Her Retirement Planning Course€¦ · for Women (& their guests) Presented by: Brian Saranovitz, Investment Advisor Representative Your Retirement Advisor 435 Lancaster St., Suite

Her Retirement Planning Coursefor Women (& their guests)

Presented by: Brian Saranovitz, Investment Advisor Representative

Your Retirement Advisor

435 Lancaster St., Suite 358 - Leominster, MA 01453

This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and registered investment adviser.

Cetera is under separate ownership from any other entity.

Hi. I’m Lynn. Welcome to Class.

However…this is More Than a Class.

Hi…I’m

Lynn

It’s the start of an educational process to help you live the retirement you’ve imagined.

Step 1. Get Smart About Retirement

Complete this class

Q&A session & complementary Retirement Efficiency Assessment with Brian

Decision to begin the rest of the planning process

www.HerRetirement.com

About Her Retirement

A planning platform and

suite of resources to

address gaps in knowledge,

preparedness and advice.

The Planning Platform

The Suites of Resources

Your Class Instructor

www.YourRetirementAdvisor.com

Brian Saranovitz of Your Retirement Advisor

YRA is a one-stop retirement advisory practice focused on pre-retirees 50-70 years old

Offices in Acton, Worcester & Leominster

Services offered online across US

Resident retirement “geek”

Investment Advisor Representative with 30 years experience

Former professional football player: Patriots, USFL, Arena.

Some People Think Brian is…

Gronk’s Father!

Brian Featured in National News Media& author of many white papers

https://yourretirementadvisor.com/2018/08/07/brian-saranovitz-featured-in-forbes/

Housekeeping

Handouts

Presentation page numbers

What’s Inside

Bring your folder/presentation next week

Asking Questions

Breaks

Homework & Class Landing Page on HR website

Complete Your Financial Inventory(for a Retirement Efficiency Assessment)

Class Evaluation Form

Disclaimer: Investments in securities do not offer a fix rate of return. Principal, yield and/or share price will

fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than

originally invested. No system or financial planning strategy can guarantee future results. Therefore, no

current or prospective client should assume that future performance or any specific investment, investment

strategy or product will be profitable.

The Topics We’ll Cover in Class

The Need for Proper Planning

Challenges Unique to Women

Building Your Plan

Retirement Risks

Income Distribution: o Expenses, Income Sources, Gaps

o Hybrid Income Portfolio

o Portfolio Costs

o Tax Efficiency

o Income Projections

Income Protection: o Healthcare/Medicare

o Long Term Care & Life Insurance

o Estate Planning

Pulling it All Together: Case Study

Where to Get Help

Next Steps:o Q & A Session & REA with Brian

Class Content Based on Research vs. Rhetoric

“All too often we base our investment decisions on industry marketing and advertising or on what we read and hear in the media or on something

else altogether.”-Robin Powell, financial journalist

Retirement Based on Research

(vs. Rhetoric)

We believe the best route to making reliable, data-driven decisions about your retirement (vs. best guesses or gut feel) is to open your mind and rely on research and analysis, cutting edge technology, and academically proven strategies.

We call this science-based planning

Powerful and reliable. We’re 100% committed to it (and you should be too)!

Some of the Researchers We Follow

Moshe Milevsky, PhD

Professor of finance at York University a leading authority on the intersection of wealth management, financial mathematics and insurance

Michael Finke, PhD

Chief Academic Officer at The American College of Financial Services

David Blanchett, PhD, CFA, CFP

Head or retirement research at Morningstar and thought leader in the fields of wealth management and retirement

Jack Guttentag, PhD

Professor emeritus of finance at the University of Pennsylvania and Consumer advocate

Some of the Researchers We Follow

Wade Pfau, PhDProfessor of Retirement Income in the PhD in Financial and Retirement Planning program at The American College of Financial Services

Larry Kotlikoff, PhDProfessor of Economics at Boston University

Roger Ibbotson, PhDProfessor in the Practice of Finance Emeritas at Yale School of Management

Michael Kitces, CFP, CLU, ChFC, RHU, REBC & CASLFinancial planner, commentator, speaker, blogger, and educator

Let’s Get Started…The Need for Proper Retirement Planning

with the right strategies…with the right process

…with the right help

Reason #1…Because we’re living

longer.

