SlideShare a Scribd company logo
1 of 42
Download to read offline
Session # V610
#V610
The Veterinarian’s Retirement Plan II
Contact Information
Mark J. McGaunn, CPA/PFS, CFP®
Managing Member
McGaunn & Schwadron, CPA’s, LLC
75 2nd, Avenue, Suite 425
Needham Heights, MA 02494-2897
main (781) 489-6651
direct (781) 348-9227
e-fax (781) 479-5985
e-mail mark@mcgaunnschwadron.com
web: www.mcgaunnschwadron.com.com
Session Goals
Scenarios
• New practice owners
• Contemplating buying
• Mid-stream owners
• Owners nearing
retirement age
Tools
• Fee-only planning
• Cost-effective investing
• Risk management
• Retirement Plans
• Funding Mechanisms
• Practical Applications
What is Retirement?
• Different interpretation to any person
• Changed idea from 5 years ago even
• Retirement meant “easy street”
• Not so sure after 2008
• So don’t look back
Charles Schwab Real Life
Retirement Survey 11/2/2009
• 52% getting more involved in retirement
planning-increased self-reliance
• 48% of Gen Y (48 percent) and 53% Gen
X have increased 401(k) contributions.
• Among 40% of Older Boomers and Gen Y,
plan to postpone their retirement date.
• 47% of workers aged 65 and older are
prepared to work during retirement.
Older Boomers (1945-1954); Younger Boomers (1955-1964)
Gen X (1965-1974) and Gen Y (post1975).
Associates Contemplating
Ownership
Gen Y consider finances more important
than:
1. taking steps to protect environment,
2. improve their physical health and nutrition
3. strengthening bonds with family and
friends.
On Cusp of Gen Y
• Just graduated from veterinary school
• May have student and car loans to pay
• Considering marriage or starting a family.
Key = manage outflows since inflows fixed.
Effectively manage your debt while
developing some basic savings habits.
Scared By Debt
• Recent UC Davis Study-Average veterinary
school graduate debt is $110,691 in 2009.
• PhD level researchers w/ > $250,000 debt.
• Veterinarians are not alone.
• Ensure your school loans are consolidated.
• May reduce interest rate with no hassle
managing multiple loans.
Save Now & Save Often
1. Need financial “consulting” over planning-general
framework.
2. Watch your spending. Use Quicken or Mint.com.
3. Investigate 401(k) plans and save an affordable
amount each pay period. Or start IRA or ROTH IRA
account.
4. Watch your lifestyle. You should enjoy life
moderately.
5. Non-practice owning veterinarians might prioritize
their savings goals as: (1) house; (2) children's
college education; (3) retirement.
Skills to Learn
• Negotiating employment
contracts,
• understanding taxes,
evaluating benefit packages,
• choosing insurance plans,
• managing debt,
• developing good saving and
spending habits,
• investing for the long-term
More
elements of
sound
financial
planning for
a new
associate
veterinarian!!!
New Associate Allocation?
High Risk High Return
70% Stocks/30% Bonds
10% S&P 500
10% Small Cap
10% REIT
10% Int’l Large Cap
0% Int’l Small Cap
10% Emerging Mkts
10% Precious Metals
30% Short Term Bonds
Source: William Bernstein
New Practice Owners
• Maybe most important point of career.
• Create your own practice, or buy into an
existing veterinary hospital,
• Perfect time to get serious about planning.
• Earnings may also be tempered by the
debt load of the practice buy-in or
acquisition.
• Must still manage expenses cautiously.
Focus on Protection
• Periodically review your all insurance
plans to ensure you have the most
appropriate coverage for your own
situation (life, disability, umbrella).
• While maybe provided by practice,
analyze your coverage and compare that
to your specific needs.
• Have estate planning in order
Education Plans
Private school or college? Or both?
• IRC Section 529 Plans
• IRC Section 2503(c) trusts
• Coverdell ESA IRA
can be an effective means of secure
funding for education.
Investment Philosophy
• Level of risk are you comfortable with?
• How aggressive do the investments need
to be to meet your goals?
• What tax implications are in play?
• What is your time horizon before
retirement?
• Are you saving for multiple goals?
Sample New Practice Owners
80% Stock/20% Bonds
25% Total US Stocks
25% S&P 500 Index
15% For. Dev. Equity
5% Emerging Markets
5% Real Estate
20% Cash
Source: Ben Stein Model Portfolio
Owners in Mid-stream
Worried Practice Owners!
1. 61% not letting recession change plans for
children's college education
2. 47% say college plans are a higher priority
than retirement savings @ 41%.
2009 survey by Country Financial and Rasmussen Reports, LLC.
More Data
• Marks 1st time in 3 years majority of
parents putting college before retirement.
• 50% of men more likely to put kid’s
education ahead of retirement (women
38%)
• Always borrow for college not retirement!!!
• 67% kids have no clue true college cost
Tips for College
What to remember:
• Be well-diversified
portfolio.
• Short accumulation
window
• Shorter distribution years
• Invest at proper risk level
for child’s age.
• Many college investment
methods offer age-based
models.
Utah (529)Educational Savings
Plan
50 year-old practice owner
Makes a $16,500 annual 401(k) contribution for 12 years until
retirement Still has potentially $342,000 at retirement
B
Same 50 year-old practice owner
Contributes max. $16,500 annual 401(k) contribution
for 12 years with $5,500 catch-up contribution plus a
corporate match of up to $32,500. Potential $1.13 million
at retirement.
Sample Mid-Life Approach
70% Stock 30%Bond
30% Domestic Equity
15% For. Dev. Equity
5% Emerging Markets
20% Real Estate
15% U.S. T-Bonds
15% TIPS
Source: David Swensen, Yale Endowment Manager
Owners Nearing Retirement
1. Picture your retirement
2. Evaluate your expenses
3. Identify your sources of income
