Creating Your Retirement Income and Investment Strategy

You’ve Worked Hard

Now It’s Time to Relax

Retirement Readiness Workshop

© 2014 PlanMember Financial Corporation

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Disclosures

This presentation is intended for general information purposes only and does not and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult with your tax, legal and/or financial services professional regarding your individual situation. Material presented is believed to be from reliable sources, and PSEC makes no representation as to its accuracy or completeness.

Investors should carefully consider the investment objectives, risks, charges and expenses of a mutual fund before. This and other important information is contained in the prospectuses or summary prospectuses, which can be obtained from your PlanMember Program Representative and should be read carefully before investing. All investments may involve risk including possible loss of principal.

The use of diversification/asset allocation as part of your investment strategy or the use of an investment advisor neither assures nor guarantees better performance and cannot protect against loss in declining markets or ensure a profit.

Investors should consider the investment objectives of the variable annuity carefully before investing. An investment in a variable annuity involves investment risk, including possible loss of principal. Variable annuities are designed for long-term investing. The contract, when redeemed, may be worth more or less than the total amount invested. Variable annuities are subject to insurance related charges including mortality and expense charges, administrative fees and the expenses associated with the underlying funds. Withdrawals prior to age 59 ½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company. Investment in sub-account value will fluctuate with market conditions.

You should carefully consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options before investing. For a copy of the prospectus for the annuity and its underlying investments, which contain this and other information about variable annuities, contact your PlanMember Program Representative. Read the prospectus carefully before you invest.

Investments are: • Not a deposit • Not FDIC or NCUS/NCUSIF insured • Not bank or credit union guaranteed • Not Insured by any federal government agency • May lose value

PlanMember Services Program products are distributed by PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC

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The Transition

Beginning Your Retirement Journey

• Investing IN retirement is much different than investing FOR retirement

• To set you retirement in motion, you first need a detailed strategy

• It is essential to focus on planning before deciding on investments

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Beginning Your Retirement Journey

The Excitement and Concerns

• How can I help ensure my savings will last my lifetime?

• Will my retirement savings cover my basic expenses?

• Will I have enough to travel or pursue a new hobby?

• How can I invest for continued growth while protecting against market volatility?

• Will I be able to pass something on to my heirs?

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The Challenges Facing Retirees

Longevity Risk

Will My Savings Last My Lifetime?

                 

75   80   85   90   95   100  

Male  Age  65  

Female  Age  65  

Couple  Both  Age  65  

Life  Span  Probability  

50%  Chance  83  24%    

Chance  89  

49%  Chance  86  24%    

Chance  92  

At  least  one  person  -­‐  51%  Chance  89  23%    

Chance  94  

Source:  Vanguard  Plan  for  Long  Re3rement  calculator  at  www.vanguard.com/us/insights/re3rement/plan-­‐for-­‐a-­‐long-­‐re3rement-­‐tool  

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Eroding Purchasing Power

The Challenges Facing Retirees

Inflation Risk

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

1 2 3 4 5 6 7 8 9 10 11

At Retirement After 10 Years After 25 Years

2% Inflation 3% Inflation 5% Inflation

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The Challenges Facing Retirees

Market Uncertainty

Assumes $100,000 initial

investment in hypothetical

portfolios and a $10,000

withdrawal at beginning of

each year for income. This

hypothetical example is for

illustrative purposes only. It

is not intended to predict nor

guarantee any actual product

results and does not reflect

the effect of any applicable

fees, charges or taxes.

Early Negative Returns Could Affect Future Income

$0

$25,000

$50,000

$75,000

$100,000

1 2 3 4 5 6 7 8 9 10

Por$olio  1  

Por$olio  2  

$58,136

$26,829

Annual Returns (Hypothetical)

Year 1 2 3 4 5 6 7 8 9 10 AveragePortfolio 1 10% 10% 10% 10% 10% 10% 10% 10% -20% 10% 6.67%Portfolio 2 10% -20% 10% 10% 10% 10% 10% 10% 10% 10% 6.67%

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Step 1 - Estimate and categorize your retirement expenses

Step 2 - Identify your known sources of retirement income and assets available for generating income.