Reason #2…Because “funding burden” is on us.

It is our responsibility

1 https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p1.html

2https://www.planadviser.com/mere-16-fortune-500-companies-offer-db-plan/

24

Retirement funding used to come from a combination

of defined benefit pension and Social Security.1

In 1998, 59 percent of Fortune 500 companies

offered a defined benefit plan, or pension.2

By 2017, that figure had dropped to 16 percent.2

61% of us baby

boomers fear running

out of money more

than they fear death.

-Allianz Retirement Survey, 2009

Reason #3…To quelch our fears.

Reason #4…To understand our

income needs.

However, 81% of us

don't know how

much money we

need to retire.

-Age Wave/Merrill Lynch, "Finances in

Retirement: New Challenges, New

Solutions," 2017

Reason #5…To create a bigger nest egg.

Another 84% of us

don’t have a written

retirement plan.

-TransAmerica Retirement Survey of

Workers, 2016

Reason #6…To control our behaviors.

Everyone has the temptation to chase returns and make uninformed, knee-jerk reactions as the

volatile markets move up and down. In fact, these behaviors have been proven in numerous studies to

negatively impact portfolios over the long term.

The Dalbar Study

Challenges Unique to Women

Retirement Challenges Unique to Women

• Life Expectancy

• Earnings Gap

• Career Breaks

• Retirement Savings Gap

• Greater Likelihood of Living Alone

• Tendency to Invest Too Conservatively

• Healthcare Costs

32

Life Expectancy

33

Women tend to live longer than men, which creates more years in retirement in which they must generate income.

• 70 percent of those ages 85+ are women according to U.S. Census Bureau.*

• According to the Social Security Administration:**

• The average man turning 65 today can expect to live to age 84.3.• The average woman turning 65 today can expect to live to age 86.6.• That’s on average an additional 27 months in retirement that women must

plan for.

*https://www.ssa.gov/planners/lifeexpectancy.html **https://www.census.gov/prod/2014pubs/p25-1140.pdf

According to the Society of Actuaries:*

34

65-Year-Old Man 65-Year-Old Woman

50% Chance 87 90

25% Chance 92 96

*At least one surviving spouse

*https://www.fidelity.com/viewpoints/retirement/longevity

Life Expectancy

Earnings Gap

35

Women who work full-time earn, on average, about 82% of what men earn

Impacts savings, Social Security retirement benefits, and pensions

Increased vulnerability to unexpected economic obstacles: job loss, divorce, single parenthood, illness, loss of spouse

Source: U.S. Bureau of Labor Statistics, Women in the LaborForce: A Databook, November 2017

Women More Likely toTake Career Breaks for Caregiving

36

Lost income and employer benefits

Potentially lower Social Security retirement benefit

Economic vulnerability in event of divorce or a spouse’s job loss

Possible difficulty finding a comparable job when

Re-entering workforce

Flexible schedules can affect salary and career advancement

*http://www.nasdaq.com/article/men-vs-women-risk-aversion-cm297364

Retirement Savings GapStart Saving Later & Save Less

37

• According to a Vanguard study, men have 50 percent higher balances in their retirement plans than women.*

• Even though women are 11 percent more likely to participate in a retirement plan than men.

This imbalance has created a retirement savings gap between men and women.

*https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/InvResWomenVsMenDCPlans

• According to the Department of Labor, women are more

likely than men to work in part-time positions with no

access to a retirement plan.*

• Also according to DoL, women are more likely than men to

interrupt their careers to care for kids or family.**

Why Is There a Retirement Savings Gap?