4. Know employer plan options
5. Other potential income sources
6. Prepare your portfolio
7. Countdown to retirement checklists
Major Issue-Health Care
• Employee Benefit Research Institute study notes that a
65 year old man who retires in 2009 will need between
$68,000 and $173,000 (females $98,000 and $242,000)
in current savings to have a 50% probability of covering
out of pocket health premiums and non-covered medical
expenses, or between $134,000 and $378,000 ((females
$164,000 and $450,000) in current savings to have a
90% probability of covering those same expenses.
• The range variability is due to whether
former employers subsidize healthcare
insurance and if the retiree maintains
Medigap and part D Medicare coverage.
Male to female disparities generally arise
from females having longer life
expectancies.
Income & Spending Plan
• Financial services industry prefers
investors strive for an 80% replacement
rate of pre-retirement income is required
• Is that realistic?
• Start thinking about how much you’re
going to spend from your investments
each year.
Withdrawal Rate Variables
1. rate of return,
2. initial withdrawal amount,
3. inflation rate.
Life Expectancy
Source: Bureau of Labor and Statistics 2009
Journal of Occupational
Health Psychology 9/09
• Older people who hold temporary or part-
time jobs after retirement enjoy better
physical and mental health than those who
stop working entirely(31% better, 17%
fewer major diseases)
• Those continuing to work in original field
have better mental health than those who
change fields, according to the study
Postponing Retirement
• 36% due to poor economy
• 28% due to stock market losses
• 24% making sure have enough money
• 9% due to cost of living more than planned
• 3% still want to keep working
Source: Employee Benefit Research Institute and Mathew Greenwald
& Associates, Inc., 1994–2009 Retirement Confidence Surveys.
• A National Association of Personal
Financial Advisors presentation in July
2009 updated older research to now state
that a 5.2% to 5.5% rate of withdrawal
from retirement savings could be
sustained for 40 years of retirement if
certain equity allocations and other rules
were followed.
Anticipate Shortfall?
• Trim your spending. Rein in your budget by looking at
your day-to-day spending. Buy a less expensive car,
dine out less often, and take fewer, less $$ vacations.
• Redefine the term “retired”. 7 in 10 Americans ages 45-
74 say they plan to work in retirement or never retire,
according to AARP. By working a few more years, you
can save more, collect medical and insurance benefits
through your employer, and help improve your finances
just by working part-time.
• Downsize your home-less expensive one, rent an
apartment, or move to a more affordable community.
• Buy an income annuity. Add-on features may be
expensive though.
• Investments
• Review your investment strategy. In these
years before you retire, it’s important to
determine whether your portfolio will be
large enough to support your needs
throughout retirement. Your asset
allocation depends on several factors,
including your investment objective, time
horizon, risk tolerance, and personal
situation.
• If you already have a balanced mix of stocks, bonds, and
cash investments, and your financial advisor has been
helping you adjust this mix through the years, you may
not need to change your portfolio when you retire. Many
retirees feel they have to switch their portfolios to a very
conservative asset mix, emphasizing bonds and money
market securities, to help to generate current income
and protect their assets from decline. But such a strategy
also limits the potential for the assets to grow and keep
pace with inflation. Because you could live for 30 or
more years in retirement, your advisor will probably
suggest that you keep at least a portion of your
investment portfolio in stocks for long-term growth.
A Better Retirement
Worker Responses to Prepare?
• 81% reducing expenses
• 43% changing investment model
• 38% working more
• 25% saving more
• 25% sought help from financial professional
Source: Employee Benefit Research Institute and Mathew Greenwald
& Associates, Inc., 1994–2009 Retirement Confidence Surveys.
Simplify Your Portfolio
• Consolidating assets with 1 institution
• Easier to manage portfolio
• Reduces overall documents you receive.
• Eases transition if you die or become
incapacitated, especially for executors and
trustees who need to administer assets.
Owners Nearing Retirement
Asset Allocation For 60%
Stocks/40% Bonds
6% S&P 500
6% US Large Value
6% US Small
6% US Small Value
6% REIT
12% Int’l Dev. (Pac /Eur)
12% Int’l Value
6% Emerging Markets
20% Inter. Term Bonds
12% Short Term Bonds
8% (TIPS)
Source: Paul Merriman at FundAdvice)
Gold Watch in 5 Years?
• Discuss retirement plans with spouse.
• Prepare a realistic retirement budget.
• Review current employer pension & benefits.
• Determine add’l health care & LTC needs.
• Compare projected income with expenses.
More Last Minute Maneuvers
• Assess the portfolio adequacy
• Increase retirement plan contributions and
taxable account savings, if necessary.
• Pay off employer retirement plan loans.
• Review your preparations at least annually
and adjust as necessary.
• Make catch-up contributions to your
employer-sponsored plan or IRA.
Thank You!
谢谢
Merci
Danke Schon
Grazie
ありがとう
당신을 감사하십시오
Obrigado
Gracias
Contact Information
Mark J. McGaunn, CPA/PFS, CFP®
Managing Member
McGaunn & Schwadron, CPA’s, LLC
75 2nd, Avenue, Suite 425
Needham Heights, MA 02494-2897
main (781) 489-6651
direct (781) 348-9227
e-fax (781) 479-5985
e-mail mark@mcgaunnschwadron.com
web: www.mcgaunnschwadron.com.com

