money at work - ucf human resources › files › moneyatwork_ppt_final.pdf · money at work 1:...

INVESTING IN YOUR FUTURE: A TIAA FINANCIAL ESSENTIALS WORKSHOP

Money at Work:Foundations of investing

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Money at Work 1: Foundations of investing

Staying on Course: Today’s agenda

▪ Retirement Advisor

▪ Understanding saving

▪ Risk tolerance

▪ Asset classes and asset allocation

▪ Mutual funds, IRAs, stocks and annuities

▪ Tools and action steps

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Trivia

1. What percentage of Americans has no confidence that they’ll have enough money to retire comfortably?

2. What percentage of Americans report that they aren’t contributing to any retirement plan?

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The basics

Where to begin?

▪ Assess your current situation

▪ Get out of debt

▪ Make saving a priority

▪ Create a budget, and stick to it

▪ Pay yourself first

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Retirement Advisor: How much will you need?

TIAA.org/setyourgoals

TIAA tools can help you figure out your

personal retirement situation.

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Understanding Saving: The rainy day will come

▪ Take advantage of employer retirement plans

▪ Start saving right away to take advantage of compound interest

▪ Put some savings toward an emergency fund

▪ Consider saving at least 15%-20% of your income each year

▪ Consider tax advantages when looking into investment vehicles

▪ 403(b) tax-deferred annuity plans

▪ An IRA can give you a tax-advantaged boost!

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Investing in Stocks: The Rule of 72

How long does it take to double your money?

72

9

the magic number

your percentage rate

of return as a whole number

= years it will take to

double your money8

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Maximizing the power of your retirement plan

The earlier you start, the less you’ll have to sacrifice to pursue the retirement you

want. For example, to reach approximately $500,000 by age 67:

Starting at age What you’ll have to “give up”

25 Daily cup of barista coffee ($187/month)

35 Monthly car payment ($365/month)

45 Annual family vacation ($782/month)

This hypothetical illustration assumes a 6% annual return on investment, and a 3% increase every year to account for inflation. It does not

represent the actual performance of any TIAA account nor does it reflect expenses or taxes, which would reduce performance. Total returns and

the principal value of the accounts will fluctuate, and yields may vary. This table cannot predict or project investment performance.

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Investing: Find your type

▪ Vehicles vs. investments

– Vehicles: 401(k), 403(b) or other types of investment accounts

– Investments: stocks, bonds, mutual funds, annuities

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Understanding your risk tolerance

What’s your risk level?

▪ Conservative

▪ Moderately conservative

▪ Moderate

▪ Moderately aggressive

▪ Aggressive

What’s your time horizon?

There are inherent risks associated with investing in securities, including loss of principal. The greater the risk, the more likely you can lose money.

An investor’s needs and the suitability of an investment should be carefully considered prior to purchase.

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Class is in session

Asset classes

▪ Guaranteed

▪ Money market

▪ Fixed income

▪ Real estate

▪ Stocks (a.k.a. equities)

There are inherent risks in investing in securities. Past performance is no guarantee of future results. In addition, investment returns and principal

value will fluctuate so your accumulation, when redeemed, may be worth more or less than the original cost.

* Subject to TIAA’s claims-paying ability.

** In California, the TIAA Real Estate Account is available through IRAs, but not all employer-sponsored plans. Please contact us to determine if

your institution’s plan can accept investments into the account.

Guaranteed*MoneyMarket

FixedIncome

RealEstate**

Equities

RiskLower Higher

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Asset Allocation: Diversifying your portfolio

You can diversify your portfolio to avoid big investment value fluctuations by:

▪ Dividing your investments into stocks, bonds and cash equivalents

▪ Diversifying by sector also (retail vs. energy vs. etc.)

As you get closer to retirement, you may want to shift more investments to safer options.

▪ Examples: Bonds, cash and a guaranteed account

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Diversification!

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Determinants of portfolio return variation

Diversification is a technique to help reduce risk. However, there is no guarantee that diversification will protect against a loss of income.

The strategies of diversification, rebalancing and asset allocation cannot eliminate the risk of investment losses or guarantee that an

investor's goal will be met.