38

*https://www.dol.gov/ebsa/publications/women.html**https://obamawhitehouse.archives.gov/issues/equal-pay***https://www.cnbc.com/2019/04/02/heres-how-much-men-and-women-earn-at-every-age.html

https://www.cnbc.com/2019/04/02/heres-how-much-men-and-women-earn-at-every-age.html

Women are more likely to live alone in retirement than men.

Likelihood of Living Alone

39

• For women ages 75+, only 32 percent live with a spouse

Heightened Risk Aversion

40

• A BlackRock study of 4,000 investors found that women on average hold more conservative investments than male investors.*

• A conservative approach can sometimes be a good thing, but growth is also important.

• Being too cautious could prevent the type of growth needed for the amount of retirement income desired.

*http://www.nasdaq.com/article/men-vs-women-risk-aversion-cm297364

Impact of Health-Care Costsin Retirement

41

Higher health-care expenses in retirement

Surviving spouse may have to cope with depleted savings (typically women)

57% of women over age 65 will need long-term care

Average monthly cost of nursing home = $6,844.

Sources: US Department of Health and Human Services, Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief,February 2016; longtermcare.gov

In Summary…

Speaking of Directions…It’s IMPERATIVE that women, especially, have a plan that addresses

these challenges with an efficient & sustainable retirement income!

This might not be the best plan for us women…

Seriously…

“Those who have a written retirement plan have a

nest egg 445% bigger than non-planners.”

-HSBC, Future of Retirement, 2013

Let’s have Brian tell us how to create and implement the right plan.

The Right Plan Answers…

How to get more from what you have?

When is retirement feasible?

How you’ll support your desired lifestyle?

How long your money will last?

How you’ll meet the gap between expenses & income?

How you’ll protect your nest egg?

What legacy you’ll leave?

To create the right plan, you’ll need to change your ideas, beliefs and mindset in retirement.

Write this down:

• Distribution phase of life is different than accumulation phase• It requires different strategies and specialized help• Most advisors have managed investments, not retirement

planning

The Right Retirement Plan is More Than a 401(k) or an Investment Strategy

“Most advisors concentrate solely on managing investments. They don’t incorporate all the intricate retirement strategies that must be utilized to dramatically increase the probability

of a retiree’s success.” - Wade Phau, PhD, Retirement Researcher

The research backs this up…

Morningstar Study – Proper strategies can add 1.59% equivalent yield

Vanguard Study – Proper strategies can add 3% or more equivalent yield

Envestnet Capital Study – Proper strategies can add 3% or more equivalent yield

50


Alpha, Beta, and Now…GammaDavid Blanchett, CFA, CFP® Head of Retirement Research, Morningstar Investment Mgt

Paul Kaplan, Ph.D., CFA Director of Research Morningstar Canada

August 28, 2013

Morningstar Executive Summary

Using Monte Carlo simulation, we estimate a retiree can expect to generate

22.6% more in certainty equivalent income using a Gamma-efficient

retirement income strategy when compared to our base scenario…

This addition in certainty-equivalent income has the same impact on expected

utility as an annual arithmetic return increase of +1.59%

51


Alpha, Beta, and Now…Gamma

Morningstar research estimates a retiree can expect to generate 22.6%

more income from a Gamma efficient income strategy

What does this mean for a retiree???

Investment only portfolio generating annual income of $60,000.

Utilizing a Gamma Strategy can generate $ 73,560. or 22.6% more income

Additional annual income generated: $13,560.

