Building Your Financial House

Transcription

1 Nationwide Financial Retirement Plans Building Your Financial House NOT A DEPOSIT NOT FDIC OR NCUSIF INSURED NOT GUARANTEED BY THE INSTITUTION NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY MAY LOSE VALUE APPROVED FOR USE WITH ALL AUDIENCES PNM-2826AO (06/14)

2 Important information The Nationwide Group Retirement Series includes unregistered group fixed and variable annuities and trust programs. The unregistered group fixed and variable annuities are issued by Nationwide Life Insurance Company. Trust programs and trust services are offered by Nationwide Trust Company, FSB, a division of Nationwide Bank. Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation. Nationwide Mutual Insurance Company and Affiliated Companies, Home Office: Columbus, OH Nationwide, the Nationwide framemark and On Your Side are service marks of Nationwide Mutual Insurance Company. PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 2

3 Building Your Financial House PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 3

4 Emergency Fund Build and maintain your Emergency Fund Determine how much you need Decide where you will keep the fund Treat it like a bill Use it only for emergencies Emergency Fund PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 4

5 Banking - Checking Account Build upon your foundation Balance your checkbook Leave yourself a cushion Sign up for overdraft protection Sign up for alerts Banking Emergency Fund PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 5

6 Banking Savings Account Build upon your foundation Treat savings like a bill Have a purpose Use it only for that purpose Ok to start slow Banking Emergency Fund PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 6

7 Insurance Protect your foundation and those who depend on you Definition Types of insurance What if I can t get insurance? Insurance Banking Emergency Fund PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 7

8 Insurance What is Insurance? Group of people joining together to share the risk and financial cost of loss Types of insurance: Property Casualty - Auto, Homeowners, Flood, Windstorm, Umbrella Liability Life - final expenses, pay off debts mortgage, income replacement Disability income replacement Long Term Care covers services to assist with activities of daily living What if I can t get insurance? Plan ahead by designating assets or creating a savings plan to fund the need APPROVED FOR USE WITH ALL AUDIENCES 8

9 Investments Understanding Investments Volatile markets Tax advantages Investments Insurance Banking Emergency Fund APPROVED FOR USE WITH ALL AUDIENCES 9

10 Investments Volatile Markets Investing in a volatile market can potentially result in emotional decisions Note: This is a hypothetical scenario and is for illustration purposes only. It is not a prediction of future market conditions. APPROVED FOR USE WITH ALL AUDIENCES 10

11 Investments - Tax Advantaged Investing Method 1 Method 2 Pre-tax contributions Taxed contributions Tax-deferred investments Tax-deferred earnings* Taxable withdrawals Tax free withdrawals* *Subject to qualification rules APPROVED FOR USE WITH ALL AUDIENCES 11

12 Investments Tax-deferred investments $200,000 $150,000 Taxable Investment Tax-deferred Investment $158,981 $115,555 $100,000 $50,000 $46,960 $57,581 $14,356 $15,822 $0 10 years 20 years 30 years Note: Totals shown reflect a $100 monthly investment with an 8% annual return, 4% annual wage inflation and a 25% federal tax rate compounded annually. From the taxable investments, taxes are taken each month from deposits and annually upon gains. Taxes are taken on the tax-deferred investment s end balance. This is a hypothetical compounding example and is not intended to predict or project investment results of any specific investment. Investment return is not guaranteed and will vary depending upon your investments and market experience. If fees were reflected, the return would be less. Assets withdrawn from a qualified plan may be subject to a 10% penalty tax if withdrawn prior to age 59 ½ distribution, and all may be subject to income tax. Neither Nationwide nor its representatives give legal or tax advice. PNM-2826AO (06/14) APPROVED FOR USE WITH ALL AUDIENCES 12

13 Investments Post-tax investments Traditional pre-tax 401(k) Roth 401(k) (15% tax bracket) Roth 401(k) (25% tax bracket) Roth 401(k) (35% tax bracket) Single contribution $10,000 $10,000 $10,000 $10,000 Less federal taxes on contribution $0 $1,500 $2,500 $3,500 Net contribution $10,000 $8,500 $7,500 $6,500 Value in 20 years $46,610 $39,618 $34,957 $30,296 Less federal taxes at distribution $11,652 $0 $0 $0 Net distribution $34,957 $39,618 $34,957 $30,296 A single contribution of $10,000 will be worth the same in 20 years (discounting inflation) if the tax bracket remains the same. However, if the future tax rate is greater, the amount distributed from the Roth account will be greater than the post-tax amount distributed from the traditional 401(k) account. Note: These examples are hypothetical in nature and assume a 25% tax bracket at distribution. They also assume that the retirement plan s value earns an average annual total return of 8% compounded annually. Investment return is not guaranteed and will vary depending upon the investments and market experience. APPROVED FOR USE WITH ALL AUDIENCES 13

14 Real Estate It s your home: buy or rent? Buying Equity Tax deductions Stability Renting Flexibility Short-term Real Estate Investments Insurance Banking Emergency Fund No maintenance APPROVED FOR USE WITH ALL AUDIENCES 14

15 Complete Your Financial House Real Estate Investments Insurance Banking Emergency Fund APPROVED FOR USE WITH ALL AUDIENCES 15