retire risk free - five concepts

Understanding Five Retirement Planning Concepts

1. Retirement Income Planning

Paradigm shift from accumulation to distribution

Goal: reduce financial risk through asset allocation and sustainable withdrawal rates

Optimum strategy for sequencing liquidation of funds

Need: a guarantee that you will never run out of money

Paradigm Shift

Paradigm Shift

?

2. Three Colors of Money


_____% _____% _____%

Power of Indexing with No Losses

Green Money vs. Red Money

3. Social Security TimingEarliest: age 62 (75%) 40% choose this

“Full” age 66-67 (100%)

Latest: age 70 (132%) 5% choose this

For each year of delay, you gain 8% + inflation for life

Keys: Longevity + Alternate income for ages 62-70

When to Start Payments?

4. Long Term Care Funding

70% will need LTC assistance eventually

Only 10% have any kind of LTC insurance

Average cost is $94K/year ($50K if at home) doubles by 2035

68% worry about how they’ll pay for it

Medicare will only cover 100 days (in facility only)


After age 60, premiums get more expensive

It’s now more difficult to qualify for LTC insurance

Alternate solutions for “anti-nursing home” insurance:

1. Life insurance + LTC hybrid (6X)

2. Annuity + LTC hybrid (3X)

If you assign no dollars to LTC costs, you’ve just assigned ALL your dollars to LTC costs

5. Maximum Tax Efficiency

$ Buckets: tax-free or advantaged, tax-deferred, taxable

Do you think tax rates will go up, stay same, go down?

Pension Protection Act (2010) impacts your planning

WHEN should you withdraw from each bucket in order to minimize your tax obligations and keep more of it?

Which of these five concepts are most important to You?

1. Retirement Income Planning


3. Social Security Timing



Two Pages

Confidential Analysis Planning

WorksheetDate/Time for second meeting?

THANK YOU for your time!

Conventional vs. my strategy

RMDsTaxable accounts (to harvest tax

losses)Tax-deferred

accounts (IRA, 401k, annuity)

Roth IRA

Avoid penalties (RMD, 10%, tax on

SS)Liquidate lower

earning accounts first

Tax-deferred accounts (IRA, 401k, annuity)

Roth IRA


90 days

Understanding a Fixed Indexed Annuity Strategy

Retirement RisksLongevityInflation & Interest RatesStock Market VolatilityTax Policy ChangesBusiness Continuity Long Term CaregivingDeath, Divorce or Family Crisis Bad Advice, Fraud, Theft

The National Retirement Risk Index says over HALF of Americans will NOT have enough retirement income to maintain their standard of living.

Going Broke vs. Death?

Examples of Annuity Payments

Social Security

Company Pensions

Structured Settlements

Lottery Payouts

A fixed sum of money paid to someone regularly for the rest of their life

Where Do Annuities Fit In?

Basic Crediting Concept

When market is UP Positive Gain

When market is DOWN Zero Loss

Interest Crediting Strategies

CAP: upper limits on the annual gain

FLOOR: lower limits on the annual gain

PARTICIPATION RATE: when gain is uncapped

SPREAD/MARGIN/FEE: differential to offset risk

BONUS: upfront incentive for rollovers

What Is Asset Allocation?

“An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and time horizon.”

Say Goodbye to the 4% Rule

Advisors once taught that if you withdrew 4% of your total portfolio each year of retirement, you wouldn't run out of money. Due to our chronic low interest rate environment, experts have now revised that number to only 2.8 - 3%.

Why Keep So Much in Cash?You want control and access if you need to

spend it.

You want to pass on as much as possible to your family and/or favorite charity/cause.

You want to be able to leverage this money to maintain your lifestyle if you need long-term care.

So, if you could meet these same objectives in a better way, would you be open to considering it?

What Is Your #1 Financial Concern?

How long have you had this concern?

What steps have you taken to address it?

How have those steps worked out so far?

Are you OK with leaving things as they are?

What are Your Core Priorities?

retire risk free - five concepts

Economy & Finance