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Educated Investor Pereira

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  • 1. 1
  • 2. Who We Are: Zuk Financial Group • Established in 1974 • 30,000+ Clients • One of the Largest Independent Retirement Planning Firms to the Educational Community in California • ACCCA Corporate Member Registered representatives offer securities and advisory services through National Planning Corporation (NPC). Member NASD/SIPC, a Registered Investment Adviser. Zuk Financial Group and NPC are separate and unrelated companies. 2
  • 3. Presenters: DOLIN PEREIRA, IAR Financial Advisor • NASD Registered Representative • Licenses Held – Series “6” and “63” • California Certified Life Agent • Investment Advisor Representative CA Insurance Lic. #0D72106 JACK BOTERENBROOD, IAR Financial Advisor • NASD Registered Representative • Licenses Held – Series “6”, “63” and “65” • California Certified Life Agent • Investment Advisor Representative CA Insurance Lic. #0D57337 3
  • 4. Feedback Card 4
  • 5. Retirement Income Will Come From Multiple Sources Will It Be Enough to Last 25+ Years? 5
  • 6. The Truth About Retirement Experts Estimate 80-85% of Pre-Retirement Gross Income Will Be Needed to Support a Comparable Retirement Lifestyle 6
  • 7. Consider Your Potential Expenses in Retirement ---Expenses Expenses That May That May Increase Decrease • Medical costs • Housing • Recreation • Taxes • Travel • Education • Long Term Care • Commuting • Care for Aging Costs Parents • Job Related • Medi-Care Expenses Supplement Insurance 7
  • 8. Understand The Impact of Inflation 1980 2006 2020 1st Class Stamp $ .15 $ .39 ? One Dozen Eggs $ .84 $1.38 ? Movie Ticket $2.69 $9.75 ? A Gallon of Gasoline $1.25 $3.00+ ? Source: Statistical Abstract of the United States, 2000. 8
  • 9. Monthly Retirement Income Needs Analysis These rates are used for hypothetical illustration only and may not be used to predict investment results. Income from investments may fluctuate and the value of the investment may fall or rise against the interest of the investor. Investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. This analysis is provided for information purposes and should not be construed as a recommendation. 9
  • 10. Life Expectancy is Increasing! Source: Hartford Life; based on the 2000 Annuity Mortality Table 10
  • 11. Types Of Retirement Accounts Pre-Tax After-Tax Contributions Contributions 403(b) - TSA Roth IRA 457 – Deferred Compensation Roth TSA 401k Plan Non Qualified IRA IRA 11
  • 12. TSA - 403(b) A Tax Sheltered Retirement Savings Plan For: • Employees of a public school or university • Employees of a qualified tax-exempt organization - 501(c)(3) Plan distributions may be subject to tax and 10% penalty if withdrawn before age 591/2 12
  • 13. TSA - 403(b) Contributions Are Tax Deductible Earnings Grow Tax Deferred Plan Features: • Contributions must be payroll deducted • Loans may be permitted by plan • Available for withdrawl at age 59 1/2 or age 55 and separated from service Investment options from District Approved Vendor List Comparisons of investments at www.403bcompare.com Plan distributions may be subject to tax and 10% penalty if withdrawn before age 591/2 13
  • 14. How to Fund TSA’s and 403(b)s 403(b) - Tax Sheltered Annuity • Issued by a life insurance company 403(b)(7) - Tax Sheltered Account • Issued by a investment management company (mutual fund) 14
  • 15. Considerations 1. Tax Brackets (Current and Future) 2. Liquidity (When and How Much) 3. Available Investment Options 15
  • 16. Bank vs. TSA Paycheck Comparison Compares $500 After-Tax Savings To $700 Pre-Tax Savings. Gross $4,000 $4,000 CalSTRS (8%) -$320 -$320 TSA $0 -$700 Taxable Gross $3,680 $2,980 Federal Tax -$458 -$309 $149 State Tax -$137 $86 $51 Medicare -$58 -$58 $200 Credit Union -$500 -$0 Net Take Home $2,527 $2,527 For illustrative purposes only, individual results will vary. 16