More Related Content

What's hot

Measuring Benefit Adequacy: How Employers Can Support HR Policy
Measuring Benefit Adequacy: How Employers Can Support HR PolicyMeasuring Benefit Adequacy: How Employers Can Support HR Policy
Measuring Benefit Adequacy: How Employers Can Support HR PolicyThe 401k Study Group ®
 
5 Actions for Financially happy family
5 Actions for Financially happy family5 Actions for Financially happy family
5 Actions for Financially happy familyDyota Solutions
 
Navigating Your Financial Future
Navigating Your Financial FutureNavigating Your Financial Future
Navigating Your Financial Futuregrant_ackerman
 
Retirement Considerations, March 18, 2014
Retirement Considerations, March 18, 2014Retirement Considerations, March 18, 2014
Retirement Considerations, March 18, 2014UO-AcademicAffairs
 
What is your retirement GAP?
What is your retirement GAP?What is your retirement GAP?
What is your retirement GAP?streeterg
 
Human Resources Perspective: A Survey of Larger 401(k) Plans
Human Resources Perspective: A Survey of Larger 401(k) PlansHuman Resources Perspective: A Survey of Larger 401(k) Plans
Human Resources Perspective: A Survey of Larger 401(k) PlansT. Rowe Price
 
A Retirement Income Roadmap for Women
A Retirement Income Roadmap for WomenA Retirement Income Roadmap for Women
A Retirement Income Roadmap for WomenDolf Dunn
 
Putnam Lifetime Income Survey 2013
Putnam Lifetime Income Survey 2013Putnam Lifetime Income Survey 2013
Putnam Lifetime Income Survey 2013Putnam Investments
 
Smart money: The Missed Opportunities in Your Existing Client Book
Smart money: The Missed Opportunities in Your Existing Client BookSmart money: The Missed Opportunities in Your Existing Client Book
Smart money: The Missed Opportunities in Your Existing Client BookChip Milner
 
