How to Build Your Retirement Pensions

Transcription

1 PICTURE YOUR RETIREMENT

2 What does RETIREMENT mean TO YOU? People today are reinventing what it means to retire. It s more than leaving a career. It s building the framework for the rest of your life doing volunteer work, enjoying time with your grandchildren, satisfying travel dreams or maybe even starting a business. And it is creating the financial independence that allows you to achieve your goals. 2

3 THINK ABOUT YOUR FUTURE Many people who reach retirement aren t as much ready for retirement as they are ready for change. They dream of being financially secure so they can spend more time with family, enjoy their interests and hobbies, travel or engage in community service. Whatever retirement means to you, one thing is certain... your need for financial security. Planning today gives you peace of mind so you can enjoy tomorrow. What does retirement mean to you? What does being financially secure mean to you? What concerns you about retirement? 3

4 What does YOUR future hold? 4

5 Design Your Retirement LIFESTYLE The first step in planning for retirement is discovering what you want to do. What excites you most about your retirement plans? What do you want to do in retirement? Where do you want to live? TEST-DRIVE YOUR RETIREMENT Before you retire, it s important to try some of the things you plan on doing in retirement try out your plans, determine whether you truly enjoy and can afford them, and make any needed adjustments before you commit. Make a list of what you plan to do most in retirement and how often. Then write down the steps you plan to take to practice it prior to retirement. What are the activities you d like to do, and how frequently? I want to live in Arizona, so I am planning to take three trips there in the next 12 months. I am going to golf every day for one week straight to see if I would really enjoy playing that often. 5

6 MAKING THE EMOTIONAL TRANSITION 6

7 Most major life-changing events, such as marriage, changing careers, or sending the kids off to college, require time to adjust emotionally. Retirement is no exception. That s why, when planning for retirement, it s important to think about the emotions that come with it: the way it might change your marital and family relationships; how it might affect your sense of identity and achievement that you experienced in your career; and perhaps most important how you will replace the purpose and meaning you experienced while working. Will you and your significant other be retiring at the same time or at different times? How does that change or delay any of the things you want to do in retirement? How will you replace or maintain your social relationships from the workplace and your community? What activities do you plan to participate in to stay intellectually stimulated and to make the most of your strengths and talents? 7

8 what are the risks? Another critical step in retirement planning is evaluating the risks that can challenge your financial security. LongEVITY The fact that people are living longer, healthier lives has a downside: the chance of running out of money to live the way you want. Market Participating in the stock market can give your retirement income the potential to keep pace with inflation. However, markets can go down as well as up. Health Care You need to budget for rising medical costs and things Medicare doesn t cover, like dental and vision, so they don t impact your income and retirement savings. Legacy You might have a goal to leave a financial legacy for your loved ones and/or charities. This often requires striking a balance between retirement needs and your legacy goals. Inflation and Taxes Taxes and inflation can take a bite out of retirement savings. Inflation reduces your purchasing power, and taxes reduce your income and leave less to spend or invest. Long-Term Care The expenses associated with a prolonged illness requiring special care can deplete the assets you ve worked hard to save, and also cause an emotional and financial strain on family members. 8

9 list YOUR concerns What risks are you concerned about in retirement and why? Longevity: Legacy: Market: Inflation and Taxes: Health Care: Long-Term Care: Other: What are your thoughts regarding leaving assets to heirs or charities? legacy checklist Update beneficiaries: Will/Trust ira /Roth IRA 401(k)/ 403(b) Pension Life Insurance What would you do if you or a loved one (spouse, parent) had a prolonged illness and needed care (assisted living facility, a skilled nursing facility or in-home care provider)? And how would you pay for it? Other Updates: Durable power of attorney for finances Durable power of attorney for health care Living will Other 70% of people turning age 65 can expect to use some form of long-term care during their lives. Source: LongTermCare.gov, Who Needs Care? 9

10 How will YOU fund your RETIREMENT? It s important to review all the retirement income sources you have available and consider when to access them. After 15 years of 4% inflation, the purchasing power of $100k would be reduced to $56k 10

11 Think about INCOME AND expenses What income and assets might be available to support your retirement needs: 401(k)/403(b) $ IRA/Roth IRA $ Sale of Business $ Part-time Employment $ Investment Property $ Stocks or Securities $ Savings $ Cash Value Life Insurance $ Lifetime Income: Social Security $ Annuity $ Pension $ Other $ One strategy in retirement is to have Essential Expenses covered by Lifetime Income so that no matter what happens in the market, you can meet your essential expenses. Use these tables to illustrate how your expenses and income might align. Pre-Retirement MONTHLY Expenses ESSENTIAL MONTHLY EXPENSES Housing $ Utilities $ Transportation $ Insurance $ Food $ Health Care $ Taxes $ Other $ SUBTOTAL $ Retirement MONTHLY Expenses ESSENTIAL MONTHLY EXPENSES (IN TODAY S DOLLARS) Housing $ Utilities $ Transportation $ Insurance $ Food $ Health Care $ Taxes $ Other $ SUBTOTAL $ Discretionary MONTHLY Expenses Entertainment $ Travel $ Donations $ Gifts $ Other $ SUBTOTAL $ Monthly TOTAL $ DiscRETIONARY MONTHLY Expenses (IN TODAY S DOLLARS) Entertainment $ Travel $ Donations $ Gifts $ Other $ SUBTOTAL $ Monthly TOTAL $ 11

12 What will success look like? Success in retirement is YOURS TO define. It doesn t have to be the same thing for all people. In fact, it shouldn t be. Like every other stage of life, retirement involves transition much of it exciting and some of it challenging. There s a lot to think about your goals, the risks common to most retirees, available resources and the timing of accessing those resources. To achieve a successful retirement, think about what your next steps are, what your priorities are and what questions you have for your advisors. Next steps: Priorities: Questions: We can help. Talk with your Northwestern Mutual financial representative, and take the next step. 12

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16 Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities) and its subsidiaries (0709) (REV 0914)