Retire In A Day Workshop [Compatibility Mode]

Retire in a Day
Retirement Rescue Plan

An Independent Fee-for-Service Registered Investment Advisor

Steve Stanganelli, CFP ®, CRPC ®
978-388-0020 / 978-621-8268

What Does • Driver: 108
Retirement • Helicopter Pilot: 82
Mean to You? • Airplane Passenger: 95
Baby Boomers don’t • Sky Diver: 92
plan to retire in the
traditional sense. • Marathon Finisher: 90
Many will shift to • Man and Woman to Marry: 96 & 94
more fulfilling careers. • Actress: 114
Can this be done
without putting your • Tuba Player: 101
retirement plans at • Racing Driver: 75
risk?
• Current Living Person: 115

YES
Source: Guinness Book of World Records, 2005

Steve Stanganelli CFP (R) / Clear View Wealth Advisors, LLC
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You Can Retire Today!

• Have a Plan
Money is just a tool • Understand the Impact of
that helps you get
Inflation on Your Way of Life
what you want!
• Manage Your Finances to
RETIREMENT Minimize the Tax Bite
SUCCESS PRINCIPLE: • Embrace the Power of
With some thought, Diversification
creativity and action,
you can keep your • Don’t Panic Over the Press
financial house in • Control What You Can
order.
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Life By
Design 1. If money and health were
no issue, how would you
Before we get to spend your time?
“THE NUMBER,”
2. What things in life do you
let’s understand
where it is that you feel are important now?
want to go. 3. What types of activities
would you like to
participate in that you’re
not now and with whom?

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Retirement Facts
• Americans are living
longer,
healthier lives
• Today’s retirees have the
most healthy and active
retirement of any
generation
• Retirees face formidable
financial challenges

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Retiree Common Concerns

• Income
• Health related matters
• Outliving their money
1964 1984 2007
Gallon of Milk $1.06 $1.94 $3.06
Loaf of Bread $0.21 $0.71 $1.97
New Car $2,350 $6,294 $23,000
New Home $30,000 $110,610 $221,000
Average Income $6,080 $12,866 $34,335
Source: Spectrum
Unlimited, LLC

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Fundamental #1: Have a Plan
Investors with financial
plans have twice as
much in savings and
investments as
investors without
plans.

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Fundamental #2:
Practice 5 Fiscal Fitness Principles

1. Pay Yourself First: Always Save 10% of Annual
Income
2. Cash is King – Stay Liquid
3. Fully Fund Qualified Plans
4. Buy the Right House for Your Budget
5. Lighten Your Load – Reduce Credit Cards and
Consumer Debt

Steve Stanganelli CFP (R) / Clear View Wealth Advisors, LLC 978-
8
388-0020

Recommendation: Build a Cash Cushion

• 30% of your projected retirement income
to pay bills and cover variable short-term
expenses
• 60% of your projected retirement income
to supplement withdrawals and to cover 2
years of fixed expenses (like a mortgage)

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Pay Yourself First

Most People Financially Independent

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Real Estate – Buy the Right Size House

Home Size Ratio:
The Fair Market Value (FMV) Target for a home purchase is 3x – 3.5x
your income in high cost states

Investable Asset Targets:
There are 3 major asset classes
Asset Type Benefit Target
Real Estate Inflation Hedge & 1/3rd
Personal Enjoyment
Interest Earning Safety & Deflation 1/3rd
Protection
Equities Growth Potential – 1/3rd
Build Wealth &
Inflation Hedge

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Lighten Your Load: Pay Off Credit Cards
and Consumer Debt
• Stop borrowing from your future to pay for your now.
• Use debt wisely
• There’s a difference between “good” debt and “bad” debt
• The Key to Retirement is managing spending because you are
now living on a fixed income

Don’t Turn Down Free Money
• Maximize contributions to employer-sponsored plans and
IRAs
• Get your company match
• By maximizing your pre-tax contribution you get governement
“free money” because of lower taxes on income and interest
earned on the money set aside
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RETIREMENT MYTH VS. REALITY

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RETIREMENT MYTH #1: You Need 70% to 80% of Pre-Retirement Income

REALITY CHECK: It all depends on your goals and lifestyle.

Actual Expenses – Post-Retirement
28% - about the same
27% - somewhat higher
25% - somewhat lower
12% - significantly higher
8% - significantly lower

Source: Fidelity Research Institute 2007 Retirement Index

Steve Stanganelli CFP (R) / Clear View
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Wealth Advisors, LLC 978-388-0020

RETIREMENT MYTH #2: You Need to Make Your Investment
Portfolio More Defensive When You Retire

REALITY CHECK:

What 3% Inflation Can Do
to a $30,000 Per Year Standard of Living
5 Years $34,778
10 Years $40,317
15 Years $46,739
20 Years $54,183
25 Years $62,813
Be prepared to double your money
if you’reStanganelli CFP (R) /forView years!!
Steve
retired Clear 25
Wealth Advisors, LLC 978-388-0020
15

RETIREMENT MYTH #3: Your Investment Portfolio Has to Beat the S&P 500

REALITY CHECK: Why does it matter? Is it more important to beat the
“market” or make progress toward your personal goals?

