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- 1. INCOME PLANNING Retirement Work Shop Retirement Income Planning: Securing your financial Future.
- 2. Notice to All Attendees Retirement U and today’s guest speaker(s) are not affiliated or endorsed by the Social Security Administration or any other governmental agency. The speaker is a licensed insurance professional and does not provide tax or legal advice. You may also find information regarding Social Security From your local Social Security Administration Office or online at www.ssa.gov. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 3. Social Security Strategies The Foundation for Creating a Successful Retirement Income Plan For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 4. Why is Social Security So Important? For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop According to a recent Study from SSA, Social Security Accounts for approximately 36% of the average individual’s retirement plan. With recent policy changes, the need for additional retirement income will increase. https://www.ssa.gov/policy/docs/chartbooks/fast_facts/2013/fast_facts13.html
- 5. Why is Social Security So Important? For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop According to a recent Study from SSA, Social Security Accounts for approximately 36% of the average individual’s retirement plan. With recent policy changes, the need for additional retirement income will increase. https://www.ssa.gov/policy/docs/chartbooks/fast_facts/2013/fast_facts13.html FOR MOST RETIREES, SOCIAL SECURITY WILL BE YOUR FIRST OR SECOND LARGEST RETIREMENT ASSET AND INCOME SOURCE
- 6. Finding Your Benefit Information • Social Security Website - www.ssa.gov/myaccount - Create Account - Research Earnings - View Benefits - Sample Statements For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 7. When Can I file For Benefits? • Min/Max Ages - Born After1937 - Minimum Age 62 - Maximum Age 70 • Full Retirement Age - Born 1943-1954 - Fra Age 66 - See Chart at SSA.gov For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 8. Assumptions in Case Studies The following case studies assume current age of 66 for all parties, using a life expectancy of 85 for Males and 90 for Females. All numbers are based on using any available switching strategies and a cost of living adjustment of 2% per year. Characters are fictional only, your results will vary. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 9. Case Study: Single Person *Characters are fictional, your results will vary • Social Security FRA Benefit - Individual $2000/ mo. - Life Expectancy age 85 • SS Income Filing ASAP - $548,174 • SS income After Planning - $593,016 For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 10. Case Study : Divorced Person *Characters are fictional, your results will vary • Social Security FRA Benefit - Individual $1500/mo. - Ex-Spouse $1500/mo. • SS Income Filing ASAP - $547,594 • SS Income After Planning -$661,989 For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 11. Case Study: Married Couple *Characters are fictional, your results will vary • Social Security FRA Benefit - Spouse #1 $2000/mo. - Spouse #2 $1000/ mo. • SS Income Filing ASAP -$1,004,211 • SS Income After Planning -$1,179,160 For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 12. How Much Income Will I Receive? * Numbers are hypothetical, individual benefit amounts will vary For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop If Age 62 $1359/mo. If Age 62 $1697/mo. If Age 62 $1931/mo. If Age 66 $1812/mo. If Age 66 $2263/mo. If Age 66 $2575/mo. If Age 70 $2391/mo. If Age 70 $2987/mo. If Age 70 $3399/mo.
- 13. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 14. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 15. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 16. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 17. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 18. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 19. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 20. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 21. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 22. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 23. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 24. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 25. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 26. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 27. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 28. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 29. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 30. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 31. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 32. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 33. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 34. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 35. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 36. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 37. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 38. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 39. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 40. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 41. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 42. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
- 43. For informational purposes only not affiliated or endorsed by the Social Security administration or any government agency INCOME PLANNING Retirement Work Shop
Editor's Notes
- S&P 500 Historical Values from 1991-2015 Before we discuss indexing, it is important to know the reasons why it has become increasingly popular for many retirees. This chart of the S&P 500 returns from 2001-2015 shows that timing can be very important when it comes to retirement and ensuring adequate retirement income.
- The Power of Indexing This material is intended for educational purposes only and is not intended to serve as the basis for any investment or purchasing decision. For financial professional use only. Not to be used for consumer solicitation purposes. Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of premium and credited interest, and the reassurance of a death benefit for beneficiaries. Although an external index may affect your interest credited, the contract does not directly participate in any equity or fixed income investments. You are not buying shares in an index. The index value does not include the dividends paid on the equity investments underlying any equity index or the interest paid on the fixed income investments underlying any bond index. These dividends and interest are not reflected in the interest credited to your contract. Product features vary by state and restrictions may apply, including possible withdrawal charges. Positive index adjustments may be limited to a monthly maximum or participation rate. The hypothetical indexing results are for illustrative purposes only and should not be deemed a representation of past or future results. Actual index results may be more or less that those shown. This illustration does not represent any specific product and/or service. Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank of the FDIC.
- The Power of Indexing For this example, we are using historical S&P 500 index data as of the close of each year from 1991-2015. The first hypothetical indexing option would be based on a 60% participation rate, meaning your contract would credited 60% of any upward movement in the index it is linked to, but would be credited 0% interest if there was negative movement in the index. Let's look at 1995 as an example. The index itself was up 34.13% for the year. Based on 60% participation, the hypothetical contract would have credited 20.48% interest {60% * 34.13%). What about the big down year in 2008? The index would have been down 38.49%, but the indexed contract has a 0% floor so no gain or loss would be credited. The second hypothetical indexing option would assume 100% participation, but be subject to a 5% spread rate. This means that the insurance company retains the first 5% in exchange for providing the 0% floor and interest is credited based on 100% of all gains above 5%. As you can see, even though this strategy might sound unfavorable {allowing the company to keep the first 5%), because a typical index can vary greatly in the amount it is up and down from year, this hypothetical strategy would have outperformed the 60% participation rate option over the 25 year historical period used.
- The Power of Indexing This graph shows the hypothetical starting and ending balance of each indexing option. As you can see, the lines are similar but the hypothetical spread rate option has credited more interest over the historical 25 year period from 1991-2015.
- The Power of Indexing Let's take a look at an option that assumes the hypothetical account is tax qualified and subject to Required Minimum Distributions {RMD). The estimated RMD is subject to change each year and was calculated using the 2016 tax year rates found in IRS Publication 590B. Based on the same 2 indexing options a starting balance of $100,000 in 1991, each index option would still have a balance of greater than the initial premium amount at age 94. This strategy is designed to show how indexing can be used to preserve retirement savings while satisfying annual RMD amounts.
- Before Based on conservative assumptions, they will only have about 85% of their income needs covered unless they take steps to secure their retirement income. Our goal is to look at retirement accounts and create income streams that will help you avoid what most retirees fear, Running Out of Money.
- After By taking a closer look at income sources and talking about needs in retirement, we were able to work Joe and Deborah to understand their Social Security options and then help close the gap created to cover any shortfalls.
- The Power of Indexing Let's look at an example of how indexing can work within an annuity contract, using actual historical data. The red line represents the S&P 500 option and all of our money is at risk of loss, the other two lines represent indexing option that guarantee a 0% {based on financial strength and claims paying ability of the insurer). The indexing options shown are not representative of all indexed annuity products, which is why we need to meet with you individually to determine the most suitable product for your situation, including income goals, liquidity needs and risk tolerance. We always recommend reviewing your risk profile, retirement income plan and all terms of the contract prior to deciding if an index annuity or life policy is right for you, this graphic shows the general value proposition associated with the use of indexing within your retirement strategy. Which line do you want for your retirement income? The red line or the green line?