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Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
Re Re Short Client Version Ent657
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Re Re Short Client Version Ent657

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RE-ENGINEERING RETIREMENT …

RE-ENGINEERING RETIREMENT
ALLIANZ
MARK D. COHEN

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  • 1. Re-Engineering Retirement SM [Presenter name, credentials] Retirement readiness with the 3-7-5 strategy Insurance and annuities are issued by Allianz Life Insurance Company of North America Neither Allianz, its agents, or representatives offer tax or legal advice. Clients shoulduse with the USA-1274a (R-8/2007) For Broker/Dealer use only – Not for always consult public. with qualified tax/legal advisors concerning their own situation. © Copyright 2008 Allianz. All rights reserved.
  • 2. Types of retirement expenses Sources of income Options for making income cover expenses Transition from accumulation to income USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.
  • 3. Important retirement questions  Will I have enough to retire when I want to retire?  Will I run out of income in retirement?  How will inflation affect my retirement income? 3 ENT-657 (R-12/2008)
  • 4. Retirement readiness? ● Don’t have formal retirement strategies ● Assume they have limited options for improving their financial situation once they reach retirement ● Confused about the complexity of financial issues ● Limited knowledge of and/or help in the retirement income strategies process ● Think retirement is simply the reverse of accumulation 4 ENT-657 (R-12/2008)
  • 5. The retirement income strategy 5 ENT-657 (R-12/2008)
  • 6. Agenda: Re-Engineering Retirement Difference between accumulation and income The 3-7-5 retirement strategy / Case study Next steps 6 ENT-657 (R-12/2008)
  • 7. Thinking differently Retirement accumulation stage Retirement Retirement Accumulation Income Stage Stage Financial Have enough Objective money to retire Asset Portfolio allocation Allocation Time Known to Horizon retirement 7 ENT-657 (R-12/2008)
  • 8. Thinking differently How much will we have? How much money will we need? Will we have enough to get by? Will there be enough for extras? Will there be something for our heirs? 8 ENT-657 (R-12/2008)
  • 9. Thinking differently Retirement income stage Retirement Retirement Accumulation Income Stage Stage Financial Have enough Not outlive assets Objective money to retire Asset Withdrawal Portfolio allocation Allocation allocation Time Known to Horizon retirement 9 ENT-657 (R-12/2008)
  • 10. Thinking differently The “Lost Decade” $12,000 10,000 8,000 6,000 The Wall Street Journal, March 26, 2008 The S&P 500: 1999 through February 2008. Total return on $10,000 investment adjusted for inflation. Note: Not possible to invest directly in the index. Standard & Poor’s 500® index (S&P 500®) is comprised of 500 stocks representing major U.S. industrial sectors. “Standard & Poor’s®,” “S&P®,” “S&P 500,” “Standard & Poor’s 500,” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Allianz Life Insurance Company of North America. The product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the product. 10 ENT-657 (R-12/2008)
  • 11. Thinking differently Sequence of returns Bad returns later / sooner $3,000,000 1250000 Hypothetical value 12.1% Year 30: Hypothetical value at 0% Year 1: 24.6% 12.1% Year 29: 750000 Year 2: 14.3% 24.6% Year 28: Year 3: 5.2% 14.3% Year 27: Year 4: 22.2% 5.2% Year 26: $500,000 250000 Year 5: 22.2% 17 19 21 1 3 5 7 9 11 13 15 23 25 27 29 11.0% Year 5: Year 26: 11.0% 3.7% Year 4: Year 27: -19.7% 3.7% Year 3: Year 28: - 19.7% - 0.8% Year 2: Year 29: - 0.8% -17.9% Year 1: Year 30: - 17.9% 0 5 10 15 20 25 30 Year This example is shown for illustrative purposes only and is not intended to predict or project future results. It is not intended to represent any specific product or investment, and does not reflect the deduction of taxes or product fees or expenses. 11 ENT-657 (R-12/2008)
  • 12. Thinking differently Retirement income stage Retirement Retirement Accumulation Income Stage Stage Financial Have enough Not outlive assets Objective money to retire Asset Withdrawal Portfolio allocation Allocation allocation Time Known to Unknown to date Horizon retirement of death 12 ENT-657 (R-12/2008)
  • 13. Thinking differently How can we make the most of my retirement income sources? What should we reposition in consideration of tax and transfer issues? What should we spend first, next, last? What should we hold? 13 ENT-657 (R-12/2008)
  • 14. Thinking differently Retirement income strategies Retirement Retirement Accumulation Re-Engineering Income Stage Transition to: Stage Retirement Financial Have enough Maximize sources Not outlive assets Objective money to retire of income Asset Reposition assets Withdrawal Portfolio allocation to meet needs Allocation allocation and goals Time Known to Unknown to date Retirement Horizon retirement of death transition strategies 14 ENT-657 (R-12/2008)
  • 15. The 3-7-5 Strategy 15 ENT-657 (R-12/2008)
  • 16. 3-7-5 Strategy Levels of Sources of Retirement Retirement Options Expense Income 16 ENT-657 (R-12/2008)
  • 17. 3-7-5 Strategy Three levels of retirement expenses Expenses Legacy Funds remaining for your heirs Desired Lifestyle “extras” Survival Expenses to cover your most basic needs 17 ENT-657 (R-12/2008)
  • 18. 3-7-5 Strategy Seven sources of income for retirement Expenses Income Sources of Welfare - charity Not desirable Legacy Continued Employment Phase into retirement gradually Nonqualified Assets Mutual funds, CDs, stocks, bonds (NQA) Roth IRA Desired Tax deferred / tax free Traditional IRA ERISA contributions and rollovers Qualified ERISA Employer sponsored plans Survival Social Security The base 18 ENT-657 (R-12/2008)
  • 19. 3-7-5 Story Hypothetical story Ken and Patty at retirement Note: This example is shown for illustrative purposes only and does not represent actual Allianz clients.. 19 ENT-657 (R-12/2008)
  • 20. 3-7-5 Story Ken & Patty – age 66 Combined Social Security $2,000 per month Defined Benefit (Pension) income $500 per month Home is mortgage free Zero IRA (including rollover) $500,000 Savings portfolio $400,000 Estimated annual Survival expenses: $36,000 retirement expenses Desired expenses: $20,000 Desire to leave a legacy Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates. 20 ENT-657 (R-12/2008)
  • 21. 3-7-5 Story Ken & Patty Sources of Income Re-Engineering Retirement Expenses Welfare – charity Legacy Continued Employment Nonqualified Assets (NQA) $400,000 Desired Roth IRA None $20,000 Traditional IRA $500,000 Qualified $6,000 ERISA Survival $36,000 Social Security $24,000 Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates. 21 ENT-657 (R-12/2008)
  • 22. 3-7-5 Story Ken & Patty Sources of Income Re-Engineering Retirement Expenses Welfare – charity Legacy Continued Employment $280,000 NQA (25 years @ 5% return) Desired Roth IRA None $120,000 annuity $20,000 Traditional IRA $500,000 Qualified $6,000 $6,000 ERISA Patty’s pension plan Survival $6,000 $36,000 Social Security $24,000 $24,000 5% Rate of return is for illustrative purposes only. Guarantees are backed by the financial strength and claims paying ability of the issuing company. 22 ENT-657 (R-12/2008)
  • 23. 3-7-5 Story Ken & Patty Sources of Income Re-Engineering Retirement Expenses Welfare – charity Continued Employment Legacy Work part-time until age 70 $280,000 NQA (25 years @ 5% return) Desired Roth IRA None $120,000 annuity $20,000 Traditional IRA $500,000 Qualified $6,000 $6,000 ERISA Patty’s pension plan Survival $6,000 $36,000 Social Security $24,000 $24,000 Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates. 23 ENT-657 (R-12/2008)
  • 24. 3-7-5 Story Ken & Patty Sources of Income Re-Engineering Retirement Expenses Welfare – charity Roth IRA Continued Employment Legacy Work part-time until age 70 $280,000 NQA (25 years @ 5% return) From nonqualified $1,750 Desired Roth IRA From IRA IRA RMD $18,250 $120,000 annuity $20,000 Traditional IRA IRA $500,000 Qualified $6,000 $6,000 ERISA Patty’s pension plan Survival $6,000 $36,000 Social Security $24,000 $24,000 Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates. 24 ENT-657 (R-12/2008)
  • 25. 3-7-5 Strategy But what if …? 25 ENT-657 (R-12/2008)
  • 26. 3-7-5 Strategy 5 Options to improve income Sources of Income Options Expenses Welfare – charity Lower your expectations Legacy Continued Employment Spend less and save Nonqualified Assets more now Roth IRA Decide to work longer. Desired Traditional IRA Take on more investment risk Company retirement programs Survival Social Security Combination (or all) of above 26 ENT-657 (R-12/2008)
  • 27. 3-7-5 Strategy Current standard 5 Options at work of living $ needed to supplement income $ now (401(k)) $ additional (401(k)) $ more Retirement 0% 8 -1 % ive 6 - 8 Combination of all options ss e - 6% gre derat tive 4 Ag Mo rv a Co nse 70? 45 Age 65 Time This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility. 27 ENT-657 (R-12/2008)
  • 28. 3-7-5 Strategy 5 Options at work Current standard of living Combination of all options $ needed to supplement income $ additional (401(k)) $ more 6 - 8% de rate 4- 6% Mo ve ervati C ons 45 Age 65 68? Time This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility. 28 ENT-657 (R-12/2008)
  • 29. Summary Many people approaching retirement are worried about their financial security in retirement Evaluate how well your retirement expenses match up with your retirement income Re-Engineering Retirement can help you successfully transition from accumulation to income 29 ENT-657 (R-12/2008)
  • 30. What is the next step? 30 ENT-657 (R-12/2008)
  • 31. Next steps Next steps? ● Lets meet for an analysis and recommendations ● Analysis and anticipated retirement expenses compared to anticipated retirement income ● Recommendations for positioning thf ese? DFs o resources to help enhance income have P D o we designed to compensate for an ● Options (if needed) anticipated shortfall of income This analysis is not a comprehensive financial or retirement plan. Planning services are available at additional cost and offered only by appropriately licensed registered investment advisors. 31 ENT-657 (R-12/2008)
  • 32. Thank you! Not FDIC insured  May lose value  No bank or credit guarantee  Not a deposit  Not insured by any federal government agency or NCUA/NCUSIF USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. © Copyright 2008 Allianz. All rights reserved.

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