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AN1463-AG-10. 5/14. Rewire to Retire Workshop Objectives . Better understand what your ideal retirement looks like. Learn key retirement insights. Understand common risks that many retirees face. Learn about the importance of planning for retirement income.

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5/14

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  1. AN1463-AG-10 5/14

  2. Rewire to RetireWorkshop Objectives • Better understand what your ideal retirement looks like. • Learn key retirement insights. • Understand common risks that many retirees face. • Learn about the importance of planning for retirement income. • Learn about potential solutions that can help fill retirement income gaps.

  3. Your Retirement • What comes to mind when you think of your retirement?

  4. Reality Check • 34% of the workforce lack savings specifically allocated for retirement1 1Social Security Basic Facts, July 2011, http://www.ssa.gov/pressoffice/basicfact.htm

  5. What Are You Doing Now to Prepare for Retirement? • Contributing to your 401(k) or employer-sponsored retirement plan? • Socking away money in an individual retirement account (IRA)? • Accumulating personal savings and investments? • Planning for retirement income?

  6. From Accumulation to Income • Saving is one piece of the retirement puzzle. • Taking income – sometimes called “distribution” or “de-accumulation” - may be just as important.

  7. Retirement Income • Do you currently rely on a steady paycheck? -Chances are, you probably know the exact amount you receive regularly from your employer. • What will your paycheck be when you retire?

  8. Reality Check • $33,383 – Median household income for those 65 and older2 2 U.S. Census Bureau, CPS 2013 Annual Social and Economic Supplement, 2013, http://www.census.gov/cps/data

  9. Potential Sources of Retirement Income • Social Security Benefits • Employer-sponsored Pension Plan • Personal Savings and Investments • Annuities

  10. Reality Check • 51% of the workforce has no private pension coverage3 • 38% of the income of elderly people comes from Social Security benefits3 3 Social Security Basic Facts, July 2013, http://www.ssa.gov/pressoffice/basicfact.htm

  11. Common Retirement Risks • Longevity Risk -The average American’s retirement lasts 20 years.4 -U.S. men’s life expectancy: 75.6 years5 -U.S. women’s life expectancy: 80.7 years5 4 Social Security Basic Facts, July 2013, http://www.ssa.gov/pressoffice/basicfact.htm 5 National Research Council and Institute of Medicine, U.S. Health in International Perspective (Washington, DC: The National Academies Press, 2013), http://www.nap.edu/catalog.php?record_id=13497

  12. Common Retirement Risks • Withdrawal Rate Risk -The risk of outliving your assets - spending money too quickly to meet current financial needs.

  13. Common Retirement Risks • Sequence of Returns Risk • This is the risk of receiving lower or negative returns early in retirement. It’s all about timing. • For instance, let’s say you and your friend have similar retirement savings strategies. You retire this year when the market is up. Sam retires next year when the market is down. In this scenario, Sam would be more likely to draw-down his assets and potentially outlive his savings.

  14. Common Retirement Risks • Inflation Risk -This is the risk of losing purchasing power due to the rising costs of goods and services.

  15. Reality Check • A $100 item in 1994 will cost $157.84 today. 5 -That’s a difference of $57.84 in 20 years. 5 U.S. Census Bureau, CPS 2013 Annual Social and Economic Supplement, 2013, http://www.census.gov/cps/data/

  16. Plan for Income: 5 Simple Steps • Identify your retirement needs and expenses. • Estimate how much of your pre-retirement income you’ll need to replace in order to cover your essential and lifestyle expenses. • Create a “buffer” to help address retirement risks (longevity, withdrawal rate risk, sequence of returns risk, inflation risk) • Identify retirement income sources. • Develop a retirement income timeline.

  17. One Potential Component of Your Overall Retirement Income Strategy • Fixed index annuity combined with an income or benefits rider

  18. What is a Fixed Index Annuity? • It’s a contract between you and an insurance company. • It is a long-term, tax deferred retirement savings and income vehicle that can help protect you from outliving your assets. • By allocating a portion of your retirement assets to a fixed index annuity, you can create your own personal “pension plan” that generates guaranteed income for as long as you live.