  • 17. Mistake I’m Only in My 20’s or Early 30’s. I Have Plenty of Time. I’ll Worry About Starting My Investment Plan Later. 17
  • 18. Start Earlier, Have More Money Chart shows annual investments of $4,000 starting at 25, 35 and 45 made until the age of 65 growing at a steady 8% return. It is for illustrative purposes only and is not meant to represent any actual investment or predict any future results; actual results will vary. Income from investments may fluctuate and the value of the investment may fall or rise against the interest of the investor. 18
  • 19. Get Invested And Stay Invested These examples are provided for illustrative purposes only. They are not intended to indicate the performance of a particular investment. Generally, mutual funds do not offer a fixed rate of return. An investor’s principal is not guaranteed or protected from a decline. The growth of your assets will be based on actual rate of return provided by the investment you choose. Dollar cost averaging does not guarantee a profit of protect against loss. Dollar cost averaging involves continuous investments in securities. You should consider your financial ability to continue making purchases through periods of low price levels. 19
  • 20. Elective Deferral Limits - 2007 20
  • 21. It is Important to Have a Distribution Plan For Your Retirement Savings! 21
  • 22. You Need a Distribution Plan Years 1-10 Years 11-20 Years 21+ Income Investments Income and Growth Investments Growth Investments Cash Equivalents Bonds and Stocks Stocks * Hypothetical example used for illustrative purposes only. An investor should always consider their investment objectives, time horizon, and tolerance for risk before implementing any investment strategy. 22
  • 23. Taking Your Money Out 403(b) and 403(b)(7) Accounts • Penalty Free Distributions are Available at Age 55 if You are Separated from Service, Otherwise at Age 59 1/2. • Required Minimum Distributions Must Begin by April 1st of the Year Following the Year You Turn Age 70 1/2. • Distributions are Taxed as Ordinary Income at Current Year Tax Bracket. 23
  • 24. Your Income Must Last Your Lifetime! Conservative Balanced Growth All Equity Stocks 20% 50% 70% 100% Bonds 50% 40% 25% 0% Cash 30% 10% 5% 0% Real Annual Withdrawal Rate * Chance of Outliving Your Retirement Assets – 25 year Distribution 6% 89% 45% 34% 30% 5% 53% 17% 9% 15% 4% 8% 0% 0% 0% * Withdrawal rate in addition to annual inflation as measured by CPI. Hypothetical example used for illustrative purposes only. Results are based on a historical simulation using all the rolling 25-year periods from 1926 to 2002. Based on monthly returns of the S&P 500 (stocks) U.S. government bonds (bonds) and U.S. 30-day Treasury bills (cash equivalents) for 1926-2002 as provided by Ibbotson Associates. Withdrawal rates were adjusted each year for actual CPI inflation rates. Taxes are not taken into account. Past performance is no guarantee of future results. Not intended to represent the performance of any specific investment and an investment can not be made in any index. Individual investor results will vary. 24
  • 25. A Financial Professional Can Help You: • Clarify Your Investment Goals • Choose Investments that Seek to Meet Your Goals, Risk Tolerance and Time Horizon • Set Realistic Expectations for Performance • Remain Disciplined • Monitor your Portfolio and Recommend Changes Over Time 25
  • 26. ZUK Financial Group Comprehensive Planning Services Include: • CalSTRS Pension • Income Taxes, Inflation Maximization and Debt Consolidation • Other Sources of • Investment Selection and Retirement Income Portfolio Construction • Taxable vs. Tax Deferred • Long Term Care and vs. Tax-Free Income Asset Preservation • TSA’s, IRA’s, Roth IRA’s, • Estate Planning and 401k’s and Simple Plans Living Trusts 26
  • 27. Your Next Steps!!! 27
  • 28. Feedback Card 28
  • 29. 29