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Gary L. Witten, CFP, ChFC Financial Planner Securities offered through, member SIPC. C09-0428-017 Retirement Readiness Looking at the Road Ahead.

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Presentation on theme: "Gary L. Witten, CFP, ChFC Financial Planner Securities offered through, member SIPC. C09-0428-017 Retirement Readiness Looking at the Road Ahead."— Presentation transcript:

1 Gary L. Witten, CFP, ChFC Financial Planner Securities offered through, member SIPC. C Retirement Readiness Looking at the Road Ahead

2 Retirement - Insurance - Investments2 Important Information Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) ING Life Insurance and Annuity Company ( Windsor, CT). Securities are distributed by ING Financial Advisers, LLC (member SIPC), Windsor, CT or through other broker/dealers with which it has selling agreements. Annuities may also be issued by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Variable annuities issued by ReliaStar Life Insurance Company are distributed by ING Financial Advisers, LLC. Variable annuities issued by ING USA Annuity and Life Insurance Company and ReliaStar Life Insurance Company of New York are distributed by Directed Service, LLC. Only ING Life Insurance Annuity Company and ReliaStar Life Insurance Company of New York are admitted and issue products in the state of New York. All companies are members of the ING Family of companies. © 2009 ING North America Insurance Corporation.

3 Retirement - Insurance - Investments3 Important Information Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) ING Life Insurance and Annuity Company ( Windsor, CT). Securities are distributed by ING Financial Advisers, LLC (member SIPC), Windsor, CT or through other broker/dealers with which it has selling agreements. Annuities may also be issued by ING USA Annuity and Life Insurance Company (Des Moines, IA) and are distributed by Directed Services, LLC. All companies are members of the ING Family of companies. © 2009 ING North America Insurance Corporation.

4 Retirement - Insurance - Investments4 Important Information Securities and [financial planning] offered through ING Financial Advisers, LLC (member SIPC), One Orange Way, Windsor, CT, © 2009 ING North America Insurance Corporation.

5 Retirement - Insurance - Investments5 Important Information Recordkeeping and Plan administrative services provided by ING Institutional Plan Services, LLC. © 2009 ING North America Insurance Corporation.

6 Retirement - Insurance - Investments6 Important Information Framewor(k) and (k)Choice Recordkeeping and Plan administrative services provided by ING Institutional Plan Services, LLC. Mutual funds offered through ING Financial Advisers, LLC (member SIPC). © 2009 ING North America Insurance Corporation.

7 Retirement - Insurance - Investments7 Important Information (continued) Variable annuities, group annuities or funding agreements are long-term investments designed for retirement purposes. If withdrawals are taken prior to age 59 1/2, an IRA 10% premature distribution penalty tax may apply. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you. Variable investments, of any kind, are not guaranteed and are subject to investment risk including the possible loss of principal. The investment return and principal value of the security will fluctuate so that when redeemed, it may be worth more of less than the original investment. In addition, there is no guarantee that any variable investment option will meet its stated objective. For 403(b)(1) annuities, the Internal Revenue Code (IRC) generally prohibits withdrawals of 403(b) salary reduction contributions and earnings on such contributions prior to death, disability and age 50 ½, severance of employment, or financial hardship. Amounts held in a 403(b)(1) annuity as of 12/31/1988 are “grandfathered” and are not subject to these restrictions. For 403(b)(7) custodial accounts, the IRC generally prohibits withdrawals of any contributions and attributable earnings prior to death, disability, age 59 ½, severance of employment, or financial hardship. For both 403(b)(1) annuities and 403(b)(7) custodial accounts, the amount available for hardship is limited to the lesser of the amount necessary to relieve the hardship, or the account value as of 12/31/1988, plus the amount of any salary reduction contributions made after 12/31/1988 (exclusive of any earnings). You should consider the investment objectives, risk, and charges and expenses of the investment options carefully before investing. Fund prospectuses contain this and other information and can be obtained by contacting your local ING representative. Please read carefully before investing.

