Presented by: Marisa Ruhter

1. Working for Today, Saving for Tomorrow
How to Take Control of Your Finances and Plan for a Profitable Retirement
November 2012
Marisa S. Ruhter

2. 2
Overview
Personal Finance
Resources
Retirement Planning
Investing

3. 3
Budget
List Fixed Expenses
Track Spending
Identify Needs vs Wants
10 Tools to Help: www.doughroller.net/tools-resources/10-online-budget-tools/

4. 4
Industry Debt Guidelines
Sum of Debt Payments
Income (Pre Tax)
=
Debt to Income
Ratio
Debt to Income Ratio
< 15 % Very Good
16% - 20% Good
21% - 35% Try to Reduce Debt
36% - 50% Too Much Debt
>50% Serious Trouble

5. 5
Emergency Fund
3 to 6 months worth of
living expenses
Exact amount depends on
personal comfort level

6. 6
Insurance

7. 7
How Much Money Will I Need?
Retirement Basics: http://money.cnn.com/retirement/guide/basics_basics.moneymag/
Medical Expenses
Leisure Activities
Health Care Costs
$$$
Savings Plan Contributions
Work Related Expenses
Taxes
$$$

8. 8
Other Things to Consider
 Retirement Age
 Length in Retirement
 Health Care
 Inflation
 Lifestyle
Retirement Calculator: http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
Image Source: Wikipedia

9. 9
401(k)
Pay Check
Modified
Income
Taxes
401(k)
Employer
Contribution
TaxesIncome
Retirement

10. 10
401(k)
 Contributions
 Managed Externally
 Investment Choices
 Employer Vesting
Source: www.irs.gov
More Info: www.401khelpcenter.com

11. 11
Traditional IRA
Pay Check
Modified
Income
Taxes
Traditional
IRA
TaxesIncome
Retirement
Employer

12. 12
Roth IRA
Pay Check
Take
Home Pay
Roth IRA
Taxes
Income
Retirement
Employer

13. 13
Contribution Limits
Traditional IRA Contribution Limits
Roth IRA Contribution Limits
Age 2012 Contribution Limits
Up to age 50 $5,000
Age 50 – 70½ $6,000
Over age 70½ Not allowed
Age 2012 Contribution Limits
Up to age 50 $5,000
Over age 50 $6,000

14. 14
Latest Age for Social Security
Payments
7067
Full Retirement Age
55
Retirement Age after
which 401(k) distributions
no longer incur 10%
penalty
50
IRA Contribution Limits Increase
Retirement Timeline
Age 59½
IRA Withdrawals subject
to 10% early distribution
penalty
62
Earliest Age for Social Security Payments
70½
Required Minimum
Distributions from Traditional
IRA’s
Social Security Benefits: www.socialsecurity.gov/estimator/

15. 15
Choosing a Brokerage
 Banks
 Mutual Fund Companies
 Brokerage Firms
Minimum Initial Investment
Automatic Contributions
Available
Minimum Contributions
Allowed
Fees
Investment Options
IRA Broker Quiz: https://www.mint.com/ira-center/?campaign=MMB_IRA_brokerage

16. 16
Diversification

17. 17
Diversification
 Merriam-Webster Definition:
“composed of distinct or unlike elements or qualities”
 Risk Management Technique

18. 18
Why Diversify?
S&P 500
Bonds
1.9%

19. 19
Yearly Asset Class Returns

20. 20
Diversification
 Individual Factors
– Risk Tolerance
– Years Until Retirement
– Confidence / Experience
Stocks
Bonds
Stocks
Money
Market Funds
Bonds
MM
Risk Tolerance Quiz: http://njaes.rutgers.edu/money/riskquiz/
– Future Expectations
– Personality

21. 21
Moderate Allocation Example
Large-Cap Equity Small-Cap Equity
International Equity Fixed Income
Cash Investments
 Indexed Funds
– Bond Market Index Fund
– Treasury Money Market Fund
– S&P 500 Index Fund
– International Index Fund
– Russell 2000 Index Fund
– Total Stock Market Index Fund
 Actively Managed Funds
– Domestic Large Co. Fund
– Domestic Small/Mid Co. Fund
– Emerging Markets Fund
– Health Care Fund
– Blue Chip Growth
– Small Cap Value Fund
35%
35%
15%
5%
10%

22. 22
Target Date Funds
Retired
Retire
2015
Retire
2020
Retire
2025
Retire
2030
Retire
2035
Retire
2040
Retire
2045
Retire
2050
Example Asset Allocation for Target Date Funds
Large / Mid-Cap Equities
Small-Cap Equities
International Equities
Real Estate
Commodities
US Bonds
Global Bonds
Inflation-Linked Bonds

23. 23
Buying Stock
 Where to start?
– Understand yourself
– Understand an industry
 Research
 Create a Watch List
General Investment References: www.fool.com & www.investopedia.com

24. 24
Buying Stock
 How
 Rule of 5
 Reflect
 Taxes
2012 Broker Rankings: www.smartmoney.com/invest/markets/smartmoneys-annual-broker-survey-23119/

25. 25
Annual Maintenance
 Review Allocations Annually
 Consider Entire Portfolio
 Professional Consultation

26. 26
Summary
Personal Finance
Resources
Retirement Planning
Investing

27. 27
“Don't be too timid and squeamish about your actions.
All life is an experiment.”
- Ralph Waldo Emerson