Need and Types of Retirement Plans
Need and Types of Retirement PlansNeed and Types of Retirement Plans
Need and Types of Retirement Planssjain06
 

What's hot (19)

SCA_PP_BENEFITS_5.20
SCA_PP_BENEFITS_5.20SCA_PP_BENEFITS_5.20
SCA_PP_BENEFITS_5.20
 
DC Research Hyperbolic Discounting
DC Research Hyperbolic DiscountingDC Research Hyperbolic Discounting
DC Research Hyperbolic Discounting
 
Measuring Benefit Adequacy: How Employers Can Support HR Policy
Measuring Benefit Adequacy: How Employers Can Support HR PolicyMeasuring Benefit Adequacy: How Employers Can Support HR Policy
Measuring Benefit Adequacy: How Employers Can Support HR Policy
 
5 Actions for Financially happy family
5 Actions for Financially happy family5 Actions for Financially happy family
5 Actions for Financially happy family
 
Financial planning 101
Financial planning 101Financial planning 101
Financial planning 101
 
Navigating Your Financial Future
Navigating Your Financial FutureNavigating Your Financial Future
Navigating Your Financial Future
 
Retirement Planning presentation
Retirement Planning presentationRetirement Planning presentation
Retirement Planning presentation
 
Retirement Considerations, March 18, 2014
Retirement Considerations, March 18, 2014Retirement Considerations, March 18, 2014
Retirement Considerations, March 18, 2014
 
What is your retirement GAP?
What is your retirement GAP?What is your retirement GAP?
What is your retirement GAP?
 
Human Resources Perspective: A Survey of Larger 401(k) Plans
Human Resources Perspective: A Survey of Larger 401(k) PlansHuman Resources Perspective: A Survey of Larger 401(k) Plans
Human Resources Perspective: A Survey of Larger 401(k) Plans
 
Frozen pension 1
Frozen pension 1Frozen pension 1
Frozen pension 1
 
A Retirement Income Roadmap for Women
A Retirement Income Roadmap for WomenA Retirement Income Roadmap for Women
A Retirement Income Roadmap for Women
 
Retirement Planning
Retirement PlanningRetirement Planning
Retirement Planning
 
Putnam Lifetime Income Survey 2013
Putnam Lifetime Income Survey 2013Putnam Lifetime Income Survey 2013
Putnam Lifetime Income Survey 2013
 
Smart money: The Missed Opportunities in Your Existing Client Book
Smart money: The Missed Opportunities in Your Existing Client BookSmart money: The Missed Opportunities in Your Existing Client Book
Smart money: The Missed Opportunities in Your Existing Client Book
 
Roadmap to Retirement
Roadmap to RetirementRoadmap to Retirement
Roadmap to Retirement
 
Money Matters
Money MattersMoney Matters
Money Matters
 
Women Seminar
Women SeminarWomen Seminar
Women Seminar
 
Need and Types of Retirement Plans
Need and Types of Retirement PlansNeed and Types of Retirement Plans
Need and Types of Retirement Plans
 

Viewers also liked

8 Key Risks of Retirement Planning
8 Key Risks of Retirement Planning8 Key Risks of Retirement Planning
8 Key Risks of Retirement Planninggalileoplanning
 
Are canadians under insured in canada?
Are canadians under insured in canada?Are canadians under insured in canada?
Are canadians under insured in canada?Solutions Financial
 
Jefferies claims WFG Investments did not have permission
Jefferies claims WFG Investments did not have permissionJefferies claims WFG Investments did not have permission
Jefferies claims WFG Investments did not have permissionSusan Harriman
 
Retirement Planning PPT
Retirement Planning PPTRetirement Planning PPT
Retirement Planning PPTmbachnak
 
Retirement Planning
Retirement PlanningRetirement Planning
Retirement PlanningJohn Daniel
 

Viewers also liked (8)

8 Key Risks of Retirement Planning
8 Key Risks of Retirement Planning8 Key Risks of Retirement Planning
8 Key Risks of Retirement Planning
 
Retirement planning
Retirement planningRetirement planning
Retirement planning
 
Are canadians under insured in canada?
Are canadians under insured in canada?Are canadians under insured in canada?
Are canadians under insured in canada?
 