52

The Right Retirement Plan …Incorporates Multi-Discipline Retirement Strategies (MDRS)

Income Distribution

Investment Management

Tax Efficiency

Home Equity

Risk Management

Estate Planning

The Right Retirement Plan…Relies on sophisticated, technology-based assessments to see what

you’ve got, what you need and how to make it as efficient as possible

55

Don’t Let Procrastination, the Media, Confusion or Bias Get in the Way of Planning

Procrastination (#1 reason people don’t have a plan)

Everyone puts off things that make them feel uncomfortable (like getting that root canal) or things they don’t understand

Listening to naysayers, media hype, misinformation

Let the data & reasoning guide you

Biased opinions from industry silos

56

Speaking of Siloes & the Media....Siloed Financial Services Industry

CPAs Prepare Taxes – Typically focus

on tax returns NOT tax planning

Insurance Agents – Typically focus on

annuities & life insurance

Investment Advisors - Typically focus

on traditional investments

Extremism in Different Siloes Can Harm

Your Retirement

• Insurance Industry Zealots – “You Could Lose all your

money in the market overnight.” Wealth Beyond Wall Street

• Investment Industry Zealots – “Insurance and Annuities

are overpriced and sold by commissioned salespeople

who are out to rob you.” Ken Fisher

Siloed, Biased and Ignorant Beliefs Can

Hurt You. Beware of such fear tactics!

Extremism

Extremism passionately focuses on one belief and

discredits opposing beliefs

• Extremisim Inpacts our World

• Religion, Politics, or Finances

• DOL Fiduciary Rule

• Putting the “best interetst” of clients first

• Extremism “flies in the face” of the rule

• Beware of advice that promotes one strategy

• Stocks, bonds or annuities - at the expense of all others

Extremist Views Can Sabotage Your Retirement!

A Better Way…. “THE MIDDLE WAY”

“THE MIDDLE WAY is a path of moderation and wisdom

between extremes” - Buddha

THE MIDDLE WAY Retirement

Approach considers all financial

facets and tailors the plan to

individual needs

Figuring this Retirement Stuff Out Can Be Hard,

Intimidating & Confusing, but the Right Plan,

Process, Strategies and Help Can Change Your

Outcome…for the Better.

To Summarize…

Funding retirement is now YOUR RESPONSIBILITY

• Base decisions on research vs. biased rhetoric

• A written plan is critical (445% bigger nest egg)!

• Knowledge is Power

• Women face extra challenges

• Be open-minded to new ideas• Most advisors focus on investments… Retirement requires more

• The right plan incorporates Multi-Discipline Retirement Strategies

• Extremism and industry silos can harm your retirement

Build Your Plan with these 5 Steps(begin 5-10 years prior to retirement)

STEP 1: Determine Retirement Goals (lifestyle desires)STEP 2: Create Income Distribution Plan

• Determine any Retirement Income Gapo Identify retirement expenses & guaranteed income sources

• Fill the Income Gap o Identify other income sources, savings & investmentso Create an efficient & sustainable retirement paycheck

• Big 5 strategies• Safe withdrawal rate

STEP 3: Create Income Protection Plano Healthcare/Medicare, long term care & life insuranceo Estate planning

STEP 4: Pull it All Together: Retirement Efficiency AssessmentSTEP 5: Get Reliable Guidance

Step 1: Determine Your Retirement Goals

Living in RetirementRetirement is more than just money

Freedom to travel, pursue hobbies

Ability to live where you want (e.g., in current home, vacation home)

Opportunity to provide financially for children or grandchildren

It’s important to take the time to determine you

(and your spouse’s “why” in retirement)

Living in RetirementRetirement is more than just money

Fit to Retire (1 year to retirement)

2000 hours annually (40 hrs/week x 50 weeks/yr)

More than Money Exercises

Determine your passion

Build Your Plan with these 5 Steps

STEP 1: Determine Retirement Goals (lifestyle desires)STEP 2: Create Income Distribution Plan

• Determine the Retirement Income Gapo Identify retirement expenses & guaranteed income sources

• Fill the Income Gap o Identify other income sources, savings & investmentso Create an efficient & sustainable retirement paycheck

• Big 5 strategies• Safe withdrawal rate

STEP 3: Create Income Protection Plano Healthcare/Medicare, long term care & life insuranceo Estate planning

STEP 4: Pull it All Together: Retirement Efficiency AssessmentSTEP 5: Get Reliable Guidance

Annual income

needed in retirement

for expenses

Annual income from guaranteed

sources

Determine Your Expenses

Determine Your Guaranteed Income Sources

Determine any Income Gap

Fill the Gap

Income Distribution PlanHow Much Do You Need To Retire?