Step 3 - Determine your personal tolerance for income variance

Step 4 - Construct your retirement income and investment strategy with a financial professional

It Starts with a Plan

Steps to Constructing Your Personal Strategy

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Estimating Your Retirement Expenses

Categorize Your Monthly Needs

Essential Expenses - Housing, utilities, food, healthcare, taxes

Important Expenses - Clothing, transportation, insurance

Discretionary Expenses - Travel, hobbies, dining out, entertainment, gifts

Step1

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Identifying Your Income Sources

Where Will My Income Come From?

Known Income Sources • Social Security • State, governmental or corporate pensions • Income from annuities* • Part-time employment income • Rental or other income

Income-Generating Assets • Assets from 403(b), 457(b), 401(k) or other employer plan • IRAs (Traditional or Roth) • Home equity • Nonqualified investments

*Guarantees and benefits subject to the claims-paying ability of the underlying insurance company.

Step2

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Considerations Include:

• Your level of comfort with variances in your income

• Your expectation of variances in your future expenses

• Concern about outliving your savings

Your Tolerance for Income Variance

How Much Guaranteed Income Do You Need?

Step3

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Constructing Your Strategy

With a Financial Professional

• Determine amount of expenses to be covered by guaranteed income sources

• Review current sources of retirement income

• Re-allocate or reposition your portfolio

• Work with a financial professional to establish a detailed strategy tailored to your objectives and circumstances

Step 4

Asset allocation or the use of an investment advisor does not ensure a profit nor guarantee against a loss.

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Constructing Your Strategy

Case Study: Hypothetical Retiree Mary

Step 1– Estimate Retirement Expenses:

• Total estimated expenses throughout retirement: $5,000/month $2,500 Essential $1,500 Important $1,000 Discretionary

• Has additional Essential expense of $1,000 for first five years of retirement (mortgage)

This example is for illustrative purposes only.

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Constructing Your Strategy

Case Study: Hypothetical Retiree Mary

Step 2 – Identify Retirement Income Sources

• Guaranteed Income Sources: $2,500/month State Retirement System benefit $500/month deferred fixed annuity payments from 403(b) account*

• Non-Guaranteed Assets: Non-guaranteed 403(b) account assets: $650,000 (mutual funds)

$2,500 / MonthState Retirement System

$500 / Month403(b)

*Guarantees and benefits are based on the claims-paying ability of the underlying insurance company. This hypothetical example is for illustrative purposes only.

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Constructing Your Strategy

Case Study: Hypothetical Retiree Mary

Step 3 – Income Variability Tolerance

• A stable, predictable stream of retirement income is of paramount importance

• Has high concern about outliving her savings

• Is worried about volatility in the markets

• Wants all Essential and Important expenses covered by guaranteed sources

• Has overall low tolerance for income variability

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Step 4 – Implement Mary’s Strategy

• Converts a portion of non-guaranteed assets to an immediate income annuity*

• Purchases additional five-year period certain income annuity to cover mortgage expense

• Works with a financial professional to construct a systematic withdrawal plan for non-guaranteed assets

Constructing Your Strategy

Case Study: Hypothetical Retiree Mary

This example is provided for illustrative purposes only and is not intended to reflect an actual investment or predict future returns.

*Income and other annuities are not insured or guaranteed by, nor obligations of, the FDIC, the NCUSIF, any government agency, or the financial institution that sells it. All guarantees depend on the issuing insurance company’s claims-paying ability and financial strength. Annuity purchase rates are based on interest rates, expense and life expectancy assumptions. Annuities have limitations, exclusions, termination provisions and terms for keeping them in force. Product availability and features may vary by state. Consult a financial professional for details.

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• Request a personalized Retirement Income Analysis to asses your retirement income needs and determine the level of guaranteed income you need

• Review your current retirement investments and income sources

• Work with a financial professional to construct your personal retirement income and investment strategy

Action Steps

What’s Next?

Retirement Income Analysis

Your Customized Retirem

ent Income and Investm

ent Plan

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Questions?Thank you.

PlanMember Services Program products are distributed by PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC

Investments are: • Not a deposit • Not FDIC or NCUA/NCUSIF insured • Not bank or credit union guaranteed • Not Insured by any federal government agency • May lose value

6187 Carpinteria Ave. • Carpinteria, CA • 93013 • (800) 874-6910 © 2014 PlanMember Financial Corporation

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