retirement planning – nearing the finish (investors 50+ yrs)
Post on 24-Jan-2015
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Retirement Planning: Nearing the Finish
(Of accumulating, of course!)
For Investors 50+ yrs old
The focus in this seminar is on Investing for Retirement
Personal Savings are split into:– Taxable Savings• Bank accounts, CD’s• Investments
– Non-taxable, retirement savings• 401(k)
– Traditional & Roth
• IRA
Our focus today
Perspective on Retirement
• We are responsible for our retirement success, no one else
• Harsh realities require focus, attention and more ownership of our retirement account(s)
Retirement 2.0 – A New Look
• Your retirement is unique; don’t be pressed into an obsolete mold
• Retiree’s are healthier, living longer, more active
• Consider need for extra income or benefits
• Working longer, part-time work, consulting or other self-employment
Create a Retirement Vision
• No one knows what the future holds
• Basics– Spend less than you make– Be a great saver – Eliminate debt– Be creative
Create a Retirement Vision
Keep Going• Compound growth
takes time to build• Largest effects felt
after years of saving and investing
• Cannot shortcut process
• Chart based on – 10% contribution rate– 5.14% annual rate of
return– 2% annual salary
increase– 3% annual inflation
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 75,000
175,000
275,000
375,000
475,000
575,000
Example of Compound Growth
Get Going
50 year old 55 year old 60 year old 75,000
175,000
275,000
375,000
475,000
575,000
520,490
344,417
212,357
401(k) Scenarios• Beginning salary– 50 yr old: $82,000– 55 yr old: $91,000– 60 yr old: $100,000
• Contributes 10%• Includes Amway
match • Retires at 67 years
old
Focus on Contributions
• Your contributions today decide your quality of retirement
• Target 12% to max allowable of $22,500
• Increase gradually, but as quickly as possible
6% 10% 15% 20% 75,000
325,000
575,000
825,000
416,962
520,491
649,901
779,311
Contribution Scenarios(50 yr old)
Manage Spending
• Work on your spending habits first; then your savings
• Use a personal financial management tool– Mint.com– Quicken Books– Excel spreadsheet– Paper / Envelopes
401k Basics – Traditional 401k
• Pre-tax savings provide highly efficient savings tool for building your nest egg
• Taxed as income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)
401k Basics – Roth 401k
• Post-tax savings provide highly efficient savings tool for creating tax-free income upon retirement
• Tax-free income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)
401k BasicsTraditional 401(k)
• Contribution is taken out of paycheck before tax
• Investments grow tax-deferred• Taxed as ordinary income upon
retirement• Distributions without penalty
allowed after 59-½
Roth 401(k)
• Contribution is taken out of paycheck after tax
• Investments grow tax-free• Tax-free upon retirement• Distributions without penalty
allowed after 59-½
401k Basics – Roth DistributionsThere is no penalty or tax on a Qualified Distribution• 5 year rule: to be a
Qualified Distribution, it must be 5 years from Jan 1 of the year of your first contribution
AND• You must be at least 59-½
OR• Qualify for early distribution
– First home– Disabled– Made by your estate
IRS Pub 509
2%3%
4%5%
9%
1%
1%
2%
5%
6%
2%
2%
3%
3%
3%
B & PS
B & PS
B & PS
B & PS
B & PS
Traditional Contribution Roth ContributionAmway Match Amway Base & Profit Sharing
401k Basics – Amway Match
• Amway matches 50% of your contributions in any combination of traditional and Roth, up to your 6%.
• Amway match is always deposited into traditional account.
• Amway’s discretionary base contribution & profit sharing is deposited into traditional account
• 2012 IRS employee contribution limits: – $17,000– $22,500 with “catch-up”
How Your Amway 401k Works
Trad 401(k)
Roth 401(k)
Amway 401(k)• Investment options are
the same for Traditional & Roth
• Select contribution % for each – any combination is allowable
• Accounts shown in aggregate on Fidelity website
Common Amway Myths
• 15% Contribution Max– You can contribute up to
70% of your salary or the IRS limits, whichever is greater
• You have to roll your $ into an IRA upon retirement– Sales technique– You can leave your $ with
the Amway plan if you have more than $5k
Glossary of Important Investment Terms
• Stocks - Fractional ownership in company (Equity)• Bonds - Money lent to company (Debt)• Mutual Funds - An account consisting of a combination of multiple
companies’ stocks and/or bonds • Asset Allocation - The apportioning of investments to the different
asset classes: stocks, bonds & cash (main 3)• Diversification - The apportioning of investments to the different asset
class sub-classes– Stocks
• Large, mid & small cap• Value, growth & blend• International, specialty
– Bonds• Gov’t & Corporate• High yield, inflation protected, low duration, etc
– Cash
An Analogy for Understanding Asset Allocation
• Your Personal Investment Recipe
• Mutual funds = Ingredients
• Recipe = How you mix Ingredients
Determining Your Ingredients
• Make sure the ingredients are varied
• How expensive it is
Focus on Risk• Risk plays a much larger
role in an account with a balance
• A 10% downturn costs far more (in dollars and cents) now that it did 10-15 years ago
• Now have fewer years until you need the money – not enough time to recover from downturn
www.mutpl.com
Common Misbehaviors
Common Misbehaviors
Common Misbehaviors
Common Misbehaviors
Retirement Fund vs. College Fund
• Adequately funding your Retirement comes 1st
• College funding must be secondary
• Our children will probably have options available to them to help pay for college
• This is your ONLY retirement funding opportunity
A Long Term Outlook
Personal Consultations• Determine a plan of action
for to put your retirement in focus
• Free for all Amway employees
• Spouses are welcome to attend
• What to bring:– Fidelity login credentials– Outside asset list– Social Security Statement– Target Retirement Year– Estimate of monthly income
needs
Thank YouSchedule your personal consultation now!
Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780
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