Jefferies claims WFG Investments did not have permission
Jefferies claims WFG Investments did not have permissionJefferies claims WFG Investments did not have permission
Jefferies claims WFG Investments did not have permission
 
Retirement planning
Retirement planningRetirement planning
Retirement planning
 
Retirement Planning PPT
Retirement Planning PPTRetirement Planning PPT
Retirement Planning PPT
 
Retirement Planning
Retirement PlanningRetirement Planning
Retirement Planning
 
Retirement Planning
Retirement PlanningRetirement Planning
Retirement Planning
 

Similar to A Veterinarian's Guide To Future Financial Planning & Retirement, Part II

Roadmap to Retirement Client Brochure
Roadmap to Retirement Client BrochureRoadmap to Retirement Client Brochure
Roadmap to Retirement Client BrochureXML Financial Group
 
Catch-up Retirement Savings Strategies-06-17
Catch-up Retirement Savings Strategies-06-17Catch-up Retirement Savings Strategies-06-17
Catch-up Retirement Savings Strategies-06-17Barbara O'Neill
 
Linked in addon ret readiness wrkshp pres 0614
Linked in addon   ret readiness wrkshp pres 0614Linked in addon   ret readiness wrkshp pres 0614
Linked in addon ret readiness wrkshp pres 0614Brig De León, CRPC®
 
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...Adam Nash
 
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...Adam Nash
 
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & Goals
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & GoalsStanford CS 007-08: Personal Finance for Engineers / Financial Planning & Goals
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & GoalsAdam Nash
 
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...Adam Nash
 
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...Adam Nash
 
Catch-Up Retirement Savings Strategies
Catch-Up Retirement Savings StrategiesCatch-Up Retirement Savings Strategies
Catch-Up Retirement Savings Strategiesmilfamln
 
Is Your Retirement At Risk In Today's Economy?
Is Your Retirement At Risk In Today's Economy?Is Your Retirement At Risk In Today's Economy?
Is Your Retirement At Risk In Today's Economy?Neal Mandelbaum
 
Choose Your Destination
Choose Your DestinationChoose Your Destination
Choose Your Destinationdanatarzia
 
Smart tips to prepare for an active retirement in 2024
Smart tips to prepare for an active retirement in 2024Smart tips to prepare for an active retirement in 2024
Smart tips to prepare for an active retirement in 2024Connect55+
 
What Young Adults Need to Know About Retirement
What Young Adults Need to Know About RetirementWhat Young Adults Need to Know About Retirement
What Young Adults Need to Know About RetirementBarbara O'Neill
 

Similar to A Veterinarian's Guide To Future Financial Planning & Retirement, Part II (20)

THE CENTENNIAL: 2016 Q2 Plan Sponsor Newsletter
THE CENTENNIAL: 2016 Q2 Plan Sponsor NewsletterTHE CENTENNIAL: 2016 Q2 Plan Sponsor Newsletter
THE CENTENNIAL: 2016 Q2 Plan Sponsor Newsletter
 
Roadmap to Retirement Client Brochure
Roadmap to Retirement Client BrochureRoadmap to Retirement Client Brochure
Roadmap to Retirement Client Brochure
 
Catch-up Retirement Savings Strategies-06-17
Catch-up Retirement Savings Strategies-06-17Catch-up Retirement Savings Strategies-06-17
Catch-up Retirement Savings Strategies-06-17
 
Linked in addon ret readiness wrkshp pres 0614
Linked in addon   ret readiness wrkshp pres 0614Linked in addon   ret readiness wrkshp pres 0614
Linked in addon ret readiness wrkshp pres 0614
 
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2019): Personal Finance for Engineers / Financial Plannin...
 
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2020): Personal Finance for Engineers / Financial Plannin...
 
Retire Ready
Retire ReadyRetire Ready
Retire Ready
 
Addressing Retirement Readiness
Addressing Retirement ReadinessAddressing Retirement Readiness
Addressing Retirement Readiness
 
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & Goals
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & GoalsStanford CS 007-08: Personal Finance for Engineers / Financial Planning & Goals
Stanford CS 007-08: Personal Finance for Engineers / Financial Planning & Goals
 
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2018): Personal Finance for Engineers / Financial Plannin...
 
Preparing for Retierment
Preparing for RetiermentPreparing for Retierment
Preparing for Retierment
 
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...
Stanford CS 007-08 (2021): Personal Finance for Engineers / Financial Plannin...
 
