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Retirement Planning – Nearing the finish (Investors 50+ yrs)
 

Retirement Planning – Nearing the finish (Investors 50+ 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 – Nearing the finish (Investors 50+ yrs) Retirement Planning – Nearing the finish (Investors 50+ yrs) Presentation Transcript

  • Retirement Planning: Nearing the Finish (Of accumulating, of course!)For Investors 50+ yrs old
  • 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
  • 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)
  • 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
  • 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
  • Create a Retirement Vision
  • Keep Going• Compound growth takes time to build Example of Compound Growth• Largest effects felt 575,000 after years of saving and investing 475,000• Cannot shortcut 375,000 process• Chart based on 275,000 – 10% contribution rate – 5.14% annual rate of 175,000 return 75,000 – 2% annual salary increase 50 55 60 65 – 3% annual inflation
  • Get Going 401(k) Scenarios• Beginning salary 575,000 – 50 yr old: $82,000 – 55 yr old: $91,000 475,000 520,490 – 60 yr old: $100,000• Contributes 10% 375,000• Includes Amway 344,417 match 275,000• Retires at 67 years 175,000 212,357 old 75,000 50 year old 55 year old 60 year old
  • Focus on Contributions Contribution Scenarios (50 yr old) 825,000• Your contributions 779,311 today decide your quality of retirement 649,901 575,000• Target 12% to max allowable of $22,500 520,491• Increase 416,962 gradually, but as 325,000 quickly as possible 75,000 6% 10% 15% 20%
  • 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
  • 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)
  • 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)
  • 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
  • 401k Basics – Roth DistributionsThere is no penalty or taxon 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
  • 401k Basics – Amway Match B & PS• Amway matches 50% of your contributions in any 3% combination of traditional B & PS and Roth, up to your 6%.• Amway match is always 6% 3% deposited into traditional B & PS account.• Amway’s discretionary B & PS 3% 5% base contribution & profit B & PS sharing is deposited into 2% 2% traditional account 9% 1.5% 1%• 2012 IRS employee 1% 5% 4% contribution limits: 2% 3% – $17,000 – $22,500 with “catch-up” Amway Base & Profit Sharing Amway Match Roth Contribution Traditional Contribution
  • 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
  • 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
  • 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
  • An Analogy for Understanding Asset Allocation• Your Personal Investment Recipe• Mutual funds = Ingredients• Recipe = How you mix Ingredients
  • Determining Your Ingredients• Make sure the ingredients are varied• How expensive it is
  • 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 www.mutpl.com time to recover from downturn
  • Common Misbehaviors
  • Common Misbehaviors
  • Common Misbehaviors
  • Common Misbehaviors
  • 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
  • A Long Term Outlook
  • 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
  • Thank You Schedule your personal consultation now! Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780