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The Fear of Running out of Money


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Lunch & Learn presentation on Retirement Income, and everyone\'s worst fear!

Published in: Economy & Finance, Business
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The Fear of Running out of Money

  1. 1. The Fear of Running out of Money Tips & planning strategies to fully utilize your Restylement™ income
  2. 2. An Uncertain Environment <ul><li>Market volatility has historically been an ally of accumulation and an enemy of withdrawal </li></ul><ul><li>A sequence of returns is important when you’re withdrawing money </li></ul>
  3. 3. Longevity <ul><li>Trends over the years… Increased risk of outliving assets </li></ul>Sources: “Working with Seniors,” The Society of Senior Advisors, 2005. National Center for Health Statistics, 2002. The Number , Lee Eisenberg, pg. 98
  4. 4. Healthcare Costs <ul><li>Some common medical expenses of today’s retirees </li></ul>Cataract Surgery $5,000 Low Back Pain Surgery $4,500 Knee Replacement $23,000 Coronary Artery Bypass $55,000 Hip Replacement $24,000 Source:, 2010.
  5. 5. Healthcare <ul><li>The average person who retires at age 65 in 2011 will need to budget for approximately $230,000 in healthcare costs </li></ul><ul><ul><li>Not including nursing home care! </li></ul></ul>Source: Fidelity Benefits Consulting Survey, 2011
  6. 6. Inflation – The Black Hole <ul><li>Loss of purchasing power due to inflation </li></ul><ul><li>You don’t see it </li></ul><ul><ul><li>Like a black hole, it creeps up on you and you don’t see it all at once. Inflation sucks you in! </li></ul></ul><ul><ul><li>Example: </li></ul></ul><ul><ul><ul><li>You’re 65, withdrawing $5k a month and you’re doing OK. </li></ul></ul></ul><ul><ul><ul><li>At 75, you find that you’re running out of money earlier each month. </li></ul></ul></ul><ul><ul><ul><li>You must ask yourself now – what am I making AFTER inflation? </li></ul></ul></ul>
  7. 7. Inflation <ul><li>What you’re making after inflation is your real return </li></ul><ul><li>Example: </li></ul><ul><ul><li>Since 1926, the S&P 500 has had an average return of 11% </li></ul></ul><ul><ul><li>Inflation, however, is approximately 4% </li></ul></ul><ul><ul><li>An investment portfolio that mirrored the S&P during this time frame would have a real return of ~ 7% </li></ul></ul>Sources: Standard & Poor’s S&P 500, Yahoo! Finance, 2010 Disclosure – The S&P 500 index is unmanaged and not available for direct investment; therefore its performance will not reflect the expenses and costs associated with active management of an actual fund. Past performance does not guarantee future results.
  8. 8. Inflation <ul><li>Unfortunately the historically low-risk investments (CD’s), have not kept pace with inflation </li></ul><ul><li>With this in mind, your money might be seem secure, but your lifestyle and standard of living is not! </li></ul>
  9. 9. How Much Do You Need? Source: The Number , Lee Eisenberg, 2006. To be . . . need... (annually) ...which means a number of... Comfortable : lives in one home, eats and travels modestly, though better than most $50K–$100K $1–$2 million Comfortable+ : likes occasional upgrade, mid-priced country club, a small second home $175K–$250K $2–$5 million Kind of Rich : likes finer things, eats/drinks/travels well, gives money away, picks up checks, couple of nice houses $350K–$500K $7–$10 million Rich : spends weeks/months abroad, exclusive gated golf communities, place for every season, fractional jets, member of boards > $1 million > $20 million
  10. 10. Social Insecurity <ul><li>The Social Security Administration projects that the program will pay out more than it takes in by 2016, and by 2037, may run out altogether* </li></ul><ul><li>There were no cost of living increases in 2011 (2 nd year in a row) </li></ul><ul><li>We’ve always believed that if you are relying on an employer or the government for your financial security, you will be in for a rude awakening! </li></ul>*Source: Social Security Administration, 2009
  11. 11. Social Security <ul><li>We believe there will be adjustments in Social Security benefits </li></ul><ul><ul><li>It’s possible they will affect people ages 65-95 </li></ul></ul><ul><li>If changes are made, they will affect those people who have decent incomes </li></ul><ul><ul><li>Everyone in this room & everyone we work with! </li></ul></ul>
  12. 12. Social Security <ul><li>With change comes opportunity </li></ul><ul><li>We are not afraid of changes in government benefits </li></ul><ul><ul><li>We will always believe that the best strategy to protect yourself is to be proactive by looking at your current situation without Social Security and Cost of Living increases. </li></ul></ul><ul><ul><li>To do: Analyze your cash flow as is, without the extras. </li></ul></ul>
  13. 13. Medicare <ul><li>Medicare is in far worse shape than Social Security </li></ul><ul><ul><li>Current recipients are going to have to pay more </li></ul></ul><ul><ul><li>All of us working are going to have to pay more under the current system </li></ul></ul><ul><li>Medicare’s Hospital Insurance Fund is projected to exhaust its funds in 2024 </li></ul><ul><ul><li>Social Security is expected to be exhausted by 2037 </li></ul></ul>
  14. 14. Medicare <ul><li>This brings up the thought of Personal Responsibility </li></ul><ul><ul><li>So… Live as healthy as you can! </li></ul></ul><ul><ul><ul><li>No one wants to hear it, but prevention is the best way to ensure a happy & healthy future Restylement™  </li></ul></ul></ul>
  15. 15. So… What Can You Do? <ul><li>Identify the challenges you can’t control and those you can directly impact. </li></ul><ul><li>Understand how to include sources of income to your portfolio that will surpass inflation rates. </li></ul><ul><li>Work with your advisor to create a custom portfolio suited to your needs. </li></ul>
  16. 16. Thank you! <ul><li>Wealth Management Group of NA, LLC </li></ul><ul><li>231 Farmington Avenue, Farmington, CT </li></ul><ul><li>(800) 226-8411 ~ (860) 679-5255 </li></ul><ul><li>[email_address] </li></ul><ul><li>[email_address] </li></ul><ul><li> </li></ul>Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Lexco Wealth Management Inc.(LEXCO), a Registered Investment Adviser and Wealth Management Group of N.A. (WMGNA), a Registered Investment Adviser. Lexco, WMGNA, The Hartford, and NPC are separate and unrelated companies.