Benchmark your progress toward the accomplishment of your goals.

Primary goal: Prevent yourself from running out of money to maintain the
lifestyle you desire.

RETIREMENT MYTH #4: You can rely on the equity in your home to retire
securely.

REALITY CHECK: Really?

RETIREMENT MYTH #5: You’ll continue working into your 60’s or early 70’s.

REALITY CHECK: See #4. And while possible, more than 40% of us will be
forced out of the workforce. And do you really want to work that long
anyway?
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RETIREMENT MYTH #6: You don’t need to save. You’ll receive a large
inheritance.

REALITY CHECK: Don’t count on it. Yes, Baby Boomers are in line to
receive the largest transfer of wealth in history. Their in line right behind the
doctors, prescription drug companies and nursing homes that their parents
will use as people live longer and medical costs increase.

So there’s not much left over to pass along … without proper planning.

RETIREMENT MYTH #7: You can live on Social Security.

REALITY CHECK: Social Security was meant to be a safety net … one of
the legs of the three-legged stool that included private savings and
company pensions. You’ll need to consider working longer, saving more or
reducing your standard of living. Your choice.

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ASSET ALLOCATION –
THE SCIENCE OF SUCCESSFUL
INVESTING

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• Hierarchy of Investing
Retirement Success
Principle
Decision Process
• Time Horizon
Asset allocation is more • Asset Classes
Most
important than the Important • Risk Capacity
investments that you own.

• Mix Among Asset Classes
How long your money lasts
and how soon you can retire Important
• Sub-Asset Classes Considered
are all impacted by this
decision

• Managers/Funds Used
Least
Important

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Over 91% of portfolio
performance is explained
by the Asset Allocation
(AA) decision.

But most investors give
more attention to:

1. Is now a good time to
invest (i.e. Market
Timing)?
2. What’s the best
fund/stock/manager to
buy now (i.e. Security
Selection)?
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•Asset Allocation Risk/Reward •Annual Returns (1926–2006)
Average Annual Inflation: 3.11%

•Stocks
Bonds
Cash

•90% Stocks •80% Stocks •70% Stocks •60% Stocks •50% Stocks •40% Stocks •30% Stocks •20% Stocks •10% Stocks •0% Stocks
0% Bonds 10% Bonds 20% Bonds 30% Bonds 40% Bonds 50% Bonds 60% Bonds 70% Bonds 80% Bonds 90% Bonds
10% Cash 10% Cash 10% Cash 10% Cash 10% Cash 10% Cash 10% Cash 10% Cash 10% Cash 10% Cash

•-38.90% •-34.80% •-30. 70% •-2 6. 59% •-22 .49% •-18.3 9% •-14.2 9% •-10.19% •-6.08%
•Largest Loss •-

•-10. 98% •-9.60% •-9.05% •-7.13% •-5.59% •-4.26% •-3.93% •-3.00% •-2.69%
Average Loss* 4.24% -

Average Return •11.49% •10.7 •10. •9.41% •8.72% •8.03% •7.34% •6.64% •5.95%
9% 10% 1.12%

Largest Gain •25 .7
•48.62% •43.41% •38.19% •32.97% •27. •24. •24.94% •26.48% 5.26%
76% 17% 1%
Average Gain**
•20.39% •18.40% •15.97% •14.48% •12 .8 •11.05% •9.11% •7.70% •6.52% 27.24%
1%

•Percentage 5.96%
•7 1. •72.84% •76.54% •76.54% •77.78% •80.25% •86.42% •90.12% •93.83%
Positive Yrs. 60%
90. 12%
•Percentage •28.40% •2 •23 •23.46% •22.22% •19. •13 •9.88% •6.17%
Negative Yrs. 7.16% .46% 75% .58%
9.88%
•Percentage of •67.90% •70.3 •70 .3 •70.37% •69. •66. •70 .3 •72 •70.37%
Yrs. Greater 7% 7% 14% 67% 7% .84%
6 1.73%
than Inflation

•Stocks – S&P 500 Index Bonds – U.S. Intermediate Term Government Bonds Cash – U.S. 30 Day Treasury Bill Inflation – Consumer Price Index Source – Ibbotson Associates

