Q2 2013 participant review
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  • NOTE ABOUT SPEAKER NOTES: Content in the speaker notes section are not meant to be used as scripts and SHOULD NOT be distributed to clients. Instead, they’re supposed to provide general concepts expressed by the material, explanations of specific services and capabilities, and suggestions for expressing these ideas effectively. You may replace content in these speaker’s notes with your own language that reflects the concepts being expressed.
  • The purpose of this section is to demonstrate our client-focused approach by showing that we’ve done our homework to identify what we know about their financial challenges and objectives and what we can do to address them.
  • The purpose of this section is to demonstrate our client-focused approach by showing that we’ve done our homework to identify what we know about their financial challenges and objectives and what we can do to address them.
  • The purpose of this section is to demonstrate our client-focused approach by showing that we’ve done our homework to identify what we know about their financial challenges and objectives and what we can do to address them.

Q2 2013 participant review Presentation Transcript

  • 1. 1 |April 30, 2013Presentation by:Steven ScottManaging PartnerRetirement Solution Group, LLCTo the Participants of RSG401(k) UpdateFeeling the Good Old Times Again“Securities offered through Ausdal Financial Partners, Inc, 220 North Main Street,Davenport, IA, 52801, 563.326.2064, member FINRA, SIPC. Advisory services provided by AusdalFinancial Partners. Retirement Solutions Group and Ausdal Financial Partners, Incare separately owned and operated companies.”
  • 2. 2 |What was the US deficit the day I drafted thispresentation (4/25/13)? (source: Concord Coalition)$2.5 Trillion$12.9 Trillion$16.8 Trillion
  • 3. 3 |Answer: C… Why retirement revenue matters?Think about that for a moment.s U.S. NATIONAL DEBT CLOCK The Outstanding Public Debt as of 25 Apr 2013 at11:45:25 AM GMT is: $16,804,978,813,739.80s The estimated population of the United States is 314,842,110so each citizens share of this debt is $53,375.89.s But does anyone think the craziness is over???Retirement Solution Group
  • 4. 4 |Agendas The Surprising Bulls Q1 Focus Topic: Roth vs. Pre-Tax Deferralss Why the Media is Sometimes Just Terrible…
  • 5. 5 |The Surprising Bull
  • 6. 6 |Markets in 2013 (Source: Morningstar as of 4/26/13)STOCKS: 1-Year Numbers & Q1, Source – Morningstar.com (as of 1/11/13)US Stocks 15.66 % & 11.29 %International Developed Countries, (EAFE) 18.23 % & 9.84 %International Emerging Markets, (EM) 0.63% & - 3.11 %BONDS: YTDCore Bond, 3.09 % & 0.9 %TIPS, YTD 4.94 % & 0.93 %Economic RealityUnemployment as of Q1 2013%•7.6% March 2013•Down 2% since last meetingQ1 2013 GDP growth = 2.5 %
  • 7. 7 |Why?s Washington DC is scared…There is a growing concern on the high probability that we have many millions of elderlyAmericans living in significant poverty in the next few decades:•38% of Americans age 55 and above have less than $10,000 inretirement savings per Fidelity study 2012•US Equities 2000 – 2010 (Source: USA Today)– DJIA - 9.3%– SPX - 24.1%– NASDAQ - 44.2%•401(k) Average Savings is believed to be 6%(Source: 401(k) Help Center, note – estimate)•Fidelity 2012 Study – 8% current deferral average•Fidelity 2012 Study – 12% needed deferral average
  • 8. 8 |What’s New In 2013s Deferral Limits:$17,500 for 2013$5,500 in catch-up contribution for participants 50 or older (Plan dependent)DC Has Been and May Remain Very Active:1. The Fiduciary Standard2. Obama’s “$3 mm Cap”3. Senator Kohl’s Target Date Fund Proposal4. Forced Annuitization5. Forced Savings OptionRetirement Solution Group
  • 9. 9 |Q1 Focus Topic: ROTH vs. Pre-Tax
  • 10. 10 |The Basic Idea…s Traditional 401(k): Since 1978 the government has allowed employees todirect “elective deferrals” salary into employer sponsored retirement plans.The deferrals are a direct reduction of the employees taxable income.Source: ERISAs Roth IRA: In 1998 Roth IRAs were formed and allowed individuals to savemoney in an after tax basis, with the agreement that there would NOT be atax a point of distribution.Source: Wikipedias Roth 401(k): In 2006 the “Roth” idea was brought into employeesponsored plans. Same general concept, but no income limits and theannual contribution limits were set by the 401(k) rules and much higher thanIRAs.Source: ERISARetirement Solution Group