Determine the Gap

Fill the Gap (create your retirement paycheck) with other income sources, savings & investmentsAnd the right strategies.

Step 2: Create Your Income Distribution Plan

62% of people have not sought adviceon how to turn savings into retirement income

The Number One

Goal of Retirement

(besides health) …

…to Make Sure Your Money

Lasts as Long as You Do (while living your desired lifestyle)

The oldest person ever whose age has been verified

is Jeanne Calment (1875–1997) of France, who died at the

age of 122 years.

Source: REUTERS

To do this effectively, you’ll need

an “Efficient & Sustainable”

retirement income for life.

You may also need an attitude adjustment or at least an open mind (and a commitment to getting educated)…

The distribution phase of life requires COMPLETELY different strategies from the accumulation phase

Creating an Efficient and Sustainable Retirement Income for Life

What does this mean to you???• Having more spendable in your pocket income and enjoying a

better, more robust retirement with your friends and family

• Leaving more on to your loved ones (children or grandchildren)

• Just knowing you’re getting the most from what you’ve got and inner peace knowing you’re all set

Annual income


for expenses


sources




Fill the Gap


Determine the Gap


Create your retirement budget

• A retirement budget is an estimate of yourfuture expenses

• Serves as a roadmap for your savings andyour strategy

• Nearly 60 percent of Americans don't use a budget*

*https://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html

Determine Your Retirement Expenses

77

General guidelines (e.g., you’ll need 60% to 90% of pre-retirement income) are easy but not always helpful

Think about what expenses will change (e.g., mortgage may decrease, health-care costs may increase)

Include costs for special retirement pursuits (e.g., travel, hobbies)

How to Project Retirement Expenses?

Fixed Expenses – The bills you have to pay. Mortgage Credit card payments Utilities Food

Discretionary Expenses – The “fun” expenses. Dining out Shopping Travel

Add these expenses together to get an estimate of your total monthly and annual spending (i.e. your budget).

Account for all Your Potential Expenses

79

Annual income


for expenses


sources




Fill the Gap


Determine the Gap


How Much Income Can You Expect in Retirement?

Source: Fast Facts & Figures About Social Security, 2017, Social Security Administration


1. Pensions Plans• Defined Benefit

2. Social Security

3. HECM Loans Tenure Offer

4. Annuity Income SPIA’s & GMIB’s

Pension Plans (Defined Benefit Plans)

Pay a guaranteed monthly income for a specified period or lifetime

Corporation or Government entity is responsible for guaranteed payments to participants

Defined Benefit Pension Plans

Typical Payout Options – Pay a guaranteed monthly income for a specified period or lifetime

Lifetime Income Only

Maximum payout option

Payments cease at the death of the pension owner

Lifetime Income with Joint & Survivor option

Reduced payout option

Payments continue to the spouse or chosen beneficiary

Many other options may be available

1. Pensions Plans Defined Benefit

2. Social Security




Income That Will Last a Lifetime

Social Security offers a guaranteed income stream along with longevity protection, spousal protection, and even some inflation protection.

Old-Age, Survivors, and Disability Insurance (OASDI) Program

• Signed into law in 1935 during the Great Depression (FDR)

• Social Security is the single largest source of retirement income for 62% of retirees

• Social Security accounts for 33% of the average Americans retirement income.

Source: Social Security Administration, 2017

History Behind America’s Retirement Safety Net

Social SecurityHow is Your Benefit Calculated?

Your highest 35 years of earnings are indexed then averaged, and a formula is applied to determine your benefit at full retirement age.

Your Social Security Statement

Visit ssa.gov/myaccount/

to create a my Social Security

account and view your

Social Security Statement online.

Understanding COLAs

After factoring in the 2019 COLA, the average monthly benefit for a retired worker will be $1,461.

