retirement planning – nearing the finish (investors 50+ yrs)
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Retirement Planning: Nearing the Finish
(Of accumulating, of course!)
For Investors 50+ yrs old
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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
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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)
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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
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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
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Create a Retirement Vision
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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
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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
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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)
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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
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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)
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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)
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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
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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
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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”
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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
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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
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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
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An Analogy for Understanding Asset Allocation
• Your Personal Investment Recipe
• Mutual funds = Ingredients
• Recipe = How you mix Ingredients
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Determining Your Ingredients
• Make sure the ingredients are varied
• How expensive it is
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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
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Common Misbehaviors
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Common Misbehaviors
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Common Misbehaviors
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Common Misbehaviors
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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
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A Long Term Outlook
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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
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Thank YouSchedule your personal consultation now!
Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780