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What’s Your Retirement Income Plan

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GO ON A JOURNEY TOWARDS RETIREMENT

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Agenda

2

The Retirement RiskThe Retirement Risk

The Retirement RealitiesThe Retirement Realities

Retirement Planning OptionsRetirement Planning Options

The Way Forward:Plan, Act, ReviewThe Way Forward:Plan, Act, Review

##11##22##33##44

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The Retirement Realities

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Planning for Retirement Raises Many Questions

How will I spend my time?

Will I outlive my savings?

How much will things really cost?

How long will I live?

Will I have enough money to leave my family protected?

Will I have enough income to maintain my lifestyle?

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What’s your Retirement Income Gap?

5

AMERICAN

ARE PROJECTED TO BE

WORKERS

$6.6 TRILLION

SHORT OFTHEIR NEEDS

Source: Boston College's Center for Retirement Research, 2010 – Retirement USA study.

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Expected Retirement Age

%

%

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2013 Retirement Confidence Survey.

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Top Reasons for Retirement Age Change

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Worker Retirement Confidence: By Debt Level

8Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2013 Retirement Confidence Survey.

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Retirement Crisis: Financial Realities

9

Source: The Retirement Savings Crisis: Is It Worse Than We Think?, Nari Rhee, PhD, National Institute on Retirement Security, June 2013.Source: The 2013 Retirement Confidence Survey, Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., March 2013.Source: Getting Paid In America Survey, American Payroll Association, September 2012. Source: A Summary of the 2013 Annual Social Security and Medicare Trust Fund Reports

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“Strategy without tactics is the slowest route to victory. Tactics

without strategy is the noise before defeat.”

― Sun Tzu

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Retirement Reflection

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The Retirement Risk

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Retirement Risks For Consideration

Market Risk

Longevity Risk

Inflation Risk

Healthcare Risk

Sequence of Returns Risk

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Longevity Risk: The risk of outliving your assets

Average Life Expectancy at Age 65 and Age 75

83

87

82

8684

88

70

75

80

85

90

Age 65

All

Chart Source: Centers for Disease Control, “Life Expectancy at Birth, at 65 and 75 Years of Age by Race and Sex” (Table 26). Health, United States 2010.

Age 75

Males Females

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Market Risk: Keep a Long Term Perspective with Retirement

14

About the data This is for illustrative purposes only and not indicative of any investment. Stocks in this example are represented by the S&P 500® index, which is an unmanaged group of securities and considered to be representative of the U.S. stock market in general. An investment cannot be made directly in an index.Bonds are represented by the Bank of America Merrill Lynch 3-month U.S Treasury bill. Government bonds and Treasury bills are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest, while stocks are not guaranteed and have been more volatile than the otherasset classes. Source: Zephyr STYLEAdvisor

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Inflation Risk: The inevitable increase of costs of goods and services

15

Ford Mustang

Nursing Home

(annual cost)

Average Home Price

$2,814

$31,395

$2,983

$83,585

$14,950

$271,600

1968

2010

Chart Source: Ford Motor Company; ElderWeb; U.S. Census Bureau (Average Home Price)

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*Source: Say Goodbye to the 4% Rule for Retirement, The Wall Street Journal, March 1, 2013

Withdrawal Risk

According to a Wall Street Journal article* you may

Withdrawal Risk: What’s your income distribution strategy?

Retirement Cash Machine

Retirement Cash MachineSay

Goodbye to the 4%

Rule

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Healthcare Care Risk: Medical costs are on the rise

Present Value of Savings Needed to Fund Out-of-Pocket Health Care Costs for Retirees With Employer Medical Coverage

Men WomenRetire in 2010

Men WomenRetire in 2020

Source: Employee Benefit Research Institute. Issue Brief No. 351, December 2010. This analysis uses a Monte Carlo simulation model to cover health insurance premiums and out-of-pocket expenses in retirement. These observations were used to determine asset targets for having adequate savings to cover retiree health costs 50 percent, 75 percent and 90 percent of the time. Estimates are also jointly presented for a stylized couple both of whom are assumed to retire simultaneously at age 65.

