to save annually towards your goal. For some, it could be upwards of 20% of your current income. This is a high number, but remember that life expectancy has increased by about 18 years since the 1930s, when Social Security established 65 as the Retirement Age. It’s realistic to plan to retire between the ages of 70 and 75! That gives you more time to achieve TRI! What is Target Replacement Income? Source: www.foxbusiness.com, Income in Retirement: Aim for Your Target, February 2012

  23. So, now that you’ve heard that most Americans do not save enough during their working years to be able to retire “on time,” how does this apply to you? How much have you saved? How much are you regularly setting aside? When was the last time you reviewed your risk profile and your portfolio allocations? Since 47% of Americans today between the ages of 56 and 62 are expected to run out of funds necessary to pay for basic expenditures if they retire at age 65, now is the time to find out if you are in this group. Are you on target? When was the last time you reviewed the status of your plan? Have you used a retirement calculator? If you are counting on an annual return of 8-9% on your portfolio, you may need to consider a lower rate given our recent market volatility. What’s your Status? Source: www.foxbusiness.com, Income in Retirement: Aim for Your Target, February 2012

  24. Your 60s: Approaching Actual Retirement

  25. Your goal is fast approaching, you are preparing to retire….. Are your sources of income confirmed? Have you reviewed your Social Security payments? Have you thought about all the variables? Life expectancy Health Care Costs Current state of the market (your portfolio) Planned activities and expenditures Are you Ready?

  26. If you find that you may not have enough money, here are some suggestions: Delay retirement Take a part-time job Downsize the spending plan Delay taking Social Security payments if you are still working If the reason is due to recent market loss, wait out the turbulence and allow your portfolio a chance to recover. Summary

  27. Remember…Your retirement should be defined by you. Take control and make your dreams a reality… Powerpoint Templates

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