retirement planning - self reliance fair

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

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