8 Retirement - Insurance - Investments8 Important Information (continued) Variable annuities, group annuities or funding agreements are long-term investments designed for retirement purposes. If withdrawals are taken prior to age 59 1/2, an IRA 10% premature distribution penalty tax may apply. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you. Variable investments, of any kind, are not guaranteed and are subject to investment risk including the possible loss of principal. The investment return and principal value of the security will fluctuate so that when redeemed, it may be worth more of less than the original investment. In addition, there is no guarantee that any variable investment option will meet its stated objective. For 403(b)(1) annuities, the Internal Revenue Code (IRC) generally prohibits withdrawals of 403(b) salary reduction contributions and earnings on such contributions prior to death, disability and age 50 ½, severance of employment, or financial hardship. Amounts held in a 403(b)(1) annuity as of 12/31/1988 are “grandfathered” and are not subject to these restrictions. For 403(b)(7) custodial accounts, the IRC generally prohibits withdrawals of any contributions and attributable earnings prior to death, disability, age 59 ½, severance of employment, or financial hardship. For both 403(b)(1) annuities and 403(b)(7) custodial accounts, the amount available for hardship is limited to the lesser of the amount necessary to relieve the hardship, or the account value as of 12/31/1988, plus the amount of any salary reduction contributions made after 12/31/1988 (exclusive of any earnings). All Guarantees are based on the financial strength and claims-paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies. You should consider the investment objectives, risk, and charges and expenses of the investment options carefully before investing. Fund prospectuses contain this and other information and can be obtained by contacting your local ING representative. Please read carefully before investing.

9 Retirement - Insurance - Investments9 Important Information (continued) You should consider the investment objectives, risk, and charges and expenses of the investment options carefully before investing. Fund prospectuses contain this and other information and can be obtained by contacting your local ING representative. Please read carefully before investing.

10 Retirement - Insurance - Investments10 Important Information (continued) This presentation/seminar contains information regarding insurance products for sale.

11 Retirement - Insurance - Investments11 Retirement is a Beginning… Not a Destination Volunteer Spend time with family Travel Try new hobbies Start a new business Embark on a new career Will Your Retirement Income Last the Journey?

12 Retirement - Insurance - Investments12 Roadblocks to Retirement Income Success You Can Navigate Them.

13 Retirement - Insurance - Investments % of females age 65 will live past age % of males age 65 will live past age 84. Based on Annuity 2000 Mortality Table assuming relatively good health (2005). We’re Living Longer than Ever Anticipated

14 Retirement - Insurance - Investments14 Is there a Downside to a Long Life? The example mentioned above is hypothetical and assumes an annual growth rate of 6% for illustrative purposes only and is not intended to project the performance of any specific investment. Actual rates of return will vary over time.

15 Retirement - Insurance - Investments15 With Age Comes Healthcare Costs 1.Longer time spent in retirement + 2.Medicare premiums, co-payments and other cost-sharing + 3.Vision, eyeglasses, hearing aids and costs not covered by Medicare Required annuity to cover projected out-of-pocket health care costs, , 2007 dollars: Year of RetirementSingleCouple 2010$102,966$205, ,752283, ,899377, ,767491,534 Source: Center For Retirement Research at Boston College, February 2008

16 Retirement - Insurance - Investments16 Navigating Retirement Healthcare Costs Consider working longer Step up retirement savings Watch weight and exercise more

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18 Retirement - Insurance - Investments18 Recognize the Corrosive Power of Inflation How much will your current income be worth in 20 years? $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0TodayIn 5 yearsIn 10 yearsIn 15 yearsIn 20 years $30,000 $25,878 $22,323 $19,256 $16,610

19 Retirement - Insurance - Investments19 The Importance of Asset Allocation and Risk

20 Retirement - Insurance - Investments20 The Importance of Asset Allocation and Risk Potential risk/reward balance of asset classes Global/International Small/Mid/Specialty Large Cap Growth Large Cap Value Stability of Principal Bonds Balanced Lower RISK Higher POTENTIAL REWARD Higher Using diversification as part of an investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets.