Asset allocation

Market timing

Security selection

Unexplained

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Mutual Funds: Strength in numbers

▪ Generally made of several assets, like stocks or bonds

▪ Money is pooled to buy assets for the investors who own part of the fund

▪ Retirement accounts can invest in mutual funds

▪ After tax vs. employer-sponsored retirement plans

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IRAs: Traditional vs. Roth

▪ Traditional IRA

▪ Roth IRA

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Traditional IRA

▪ Contributions may be tax deductible

▪ Tax-deferred potential growth

▪ No income limits to make contributions

▪ May be a good option if you think you might be in a lower tax bracket during retirement or if you may need money before age 59½ (withdrawal is subject to 10% early distribution penalty)

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Roth IRA

▪ Contributions made with after-tax dollars

▪ Withdrawals can be tax free (conditions apply)

▪ Consider a Roth IRA if you:

- Think you might be in a higher tax bracket during retirement

- Can double as a savings vehicle for certain short-term goals such

as buying a home or college tuition (qualifications, restrictions

and/or penalties may apply)

- Would like to leave tax-free assets to your heirs

- May want to retrieve your original contributions before retirement

- Are age 70½ or older and want to continue investing in an IRA

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IRA comparison

Traditional IRA Roth IRA

Tax benefitsTax-deferred growth

Tax deductible contributions*

Tax-free growth

Tax-free qualified withdrawals

Eligibility: Income limits None

Single or head of household:

$122,000-$137,000

Married, filing jointly:

$193,000-$203,000

Annual contribution limitsAge 49 and below: $6,000 cumulative

Age 50 and above: $7,000 cumulative

Eligibility: Withdrawals

If held for >5 years, eligible for

withdrawals starting at age 59½

Can withdrawal contributions only,

anytime without penalty

No restrictions with earned

compensations and income levels met

Penalties at withdrawalIf age 59½ or younger, withdrawals

are subject to a 10% federal early

withdrawal fee*

If held <5 years, withdrawals result in

taxable earnings and a 10% early

withdrawal fee if age 59½ or less*

Required minimum

distributions (RMDs)Must start at age 70½ No requirements

* Some qualifications and/or exceptions may apply. Consult a tax advisor for more information.

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Investing in Stocks: A primer

▪ A stock is a piece—or share—of something valuable.

▪ Stocks are also known as equities.

▪ Stocks are volatile investments—their value can vary a great deal in a short time period.

▪ BUT that’s looking at too big of a picture!

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Dollar-cost averaging

NOTE: A periodic investment plan such as dollar-cost averaging does not assure a profit or protect against a loss in declining markets.

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Demystifying the annuity

TIAA.org/public/offer/products/annuities

An annuity is a contract between you and an insurance company.

▪ There are different kinds of annuities:

– Deferred vs. immediate annuities

– Fixed vs. variable annuities

▪ Some annuities offer the option of lifetime income.

▪ Myths about annuities

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http://www.tiaa.org/public/offer/products/annuities


Average annual total returns (1926-2017)(Subtract inflation from the nominal return to get the real return)

*Chart illustrates returns from 1/1/1926 to 12/31/2017. Real Estate returns are from 12/31/1978 to 12/31/2017 from NCREIF Index.

Source: ©2018 Morningstar Investment Management LLC. All rights reserved. Morningstar Investment Management LLC is a registered investment

adviser and subsidiary of Morningstar, Inc. The Morningstar name and logo are registered marks of Morningstar, Inc. These returns are for

illustrative purposes only and do not reflect TIAA-CREF performance or the returns various kinds of investments may earn in the future. Stocks

represent shares of ownership in a corporation, bonds are debt obligations and real estate is direct property ownership. The value of each will

fluctuate with market conditions. Treasury bills (T-bills) and government bonds are insured as to timely payment of principal and interest by the U.S.

government, unlike stocks and corporate bonds. T-bills are short-term money market instruments. Past performance does not guarantee future

returns.

0

2

4

6

8

10

12

Inflation U.S. T-Bills Long-termCorporate Bonds

Real Estate* Common Stocks

2.89 2.893.35

0.46

6.06

3.17

9.23

6.34

10.16

7.27

Nominal Real

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You’re in control of your investments: Next steps to consider

▪ Pay off debt

▪ Make and stick to a budget

▪ Discover your investment personality

▪ Build your investment mix

▪ Review your retirement plan regularly

▪ Use our online tools: TIAA.org/tools

▪ Schedule an appointment with a Financial Consultant

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Tools and resources

TIAA.org/tools

Retirement AdvisorTIAA.org/setyourgoals

Selecting the right IRATIAA.org/public/iraselectortool

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Congratulations. You’ve invested in your future today

Questions?

