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Similar to Choose your path to retirement.
Choose your path to retirement.
- 1. Choose your pathto retirement. Navigating the challenges on the road ahead. (SMRU1735114 Exp 6.1.18)
- 2. 2 Presented by Registered Representativeoffering securities through NYLIFE Securities LLC., Member FINRA/SIPC, A Licensed Insurance Agency Andrew M. Leeman Financial Services Professional Agent, New York Life Insurance Company Registered Representative offering securities through NYLIFE Securities, LLC (member FINRA/SIPC), a Licensed Insurance Agency 6100 Oak Tree Blvd. Suite 300 Independence, OH, 44131 M. 330 639 8203 B. 216 532 3094 E. aleeman@ft.newyorklife.com Agent information.
- 3. 3 This informational seminarand insurance sales presentation will cover a variety of topics examining the role insurance and other financial products may play in your financial decisions. Although many of the topics presented may involve tax, legal, accounting, or other issues, neither New York Life nor any of its agents are in the business of offering such advice. You should consult with your own professional advisors to examine the tax, legal, or accounting aspects of any topic presented. Disclaimer
- 4. 4 Overcome the challengesand give retirement the green light with these 5 strategies. 01. Challenge Cost of living increases in retirement 02. Challenge Outliving your retirement savings 03. Challenge Taxes 04. Challenge Expenses 05. Challenge Expectation vs. reality Consider some possible solutions Agenda
- 5. 5 Challenge #1 Inflation Cost ofliving increases in retirement. Market risks
- 6. 6 Source: http://inflationdata.com/Inflation/Inflation_rate/HistoricalInflation.aspx >Historical Inflation Rate February 2017 Inflation and cost of living Cost of living increases in retirement. 2010 1.64% 2012 2.07% 2016 1.26%
- 7. 7 The effects ofinflation on the cost of living. Source: http://fintrend.com/financial calculators/retirement-planning-calculator $500,000 Keep your money growing. $586,000 $688,000 $807,000 $946,000
- 8. 8 Could early lossesin retirement undermine your goals and dreams? What are the market risks?
- 9. 9 Challenge #2 Savings withdrawalrate Outliving your retirement savings. Longevity
- 10. 10 Too much = depletion ofsources Not enough = limited enjoyment When it comes to withdrawal rates, you have to strike the right balance.
- 11. 11 • People areliving longer than ever before • A longer lifespan may mean stretching your retirement savings Consider this: Will living longer affect your retirement savings?
- 12. 12 Source: Social SecurityAdministration 2017. www.ssa.gov/planners/lifeexpectancy.html If you retire at 65, birthday, you can expect to live until age Did you know? you can expect to live until 86 If you celebrate your 86th 93 Year olds will live past age 1 out of 4 65 90 1 out of 10 will live past age 65
- 13. 13 If you loseyour spouse at age 65, you still have a 70% chance of reaching 85. Data extracted from: Analysis of the 2013 Period Life Table for Social Security Area Population. http://www.ssa.gov/oact/STATS/table4c6.html Be able to cover final expenses? If you lost your spouse, would you: Have sufficient income? Be able to meet basic needs? Surviving the loss of a spouse.
- 14. 14 Challenge #3 Required minimums distributions(RMDs) Rollovers Long-term capital gains How could taxes affect your retirement savings? Taxes
- 15. 15 Tax deferral is notforever Taxes reduce spendable income Help minimize the tax bite How big is the tax bite?
- 16. 16 Let’s consider thetax bite further: • Distributions from a 401(k) lump-sum distribution are taxed at a marginal rate • Rollover to IRA enables smaller withdrawals and lower taxes. (Note: This assumes that the 401(k) plan does not let participants take partial withdrawals.) • Balance retains tax-deferred status, so growth continues Rollovers and taxes. *Before rolling over the proceeds of your retirement plan to an Individual Retirement Account (IRA) or annuity; consider whether you would benefit from other possible options such as leaving the funds in your existing plan or transferring them into a new employer’s plan. You should consider the specific terms and rules that relate to each option including: the available investment options, applicable fees and expenses, the services offered, the withdrawal options, the potential flexibility around taking IRS required minimum distributions from the option, tax consequences of withdrawals and of removing shares of employer stock from your plan, possible protection from creditors and legal judgments and your unique situation.
- 17. 17 Taxation of netlong-term capital gains (investments held more than 12 months) Federal income tax bracket Maximum tax rate for sales occurring prior to 1/1/13 Maximum tax rate for sales occurring on/after 1/1/13 25%, 28%, 33%, 35% 15% 15% (20% for 39.6% tax bracket) 10% or 15% 0% 0% Long-term capital gains and taxes.