•*Average Loss: the average loss when there is a negative return. **Average Gain: the average gain when there is a positive return.
•Mutual Funds: • Are not insured by the FDIC or any other agency • Are not obligations of any financial institution • Involve investment risks, may lose value
•The information presented is past performance. Past performance is no guarantee of future return. Investment return and principal value of a mutual fund investment will fluctuate so that an
investor’s shares on redemption may be worth more or less than the original cost.
•In addition to the normal risks associated with equity investing, narrowly focused investments and investments in smaller companies typically exhibit higher volatility. International investments
may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability in other
nations.
•The indices illustrated herein are unmanaged indices. You cannot invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index
information seen here is for illustrative purposes only. For more information, please contact your financial advisor. This piece is provided by SEI Investments Management Corporation.
•This is not indicative of any specific investment. It is an illustration of how a certain profile may have performed using the past performance of the indices listed. SEI-M-215 (2/07)

CREATING INCOME FOR LIFE

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“I’ve got all the money I’ll Retirement Accumulation
ever need, if I die by four
o’clock” -- Calculator – An Illustration
Henny Youngman Desired Retirement Income (Today’s Dollars) $40,000 (1)
Years Until Retirement: ___4___
Estimated Inflation Rate: ___3__ %
Figure out what kind of
lifestyle you want in Inflation Factor from Table ___1.13___ (2)
retirement.
Est. Annual Retirement Income Need – Yr 1 $ 45,200 (3)
(1) x (2)
Family? More Travel?
Factor ‘B’ from Personal Calculator Table (#1) __2.36_(4)
Hobbies? New Business?
Est. Annual Retirement Income Need – Yr 30 $_106,672
(3) x (4)
Factor ‘C’ from Personal Calculator Table (#1) 19.65 (5)
Sample Calculators at Retirement Accumulation Needed $ 888,180 (6)
www.ClearViewWealthAdvisors.com
Factor ‘D’ from Personal Calculator Table (#1): 0.767 (7)
Investment Value in 30 Years in Yr 1 Dollars $681,234 (6x7)
Factor ‘E’ from Personal Calculator Table (#1) 1.861 (8)
Investment Value in 30 Yrs in Future Dollars: $ 1,652,903
23 Steve Stanganelli CFP (R) / Clear View Wealth Advisors, LLC (6) x (8)
978-388-0020

Will You Outlive Your Money?

How Long Does Your Money Need to Last?

• Family Longevity?
• Health?
• Lifestyle?

• Actuarial tables from insurance companies
• Specialized services like 21st Services Longevity Planning
Report ©

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Income
Predictable Income Sustainable Income
• Pension A. 4% Investment Withdrawal
• Social Security B. Spending Ratio vs
• Rental Income Downside Exposure
• Arrange for Scheduled (SORDEX)
Withdrawals from C. Asset Allocation to Equities
Investments Based on 128 – Attained
– In most cases it’s usually Age or at least 33% to 40%
better to take money out of D. “Safe-Money Benchmark”
non-retirement accounts first

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“Safe-Money” Benchmark Strategy
Before Retirement
• Determine Expenses
• Accumulate Savings Equal
to 1 to 5 Years of
Withdrawals
• Amount Will Depend on
Risk Tolerance and Capacity
• Harvest Money from
Investment Accounts to
Place into “Safe Money”
Resource (i.e. CD, M/M)
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Safety Net: Laddered US Treasuries
An Option to Help Investors Sleep Well at Night

• Super-Safe Government Bonds
• “Stripped” Securities Pay No Interest
• Target 50% of Projected Cash Flow Needs
• Can Start Strategy in Year of Retirement
• Treasuries are “non-callable”
• Use This Strategy in a Qualified Plan or IRA

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Creating Increasing Income in a
World of Inflation or Recession
5 Inflation-Beating Bond Picks
– TIPS or other inflation-linked corporate bonds
– Go Short: Keep the average maturity down (When the 7-
Year US Treasury yield is trending higher than it was 6-months
prior than stay short; if trending lower then consider more
intermediate bond maturities)
– Consider Floating Rate Notes
– Look at adding Convertible Bonds
– High Yield or “junk” bonds still offer opportunities

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Income-Producing
Recommendations
• Dividend-Paying Stocks: Those with a history
of continuing and increasing dividends
• Dividend-Payors act as an inflation hedge
• A $1,000 investment started in January 1,
1957 thru December, 2009 in the top 100
highest-dividend yielding stocks would have
accumulated more than $450,000 (assuming
dividends reinvested) or a 12.5% annual
return beating the S&P 500 by 2.5%
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Other Income Resources
• Real Estate Investment Trusts (REITS)
• Master Limited Partnerships (MLPs)

Other Options:
• Reverse Mortgages
• Fixed Annuities as CD Replacement

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6 Deadly Investing Sins

1. Overconfidence
2. Following the Herd: Euphoria & Pessimism Are
Contagious and Usually Wrong
3. Timing the Market
4. Assuming You Control More than You Have
5. Paying Too Much in Fees
6. Trusting Stockbrokers

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