Catch-Up Retirement Savings Strategies
Catch-Up Retirement Savings StrategiesCatch-Up Retirement Savings Strategies
Catch-Up Retirement Savings Strategies
 
Is Your Retirement At Risk In Today's Economy?
Is Your Retirement At Risk In Today's Economy?Is Your Retirement At Risk In Today's Economy?
Is Your Retirement At Risk In Today's Economy?
 
Choose Your Destination
Choose Your DestinationChoose Your Destination
Choose Your Destination
 
Smart tips to prepare for an active retirement in 2024
Smart tips to prepare for an active retirement in 2024Smart tips to prepare for an active retirement in 2024
Smart tips to prepare for an active retirement in 2024
 
Retire Ready.ppt
Retire Ready.pptRetire Ready.ppt
Retire Ready.ppt
 
What Young Adults Need to Know About Retirement
What Young Adults Need to Know About RetirementWhat Young Adults Need to Know About Retirement
What Young Adults Need to Know About Retirement
 
AIA LTC Presentation
AIA LTC PresentationAIA LTC Presentation
AIA LTC Presentation
 
Changing Landscape: Are Aging Baby Boomers Ready for Retirement?
Changing Landscape: Are Aging Baby Boomers Ready for Retirement?Changing Landscape: Are Aging Baby Boomers Ready for Retirement?
Changing Landscape: Are Aging Baby Boomers Ready for Retirement?
 

Recently uploaded

Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfSCBEICSCB
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfMichael Silva
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTindexPub
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMFaisal834049
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoCoinGecko
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 

Recently uploaded (20)

Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
E-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in GhanaE-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in Ghana
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdf
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdf
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Mobile Money Taxes: Knowledge, Perceptions and Politics: The Case of Ghana
Mobile Money Taxes: Knowledge, Perceptions and Politics: The Case of GhanaMobile Money Taxes: Knowledge, Perceptions and Politics: The Case of Ghana
Mobile Money Taxes: Knowledge, Perceptions and Politics: The Case of Ghana
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
 
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
Effects & Policies Of Bank Consolidation
Effects & Policies Of Bank ConsolidationEffects & Policies Of Bank Consolidation
Effects & Policies Of Bank Consolidation
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 