Source: Social Security Administration, 2018

Years COLASince 1975 3.7% average

2009 5.8%

2010 0%

2011 0%

2012 3.6%

2013 1.7%

2014 1.5%

2015 1.7%

2016 0%2017 0.3%2018 2.0%

2019 2.8%

Benefits are based on the age when you claim them.

Earliest age: 62*

Full retirement age: 66 to 67**

Latest age: 70

*Surviving spouses can claim survivor benefits at age 60.

**Full retirement age varies depending on year of birth.

When Can You Claim Social Security Retirement Benefits?

Full retirement age Age 62 benefitYear of birth Age 70 benefit

1943–54 66 75.00% 132.00%

1955 66 and 2 months 74.17% 130.67%

1956 66 and 4 months 73.33% 129.33%

1957 66 and 6 months 72.50% 128.00%

1958 66 and 8 months 71.67% 126.67%

1959 66 and 10 months 70.83% 125.33%

1960 & later 67 70.00% 124.00%

How Does Filing Early or Later Affect the Monthly Benefit?

ToddBirth year: 1956 Full retirement age: 66 + 4 months

Monthly Annually

Age 62 benefit (73.33%) $1,467 $17,604

Full retirement benefit (100%) $2,000 $24,000

Age 70 benefit (129.33%) $2,587 $31,044

MarianBirth year: 1960 Full retirement age: 67

Monthly Annually

Age 62 benefit (70%) $1,680 $20,160

Full retirement benefit (100%) $2,400 $28,800

Age 70 benefit (124%) $2,976 $35,712

These hypothetical examples are used for illustrative purposes only. Actual benefits and results will vary.

How Claiming Age Affects Monthly and Annual Benefits

By delaying, you might increase not only your monthly benefits but also your lifetime benefits, depending on how long you live.

62

$700,000 Age 70 Maximum monthly benefit:$2,640

Age 66 Full monthly benefit (PIA):$2,000

Age 62 Reduced monthly benefit:$1,500

62 66 70 74 78 82 86 90

$633,600$576,000$504,000

$350,000

$0

Assumes $2,000 PIA at age 66.

This hypothetical example is used for illustrative purposes only. Actual benefits and results will vary.

How Claiming Age Affects Lifetime Benefits

Social Security tax is assessed at 6.2% for employers and employees Earning threshold is $132,900 Maximum tax of $8,329

Social SecurityMaximum taxable Earnings

Social SecurityDo You Plan to Continue Working?

Under fullretirement age?

Reached fullretirement age?

Earnings from a job will reduce your Social Security benefit.

Earnings from a job will not reduce your Social Security benefit.

Social SecurityHow Working Affects Benefits?

$1 reduction for every $2 that earnings exceed annual limit-- $17,640 in 2019

Before full retirement age

Year you reach full retirement age

At or after full retirement age

$1 reduction for every $3 that earnings exceed annual limit--

$45,360 in 2019

Earnings will not affect your benefit

Social SecurityWill Your Benefit Be Taxable?

Provisional Income = adjusted gross income + nontaxable income + ½ of Social Security benefit income

Up to 50% of benefit may be taxable if your combined income* is:

$25,000 to $34,000 and you file as single

$32,000 to $44,000 and you file as married filing jointly

Up to 85% of benefit may be taxable if your combined income* is:

Over $34,000 and you file as single

Over $44,000 and you file as married filing jointly

Social SecuritySurvivor’s Benefits

Surviving spouse generally receives the greater of the retirement benefit the worker was receiving or his or her own benefit

Survivor’s benefits may be payable as early as age 60, subject to reduction

Social SecurityThe Impact of Divorce

As a divorced spouse, you may be entitled to Social Security benefits based on ex’s work record if:

● You were married for at least 10 years

● You have attained the minimum age required

● You are unmarried* (it doesn’t matter whether ex has remarried)

● Your own worker benefit would be lower than ex-spouse’s benefit

*Remarriage after reaching age 60 does not affect eligibility for survivor benefits if ex is deceased.

