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Planning for Retirement. #14. Learning Goals. Role of Retirement Planning. Set Your Goals At what age do you want to retire? How much money will you need?. Three Biggest Pitfalls in Retirement Planning. Compounding magnifies these pitfalls. Estimating Income Needs. Sources of Income .

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Planning for Retirement

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Presentation Transcript

Planning for retirement

Planning for Retirement


Learning goals

Learning Goals

Role of retirement planning

Role of Retirement Planning

Set Your Goals

At what age do you want to retire?

How much money will you need?

Three biggest pitfalls in retirement planning

Three Biggest Pitfalls in Retirement Planning

Compounding magnifies these pitfalls

Estimating income needs

Estimating Income Needs

Sources of income

Sources of Income

Social security

Social Security

See it as an insurance system not a retirement plan

Benefits provided by payroll taxes employee and employer pay

Amount of benefits may not be sufficient at retirement

Ss retirement benefits

SS Retirement Benefits

Ss retirement benefits1

SS Retirement Benefits

Basic Social Security benefits include:

Pension plans and retirement programs

Pension Plans and Retirement Programs

Employer-sponsored retirement programs

Self-directed retirement program

Employee sponsored programs

Employee Sponsored Programs

Planning for retirement

Defined Contribution

company guarantees contribution, but not a return on it or a retirement benefit

Defined Benefit

company guarantees retirement benefit regardless of pension fund performance

Employer-Sponsored Programs

Supplemental plans

Supplemental Plans

Supplemental plans1

Supplemental Plans

Evaluating Employer-Sponsored Pension Plans

Self directed retirement programs

Self-Directed Retirement Programs

Types of ira s

Types of IRA’s

Self directed accounts and their investment vehicles

Self-Directed Accounts and their Investment Vehicles

  • Individual makes own investment decisions

  • Fund with income-producing assets outside retirement account

    • Growth-oriented securities are more risky

    • Cannot write off losses from sale of securities in IRA or Keogh





Before Retirement:

Accumulation Period

annuitant purchases annuity by paying premiums into the account

During Retirement:

Distribution Period

insurance company makes payments to annuitant. Portion not returned to annuitant prior to death goes to beneficiaries

Planning for retirement

Single Premium vs. Installments

one lump-sum payment or a series of payments to purchase annuity

Fixed vs. Variable

investment grows at low guaranteed fixed rate or possibly a higher variable rate with no guarantee of return

Classification of Annuities

Types of annuity contracts

Types of Annuity Contracts

Deposition of proceeds

Deposition of Proceeds

Fixed versus variable annuity

Fixed versus Variable Annuity

Fixed-rate annuity

insurance company agrees to pay guaranteed rate of interest

Variable annuity

monthly income from policy varies based on insurer’s actual investment experience

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