$354,000

$406,000

$187,000

$242,000

$100,000$146,000 $183,000

$245,000

Represents an average chance (50%) of having enough money to cover health care expenses

Represents a higher chance (90%) of having enough money to cover health care expenses

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

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"Obstacles are those frightful things you see when you take

your eyes off your goal."

- Henry Ford (1863-1947)

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Retirement Reflection

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The Retirement Options

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19%19%

12%12%

25%25%2%2%

Chart Source: Sources of Income of Elderly Men and Women (Age 65 and older), Employee Benefit Research Institute, EBRI Notes, September 2010, No. 176

OtherOther

Employment Employment EarningsEarnings

Income fromIncome fromAssetsAssets

Pension & Pension & AnnuitiesAnnuities

Income during Income during retirement retirement takes on a takes on a new meaning.new meaning.

42%42%

Where Will The Income Come From?

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TAKE A HOLISTIC APPROACH

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What Are Sources Of Guaranteed Income?

Social SecurityFederal retirement income program with inflation protection

AnnuitiesIs a long-term financial product designed for retirement planning; provides income that can begin immediately or in the future

Life InsuranceProtection for your future with access during retirement

Pension PlansRetirement income from employer defined benefit plans; guaranteed by the federal Pension Benefit Guaranty Corporation

Certificates of Deposit Time deposits issued by financial institutions insured by up to $250,000 by the Federal Deposit Insurance Corporation

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The Way Forward

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Plan, Act, Review

• Understand what you value most

• Help you design a plan tailored to your goals

• Reach your most important financial objectives, including retirement

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Plan: Uncovering What Matters Most to You

Start thinking about your life goals

Define your income needs

Identify any areas of concern

Talk to your financial professional about tradeoffs:

◦ Retirement vs. Education Funding

◦ Spending vs. Saving

◦ Retirement Lifestyle vs. Legacy Planning

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Step 1

Step 2

Step 3

Step 4

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Take stock of where you are now◦ Review sources of income◦ Estimate budget / Identify gaps

Discuss financial and lifestyle goals with your financial professional ◦ Visit our financial planning and

educational websites:─ MyRetirementWalk.com─ RetirementStyleMatters.com

Implement your plans

2

Act: Put Your Plan to Work

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Step 1

Step

Step

3

Step 3

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Act: How Much Retirement Income Will You Need?

Basic Needs Discretionary Needs Legacy Needs

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Act: How Much Retirement Income Will You Need?

Basic Needs Discretionary Needs Legacy Needs• Mortgage/Rent• Insurance• Food• Clothing• Healthcare

• Entertainment• Travel and Hobbies• Gifts for

Grandchildren• New Car

• Provide for Spouse or Family

• Charitable Gifts• Educational

Scholarships

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Act: How Much Retirement Income Will You Need?

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Act: Take Advantage of Educational Resources

Empower Yourself:

• Visit our Retirement Planning Site MyRetirementWalk.com

• Take our animated walk throughout life’s major milestones and learn saving and planning tips for your consideration

• Access valuable resources: articles, calculators, infographics, and videos

• Hear and learn from industry-recognized experts about a wide spectrum of retirement topics on our frequently updated blog

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Act: Leverage Educational Tools

InfographicsInfographics

CalculatorsCalculators

Financial Personality QuizFinancial Personality Quiz

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Review: Communicate Life Changes

Meet regularly with financial professional to track your retirement portfolio

Communicate any life changes to financial professional

◦ Getting married

◦ Purchasing new home

◦ Welcoming a grandchild

Modify portfolio as your situation – and market conditions – shifts

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Step 1

Step 2

Step 3

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Working Togethe

r

Next Steps:A Financial Professional Can Help

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Develop plan that balances competing financial goals

Understand what the numbers really mean

Create your personalized retirement savings strategy

Find ways to increase your retirement savings

Determine when you can retire

Monitor and make adjustments over time

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In Summary

• Retirement Realities

◦ There are many reasons that cause inaction; you’re not alone and there are ways to prepare.

• Retirement Risk

◦ A number of risks exist that you need to consider over time; resist the urge to let your retirement plan go on autopilot.

• Retirement Options

◦ There are action steps you can take today to become better prepared for the retirement income stage of your life.

◦ Work with your financial professional to determine the right strategy; they can be one of your best allies when it comes to retirement planning.

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Discussion

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