Retirement Transition Services

Transcription

1 April 2015 Retirement Transition Services Chris Herman Senior Vice President, Workplace Investing

2 Reasons Why People Rollover % Extremely/Very Impactful Consolidate in one place 66% Get access to more investment options 60% Build on these savings, can't contribute more 48% Get guidance for retirement investments 45% Have easier access to savings 45% Have access to planning tools 45% Work with different firm 29% Break ties with former employer 26% Source: Fidelity Investments, Rollover Survey, May 2012

3 Cash-Outs A Costly Decision % of Rollover-Eligible Accounts Cashing Out by Age 44% 33% 38% 27% 24% 26% Fidelity Investments. Based on the analysis of 800,000 terminating participants in 21,200 plans as of December 31, 2012.

4 Social Security Many Ways to Claim Helping navigate the complexities of when and how to claim is critical to maximizing the benefit Over 60% take Social Security before Full Retirement Age 1 Yet, delaying could increase payments by up to 40% 2 1 Social Security Administration, Master Beneficiary Record. Table 6.B5 Number, average age, and percentage distribution, by sex and age, selected years Social Security Administration, SSA Publication No , ICN , January 2015

5 Retiree Healthcare A Growing Cost Concern 1 Fidelity Retiree Health Care Cost Estimate, June 2014, Fidelity Benefits Consulting Report. Based on a hypothetical couple retiring in 2014, 65 years or older, with average (82 male, 85 female) life expectancies. See Important Information for additional details. 2 EBRI, A 65-year-old couple, both with median drug expenses, would need $360,000 in 2013 to have a 90 percent chance of having enough money to cover health care expenses (excluding long-term care) in retirement 3 According to an HSA survey conducted by GfK Public Affairs & Corporate Communications, April 30th to May 9th, 2014: $50,000: median estimated amount of money needed for healthcare expenses during retirement (excluding the cost of long-term care), cited by year-olds. Assumes $100,000 based on a couple.

6 Critical Milestones on the Journey to Retirement 77% of pre-retirees do not have a retirement income plan 1 60+% take Social Security before Full Retirement Age 2 $220K estimated cost of healthcare in retirement 3 Eligible for catch-up contributions 50 Able to withdraw retirement income without penalty 59½ Able to claim reduced Social Security 62 Medicare eligible 65 Minimum Required Distributions 70½ ONLY 28% say they are very confident about a financially secure retirement 4 1 Fidelity Advisor 2013 Survey of Investors at Retirement, July Social Security Administration, Master Beneficiary Record. Table 6.B5 Number, average age, and percentage distribution, by sex and age, selected years Fidelity Benefits Consulting, Based on a hypothetical couple retiring at age 65 years or older, with average (82 male, 85 female) life expectancies. See Important Information for additional details. 4 Employee Benefit Research Institute - Retirement Confidence Survey, March 2014

7 Important information For Plan Sponsor and Investment Professional use only. Additional Information for slide #5 and #6. Fidelity Retiree Healthcare Estimate. Fidelity Benefits Consulting, Based on a hypothetical couple retiring at age 65 years or older, with average (82 male, 85 female) life expectancies. Estimates are calculated for average retirees, but may be more or less depending on actual health status, area of residence, and longevity. Assumes individuals do not have employerprovided retiree health care coverage, but do qualify for Medicare. The calculation takes into account cost sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care. Fidelity Investments, LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI