Presentation on theme: "Retirement on the Horizon Date April 2009 Presented by: Vernon H. Stockton, III Retirement Plan Specialist AC: 0109-2817."— Presentation transcript:
Retirement on the Horizon Date April 2009 Presented by: Vernon H. Stockton, III Retirement Plan Specialist AC:
2 Getting Ready for Retirement in 6 Steps Step #1: Fine tune your goals Step #2: Find out what retirement income you can expect Step #3: Estimate your retirement budget Step #4: Consider payout options Step #5: Review your portfolio Step #6: Consult with an ICMA-RC expert
3 Step #1: Fine Tune Retirement Goals When will your retire? Where will you live? What do you want to do? What is your life expectancy? How will you pay for health care? Have you considered inflation? Financial objectives like paying off mortgage?
4 Step #2: What can you Expect? Employer-sponsored plans Defined Benefit (pension) Plan ICMA-RC administrated plans Benefit estimate from ICMA-RC Social Security Go to to calculate and/or Call the Social Security Administration at their toll-free number (800) to request a Personal Earnings and Benefit Estimate Statement Not all public employees are eligible Be sure to include your spouse’s employer-sponsored plan
5 Step #3: Estimate Your Retirement Budget Must have realistic estimate of expenses Use Worksheet #2 from “Charting Your Course” Things to consider Will you need to pay for medical insurance? Long-term care? Should you decrease life insurance premiums? Will you have your mortgage paid-off? Carrying costs like property taxes, insurance Other financial responsibilities to dependents or elder care? Do you have emergency funds?
6 Step #3: Estimate Your Retirement Budget Not sure you’ll have enough? In final years before retirement, may be eligible to do some of the following Increase contributions to Defined Contribution Plan Catch-up Provisions IRA (pre-tax and after-tax contributions)
7 Step #3: Estimate Your Retirement Budget Allows you to contribute greater than the maximum limits Two types “Age 50” Catch-up Provision “Normal” Catch-up Provision Must follow very specific IRC guidelines Catch-up limits Cannot use both types in same calendar year “Catch-up Provision Packet” for complete information and worksheets Catch-up Provision
8 Step #3: Estimate Your Retirement Budget No-Fee Vantagepoint IRA 1 Earning grows tax-deferred Penalty-free withdrawals if you are 59½ or older, or other rules are met. Roth IRATraditional IRA Key tax advantage Tax-free growth potentialContributions may be tax deductible 2009 maximum annual contribution $5,000 or earned income ($10,000 for some couples) Eligibility No age requirement; any individual with earned income within the allowable guidelines. Anyone with earned income from wages or salary under the age of 70½ (on December 31 of the year). Earnings taxed upon withdrawal No, if held five years, and you are 59½ or older, or if other rules are met Yes See disclosure at the end of this presentation. * No Fee Vantagepoint IRA requires a Minimum balance of $1,500. IRA
9 Step #4: Payout Options Things to consider Based on budget estimate, how often will you need to receive payments during retirement? Opportunity for earnings of remaining assets? Tax implications of certain payouts IRA distributions could be subject to taxation depending on your age and how long you’ve held the account. Check the appropriate withdrawal packet for the specific tax information. Will beneficiaries receive remaining assets?
10 Step #4: Payout Options Flexibility in selecting a starting date For 457, don’t have to wait until age 59½ Must start no later than 70½ if you are separated from service (IRC regulation) 457 Payout options Lump-sum payment Periodic payments over a specified number of years Periodic payments until account is exhausted Life expectancy periodic payments COLA (Cost of Living Adjustments) payments Irregular schedule, i.e., partial lump sum and periodic payment Annuity
12 Step #5: Review Your Portfolio As you get closer to retirement, a portion of your portfolio should assume less risk Fund Withdrawal Order to minimize risk Retirement income required for the next 3 to 5 years invested in more conservative, less aggressive investment fund Remaining portfolio can be invested for long-term growth Portfolio should still be diversified Maximize return potential Retirement investments still continue earning Investments react differently to market conditions Protect against inflation and interest rate changes Rebalance Asset Allocation
13 A Tool to Help Fund Withdrawal Order You predetermine which funds from which to take withdrawals (depletion order) “Take all withdrawal from Fund A” Usually, your most conservative investment Stable Value
14 Fund Withdrawal Order Visual representation of fund withdrawal order portfolio 123 Step 1: Fund Two Investment Segments
15 Fund Withdrawal Order For example an investor might want to withdraw their assets in the following manner 1.Stable Value funds 2.Bond funds 2 3.More aggressive funds 123 Step 2: Order Withdrawals from Conservative Portion See disclosure at the end of this presentation.
16 Fund Withdrawal Order Restore amounts withdrawn from longer term segment Rebalance annually Without rebalancing, your portfolio may become more aggressive Step 3: Rebalance Annually as Funds Used 123
17 Step #5: Review Your Portfolio Consolidate all sources of retirement income from all employers to one account Easy rollover process Simplifies portfolio Easier to manage your account and monitor investments Easy withdrawal process ICMA-RC remains your trusted administrator All advantages of being a participant continues Asset Consolidation
18 Step #6: Consult with ICMA-RC CFP ® Professional check-up to make sure you’re on track Discuss financial complexities and “technical” planning Different accounts; IRA contributions Early retirement issues Special issues Estimates of Income from all sources Projected value of all accounts Withdrawal options and tax consequences Realistic Income tax forecasts Different levels of assistance
19 How We Can Help Answer questions and help fill out enrollment forms Retirement planning worksheets and materials Location visits on a regular basis or contact me directly Ongoing presentations focusing on the basics of investing Local Representative Account inquiries Answer questions Resolve Issues Transactions Address changes Other customer service- related issues ICMA-RC Investor Services: Automated services 24 hours a day, 7 days a week Investor Services representative Monday - Friday between 8:30am and 9:00pm ET Phone Check account balance Make transactions Fund information Additional helpful tools and services ICMA-RC Web site Mailed 10 business days after quarter end Provides Account summary Personalized performance Account balance charts Fund information Your Account Statement Contact Info VH Stockton, III toll free
20 Additional ICMA-RC Resources Services specific for those close to retirement Publications Charting Your Course Brochure Reaching Your Dreams Brochure and Web site0 31 Questions 457 Deferred Compensation Plan Catch-Up Provision Packet Additional IRA Information Benefit projection – Retirement Plans Specialist
21 Next Steps 1. Gauge where you are Review your goals Confirm your retirement savings Review and plan for your payout options Review your portfolio Rebalance your portfolio 2.Use ICMA-RC as a resource Set up a one on one meeting today Call Investor Services Visit the icmarc.org Web site
22 Disclosures 1.Please consult both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC by calling (TDD: ) or write to 777 North Capitol Street, NE, Washington, DC You may also visit, us on the Web at Para asistencia en Español llame al A rise/fall in the interest rates can have a significant impact on bond prices and the NAV (net asset value) of the fund. Funds that invest in bonds can lose their value as interest rates rise and an investor can lose principal.