- 18. 18 Required minimum distributionsare: • Taxed as ordinary income • Taxed at an individual’s current federal income tax rate • May be subject to state and local taxes • Taxed in the year taken • Keep in mind, after-tax contributions may be tax free Taxes could significantly reduce your retirement income and enjoyment Required minimum distributions and taxes.
- 19. 19 Challenge #4 Health careThe basics The extras Leaving a legacy Expenses.
- 20. 20 • How longwill my savings last? • How could I pay these expenses? EBRI Notes, Savings Medicare beneficiaries need for health expenses: Some couples need as much as $350,000,” January 2017. Vol. 38, No. 1 Longevity is good, but there’s a cost. Medical costs during retirement.
- 21. 21 Source: Consumer ExpenditureSurvey, September 2014 Retiree spending habits as a percent of incomes. Other Entertainment/Eating Out Health care Housing Personal Insurance and Pensions Paying for the basics. 11% 25% 12% 11% 7% 34% Food/Transport/Utilities/Public Services
- 22. 22 Source: Purchasing Powerof Money in the U.S., http://www.measuringworth.com The decreasing buying power of $100 Purchasing Power Consumer Price Index Inflation Calculations* Base = 1990 1990 2000 2010 2014 $100.00 $132.00 $167.00 $181.00 Inflation and your purchasing power.
- 23. 23 The cost ofbasics gradually increases *Bureau of Labor Statistics, Consumer Expenditure Survey, Expediture Tables. www.bls.gov. Information retrieved August 2016. Inflation and your purchasing power. 1990 2000 2010 2015
- 24. 24 Dining GiftsEntertainment Travel Whatabout the extras?
- 25. 25 Favorite charity Think aboutwhat’s important to you, and how you’d like to be remembered. Family Alma mater or other institution Do you want to leave a legacy?
- 26. 26 Challenge #4b How muchdo you need to maintain your current lifestyle? How much can you withdraw from your retirement savings? What will your Social Security provide? Expectation vs. reality.
- 27. 27 Will you reallyreduce your spending after you retire? Conventional wisdom about expenses after retirement. Expenses after retirement Expenses before retirement Paying for the necessities and the extras.
- 28. 28 Did you knowthat retirees are actually living the same lifestyle? *Employee Benefit Research Institute Issue Brief, February 2012. Estimates from the Consumption and Activities Mail survey (2001–2009). Percent of population that anticipated a decline/increase in spending vs. actual experience* Think again. Drop Increase Anticipated Experienced
- 29. 29 Rule of thumb: $500,000 atstart = $20,000 annually Withdraw 4% of total savings annually $1,000,000 at start = $40,000 annually How much can I withdraw?
- 30. 30 Fact: Most peoplereceive Social Security and other sources of retirement income *U.S. Social Security Administration, Office of Retirement and Disability Policy, Fast Facts & Figures, About Social Security, 2016. www.ssa.gov Sources of income. Other Government Employee Pension Private Pensions Asset Income Earnings Social Security 31%31% 15% 3% 6% 14%
- 31. 31 Source: U.S. SocialSecurity Administration, Monthly Statistical Snapshot, February 2017. https://ssa.gov/policy/docs/quickfacts/stat_snapshot/ After-tax amount: Average monthly benefit in 2017 - $1,250 - $1,250 = $1,000 What does the average Social Security benefit look like? 20% state and federal income taxes After-tax benefit
- 32. 32 There are 5strategies to help you on the road to a more fulfilling retirement: Optimize investment portfolio Minimize income taxes Plan for extended periods of care not covered by medical insurance Consider guaranteed income for life* Consider other sources of retirement income 1. 2. 3. 4. 5. Let’s talk about solutions. *Guarantees are dependent upon the claims paying ability of the issuing insurer.
- 33. 33 Fixed return products Before and afterretirement Evaluate your portfolio • Make adjustments as necessary • Consider being more conservative Optimize your investment portfolio.
- 34. 34 • Roll overyour 401(k) to an IRA • Smaller payouts = less income tax (Note: This assumes that the 401(k) plan does not let participants take partial withdrawals. Please check with your employer s benefits department for the specifics of your plan.) • Balance earns tax-deferred interest 401(k) IRA Smaller Payments Avoid lump-sum distributions Minimize your income taxes. *Before rolling over the proceeds of your retirement plan to an Individual Retirement Account (IRA) or annuity; consider whether you would benefit from other possible options such as leaving the funds in your existing plan or transferring them into a new employer’s plan. You should consider the specific terms and rules that relate to each option including: the available investment options, applicable fees and expenses, the services offered, the withdrawal options, the potential flexibility around taking IRS required minimum distributions from the option, tax consequences of withdrawals and of removing shares of employer stock from your plan, possible protection from creditors and legal judgments and your unique situation.
