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USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. Retirement readiness with the 3-7-5 strategy Re-Engineering Retirement SM.

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Presentation on theme: "USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. Retirement readiness with the 3-7-5 strategy Re-Engineering Retirement SM."— Presentation transcript:

1 USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. Retirement readiness with the strategy Re-Engineering Retirement SM Insurance and annuities are issued by Allianz Life Insurance Company of North America Neither Allianz, its agents, or representatives offer tax or legal advice. Clients should always consult with qualified tax/legal advisors concerning their own situation. © Copyright 2008 Allianz. All rights reserved. [Presenter name, credentials]

2 USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. Transition from accumulation to income Types of retirement expenses Sources of income Options for making income cover expenses

3 ENT-657 (R-12/2008) 3 Important retirement questions Will I have enough to retire when I want to retire? Will I run out of income in retirement? How will inflation affect my retirement income?

4 ENT-657 (R-12/2008) 4 Retirement readiness? -Dont have formal retirement strategies -Assume they have limited options for improving their financial situation once they reach retirement -Confused about the complexity of financial issues -Limited knowledge of and/or help in the retirement income strategies process -Think retirement is simply the reverse of accumulation

5 ENT-657 (R-12/2008) 5 The retirement income strategy

6 ENT-657 (R-12/2008) 6 Agenda: Re-Engineering Retirement The retirement strategy / Case study Next steps Difference between accumulation and income

7 ENT-657 (R-12/2008) 7 Retirement accumulation stage Retirement Accumulation Stage Retirement Income Stage Financial Objective Have enough money to retire Asset Allocation Portfolio allocation Time Horizon Known to retirement Thinking differently

8 ENT-657 (R-12/2008) 8 How much will we have? How much money will we need? Will we have enough to get by? Will there be enough for extras? Will there be something for our heirs? Thinking differently

9 ENT-657 (R-12/2008) 9 Retirement income stage Retirement Accumulation Stage Retirement Income Stage Financial Objective Have enough money to retire Not outlive assets Asset Allocation Portfolio allocation Withdrawal allocation Time Horizon Known to retirement Thinking differently

10 ENT-657 (R-12/2008) 10 The Lost Decade 6,000 8,000 10,000 $12,000 The S&P 500: 1999 through February Total return on $10,000 investment adjusted for inflation. Note: Not possible to invest directly in the index. Standard & Poors 500® index (S&P 500®) is comprised of 500 stocks representing major U.S. industrial sectors. Standard & Poors®, S&P®, S&P 500, Standard & Poors 500, and 500 are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Allianz Life Insurance Company of North America. The product is not sponsored, endorsed, sold or promoted by Standard & Poors and Standard & Poors makes no representation regarding the advisability of purchasing the product. Thinking differently The Wall Street Journal, March 26, 2008

11 ENT-657 (R-12/2008) 11 Sequence of returns Bad returns later / sooner Year $500,000 $3,000, Hypothetical value Hypothetical value at 0% Year 1: -17.9% Year 2: - 0.8% Year 3: -19.7% Year 4: 3.7% Year 5: 11.0% Year 26: 22.2% Year 27: 5.2% Year 28: 14.3% Year 29: 24.6% Year 30: 12.1% Year 1: 12.1% Year 2: 24.6% Year 3: 14.3% Year 4: 5.2% Year 5: 22.2% Year 26: 11.0% Year 27: 3.7% Year 28: % Year 29: - 0.8% Year 30: % This example is shown for illustrative purposes only and is not intended to predict or project future results. It is not intended to represent any specific product or investment, and does not reflect the deduction of taxes or product fees or expenses. Thinking differently

12 ENT-657 (R-12/2008) 12 Retirement income stage Retirement Accumulation Stage Retirement Income Stage Financial Objective Have enough money to retire Not outlive assets Asset Allocation Portfolio allocation Withdrawal allocation Time Horizon Known to retirement Unknown to date of death Thinking differently

13 ENT-657 (R-12/2008) 13 How can we make the most of my retirement income sources? What should we reposition in consideration of tax and transfer issues? What should we spend first, next, last? What should we hold? Thinking differently

14 ENT-657 (R-12/2008) 14 Transition to: Maximize sources of income Retirement income strategies Retirement Accumulation Stage Financial Objective Have enough money to retire Asset Allocation Portfolio allocation Time Horizon Known to retirement Thinking differently Reposition assets to meet needs and goals Retirement strategies transition Re-Engineering Retirement Retirement Income Stage Not outlive assets Withdrawal allocation Unknown to date of death

15 ENT-657 (R-12/2008) 15 The Strategy

16 ENT-657 (R-12/2008) Strategy

17 ENT-657 (R-12/2008) 17 Three levels of retirement expenses Expenses Legacy Desired Survival Strategy Expenses to cover your most basic needs Lifestyle extras Funds remaining for your heirs

18 ENT-657 (R-12/2008) 18 Seven sources of income for retirement Sources of Income Welfare - charity Nonqualified Assets (NQA) Roth IRA Traditional IRA Qualified ERISA Social Security Continued Employment Expenses Legacy Desired Survival Strategy The base Employer sponsored plans ERISA contributions and rollovers Tax deferred / tax free Mutual funds, CDs, stocks, bonds Phase into retirement gradually Not desirable

19 ENT-657 (R-12/2008) 19 Hypothetical story Ken and Patty at retirement Story Note: This example is shown for illustrative purposes only and does not represent actual Allianz clients..

