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Investment Insight:Planning Ahead or Lie Without a Paycheck

With a ew calculations, it is possible to estimate how much

money you will need in retirement in order to maintain apre-retirement standard o living. Your Financial Consultantwill be glad to make these projections or youcalculationsthat include the lump sum total (o your retirement nestegg)and a monthly income gure.Once you get a x on the big picture, you can gure out where the money willcome rom. Will it be your employer, your government, your private investmenteforts, or a combination o all three?

First o all, a ew realities are in order. Be aware that:

Americansarelivinglonger,healthierlives.erefore,youmayneed25+years or more o income in retirement. efederalgovernmenthassignaledinmanywaysthatitexpectscitizens

to pay their own way in retirement.

Demographers estimate that most retirees will need at least 70 to 80 percent otheircareerincomeduringretirementyears.Seventypercentof$50,000,forex-ample,is$35,000.Broadlyspeaking,aretirementnesteggusuallyhasthreesources;these are your social insurance benets rom the Social Security system, pensionunds rom your employer and private investments generated by your own eforts.

To determine what your Social Security benet will be, contact the people whorunthefederalprogram.eSocialSecurityAdministrationinWashington,D.C.maintainstaxrecordsonwage-earnersfromcoasttocoast;thesestatisticsdateback to the New Deal era o Franklin D. Roosevelt. Federal actuaries use the enor-mous reams o data to calculate and project the scope o your benets in old age.And you have a right to the inormation any time you choose to seek it.

esizeofyourbenetfromthispublicinsuranceprogramisrootedintheaveragewage you earn throughout your career. Roughly, here is what you can expect romSocial Security:

$8,000annuallyifyouearnupto$25,000now $12,000annuallyifyouearnupto$40,000now $14,500annuallyifyouearnmorethan$40,000now*

Experts agree that Social Security will replace less than hal the income you earn

duringyourworkingyears.Typically,itreplacesonly40percentoftheaverageworkerswage.atleaves60percenttobenancedthroughprivate-sectorsources

Another signicant detail here is that the eligibility age or claiming benets isclimbing. At the moment, Americans can claim ull Social Security benets at age

A 401(k) savings program

guarantees nothing. Future

benefits depend on how

wisely the wage-earner

invests in the stock market,

a reality that has shifted the

risk and responsibility of

financing retirement from

the shoulders of employer toemployee.

Investment Insight

for Every Generation

Since 1854sm

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Investment Insight: Planning Ahead or Lie Without a Paycheck

65.Asecondoptionpermitsretirementat62witha20percentreductioninben-ets.Beawarethatifyouchoosetoretireat62,thebenetreductionispermanent

Forcitizensbornin1960orlater,however,theeligibilityagewillreach67.echange occurred because lawmakers reasoned that with lie expectancies rising,

Americans can work longer.

Next, look to your employer or retirement income. What help can be expectedthere? Less than in years past. Guaranteed pensions in the orm o a so-calleddenedbenetincomestreamarenowscarce.eparadigmthathasreplaceditisadenedcontribution401(k)savingsprogramthatguaranteesnothing.Futurebenets depend on how wisely the wage-earner invests in the stock market, areality that has shited the risk and responsibility o nancing retirement rom theshoulders o employer to employee.

To evaluate the value o your workplace retirement savings eforts in tomorrowsdollars,gethelp.eultimatecalculationwilladdthesumexpectedfromyour401(k)toyourSocialSecuritybenet.edierencebetweenthissumandthe

total amount needed will be how much money you must raise through privateinvestments or a part-time job.

Doing the mathenesteggyouwillneedinretirementisprofoundlyinuencedbyyourageuponretirement.Ifyouchoosetoretireat55insteadof65or70,thedecisionwillgreatlyaccelerate your need to save. Follow the ormula below to help in making calcula-tions. Take the sum you will need annually rom private investments and multiplyitbyoneofthefactorscitedbelow.iswillyieldtheamountyoumustsavebeforeretirementdawnsifyouexpecttoproduceannualincomeofthatsizeduringretire-ment.

Retirement Age Factor 55 23.8 60 19.8 65 16.2 70 12.8*

Forexample,ifyouneedtoraise$12,500annuallyfromyourprivateinvestments,andyouwanttoretireat60,multiply$12,500by19.8.eresultinggureis$247,500,anamountthatcanberaisedbyaninvestmentportfolioifyoubeginearly.

As with all nancial deliberations, the aid o proessional advice is invaluable. Aterall, achieving long-term investment goals requires the time and attention o proes-sionals dedicated to your success. Call on me to help you make decisions that arebest suited or you.

*Source:SecuritiesandFinancialMarketsAssociation.

The complexities of building,

preserving and passing along

wealth have never been

greater. Affluent investors are

increasingly seeking guidance

and comprehensive solutions

that consider their unique

circumstances and long-term

goals. Its my pleasure to work

with such individuals to offer

insight, advice and solutions in

helping them reach their goals.

www.hilliard.com

Hilliard Lyons does not oer tax or legal advice. Please consult your tax advisor or attorney beore makingany decision that may aect your tax or legal situation. Securities oered through J.J.B. Hilliard, W.L. LyonsLLC|MemberNYSE,FINRAandSIPC.2007Allrightsreserved.Rev.01/2011.