- 35. 35 Tax advantaged assetsinclude: Tax-free bonds Long-term capital gain investments Life insurance Minimize your income taxes. *Keep in mind cash value is accessed through withdrawals and loans. Withdrawals and policy loans decrease the death benefit and cash value by the amount of the withdrawal or outstanding loan and interest. And loans against your policy accrue interest. Assets are mentioned for informational purposes only and are not intended as a solicitation. Registered products may only be offered by a properly licensed Registered Representative.
- 36. 36 • Are livinglonger lives • Have increased health issues and chronic illness • May need extended periods of care for an illness or injury Consider that people: But you might need more…
- 37. 37 *Centers for DiseaseControl and Prevention, NCHS Data Brief, Number 100, Multiple Chronic Conditions Among Adults Aged 45 and Over: Trends Over the Past 10 Years, Key Findings from the National Health Interview Survey 1999-2000 and 2009—2010, released July 2012. Percentage of people age 65 and over who have two or more chronic conditions* Chronic health conditions. 0 10 20 30 40 50 43% 36% 49% 39% 45% 37% Women Men Total 2009–2010 1999–2000
- 38. 38 • Income fora surviving spouse. • Plan for guaranteed income. Keep in mind, guarantees are based on the claims-paying ability of the product issuer Leaving a spouse behind.
- 39. 39 The challenge: Takea lifetime of savings and convert it in to a stream of income. Increasing life expectancies and rising health care costs mean your dollars have to stretch even further. Working longer* • May allow some Americans like you to rebuild retirement savings that were depleted in the 2008 stock market collapse • 10% of Americans don’t expect to retire at all • Offers a chance to utilize employer- provided health insurance at least until you qualify for Medicare The percentage of workers who expect to retire after age 65 has increased steadily over the past 20+ years.* *Employee Benefit Research Institute, 2015 RCS Fact Sheet #2, Expectations about retirement. www.ebri.org Outliving savings % Workers Who Expect to Retire after 65 1991 11% 2000 20% 2015 36% Guaranteed income for life.
- 40. 40 Probability of ahealthy 65-year-old living to various ages* *Society of Actuaries; Key Findings and Issues: Longevity, 2011 Risks and Process of Retirement Survey Report” Age 80 85 90 95 100 Male 60% 40% 20% 6% 1% Female 71% 53% 31% 12% 3% Survivor 88% 72% 45% 18% 4% Longevity risk.
- 41. 41 • Provides youa guaranteed lifetime stream of income • Payments will continue throughout your lifetime* and are not tied to market performance *Guarantees are based on the claims-paying ability of the issuer. Death benefit not available in NY State, and not available on qualified policies Guarantees based on the claims-paying ability of New York Life Insurance and Annuity Corporation (NYLIAC) (a Delaware Corporation) Products approved in jurisdictions Policy form number in OR is ICC11-P102 Benefits: The New York Life Guaranteed Income Annuity Guaranteed income for life.
- 42. 42 Guarantees and benefits* •Offers periods of guaranteed fixed interest rates • Tax-deferred growth • Access to money** • No market exposure or volatility • Guaranteed death benefit prior to annuitization • Lifetime income opportunity *New York Life Fixed Annuities are issued by New York Life Insurance and Annuity Corporation (NYLIAC), a Delaware Corporation, a wholly owned subsidiary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010. Guarantees are based on the claims-paying ability of the issuer. Products available in jurisdictions where approved. In most jurisdictions, the policy form number for the New York Life Secure Term Choice Fixed Annuity in OR is ICC11-P113; for the Secure Term MVA Fixed Annuity the policy form number in OR is ICC10-P111; for the Flexible Premium Fixed Annuity the policy form number in OR is ICC10- P108. **Withdrawals may be subject to regular income tax, and if made prior to age 59½, may be subject to a 10% IRS penalty. In addition, surrender charges and other charges may apply. The New York Life Fixed deferred annuities.
- 43. 43 Advantages Disadvantages Interest rateis fixed and certain Income is dependable FDIC insured up to $250K per individual account per bank Rate may not be competitive Income is taxable and could affect taxation of Social Security benefits What about CDs?
- 44. 44 • Income andlegacy • Gives you death benefit protection • Offers cash value, which can be accessed via policy loans* for income or emergencies • Allows you to leave a legacy *Keep in mind, loans accrue interest and decrease the total death benefit and cash value. Permanent life insurance solutions.
- 45. 45 How can youcreate it and who will you create it for? • For your children, grandchildren, or future generations • For a charitable organization • For other causes that you feel passionate about A lasting legacy.
- 46. 46 Navigating the challengesalong the way is up to you. Together, we can overcome them! You can give retirement the green light.
- 47.