Planning for Retirement Needs

1. Planning for Retirement Needs Introduction to Individual Retirement Planning Chapter 20

2. Establishing and Defining the Client-Planner Relationship (8%) Gathering Information Necessary to Fulfill the Engagement (9%) Analyzing and Evaluating the Client’s Current Financial Status (25%) Developing the Recommendation's (25%) Communicating the Recommendation's (9%) Implementing the Recommendation's (9%) Monitoring the Recommendation's (5%) Practicing within Professional and Regulatory Standards (10%) Exam Job Domains

3. Chapter 20 • Translating pension knowledge into solutions for individual clients • The retirement planning process • Critical issues that affect retirement

4. Maintain standard of living Maintain self-sufficiency Minimize taxes Retire early Pass on wealth Adapt to lifestyle change Improve lifestyle Care for dependents Other Retirement Objectives

5. Requires wide-ranging expertise Involves many different tasks “holistic planning” Calculating the amount needed for secure retirement Planning a strategy to get there Managing assets and building weath Medicare and other health care options Long-term care needs Employer provided benefit options Housing options Gerontological issues The Role of the Retirement Planner

6. No average retiree Dealing with people of different ages Everyone has unique goals, objectives, starting times and financial resources More of an art than science Coordinate with other financial goals Estate planning College planning Coordinate with other professionals The Role of the Retirement Planner

7. Establish client-planner relationships Determine goals Analyze and evaluate financial status Develop and present the plan Implement the plan Monitor the plan Steps in the Retirement Planning Process

8. Current workers planning to work longer More responsibility for caregiving Changing Face of Retirement

9. Private Pension availability 85% for employers with 100 or more 50% for employers with 25 to 99 20% for employers with less than 25 Women and retirement—unique problems Less likely to have a pension at work Lower earnings higher turnover Greater longevity Caregivers More likely to be widowed Conservative investments More willing to take advice! Critical Issues that Affect Retirement Planning

10. Call for action 86% of human resource professionals feel employees needed more advice 57% of employees conceded they have not calculated how much to save for retirement Education and planning works Seminar presentations increase 401(k) participation rates and contribution rates 65 year olds with out a plan twice as likely to find retirement a time of financial worry than those with a plan The Need for Education and Planners

11. 1946 – 1964 Retirement is maturing with baby boomers Baby Boomers

12. Spendthrift lifestyles Unexpected expenses Inadequate insurance coverage Divorce Not covered under a company pension Fail to roll over company pension Lack of financial literacy Diverting funds to other financial goals Roadblocks to Retirement Saving

13. Climbing the Ladder to Financial independence in Retirement • Social Security benefits • Company retirement plans • Personal savings • Planning • Insurance solutions • Fiscal welfare/social assistance • Part-time wages • Inheritances • Other: home equity, life insurance, family business, rental

14. Understanding the benefit or contribution formula Understanding the plan’s key provisions (hardship withdrawals, loans etc.) Identifying documents (SPDs, personal benefit statements) Appreciating the importance of before tax contributions Ramifications of starting social security early Transferable Skills

15. Choosing a Keogh plan for clients with Schedule C income Recognizing the importance of ESOP diversification Determining IRA options Explaining the rules for social security and nonqualified plans Transferable Skills

16. baby-boom generation fiscal welfare social assistance Supplemental Security Income (SSI) Vocabulary

17. Retirement planning is difficult not only because of the breadth of knowledge needed by the planner, but also because of the need to coordinate other financial objectives, such as estate planning. It is appropriate to wait to start saving for retirement until after other objectives, such as funding children’s college education, have been completed. Women are more likely than men to be eligible for retirement benefits from an employer-sponsored retirement plan. Unexpected expenses can be a roadblock to retirement savings. True/False Questions

18. Most clients have essentially the same planning needs when it comes to retirement planning. Women tend to invest more aggressively than men. Many middle class retirees are eligible for SSI benefits in retirement. Home equity can be a source or retirement income. Approximately 55% of baby boomers will inherit a significant amount of money from their parents. True/False Questions

19. Holistic approach Each client unique Comprehensive fact-find Coordinate professionals Road blocks Living on all income Unexpected expenses No or limited pension coverage Solutions Save 10%+ Insurance review Roll pensions Changing face Boomers (1946 to 64) heading to retirement Planning to work longer Caring for children/ grandchildren/parents SS less important Chapter 20 Review

20. Financial preparedness Women’s concerns Pension coverage greater for large employers Two workers both pensions in better shape Retirement ladder SS/pensions/savings bottom rungs Planning Wages Social assistance (SSI) Fiscal welfare (IRA tax credit for low income) Inheritance (small) Chapter 20 Review (cont.)