Retirement Planning: Nearing the Finish

(Of accumulating, of course!)

For Investors 50+ yrs old

The focus in this seminar is on Investing for Retirement

Personal Savings are split into:– Taxable Savings• Bank accounts, CD’s• Investments

– Non-taxable, retirement savings• 401(k)

– Traditional & Roth

• IRA

Our focus today

Perspective on Retirement

• We are responsible for our retirement success, no one else

• Harsh realities require focus, attention and more ownership of our retirement account(s)

Retirement 2.0 – A New Look

• Your retirement is unique; don’t be pressed into an obsolete mold

• Retiree’s are healthier, living longer, more active

• Consider need for extra income or benefits

• Working longer, part-time work, consulting or other self-employment

Create a Retirement Vision

• No one knows what the future holds

• Basics– Spend less than you make– Be a great saver – Eliminate debt– Be creative

Create a Retirement Vision

Keep Going• Compound growth

takes time to build• Largest effects felt

after years of saving and investing

• Cannot shortcut process

• Chart based on – 10% contribution rate– 5.14% annual rate of

return– 2% annual salary

increase– 3% annual inflation

50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 75,000

175,000

275,000

375,000

475,000

575,000

Example of Compound Growth

Get Going

50 year old 55 year old 60 year old 75,000

175,000

275,000

375,000

475,000

575,000

520,490

344,417

212,357

401(k) Scenarios• Beginning salary– 50 yr old: $82,000– 55 yr old: $91,000– 60 yr old: $100,000

• Contributes 10%• Includes Amway

match • Retires at 67 years

old

Focus on Contributions

• Your contributions today decide your quality of retirement

• Target 12% to max allowable of $22,500

• Increase gradually, but as quickly as possible

6% 10% 15% 20% 75,000

325,000

575,000

825,000

416,962

520,491

649,901

779,311

Contribution Scenarios(50 yr old)

Manage Spending

• Work on your spending habits first; then your savings

• Use a personal financial management tool– Mint.com– Quicken Books– Excel spreadsheet– Paper / Envelopes

401k Basics – Traditional 401k

• Pre-tax savings provide highly efficient savings tool for building your nest egg

• Taxed as income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)

401k Basics – Roth 401k

• Post-tax savings provide highly efficient savings tool for creating tax-free income upon retirement

• Tax-free income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)

401k BasicsTraditional 401(k)

• Contribution is taken out of paycheck before tax

• Investments grow tax-deferred• Taxed as ordinary income upon

retirement• Distributions without penalty

allowed after 59-½

Roth 401(k)

• Contribution is taken out of paycheck after tax

• Investments grow tax-free• Tax-free upon retirement• Distributions without penalty

allowed after 59-½

401k Basics – Roth DistributionsThere is no penalty or tax on a Qualified Distribution• 5 year rule: to be a

Qualified Distribution, it must be 5 years from Jan 1 of the year of your first contribution

AND• You must be at least 59-½

OR• Qualify for early distribution

– First home– Disabled– Made by your estate

IRS Pub 509

2%3%

4%5%

9%

1%

1%

2%

5%

6%

2%

2%

3%

3%

3%

B & PS

B & PS

B & PS

B & PS

B & PS

Traditional Contribution Roth ContributionAmway Match Amway Base & Profit Sharing

401k Basics – Amway Match

• Amway matches 50% of your contributions in any combination of traditional and Roth, up to your 6%.

• Amway match is always deposited into traditional account.

• Amway’s discretionary base contribution & profit sharing is deposited into traditional account

• 2012 IRS employee contribution limits: – $17,000– $22,500 with “catch-up”

How Your Amway 401k Works

Trad 401(k)

Roth 401(k)

Amway 401(k)• Investment options are

the same for Traditional & Roth

• Select contribution % for each – any combination is allowable

• Accounts shown in aggregate on Fidelity website

Common Amway Myths

• 15% Contribution Max– You can contribute up to

70% of your salary or the IRS limits, whichever is greater

• You have to roll your $ into an IRA upon retirement– Sales technique– You can leave your $ with

the Amway plan if you have more than $5k

Glossary of Important Investment Terms

• Stocks - Fractional ownership in company (Equity)• Bonds - Money lent to company (Debt)• Mutual Funds - An account consisting of a combination of multiple

companies’ stocks and/or bonds • Asset Allocation - The apportioning of investments to the different

asset classes: stocks, bonds & cash (main 3)• Diversification - The apportioning of investments to the different asset

class sub-classes– Stocks

• Large, mid & small cap• Value, growth & blend• International, specialty

– Bonds• Gov’t & Corporate• High yield, inflation protected, low duration, etc

– Cash

An Analogy for Understanding Asset Allocation

• Your Personal Investment Recipe

• Mutual funds = Ingredients

• Recipe = How you mix Ingredients

Determining Your Ingredients

• Make sure the ingredients are varied

• How expensive it is

Focus on Risk• Risk plays a much larger

role in an account with a balance

• A 10% downturn costs far more (in dollars and cents) now that it did 10-15 years ago

• Now have fewer years until you need the money – not enough time to recover from downturn

www.mutpl.com

Common Misbehaviors

Common Misbehaviors

Common Misbehaviors

Common Misbehaviors

Retirement Fund vs. College Fund

• Adequately funding your Retirement comes 1st

• College funding must be secondary

• Our children will probably have options available to them to help pay for college

• This is your ONLY retirement funding opportunity

A Long Term Outlook

Personal Consultations• Determine a plan of action

for to put your retirement in focus

• Free for all Amway employees

• Spouses are welcome to attend

• What to bring:– Fidelity login credentials– Outside asset list– Social Security Statement– Target Retirement Year– Estimate of monthly income

needs

Thank YouSchedule your personal consultation now!

Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780