Building a Strong Financial Future: Strategies for Age 45 to Retirement SECURITIES OFFERED THROUGH LPL FINANCIAL" MEMBER FINRA/SIPC"

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Judith Lawson
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1 Investor Seminar Series Building a Strong Financial Future: Strategies for Age 45 to Retirement SECURITIES OFFERED THROUGH LPL FINANCIAL" MEMBER FINRA/SIPC"

2 Introduction Today we ll discuss: Planning for retirement Managing multiple financial goals Estate planning essentials

3 The Future of Retirement People are living longer. People are enjoying healthier, more active lifestyles. Social Security benefits are starting later.

4 Are You Saving for Retirement? All Workers Ages Ages Ages Ages 55+ Less than $10,000 46% 59% 45% 44% 29% $10,000-$24,999 10% 12% 10% 8% 7% $25,000-$49,999 11% 9% 13% 10% 14% $50,000-$99,999 9% 9% 8% 10% 10% $100,000-$249,999 14% 9% 15% 12% 22% $250,000 or more 11% 3% 9% 15% 19% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc Retirement Confidence Survey. (Totals do not include value of primary residence or defined benefit plan, if any.)

7% $25,000-$49,999 11% 9% 13% 10% 14% $50,000-$99,999 9% 9% 8% 10% 10% $100,000-$249,999 14% 9% 15% 12% 22% $250,000 or more

5 Calculate a Savings Goal You may work to age 65 or beyond. You may need 60% to 100% of your final year s salary each year in retirement. Social Security and pensions will provide only a fraction of your income needs.

6 Estimated Social Security Benefits Investor Seminar Series Current Annual Earnings $40,000 $60,000 $80,000 Age in 2011: 60 (born 1951) Retirement age 62 and one month in in in 2021 Monthly benefit in 2011 dollars $882 $1,242 $1,695 $1,155 $1,639 $2,250 $1,428 $1,990 $2,664 Source: Social Security Administration. Example assumes no future increases in prices or earnings.

70 in 2021 Monthly benefit in 2011 dollars $882 $1,242 $1,695 $1,155 $1,639 $2,250 $1,428 $1,990

7 Target a Retirement Savings Goal How Much Will You Need? Final Annual Salary $40,000 Annual Retirement Income (80%) $32,000 Annual Social Security Benefit (est.) $17,208 Estimated Savings Goal (in today s dollars) $218,902 $60,000 $48,000 $23,112 $368,309 $80,000 $64,000 $26,028 $561,394 These estimates are not adjusted for future inflation. They assume $0 principal remaining after 25 years in retirement and an after-inflation annual rate of return of 5% during retirement.

) $17,208 Estimated Savings Goal (in today s dollars) $218,902 $60,000 $48,000 $23,112 $368,309 $80,000 $64,000 $26,028

8 Inflation and Your Savings Goal Retirement Savings Goal In Today s Dollars $260,634 $429,397 $606,152 In 20 Years at 3% Inflation Rate $394,360 $665,206 $1,014,915 Source: S&P Capital IQ Financial Communications. This example assumes a constant 3% annual inflation rate.

$394,360 $665,206 $1,014,915 Source: S&P Capital IQ Financial

9 It s Never Too Late to Start $592,247 Investment Earnings Total Invested Investment Earnings Can Potentially Compound Over Time $59,295 $120,000 $296,474 $240,000 $24,000 Investing $100 monthly Investing $500 monthly Investing $1,000 monthly This is a hypothetical illustration and not representative of any specific investment. Assumes 8% annual return over a 20-year period. Your situation will vary.

Investing $500 monthly Investing $1,000 monthly This is a hypothetical illustration and not

10 Retirement Savings Accounts How Much Can You Contribute to Company Retirement Plans, Traditional IRAs, and Roth IRAs? Year IRAs IRA Catch up Employersponsored plans Employersponsored plans Catch up 2012 $5,000 $1,000 $17,000 $5,500

IRAs? Year IRAs IRA Catch up Employersponsored plans

11 The Advantage of Tax Deferral The Power of Tax-Deferred Compounding Results of Investing $100 per Month for 20 Years at an 8% Average Return $46,435 $59,295 Taxed Tax-Deferred For illustrative purposes only. Does not represent the performance of any particular investment vehicle. Your situation will vary.

$59,295 Taxed Tax-Deferred For illustrative purposes only.

12 Investing Your Retirement Savings Your asset allocation is based on Time horizon Risk tolerance

13 Investing for Long-Term Growth Stocks High Bonds Risk/Return Potential Money Market Instruments Low

14 A Look at Performance Average Risk and Return Over 30 Years Ended December 31, 2011 Sources: Standard & Poor s; the Federal Reserve. Stocks represented by the S&P 500 Index. Bonds represented by the Barclays U.S. Aggregate Bond Index. Cash represented by a composite of yields on 3-month Treasury bills and the Barclays 3-Month Treasury Bills Index. Past performance cannot guarantee future results. Indexes are unmanaged and cannot be invested into directly. (CS000137)

Cash represented by a composite of yields on 3-month Treasury bills and the Barclays 3-Month Treasury Bills Index.

15 The Impact of Inflation $1,000 Inflation can reduce the purchasing power of your savings. How $1,000 can shrink at just a 4% inflation rate $676 $456 $308 $208 Today 10 yrs 20 yrs 30 yrs 40 yrs Source: Standard & Poor s.

16 Aggressive Growth Higher Risk Investor Seminar Series 10% bonds" 80% stocks" 10% money market instruments"

17 Moderate Growth Moderate Risk Investor Seminar Series 30% bonds 60% stocks 10% money market instruments

18 Conservative Lower Risk 30% stocks 50% bonds 20% money market instruments

19 Manage Your Asset Allocation Over Time Investor Seminar Series Review your asset allocation once a year Modify your asset allocation as your needs change Work with a financial professional

20 When You Leave Your Job Leave your assets in the company s plan Transfer to new employer s plan Roll over to an IRA Take a lump-sum distribution

21 Managing Multiple Financial Goals Investor Seminar Series Retirement savings College costs Helping aging parents

22 Financial Considerations for Caregivers Fewer opportunities for job advancement Reduced Social Security and pension benefits Out-of-pocket expenses Less money to save and invest

23 Estate Planning Essentials A valid will Insurance policies Trusts

24 Ever-Changing Tax Rules Estate taxes IRAs

25 Your Retirement Action Plan Establish a savings goal and make regular contributions to your retirement accounts. If you are over age 50, plan to make additional contributions as permitted by tax laws. Invest your savings to potentially outpace inflation. Review your asset allocation regularly and make adjustments as you near retirement. Work with a financial advisor.

26 Questions? Jake Bleyenberg Financial Advisor (636)

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