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Action steps to consider

Call 800-732-8353Weekdays, 8 a.m. to 8 p.m. (ET)

to schedule a one-on-one session with

a TIAA Financial Consultant

Schedule online at

TIAA.org/schedulenow

TIAA PUBLIC


Sources

36% of working Americans, and 25% of retirees, say they are not too confident or not at all confident about having enough money for a comfortable retirement1

1Employee Benefits Research Institute, Retirement Confidence Survey “2018 RCS Fact Sheet #1: Retirement Confidence,” April 2018

Nearly 4 in 10 American workers say they aren’t contributing to any retirement plan, according to a 2018 study by the Employee Benefit Research Institute.2

2Employee Benefits Research Institute, Retirement Confidence Survey “2018 RCS Fact Sheet #3: Preparing for Retirement in America,” April 2018

Average annual healthcare spending can reach nearly $4,400 for households over 65—and can jump to more than $6,600 for those 85 and older.3

3Employee Benefit Research Institute, “Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees,” accessed October 2018

Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. By investing in more than one asset category, if one asset category's investment return falls, you'll be in a position to counteract your losses in that asset category with potentially better investment returns in another asset category. The practice of spreading money among different investments to reduce risk is known as diversification. By picking the right group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns.4

4Securities and Exchange Commission, “Beginners' Guide to Asset Allocation, Diversification, and Rebalancing,” accessed October 2018

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The Retirement Advisor does not monitor your retirement assets or personal circumstances. The purpose

of the retirement income tool is to show how the performance of the underlying investment accounts

could affect the participant's policy cash value and the resulting retirement income. It is not intended to

project or predict investment results. The advice may vary over time and with each use. There may be

other investments not considered by the Retirement Advisor that have characteristics similar or superior

to those being analyzed. The tool’s advice is based on statistical projections of the likelihood that you will

achieve your retirement goals. The projections rely on financial and economic assumptions of historical

rates of return of various asset classes that may not reoccur in the future, volatility measure and other

facts, as well as information you have provided.

IMPORTANT: Projections and other information generated through the Retirement Advisor regarding the

likelihood of various investment outcomes are hypothetical, do not reflect actual investment results and

are not a guarantee of future results. The projections are dependent in part on subjective assumptions,

including the rate of inflation and the rate of return for different asset classes. These rates are difficult to

accurately predict. Changes to the law, financial markets or your personal circumstances can cause

substantial deviation from the estimates. This could result in declines in the account’s value over short or

even extended periods of time.

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You should consider the investment objectives, risks, charges, and expenses

carefully before investing. Call 877-518-9161 or log on to TIAA.org for underlying

product and fund prospectuses that contain this and other information. Read the

prospectuses carefully before investing.

This material is for informational or educational purposes only and does not constitute investment advice under

ERISA. This material does not take into account any specific objectives or circumstances of any particular investor,

or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and

circumstances.

Investment, insurance, and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not

insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

Investment products may be subject to market and other risk factors. See the applicable product literature, or visit TIAA.org for

details. It is possible to lose money when investing in securities.

TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC,

Members FINRA and SIPC, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and

Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. The TIAA-CREF Retirement

Advisor is a brokerage service provided by TIAA-CREF Individual & Institutional Services, LLC, a registered broker/dealer and

member of FINRA. After-tax annuities are issued by TIAA-CREF Life Insurance Company, New York, NY. Each is solely responsible

for its own financial condition and contractual obligations.

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TIAA.org

©2018 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

Annuities are designed for retirement and other long-term goals. If you choose to invest in variable annuities, your money

will be subject to the risks inherent in investing in securities. Annuities offer several payment options, including lifetime

income. Guarantees are based on the claims-paying ability of the issuer. Payments from variable annuity accounts are not

guaranteed and will rise or fall based on investment performance.

Withdrawals of earnings from a retirement account or annuity are subject to ordinary income tax, plus a possible federal

10% penalty if you make a withdrawal before age 59½.

The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of

avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and

services addressed herein. The TIAA group of companies does not provide legal or tax advice. Taxpayers should seek

advice based on their own particular circumstances from an independent tax advisor.

648391

141030155TIAA PUBLIC


Thank you!

You can call 800-732-8353Weekdays, 8 a.m. to 8 p.m. (ET)

to schedule a one-on-one session with a TIAA Financial Consultant

Or, schedule online at

TIAA.org/schedulenow

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money at work - ucf human resources › files › moneyatwork_ppt_final.pdf · money at work 1:...

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