A Veterinarian's Guide To Future Financial Planning & Retirement, Part II

  • 1. Session # V610 #V610 The Veterinarian’s Retirement Plan II
  • 2. Contact Information Mark J. McGaunn, CPA/PFS, CFP® Managing Member McGaunn & Schwadron, CPA’s, LLC 75 2nd, Avenue, Suite 425 Needham Heights, MA 02494-2897 main (781) 489-6651 direct (781) 348-9227 e-fax (781) 479-5985 e-mail mark@mcgaunnschwadron.com web: www.mcgaunnschwadron.com.com
  • 3. Session Goals Scenarios • New practice owners • Contemplating buying • Mid-stream owners • Owners nearing retirement age Tools • Fee-only planning • Cost-effective investing • Risk management • Retirement Plans • Funding Mechanisms • Practical Applications
  • 4. What is Retirement? • Different interpretation to any person • Changed idea from 5 years ago even • Retirement meant “easy street” • Not so sure after 2008 • So don’t look back
  • 5. Charles Schwab Real Life Retirement Survey 11/2/2009 • 52% getting more involved in retirement planning-increased self-reliance • 48% of Gen Y (48 percent) and 53% Gen X have increased 401(k) contributions. • Among 40% of Older Boomers and Gen Y, plan to postpone their retirement date. • 47% of workers aged 65 and older are prepared to work during retirement. Older Boomers (1945-1954); Younger Boomers (1955-1964) Gen X (1965-1974) and Gen Y (post1975).
  • 6. Associates Contemplating Ownership Gen Y consider finances more important than: 1. taking steps to protect environment, 2. improve their physical health and nutrition 3. strengthening bonds with family and friends.
  • 7. On Cusp of Gen Y • Just graduated from veterinary school • May have student and car loans to pay • Considering marriage or starting a family. Key = manage outflows since inflows fixed. Effectively manage your debt while developing some basic savings habits.
  • 8. Scared By Debt • Recent UC Davis Study-Average veterinary school graduate debt is $110,691 in 2009. • PhD level researchers w/ > $250,000 debt. • Veterinarians are not alone. • Ensure your school loans are consolidated. • May reduce interest rate with no hassle managing multiple loans.
  • 9. Save Now & Save Often 1. Need financial “consulting” over planning-general framework. 2. Watch your spending. Use Quicken or Mint.com. 3. Investigate 401(k) plans and save an affordable amount each pay period. Or start IRA or ROTH IRA account. 4. Watch your lifestyle. You should enjoy life moderately. 5. Non-practice owning veterinarians might prioritize their savings goals as: (1) house; (2) children's college education; (3) retirement.
  • 10. Skills to Learn • Negotiating employment contracts, • understanding taxes, evaluating benefit packages, • choosing insurance plans, • managing debt, • developing good saving and spending habits, • investing for the long-term More elements of sound financial planning for a new associate veterinarian!!!
  • 11. New Associate Allocation? High Risk High Return 70% Stocks/30% Bonds 10% S&P 500 10% Small Cap 10% REIT 10% Int’l Large Cap 0% Int’l Small Cap 10% Emerging Mkts 10% Precious Metals 30% Short Term Bonds Source: William Bernstein
  • 12. New Practice Owners • Maybe most important point of career. • Create your own practice, or buy into an existing veterinary hospital, • Perfect time to get serious about planning. • Earnings may also be tempered by the debt load of the practice buy-in or acquisition. • Must still manage expenses cautiously.
  • 13. Focus on Protection • Periodically review your all insurance plans to ensure you have the most appropriate coverage for your own situation (life, disability, umbrella). • While maybe provided by practice, analyze your coverage and compare that to your specific needs. • Have estate planning in order
  • 14. Education Plans Private school or college? Or both? • IRC Section 529 Plans • IRC Section 2503(c) trusts • Coverdell ESA IRA can be an effective means of secure funding for education.
  • 15. Investment Philosophy • Level of risk are you comfortable with? • How aggressive do the investments need to be to meet your goals? • What tax implications are in play? • What is your time horizon before retirement? • Are you saving for multiple goals?
  • 16. Sample New Practice Owners 80% Stock/20% Bonds 25% Total US Stocks 25% S&P 500 Index 15% For. Dev. Equity 5% Emerging Markets 5% Real Estate 20% Cash Source: Ben Stein Model Portfolio
  • 17. Owners in Mid-stream Worried Practice Owners! 1. 61% not letting recession change plans for children's college education 2. 47% say college plans are a higher priority than retirement savings @ 41%. 2009 survey by Country Financial and Rasmussen Reports, LLC.
  • 18. More Data • Marks 1st time in 3 years majority of parents putting college before retirement. • 50% of men more likely to put kid’s education ahead of retirement (women 38%) • Always borrow for college not retirement!!! • 67% kids have no clue true college cost
  • 19. Tips for College What to remember: • Be well-diversified portfolio. • Short accumulation window • Shorter distribution years • Invest at proper risk level for child’s age. • Many college investment methods offer age-based models.
  • 21. 50 year-old practice owner Makes a $16,500 annual 401(k) contribution for 12 years until retirement Still has potentially $342,000 at retirement B
  • 22. Same 50 year-old practice owner Contributes max. $16,500 annual 401(k) contribution for 12 years with $5,500 catch-up contribution plus a corporate match of up to $32,500. Potential $1.13 million at retirement.
  • 23. Sample Mid-Life Approach 70% Stock 30%Bond 30% Domestic Equity 15% For. Dev. Equity 5% Emerging Markets 20% Real Estate 15% U.S. T-Bonds 15% TIPS Source: David Swensen, Yale Endowment Manager
