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PLANNING FOR RETIREMENT

PLANNING FOR RETIREMENT. TYPES OF RETIREMENT INCOME PLANS. TYPES OF RETIREMENT INCOME PLANS. National Insurance Scheme Company Sponsored Pension Plan Personal Annuity . OUR GOAL. Preparing for Retirement via Investment in a Personal Annuity . FEATURES OF PERSONAL ANNUITY.

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PLANNING FOR RETIREMENT

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  1. PLANNING FOR RETIREMENT

  2. TYPES OF RETIREMENT INCOME PLANS

  3. TYPES OF RETIREMENT INCOME PLANS • National Insurance Scheme • Company Sponsored Pension Plan • Personal Annuity

  4. OUR GOAL • Preparing for Retirement via Investment in a Personal Annuity

  5. FEATURES OF PERSONAL ANNUITY • You set the Contribution Rate • Insurance Company / Financial Institution • Tax Deduction if Registered with BIR • Pension based on Fund at Retirement • 25% Tax Free Lump at Retirement • Retire anytime after age 50

  6. FEATURES OF PERSONAL ANNUITY • Pension based onFund at Retirement

  7. BUILDING YOUR NEST EGG Depends on the Balance of : • Amount you Save - Ability to Save not Income Level builds Wealth • Time Invested • The Magic of Compound Interest • Interest Earned • Balance of Risk versus Reward

  8. BUILDING YOUR NEST EGG Effect of Procrastination Illustrated - 2 Friends invest $15,000 each year - Harry starts at Age 25 - Peter starts at Age 30 - Both want to retire at Age 60 - Both earn 7% per annum

  9. BUILDING YOUR NEST EGG

  10. BUILDING YOUR NEST EGG In fact, Peter needs to invest $22,000 per year to have to same Fund Balance as Harry at age 60.

  11. REPLACEMENT RATIO • Your Annual Pension as a percentage of Your Salary Prior to Retirement

  12. REPLACEMENT RATIO • What can I expect? • Let’s Assume: • - Contribute 15% of Salary • - Salary Increase at 5% per annum • - Interest Credited at 7% per annum • - Retire at Age 60

  13. Replacement Ratio at Age 60

  14. What if I want to achieve a 65% Replacement Ratio but I’m past age 25. Option 1 – Increase Contribution Rate Can you afford to save the required amount?

  15. What if I want to achieve a 65% Replacement Ratio but I’m past age 25. Option 2 – Seek out Higher Investment Returns Remember: Higher Returns means Higher Risks

  16. IN SUMMARY • Start Early • The younger you start, the more time compounding is able to work for you. • Remain Disciplined • Maximize your contributions • Make regular contributions • Stay Invested • Be patient and allow your investment to grow

  17. THANK YOU

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