  19. What is a Fixed Index Annuity? • While not suitable for everyone, a fixed index annuity may be ideal for those who are looking to*: • Generate a guaranteed stream of lifetime income. • Potentially grow assets – tax deferred. • Provide a predictable, reliable source of retirement income for a surviving spouse. • Bridge the gap to full Social Security benefits if you delay receiving benefits until your full retirement age. • Cover unforeseen expenses as you get older • Create a legacy for your loved ones. *Check the terms of your contract. Caps and participation rates may apply. Withdrawals will affect the annuity’s value. The Internal Revenue Code already provides tax deferral to IRAs, so there is no additional tax benefit obtained by funding an IRA with an annuity; consider the other benefits provided by an annuity, such as lifetime income and a death benefit.

  20. How a Fixed Index Annuity Works • The interest the fixed index annuity earns is tax-deferred and based, in part, on a stock market index.

  21. How a Fixed Index Annuity Works • This provides greater upside potential than other retirement savings vehicles, such as Certificates of Deposit (CDs) and bank savings accounts. • The fixed index annuity also protects your principal from market loss.* *Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Annuities are long-term products of the insurance industry designed for retirement income. They contain limitations and exclusions, including withdrawal charges and a market value adjustment that will affect contract values.

  22. Case Study: Jim & Nancy’s Story • Jim and Nancy are married and both are 50 years old. • They are currently employed full-time and hope to retire in 10 years. • They’ve been diligently contributing to their 401(k) plans and Individual Retirement Accounts (IRAs). • Their employers do not offer pension benefits.

  23. Jim & Nancy’s Story • They don’t know how they are going to supplement their retirement income. • They understand they will need to rely on their retirement savings to help them cover future expenses, especially during the first 10 years of retirement. This is because: • The couple wants to delay taking Social Security until age 70 so they can maximize the benefits. • They also want to address potential medical insurance premiums until Medicare kicks in at age 65.

  24. Jim & Nancy’s Story • At age 50, Jim and Nancy reposition $100,000, a portion of their retirement assets, to an Athene Annuity & Life Assurance Company fixed index annuity combined with a benefits rider. • 10-year contract • The optional benefits rider is purchased for an additional fee

  25. What Does This Do? • Gives Jim & Nancy the opportunity for tax-deferred accumulation • Preserves principal and protects against market downturns^ • Provides the security of a guaranteed stream of income they cannot outlive ^Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Withdrawal charges and market value adjustment may apply.

  26. 10 Years Later… • At age 60, Jim and Nancy turn on income from the benefits rider. • They receive $6,300 annually, which is guaranteed for the rest of their lives.# # Assumes a hypothetical benefits rider rollup rate of 8.0% and 10 years of income deferral. Also assumes no withdrawals during the 10-year surrender charge schedule.

  27. What Does This Do? • Gives the couple a steady flow of income they can count on for the rest of their lives. • Helps supplement income to help pay for health insurance and other expenses.

  28. Down the Retirement Road… • At age 65, Medicare begins. • At age 70, Jim and Nancy start taking their Social Security benefits.* • At age 85, Jim and Nancy would have received over $157,000 in income from their benefits rider. • At age 90, they would have received $189,000 in income. • At age 95, over $220,000 in income. *It’s important to consult with financial, tax, and legal professionals to determine when it’s best to begin taking your Social Security benefits. A number of factors can play into this very important decision, including: taxes, future income, age difference between spouses, potential medical issues, and former earnings history.

  29. Build Your Own Retirement Income Strategy • Take action today to help secure the retirement you want. AGENT NAME AGENE PHONE NUMBER AGENT EMAIL Annuity contracts contain exclusions, limitations and charges. For details, please contact your insurance agent. Annuities are long-term products of the insurance industry designed for retirement income. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation. Annuities issued by Athene Annuity & Life Assurance Company, Wilmington, DE. Product features and benefits not available in all states. AN1463-AG-10 5/14

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