  • 24. Owners Nearing Retirement 1. Picture your retirement 2. Evaluate your expenses 3. Identify your sources of income 4. Know employer plan options 5. Other potential income sources 6. Prepare your portfolio 7. Countdown to retirement checklists
  • 25. Major Issue-Health Care • Employee Benefit Research Institute study notes that a 65 year old man who retires in 2009 will need between $68,000 and $173,000 (females $98,000 and $242,000) in current savings to have a 50% probability of covering out of pocket health premiums and non-covered medical expenses, or between $134,000 and $378,000 ((females $164,000 and $450,000) in current savings to have a 90% probability of covering those same expenses.
  • 26. • The range variability is due to whether former employers subsidize healthcare insurance and if the retiree maintains Medigap and part D Medicare coverage. Male to female disparities generally arise from females having longer life expectancies.
  • 27. Income & Spending Plan • Financial services industry prefers investors strive for an 80% replacement rate of pre-retirement income is required • Is that realistic? • Start thinking about how much you’re going to spend from your investments each year.
  • 28. Withdrawal Rate Variables 1. rate of return, 2. initial withdrawal amount, 3. inflation rate.
  • 29. Life Expectancy Source: Bureau of Labor and Statistics 2009
  • 30. Journal of Occupational Health Psychology 9/09 • Older people who hold temporary or part- time jobs after retirement enjoy better physical and mental health than those who stop working entirely(31% better, 17% fewer major diseases) • Those continuing to work in original field have better mental health than those who change fields, according to the study
  • 31. Postponing Retirement • 36% due to poor economy • 28% due to stock market losses • 24% making sure have enough money • 9% due to cost of living more than planned • 3% still want to keep working Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1994–2009 Retirement Confidence Surveys.
  • 32. • A National Association of Personal Financial Advisors presentation in July 2009 updated older research to now state that a 5.2% to 5.5% rate of withdrawal from retirement savings could be sustained for 40 years of retirement if certain equity allocations and other rules were followed.
  • 33. Anticipate Shortfall? • Trim your spending. Rein in your budget by looking at your day-to-day spending. Buy a less expensive car, dine out less often, and take fewer, less $$ vacations. • Redefine the term “retired”. 7 in 10 Americans ages 45- 74 say they plan to work in retirement or never retire, according to AARP. By working a few more years, you can save more, collect medical and insurance benefits through your employer, and help improve your finances just by working part-time. • Downsize your home-less expensive one, rent an apartment, or move to a more affordable community. • Buy an income annuity. Add-on features may be expensive though.
  • 34. • Investments • Review your investment strategy. In these years before you retire, it’s important to determine whether your portfolio will be large enough to support your needs throughout retirement. Your asset allocation depends on several factors, including your investment objective, time horizon, risk tolerance, and personal situation.
  • 35. • If you already have a balanced mix of stocks, bonds, and cash investments, and your financial advisor has been helping you adjust this mix through the years, you may not need to change your portfolio when you retire. Many retirees feel they have to switch their portfolios to a very conservative asset mix, emphasizing bonds and money market securities, to help to generate current income and protect their assets from decline. But such a strategy also limits the potential for the assets to grow and keep pace with inflation. Because you could live for 30 or more years in retirement, your advisor will probably suggest that you keep at least a portion of your investment portfolio in stocks for long-term growth.
  • 36. A Better Retirement Worker Responses to Prepare? • 81% reducing expenses • 43% changing investment model • 38% working more • 25% saving more • 25% sought help from financial professional Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1994–2009 Retirement Confidence Surveys.
  • 37. Simplify Your Portfolio • Consolidating assets with 1 institution • Easier to manage portfolio • Reduces overall documents you receive. • Eases transition if you die or become incapacitated, especially for executors and trustees who need to administer assets.
  • 38. Owners Nearing Retirement Asset Allocation For 60% Stocks/40% Bonds 6% S&P 500 6% US Large Value 6% US Small 6% US Small Value 6% REIT 12% Int’l Dev. (Pac /Eur) 12% Int’l Value 6% Emerging Markets 20% Inter. Term Bonds 12% Short Term Bonds 8% (TIPS) Source: Paul Merriman at FundAdvice)
  • 39. Gold Watch in 5 Years? • Discuss retirement plans with spouse. • Prepare a realistic retirement budget. • Review current employer pension & benefits. • Determine add’l health care & LTC needs. • Compare projected income with expenses.
  • 40. More Last Minute Maneuvers • Assess the portfolio adequacy • Increase retirement plan contributions and taxable account savings, if necessary. • Pay off employer retirement plan loans. • Review your preparations at least annually and adjust as necessary. • Make catch-up contributions to your employer-sponsored plan or IRA.
  • 42. Contact Information Mark J. McGaunn, CPA/PFS, CFP® Managing Member McGaunn & Schwadron, CPA’s, LLC 75 2nd, Avenue, Suite 425 Needham Heights, MA 02494-2897 main (781) 489-6651 direct (781) 348-9227 e-fax (781) 479-5985 e-mail mark@mcgaunnschwadron.com web: www.mcgaunnschwadron.com.com