Helping you retire with confidence

Transcription

1 Retirement Help for Life Helping you retire with confidence Craig Adler, CFP

2 Who we are Cofounded by Bill Sharpe, Nobel Prize-winning economist More than 15 years of trusted advice and professional management Help available to 8.3 million participants 1 Large plan expertise with 141 Fortune 500 companies 2 Independent investment advisor No commissions No investment product sales 2

3 Personal Retirement Plan Whether you choose Online Advice or Professional Management, Financial Engines can help Savings We can point out your savings opportunities Investing We can help you diversify and manage risk-appropriate portfolios Retirement Income We can give you a good idea of what you could expect 3

4 Investing and retirement planning Common concerns Am I saving enough money? Have I made good investment choices? How much income can I expect in retirement? Are there strategies to enhance and protect my retirement income? If you have any of these questions, Financial Engines can help. 4

5 Understanding the savings phase INFORMED INVESTING SHIFT WITH CONFIDENCE NEARING RETIREMENT FLEXIBLE SPENDING COMMIT TO SAVING MID-CAREER RETIREMENT STARTING OUT 5

6 Typical savings example With a 7% rate of return, how much must I save to have $500,000 at age 65? Start Age Monthly Contribution Total Contribution 25 $190 $91, $410 $148, $960 $230, $2,889 $347,000 6

7 Savings steps to a successful retirement Start saving as soon as possible. Save as much money as you can afford to save. Don t just limit yourself to the company match, this should be your minimum contribution amount. 7

8 Challenges to the traditional savings model Are we all going to retire at age 65? We all have different abilities to save. If you start late, can you afford the larger required savings rate? We all have different future financial needs and therefore need our own custom goals. There has to be a better solution for me. 8

9 A personalized savings plan focuses on you Every recommendation will be based on your personal financial profile! 9

10 Closer look at investment planning INFORMED INVESTING SHIFT WITH CONFIDENCE NEARING RETIREMENT FLEXIBLE SPENDING COMMIT TO SAVING MID-CAREER RETIREMENT STARTING OUT 10

11 Three investment building blocks Stocks BENEFITS Designed for long term growth CONCERNS Volatility, stocks lost 43.1% in 1931 and 36.9% in 2008 Bonds BENEFITS Generally higher income than cash and lower risk than stocks CONCERNS Limited growth potential, some price volatility Cash BENEFITS The highest degree of price stability CONCERNS No growth and very low income generation 11

12 Understanding portfolio structure Asset allocation: Significant influence on overall portfolio risk and potential return 50% Stocks 40% Bonds 10% Cash The allocation should be based on your goals, time horizon, and risk tolerance. How many of you know your current allocations? 12

13 Understanding portfolio structure Fund selection: Looks at the specific funds used to build your appropriate allocation. 50% Stocks 23% Large Cap 11% Mid Cap 5% Small Cap 11% International 30% Fund A 15% Fund B 5% Fund C 40% Bonds 15% Government 14% Corporate 11% Mortgage Backed 24% Fund X 16% Fund Y 10% Cash 10% Money Fund Z 13

14 Understanding portfolio structure Fund selection: Looks at the specific funds used to build your appropriate allocation. 50% Stocks 23% Large Cap 11% Mid Cap 5% Small Cap 11% International 30% Fund A 15% Fund B 5% Fund C 40% Bonds 15% Government 14% Corporate 11% Mortgage Backed 24% Fund X 16% Fund Y 10% Cash 10% Money Fund Z 14

15 Three key goals of portfolio structure 1) Appropriate diversification 2) Acceptable risk level 3) Cost efficient What s the ultimate goal of portfolio design? 15

16 It s all about optimization Building an optimal portfolio An optimal portfolio is designed to manage risk appropriately Improve performance by effectively capturing market returns Be efficient by minimizing cost 16

17 Challenges to portfolio design It can be difficult to research funds Lack of comfort with personal finance Lack of time or desire to manage account Portfolio construction is a complex process There needs to be an easier and more effective way. 17