20 ENT-657 (R-12/2008) 20 Ken & Patty – age 66 Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates Story Combined Social Security$2,000 per month Defined Benefit (Pension) income$500 per month Home is mortgage freeZero IRA (including rollover)$500,000 Savings portfolio$400,000 Estimated annual retirement expenses Survival expenses: $36,000 Desired expenses: $20,000 Desire to leave a legacy

21 ENT-657 (R-12/2008) 21 Survival $36,000 Desired $20,000 Legacy Expenses Re-Engineering Retirement Sources of Income Welfare – charity Nonqualified Assets (NQA) Roth IRA Traditional IRA Qualified ERISA Social Security Continued Employment $400,000 None $500,000 $24,000 $6, Story Ken & Patty Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

22 ENT-657 (R-12/2008) 22 Re-Engineering Retirement Survival $36,000 Desired $20,000 Legacy Expenses Sources of Income Welfare – charity NQA Roth IRA Traditional IRA Qualified ERISA Social Security Continued Employment $6,000 $120,000 annuity $280,000 (25 5% return) $24,000 None $500,000 Pattys pension plan $6,000 5% Rate of return is for illustrative purposes only. Guarantees are backed by the financial strength and claims paying ability of the issuing company Story Ken & Patty $24,000 $6,000

23 ENT-657 (R-12/2008) 23 Re-Engineering Retirement Survival $36,000 Desired $20,000 Legacy Expenses Sources of Income Welfare – charity NQA Roth IRA Traditional IRA Qualified ERISA Social Security Continued Employment $6,000 $120,000 annuity $6,000 $24,000 Work part-time until age 70 $24,000 $280,000 (25 5% return) None $500,000 Pattys pension plan $6, Story Ken & Patty Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

24 ENT-657 (R-12/2008) 24 Re-Engineering Retirement Survival $36,000 Desired $20,000 Legacy Expenses Sources of Income Welfare – charity NQA Roth IRA From IRA Traditional IRA IRA $500,000 Qualified ERISA Social Security Continued Employment $6,000 $120,000 annuity $6,000 $24,000 IRA RMD $18,250 From nonqualified $1,750 Roth IRA $24,000 $280,000 (25 5% return) Work part-time until age 70 Pattys pension plan $6, Story Ken & Patty Note: This example is shown for illustrative purposes only. All figures are pre-tax estimates.

25 ENT-657 (R-12/2008) 25 But what if …? Strategy

26 ENT-657 (R-12/2008) 26 5 Options to improve income Sources of Income Welfare – charity Nonqualified Assets Roth IRA Traditional IRA Company retirement programs Social Security Continued Employment Strategy Survival Desired Legacy Expenses Options Lower your expectations Spend less and save more now Decide to work longer. Take on more investment risk Combination (or all) of above

27 ENT-657 (R-12/2008) 27 5 Options at work Strategy $ needed to supplement income $ now (401(k)) $ additional (401(k)) $ more 70? Conservative 4 - 6% Moderate 6 - 8% Aggressive % Combination of all options Current standard of living Age Time Retirement This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.

28 ENT-657 (R-12/2008) 28 Current standard of living 5 Options at work Strategy Age Time $ needed to supplement income $ additional (401(k)) $ more Combination of all options 65 68? Conservative 4 - 6% Moderate 6 - 8% Age Time This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.

29 ENT-657 (R-12/2008) 29 Summary Evaluate how well your retirement expenses match up with your retirement income Many people approaching retirement are worried about their financial security in retirement Re-Engineering Retirement can help you successfully transition from accumulation to income

30 ENT-657 (R-12/2008) 30 What is the next step?

31 ENT-657 (R-12/2008) 31 Lets meet for an analysis and recommendations -Analysis and anticipated retirement expenses compared to anticipated retirement income -Recommendations for positioning resources to help enhance income -Options (if needed) designed to compensate for an anticipated shortfall of income Next steps Next steps? This analysis is not a comprehensive financial or retirement plan. Planning services are available at additional cost and offered only by appropriately licensed registered investment advisors.

32 USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public. Thank you! © Copyright 2008 Allianz. All rights reserved. Not FDIC insured May lose value No bank or credit guarantee Not a deposit Not insured by any federal government agency or NCUA/NCUSIF


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