Social SecurityThe Future of Social Security

Over the years, we’ve worked hard and contributed into the Social Security system. The question is, when we retire, will there be any money left?

Demographic TrendsIn 1945, the ratio of workers to Social Security beneficiaries was 41.9 to 1*

In 2013, the ratio of workers to Social Security beneficiaries was 2.8 to 1*

In 2035, the projected ratio of workers to Social Security beneficiaries will be 2.1 to 1By 2034, only 79% of scheduled annual benefits will be funded*

*Social Security Administration, 2014 OASDI Trustees Report.

Social SecurityThe Future of Social Security

What Can You Expect?

Restructuring Social Security always seems to be on the political agenda. Possible future changes may include:

• Delaying full retirement age

• Reducing cost of living increases

• Modifying the benefit formula to reduce basic benefits

• Increasing payroll taxes

Social SecuritySocial Security Timing Strategy

Sophisticated Social Security Analysis

Determine maximum Income

Assess breakeven analysis

Integrate benefit with all retirement assets to determine the highest probability of portfolio survival


2. Social Security




HECM Loans (Reverse Mortgages)

Can I tap into my home equity to support myself in retirement?

Must be 62 Years of age

Typically need 60% equity to qualify

Owners must maintain the home as well as pay property taxes


How to Utilize a RM?

Line of Credit – Can create an increasing line of credit which can be utilize as a tax-free source of funds

Tenure Payment – Can create a tax-free guaranteed income payment for life

Eliminate Monthly P&I Payment – Can eliminate the P&I payments based upon your equity balance


How to use Reverse Mortgages to Secure Your RetirementBy Wade Pfau, Ph.D, CFA,February 27, 2017

“Though reverse mortgages have long held a bad reputation, research and Public policy in recent years are shedding a new light on their potential uses in retirement.”

“Financial planning research has shown that coordinated use of a reverse Mortgage starting earlier in retirement outperforms waiting to open a reverse mortgage as a last resort option once all else has failed.”

NOTE: It is imperative to calculate the effect of a reverse mortgage on each individuals personal situation to determine the negative or positive effect on the overall retirement outcome. Each retiree’s situation and asset levels different and outcomes will vary based upon these nuances.

HECM Life of Credit Growth Rate

The Growth Rate is always 1.25% above the initial interest rate (IIR), which is the annual rate that interest accrues on the loan balance.

For example, if the IIR on the loan balance is 3.75% then the growth rate on the credit line would be 5.00% (3.75% + 1.25%)

As long as at least one borrower is living in the home and paying the required property charges (property taxes, homeowner’s insurance, etc.)

The line of credit is always guaranteed to grow without limit

108

Prudent Use of Home Equity

HECM Outstanding Loan Balance

Any outstanding loan balance accrues internally and are debited against home equity

•Will be repaid upon death or sale of the property

•Any equity is retained by the owners or the estate

Non-recourse Loan – If the loan amount exceeds the home’s value, the lender cannot go after the borrower, heirs or the estate.

109

Prudent Use of Home Equity


2. Social Security





All Annuities Offer

Accumulation

(Fixed or Variable)

Guaranteed Income Stream

(SPIA or GMIB)

Add to your Guaranteed Income SourcesImmediate Income Annuities

Single Premium Immediate Annuity (SPIA)

Purchase Options Purchase with a Lump sum payment (NQ or Qualified) Convert any annuity from accumulation to a SPIA

Guaranteed Income Payout Options Lifetime income Lifetime Income with 10 Yr Certain Lifetime Income with 20 Yr Certain Lifetime income with survivor options Plus many more options

Annual income


for expenses


sources




Fill the Gap

Income Distribution PlanAfter determining the gap, we move on to filling the gap

Determine the Gap


END SECTION 1

Documents

Her Retirement Planning Course€¦ · for Women (& their guests) Presented by: Brian Saranovitz, Investment Advisor Representative Your Retirement Advisor 435 Lancaster St., Suite