Building a Strong Financial Future

Member FINRA/SIPC

Building a Strong Financial Future

Strategies for Age 45 to RetirementApproved DBA Name

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BUILDING A STRONG FINANCIAL FUTURE

Introduction

Today we will discuss: Planning for retirement

Managing multiple financial goals

Estate planning essentials

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This presentation was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. The presenter is providing educational services only and is not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational presentation.

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The Future of Retirement

People are living longer

Healthier, more active lifestyles

Social Security benefits are starting later

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Are You Saving for Retirement?

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. 2010 Retirement Confidence Survey.

Less than $10,000

$10,000-$24,999

$25,000-$49,999

$50,000-$99,999

$100,000-$249,999

$250,000 or more

56%

15%

12%

8%

6%

4%

46%

14%

11%

11%

11%

8%

38%

8%

13%

11%

17%

14%

29%

8%

11%

15%

13%

23%

43%

11%

12%

11%

11%

11%

All Workers

Ages25-34

Ages35-44

Ages45-54

Ages55+

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Calculate a Savings Goal

You may work to age 65 or beyond

You may need 60% to 100% of your final year’s salary each year in retirement

Social Security and pensions will provide only a fraction of your income needs

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Estimated Social Security Benefits

Current Annual Earnings

Source: Social Security Administration. Example assumes no future increases in prices or earnings.

Age in 2010: 60 (born 1950)

Retirement age

62 + one month in 2012

66 in 2016

70 in 2020

$40,000

$868

$1,199

$1,662

Monthly benefit in 2010 dollars

$60,000

$1,139

$1,582

$2,206

$80,000

$1,410

$1,920

$2,608

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Target a Retirement Savings Goal

How Much Will You Need?

These estimates are not adjusted for future inflation. They assume $0 principal remaining after 25 years in retirement and an after-inflation annual rate of return of 5% during retirement.

Final Annual Salary

Annual Retirement Income (80%)

Estimated Savings Goal (in today’s dollars)

Annual Social Security Benefit (est.)

$40,000

$60,000

$80,000

$32,000

$48,000

$64,000

$260,634

$429,397

$606,152

$17,612

$29,016

$40,960

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Inflation and Your Savings Goal

Source: Standard & Poor’s. This example assumes a constant 3% annual inflation rate.

In Today’s Dollars

In 20 Years at 3% Inflation Rate

$470,733

$775,539

$1,094,779

$260,634

$429,397

$606,152

Retirement Savings Goal

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It’s Never Too Late to Start

Investment Earnings Can Potentially Compound Over Time

Investing $100monthly

Investing $500monthly

Investing $1,000monthly

$24,000

$59,295 $120,000

$240,000

$296,474

$592,247Investment Earnings

Total Invested

This is a hypothetical illustration and not representative of any specific investment. Assumes 8% annual return over a 20-year period. Your situation will vary.

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Retirement Savings Accounts

How Much Can You Contribute to Company Retirement Plans, Traditional IRAs, and Roth IRAs?

Year IRAsIRA

“Catch up”

401(k), 403(b), 457

plans

401(k), 403(b), 457 “Catch up”

2012 $5,000 $1,000 $17,000 $5,500

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The Advantage of Tax Deferral

The Power of Tax-Deferred CompoundingResults of Investing $100 per Month for 20 Years at an 8% Average Return

Taxed

$59,295

Tax-Deferred

$46,435

For illustrative purposes only. Does not represent the performance of any particular investment vehicle. Your situation will vary.

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Investing Your Retirement Savings

Your asset allocation is based on Time horizon

Risk tolerance

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Investing for Long Term Growth

Risk/ReturnPotential

Bonds

High

Low

Stocks

Money Market Instruments

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A Look at Performance

Average Risk and Return Over 30 Years Ended December 31, 2010

Sources: Standard & Poor’s; the Federal Reserve. Stocks represented by the S&P 500 Index. Bonds represented by the Barclays U.S. Aggregate Bond Index. Cash represented by a composite of yields on 3-month Treasury bills and the Barclays 3-Month Treasury Bills Index. Past performance cannot guarantee future results. Indexes are unmanaged and cannot be invested into directly. (CS000137)

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The Impact of Inflation

Inflation can reduce the purchasing power of your savings.

Source: Standard & Poor’s.

How $1,000 can shrink at just a 4% inflation rate

Today

$1,000

$676

10 yrs

$456

20 yrs

$308

30 yrs

$208

40 yrs

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Aggressive Growth–Higher Risk

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10% bonds

10% money market instruments

80% stocks

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Moderate Growth–Moderate Risk

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30% bonds

60% stocks

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Conservative–Lower Risk


40% bonds40% stocks

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Manage Your Asset Allocation Over Time

Review your asset allocation once a year

Modify your asset allocation as your needs change

Work with a financial professional

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When You Leave Your Job

Leave your assets in the company’s plan

Transfer to new employer’s plan

Roll over to an IRA

Take a lump-sum distribution

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Managing Multiple Financial Goals

Retirement savings

College costs

Helping aging parents

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Financial Considerations for Care Givers

Fewer opportunities for job advancement

Reduced Social Security and pension benefits

Out-of-pocket expenses

Less money to save and invest

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Estate Planning Essentials

A valid will

Insurance policies

Trusts

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Ever-Changing Tax Rules

Estate taxes

IRAs

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Your Retirement Action Plan

Establish a savings goal and make regular contributions to your retirement accounts

If you are over age 50, plan to make additional contributions as permitted by tax laws

Invest your savings to potentially outpace inflation

Review your asset allocation regularly and make adjustments as you near retirement

Work with a financial advisor

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Thank You

This presentation was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. The presenter is providing educational services only and is not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational presentation.

RP-07740-1211

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Building a Strong Financial Future