Retirement Planning
Nov 28, 2014
Retirement Planning
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
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
Social Security
Defined BenefitPlans
Personal Savings(IRAs / 401k)
EmploymentEarnings
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
%
%
%
%
%
%
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
%%
%
%%
%
%
%
%
How Much?
Inflation Longevity Market
Spending Income Issuer
HealthcareHousehold
Shock Public Policy
Retirement Risks
Source: Retirement Income Industry Association
Inflation Longevity Market
Spending Income Issuer
HealthcareHousehold
Shock Public Policy
Investment Related Retirement Risks
Source: Retirement Income Industry Association
How Long?
For healthy 65 year-old couples
50% chance one spouse will live to age 92
Source: Annuity 2000 Mortality Tables, New York Life
For healthy 65 year-old couples
25% chance one spouse will live to age 97
Source: Annuity 2000 Mortality Tables, New York Life
Mind the Gap
Gap = Living Expenses lessSocial Security & Pension
$50,000 - $20,000 = $30,000
Social Security Estimate
www.ssa.gov/oact/quickcalc/index.html
Spending Rate = Gap / Nest Egg
$30,000 / $750,000 = 4%
0
10
20
30
40
50
60
70
80
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
%
%
%
%
%
%
%
%
0
10
20
30
40
50
60
70
80
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
%
%
%
%
%
%
%
%
13.1%
29.2%
Probability of Ruin
50% Equity 50% Fixed Income Portfolio
6.3%
4.5%-28.0%
Spending RateReturn
1%
10%
Single Premium Immediate Annuity
also know as
Lifetime Income Annuity
Lifetime Income Annuity Estimate
www.immediateannuities.com
Joint Life Income (100% to Survivor)
65 Year Old Couple
$30,000 annual = $504k
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
Simple Retirement Calculator
bit.ly/aqDyWn
3% ???
Questions and Answers