Challenges Pre Retire
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Challenges Pre Retire

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The reality we are facing in todays retirees

The reality we are facing in todays retirees

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Challenges Pre Retire Presentation Transcript

  • 1. Challenges that may impact your retirement
    Seminar and Insurance Sales Presentation
    1008
    RIO1341 1010
  • 2. 2
    1 Retirement – what’s changed?
    2 The challenges you may face
    3 A way to invest, prepare and protect
    Today’s objectives
  • 3. 3
    Retirement – what’s changed?
    Shift to 401(k) – are savings enough?
    20%
    $121,202
    percentage of employees who have a pension plan
    average 401(k) balance
    As of year end 2006.
    401(k) Plan Asset Allocation, Account Balances and Loan Activity in 2006 – www.ici.org
    Deloitte – Annual 401(k) Benchmarking Survey 2005/2006 Edition
  • 4. 4
    LIMRA – Working in Retirement – 2007
    Retirement – what’s changed?
    24% of retirees work in retirement
    86% of pre-retirees have not ruled out working
    27% need extra income
    14% cannot afford to retire
  • 5. 5
    Wall Street Journal Online – September 2007
    Retirement – what’s changed?
    Mortgages in retirement
    Retirees ages 65 - 74
    19% in 1992
    32% in 2004
  • 6. 6
    Retirement – what’s changed?
    Social Security: will it be there for you?
    Trust fund assets projected to be exhausted 2041
    Social Security Board of Trustees – March 2008
  • 7. 7
    1974
    2030
    Projected
    Source: Research on Potential New Products for Retirement Income, FCNBD, May 2006
    Retirement – what’s changed?
    Personal assets and work
  • 8. 8
    Example
    Your information
    Desired Annual Retirement Income
    $100,000
    ?
    Pension Income
    – $24,000
    ?
    Will you be prepared?
    :
    How much money might you need to retire?
    Social Security
    – $25,000
    ?
    Income Gap
    $51,000
    ?
    Desired Withdrawal Rate
    .04 (4%)
    ?
    Personal Savings Needed
    $1,275,000
    ?
  • 9. 9
    Challenges of retirement
    Longevity
    Inflation
    Health care costs
    Asset allocation
    Excess withdrawal
  • 10. 10
    People are living longer
    Probability of a 65-year-old couple needing income for:
    Annuity 2000 Mortality Table, Society of Actuaries
    Longevity risk
  • 11. Cost of goods and services are increasing
    11
    Source: U.S. Postal Service 2008
    Inflation
  • 12. Health care costs outpace inflation
    Average annual price increases –
    years 2000-2005
    12
    Physician & clinical services:
    Prescription drugs:
    10.7%
    7.9%
    Inflation:
    2.5%
    National Center for Health Statistics – Health, United States 2007
    Health care costs
  • 13. 13
    Long term return potential.
    Significant potential.
    Volatility.
    Lower return potential.
    Little volatility.
    Risk: too aggressive or too conservative?
    Assumptions: $100,000 investment 1988-2007. Past performance does not guarantee future results. The investment return and principal
    value of a security will fluctuate with market conditions so that when redeemed, may be worth more or less than their original cost.
    The S&P 500 Index is a list of securities frequently used as a measure of U.S. stock market performance.
    The Consumer Price Index (CPI) is an inflationary indicator that measures the change in the cost of goods purchased by the average U.S. household.
    Treasury Bills (TBills) are a short-term obligation of the U.S. Treasury having a maturity period of one year or less and sold at a discount from face value.
    The indices represented in the grid are unmanaged, do not incur expenses and cannot be purchased directly by investors.
    The historical performance shown is for illustrative purposes only and does not represent the performance of any particular product or underlying fund.
  • 14. 14
    Average annual return 1988 – 2007
    11.8%
    4.5%
    3.0%
    Average Investor
    S&P 500 Index
    Inflation
    Equity investing
    Source: Dalbar, Inc., QAIB Study, 2008. This hypothetical example is for illustrative purposes, and is not representative of any MassMutual product. The S&P 500 Index is a list of securities frequently used as a measure of U.S. stock market performance. Indices are not available for direct investment.
  • 15. 15
    Diversification through asset allocation
    Past performance does not guarantee future results. The investment return and principal value of a security will fluctuate with market conditions so that when redeemed,
    may be worth more or less than their original cost.
    Asset allocation does not ensure a profit and does not protect against loss in a declining market.
    The indices represented in the grid are unmanaged, do not incur expenses and cannot be purchased directly by investors.
    The historical performance shown is for illustrative purposes only and does not represent the performance of any particular product or underlying fund.
    Source: S&P Micropal, February 2008
  • 16. 16
    Past performance does not guarantee future results.
    The indices represented in the grid are unmanaged, do not incur expenses and cannot be purchased directly by investors. The historical performance shown is for illustrative purposes only and does not represent the performance of any particular product or underlying fund.
    Diversification through asset allocation
  • 17. 17
    Probability of meeting income needs
    Various withdrawal rates and portfolio allocations over a 25-year retirement
    Stocks are represented by the Standard & Poor's 500, which is an unmanaged group of securities and considered to be representative of the stock market in general. Bonds are represented by the five year U.S. government bond, inflation by the Consumer Price Index and mutual fund expenses from Morningstar. Annual investment expenses were assumed to be 0.94% for stock mutual funds and 0.82% for bond mutual funds. The inputs used by Morningstar are historical 1926-2006 figures. The data assumes reinvestment of income and does not account for taxes or transaction costs. An investment cannot be made directly in an index.
    IMPORTANT: Projections generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary over time and with each simulation. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2007 Morningstar, Inc. 3/1/2007. All rights reserved.
    Excess withdrawal risk
  • 18. 18
    Don’t leave your retirement to chance
    Consult a financial professional.
    A financial professional will help you:
    Establish Goals
    Address Challenges
    Develop a Strategy
    Monitor and Update Strategy
  • 19. Steps to develop a retirement income strategy
    Planning your retirement income strategy:
    1
    Gather information
    2
    Formulate a strategy
    3
    Put strategy into action
  • 20. Set Up
    An Appointment
    Today!
  • 21. Variable annuities are sold by prospectus. Before purchasing a variable annuity contract, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity contract and its underlying investment choices. For this and other information, obtain the prospectuses for the variable annuity contract and its underlying investment choices from your registered representative. Please read the prospectuses carefully before investing or sending money.
  • 22. 22
    Thank You!!
    Questions & Answers
  • 23. 23
    The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.
    Annuity products are issued by Massachusetts Mutual Life Insurance Company and C.M. Life Insurance Company. C.M. Life Insurance Company, 100 Bright Meadow Boulevard, Enfield, CT 06082, is non-admitted in New York and is a subsidiary of Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, MA 01111-0001.
    Principal Underwriter:MML Distributors, LLC, 1295 State Street, Springfield, MA 01111-0001. Wholly owned subsidiary of Massachusetts Mutual Life Insurance Company.
  • 24. 24
    © 2008 Massachusetts Mutual Life Insurance Company, Springfield, MA. All rights reserved. www.massmutual.com
    MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual)
    and its affiliated companies and sales representatives.