  • 11. 11 |Example 1 – Tax Rate in Retirement is the Same401(k) Comparative: 30 year old who plans on retiring at 65 and 25% tax bracketAccumulation Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Annual contribution (before tax) $10,000 $10,000Adjustment for taxable contributions* -2,500 -0Total annual contribution (after tax) $7,500 $10,000Interest rate (accumulation phase) 8% 8%Term (accumulation phase) 35 35Account value at retirement $1,395,769 $1,861,026Distribution Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Account value at retirement $1,395,769 $1,861,026Term (distribution phase) 30 30Interest rate (distribution phase) 6% 6%Annual income before taxes $101,401 $135,202Annual income tax $0 $33,800After-tax annual income $101,401 $101,401After-tax monthly income $8,450 $8,450
  • 12. 12 |Example 2 – Tax Rate in Retirement is Higher401(k) Comparative: 30 year old who plans on retiring at 65 and 25% tax bracket,but 45% tax bracket at point of retirementAccumulation Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Annual contribution (before tax) $10,000 $10,000Adjustment for taxable contributions* -2,500 -0Total annual contribution (after tax) $7,500 $10,000Interest rate (accumulation phase) 8% 8%Term (accumulation phase) 35 35Account value at retirement $1,395,769 $1,861,026Distribution Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Account value at retirement $1,395,769 $1,861,026Term (distribution phase) 30 30Interest rate (distribution phase) 6% 6%Annual income before taxes $101,401 $135,202Annual income tax $0 $60,841After-tax annual income $101,401 $74,361After-tax monthly income $8,450 $6,197
  • 13. 13 |Example 3 – Tax Rate in Retirement is Lower401(k) Comparative: 30 year old who plans on retiring at 65 and 25% tax bracket,but 15% tax bracket at point of retirementAccumulation Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Annual contribution (before tax) $10,000 $10,000Adjustment for taxable contributions* -2,500 -0Total annual contribution (after tax) $7,500 $10,000Interest rate (accumulation phase) 8% 8%Term (accumulation phase) 35 35Account value at retirement $1,395,769 $1,861,026Distribution Phase Roth 401(k) (Non-Deductible) 401(k) (Deductible)Account value at retirement $1,395,769 $1,861,026Term (distribution phase) 30 30Interest rate (distribution phase) 6% 6%Annual income before taxes $101,401 $135,202Annual income tax $0 $20,280After-tax annual income $101,401 $114,921After-tax monthly income $8,450 $9,577
  • 14. 14 |Why the Media is Sometimes Just Terrible…
  • 15. 15 |Medias The Problem2008 CrashThe 401(k) thing has to work…Unclear pricingHidden feesUnengaged advisors just collecting feesNo standards•These are the reason behind 2012 fee disclosure rulesRetirement Solution Group
  • 16. 16 |Thank You Frontline…s Why they DO NOT “Get It”:1. Comparing the Vanguard S&P 500 vs. an S&P 500 Fund in a 401(k)2. But a 401(k) has a few more moving parts:1. Massive and increasing government compliance2. Annual Audits3. 5500 tax filings4. Active management5. Fiduciary liability6. Daily recordkeeping7. Educational/404(c) requirementsQuestion: If self directed on-line IRAs are cheaper why are the savingsrates in 401(k) plans more than double?Retirement Solution Group
  • 17. 17 |Summarys The Surprising BullStrong Results, but Risk Remainss Q1 Focus: ROTH vs. Pre-TaxKey is Taxess The MediaApples vs. Oranges
  • 18. 18 |So What?Next Steps:s 2013 limits are $17,500 ($23,000 with catch-up provision for those over 50)s What do you own?s Volatility will remains Does it fit?Next Steps:s Save Mores Be More Engageds Create a Retirement Plan CalendarThe DOL says the average American Should Save 12%Note: 3.7% Savings Rate (Source: BEA)Retirement Solution Group“Investments involve risks and potential loss of principal and are not FDIC insured investments.Investments and investments in 401k plans are not guaranteed by the federal government orthe FDIC, they involve risk including but not limited to loss of principal. Opinions expressed arethose of Steve Scott and do not represent the opinions of Ausdal Financial Partners, orRetirement Solution Group, LLC. They are opinion only and should be not considered as standalone advice.”
  • 19. 19 |RSG Participant Support TeamRSG is always available, 866-352-77311. Steve Scott, Managing Partner x 2102. Elvia Sanchez, Education & Relationship Manager (Bi-Lingual) x4103. Christie Cheng, Education & Relationship Manager x3104. Megan Dunne, Associate x2005. Mary Urlich, Participant Transactions x1“Can you help me with my forms?”“I have no idea on these funds, can you help me with that?”“How much should I be saving?”“Not really sure if I am aggressive investor or not, how do I figure that out?”“What is a stock/bond?”“Why do people keep talking about Spanish Bonds Yields?”Retirement Solution Group