Retirement Planning – Maintaining momentum (investors 36-49 yrs)

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  • Retirement investing vs non-retirement investmentsFocus on retirement in this seminar
  • Focus on being mortgage-free upon retirement (imagine what you could do without that payment)
  • The longer your money is invested, the more compounding you have for it to grow.
  • NOTE: The amount you contribute to your account is the #1 reason for the outcome of your retirement, not how you invest it.Target 12% - 20% of your salary
  • Get your spending habits in line, and your savings will take care of itself – PAY YOURSELF FIRSTHighly recommend a personal financial management toolMint.comQuickenSpreadsheets
  • Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
  • Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
  • Taxes are “pre-paid” with your contributions, investment and contributions come out tax free upon retirement (after 59 ½ yrs old)Allows you to create more flexibility upon retirement by creating a ‘tax free income’ retirement bucket
  • Investment options are identical for each plan, you simply need to determine what % goes in pre-tax (traditional) and after-tax (Roth)
  • Buy High Sell Low
  • AnchoringHead in the sandConfirmation Bias
  • AnchoringHead in the sandConfirmation Bias
  • AnchoringHead in the sandConfirmation Bias
  • Retirement Planning – Maintaining momentum (investors 36-49 yrs)

    1. 1. Retirement Planning:Maintaining MomentumFor Investors 36 - 49 yrs old
    2. 2. The focus in this seminar is on Investing for RetirementPersonal Savings are split into: – Taxable Savings Our • Bank accounts, CD’s focus • Investments today – Non-taxable, retirement savings • 401(k) – Traditional & Roth • IRA
    3. 3. Create a Retirement Vision• No one knows what the future holds• Basics – Spend less than you make – Be a great saver – Eliminate debt
    4. 4. 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)
    5. 5. Create a Retirement Vision
    6. 6. Get Going• Compound growth takes time to build Example of Compound Growth• Largest effects felt 1,025,000 after years of saving and investing 775,000• Cannot shortcut process 525,000• Chart based on – 10% contribution rate 275,000 – 5.14% annual rate of return 25,000 – 2% annual salary increase 35 40 45 50 55 60 67 – 3% annual inflation
    7. 7. Get Going 401(k) Scenarios• Beginning salary 1,025,000 – 35 yr old: $61,000 – 45 yr old: $75,000 927,764 – 55 yr old: $91,000 775,000• Contributes 10%• Includes Amway 525,000 match 463,159• Retires at 67 years 275,000 old 197,750 25,000 35 year old 45 year old 55 year old
    8. 8. Focus on Being a Great Saver Contribution Scenarios (35 yr old) 1,525,000 1,423,268• Your contributions 1,233,674 today decide your 1,275,000 quality of retirement 1,025,000• Target 12% to 20% 927,763 775,000• Increase 683,036 gradually, but as 525,000 quickly as possible 275,000 25,000 6% 10% 15% 20%
    9. 9. Manage Spending• Work on your spending habits and your savings will take care of themselves• Use a personal financial management tool – Mint.com – Quicken Books – Excel spreadsheet – Paper / Envelopes
    10. 10. 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)
    11. 11. 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)
    12. 12. 401k Basics Traditional 401(k) Roth 401(k)• Contribution is taken out of • Contribution is taken out of paycheck before tax paycheck after tax• Investments grow tax-deferred • Investments grow tax-free• Taxed as ordinary income upon • Tax-free upon retirement retirement • Distributions without penalty• Distributions without penalty allowed after 59-½ allowed after 59-½
    13. 13. 401k Basics – Amway Match B & PS• Amway matches 50% of your contributions in any combination of traditional 3% and Roth, up to your 6%. B & PS• Amway match is always deposited into traditional 3% 6% B & PS account.• Amway’s discretionary B & PS base contribution & profit 3% 5% B & PS sharing is deposited into 2% 2% traditional account 9% 1.5%• 2012 IRS employee 1% 1% 5% 4% contribution limits: 3% 2% – $17,000 – $22,500 with “catch-up” Amway Base & Profit Sharing Amway Match Roth Contribution Traditional Contribution
    14. 14. How Your Amway 401k Works Amway 401(k)• Investment options are the same for Traditional & Roth Roth• Select contribution % 401(k) for each – any combination is allowable Trad• Accounts shown in 401(k) aggregate on Fidelity website
    15. 15. 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
    16. 16. 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
    17. 17. An Analogy for Understanding Asset Allocation• Your Personal Investment Recipe• Mutual funds = Ingredients• Recipe = How you mix Ingredients
    18. 18. Determining Your Ingredients• Make sure the ingredients are varied• Consider risk• How expensive it is
    19. 19. Common Misbehaviors
    20. 20. Common Misbehaviors
    21. 21. Common Misbehaviors
    22. 22. 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
    23. 23. A Long Term Outlook
    24. 24. Thank You Schedule your personal consultation now! Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780

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