18 The easier way to portfolio design You give Financial Engines the following: Your desired retirement age Your risk tolerance Information on any outside retirement accounts 18

19 Personalized information & research The solutions you need. 19

20 A transition into retirement and income generation INFORMED INVESTING SHIFT WITH CONFIDENCE NEARING RETIREMENT FLEXIBLE SPENDING COMMIT TO SAVING MID-CAREER RETIREMENT STARTING OUT 20

21 Retirement income planning challenges How do I generate consistent income from my investment portfolio? What can I do to make sure I don t outlive my portfolio? Which investments should I distribute from and when? What can I do to maximize Social Security? For illustrative purposes only. Financial Engines does not guarantee future results. 21

22 Income longevity strategies Lower your portfolio risk Consider the purchase of an annuity Possible part-time employment in retirement Carefully evaluate when you start Social Security For illustrative purposes only. Financial Engines does not guarantee future results. 22

23 Why Social Security is so important No longevity risk No inflation risk No management risk Initially flexible payment options A very large future benefit The choices you make concerning Social Security will make a large impact on your financial security in retirement. 23

24 Putting it all together For illustrative purposes only. Financial Engines does not guarantee future results. 24

25 A choice of services Online Advice We do the work You do the work Build a Retirement Plan Stay on track Professional Management Get ready for retirement Receive a Retirement Plan Stay on track Get ready for retirement Not sure which is right for you? Call an Advisor. 25

26 Online Advice: Do-it-yourself investor Personalized Retirement Plan, complete with an investment, savings and retirement income forecast Easy-to-use forecasting tools to help prepare for your future Expert recommendations to help reach your goals Progress reports to keep you informed Call center support if you have questions For illustrative purposes only. Changes made impact your current balances and future allocations. 26

27 Professional Management: Hands-off investor Personalized Retirement Plan, complete with an investment, savings and retirement income forecast Access to an investment advisor representative Ongoing management, where we: Create a personalized plan for you Manage your 401(k) Plan account and keep you on track Help you transition to retirement A fee for Professional Management Low rate Based on your 401(k) Plan account balance Charged quarterly and deducted from your 401(k) Plan account There is a minimum $5 balance required You can cancel anytime with no penalty by calling an investment advisor representative For illustrative purposes only. 27

28 Investment Summary Save early and save often. Diversify appropriately to build an optimal portfolio. Look carefully at all income sources and determine if you re on track to reach your goals. Be diligent in selecting a Social Security claiming strategy. Use Online Advice as a comprehensive research tool at no cost to you. If you need additional help, consider fee-based Professional Management service. Have fun and enjoy the journey. For illustrative purposes only. Financial Engines does not guarantee future results. 28

29 A quick review Do it yourself Online Advice Log In You use our online tools to build your strategy. You get specific fund recommendations. You can log in anytime to see if you re on track. You request the transactions for your 401(k). You get online help/technical support by phone. You can sign up for Retirement Updates. Enjoy Online Advice is included as a service of your plan for no additional fee. To get started, login to and click the Get Personalized Help from Financial Engines link. Partner with an expert Professional Management Set it up We send a personalized plan to you. We put your plan into action working with Fidelity. We monitor your account and rebalance as needed. We can consider assets outside your 401(k) as part of your plan for retirement. We have investing professionals you can talk to. We keep you informed with quarterly Retirement Updates. Relax We make it affordable. Teradyne has negotiated a Professional Management fee of about $5.00 a month for every $10,000 in your account. You can cancel at any time with no penalty. 29

30 Compare the two services Independent, objective advice and personalized recommendations Proven investment methodology used to evaluate investment options Professional Management Online Advice Personalized recommendations Other retirement savings & investments influence recommendations Access to live Investment Advisor Representatives by phone Monitors your investments over time Handles investments and directs plan provider to transact in order to reallocate your portfolio Printed Retirement Updates every three months Participant cost Account Balance Annual Fee Up to $100, % $100,000 - $250, % Over $250, % No additional cost 30