Download - Retirement Planning - Self Reliance Fair
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Retirement Planning
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As we obey the counsel to avoid and get out of debt now, we use our agency and obtain liberty to use our disposable income for helping and blessing others.
- Robert D. Hales, October 2010
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To those of you who are not yet to the season of life when you might serve a couple mission, I urge you to prepare now for the day you and your spouse may do so. As your circumstances allow, as you are are eligible for retirement, ....
- Thomas S. Monson, October 2010
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Social Security
Defined BenefitPlans
Personal Savings(IRAs / 401k)
EmploymentEarnings
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Defined Benefit Only
Defined Contribution Only
Both DB and DC Plans26
67
7
22
16
62
Worker Participation Percentage by Plan Type
Source: Employee Benefits Research Institute
1979 2008
%
%
%
%
%
%
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Social Security
Employer Pension
401(k) - IRA Savings66
11
13
49
19
21
21
21
42
Largest Source of Retirement Income
Source: Pew Research Center
Current Retirees Baby Boomers Ages 41-49Adults Ages 18-40
%%
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%%
%
%
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%
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How Much?
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Inflation Longevity Market
Spending Income Issuer
HealthcareHousehold
Shock Public Policy
Retirement Risks
Source: Retirement Income Industry Association
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Inflation Longevity Market
Spending Income Issuer
HealthcareHousehold
Shock Public Policy
Investment Related Retirement Risks
Source: Retirement Income Industry Association
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How Long?
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For healthy 65 year-old couples
50% chance one spouse will live to age 92
Source: Annuity 2000 Mortality Tables, New York Life
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For healthy 65 year-old couples
25% chance one spouse will live to age 97
Source: Annuity 2000 Mortality Tables, New York Life
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Mind the Gap
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Gap = Living Expenses lessSocial Security & Pension
$50,000 - $20,000 = $30,000
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Social Security Estimate
www.ssa.gov/oact/quickcalc/index.html
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Spending Rate = Gap / Nest Egg
$30,000 / $750,000 = 4%
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2% 3% 3.5% 4% 4.5% 5% 6% 7% 8% 9% 10%
30% Equity 70% Fixed 50% Equity 50% Fixed 70% Equity 30% Fixed
Annual Spending Rate
Probability of Retirement Ruin - 65 Year Old
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2% 3% 3.5% 4% 4.5% 5% 6% 7% 8% 9% 10%
60 Year Old 65 Year Old 70 Year Old
Annual Spending Rate
Probability of Retirement Ruin - 50% Equity / 50% Fixed
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13.1%
29.2%
Probability of Ruin
50% Equity 50% Fixed Income Portfolio
6.3%
4.5%-28.0%
Spending RateReturn
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1%
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10%
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Single Premium Immediate Annuity
also know as
Lifetime Income Annuity
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Lifetime Income Annuity Estimate
www.immediateannuities.com
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Joint Life Income (100% to Survivor)
65 Year Old Couple
$30,000 annual = $504k
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Real interest rate (i.e. net of inflation) 3%
Years until retirement 25
Current Savings $150,000
Annuity Cost $504,000
Additional Savings for Inflation Protection $100,000
Minimum Annual Savings to Fund Annuity $9,427
Min Annual Savings to Fund Annuity + Protection $12,090
Simple Retirement Calculator
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Simple Retirement Calculator
bit.ly/aqDyWn
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3% ???
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Questions and Answers