21 Retirement - Insurance - Investments21 Get an Early Start Start saving early Save for the long run Poor performance in the early years of retirement can drastically impact the lifespan of retirement assets. The results can follow you throughout retirement

22 Retirement - Insurance - Investments22 $100,000 $300,000 $500,000 $600,000 $0 $400,000 $200, % withdrawal rate 9% withdrawal rate 8% withdrawal rate 7% withdrawal rate 6% withdrawal rate Hypothetical value of $500,000 invested at year-end Portfolio: 50% large company stocks, 50% intermediate-term bonds. Assumes reinvestment of income and no transaction costs or taxes. 5 years10 years20 years15 years Past performance is no guarantee of future results. Source: Ibbotson Presentation Materials, Used with permission. Keep Your Withdrawals Realistic

23 Retirement - Insurance - Investments23 Important Information Standard & Poor's 500 Composite Total Return Index - The Standard & Poor's (S&P) 500 index is a market-value-weighted unmanaged index covering the stock of 500 industrial, utility, transportation and financial companies. The index return includes the reinvestment of dividends and is considered to be representative of the performance of large capitalization companies of the U.S. markets. Barclays Capital U.S. Aggregate Bond Total Return Index - The Barclays Capital U.S. Aggregate Index represents securities that are SEC- registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

24 Retirement - Insurance - Investments24 Pay Attention to Qualified Account Withdrawals State and local taxes may also apply. Type of TaxWhen it AppliesHow Much it May Be Income TaxIf you withdraw money that has not yet been taxed Current federal income tax rate up to 35% Early Withdrawal Penalty Generally, if you withdraw prior to age 59 1/2 10% of amount withdrawn Required Minimum Distribution Penalty* If you don’t withdraw at least the Minimum Required Distribution beginning at the later of retirement or April 1st of the year after you turn age 70 1/2 50% of Minimum Required Distribution not taken * Required Minimum Distributions requirements are waived for 2009.

25 Retirement - Insurance - Investments25 Withdrawals from Qualified Accounts at 70½ The IRS requires a minimum distribution (RMD) when you reach age 70½ Failure to withdraw or withdrawing too little leads to a 50% penalty tax on the amount that you should have withdrawn Consider Mary: Mary’s RMD$8,000 Her actual withdrawal$3,000 Discrepancy$5,000 IRS penalty$2,500

26 Retirement - Insurance - Investments26 Be in Sync with Your Spouse/Partner Take the time to discuss your personal retirement goals Identify what you want to do and map out the cost Identify and consolidate your retirement assets Create a retirement spending plan Determine appropriate options for social security and pensions Make sure you and your spouse/partner are on the same road

27 Retirement - Insurance - Investments27 Direct Route to Retirement Income

28 Retirement - Insurance - Investments28 Keys for Success Plot your destination Make sure your spouse/partner is on board Track your planning progress Create and follow a retirement income roadmap

29 Retirement - Insurance - Investments29 Plot Your Destination Five to ten years before you retire, ask yourself… Where will you live? What will you do? How will you live? How do you expect your health will hold up? How long do you expect to live?

30 Retirement - Insurance - Investments30 If you don't know where you are going, you might wind up someplace else. -Yogi Berra

31 Retirement - Insurance - Investments31 Test-Drive Your Plan Evaluate your current retirement savings plan and identify whether increased savings are needed (catch-up provisions may be available) Compare to the goals and needs you desire and identify gaps How will you replace your paycheck? Pension and Social Security benefits may not be enough to maintain pre- retirement income levels Are you on track?

32 Retirement - Insurance - Investments32 Social Security Administration, Office of Policy Data, Fast Facts & Figures About Social Security, 2006, Aggregate Income, By Source, 2004, Released September 2006 Map Out Your Retirement Income Strategy Social Security provides about 40 percent of the average retiree’s monthly income Where will your retirement income come from? On average, pensions provide about 20 percent of the typical retiree’s income

33 Retirement - Insurance - Investments33 Second career Rental income IRAs, banking instruments Investments Employer-sponsored retirement plans How Will You Fund Potential Income Gaps? Your share may come from…

34 Retirement - Insurance - Investments34 Create Your Retirement Income Roadmap In retirement, it’s all about smart money management

35 Retirement - Insurance - Investments35 Organize Your Resources 1. Create an emergency fund to cover up to 6 months’ expenses 2. Separate remaining assets A. Short-term money to cover necessary expenses B. Mid-term money for discretionary expenses C. Long-term money to grow and potentially replenish other sources

36 Retirement - Insurance - Investments36 Short-term: Checking Account, Emergencies Manage Cash Flow to Maintain Your Income Income Producing Growth Long Term Asset Allocation Consolidation of assets Fill In Flow Pension and Social Security Mid-term: Income Producing Long- term: Growth Potential Fill Cover Essential Retirement ExpensesCover Discretionary Expenses Purchasing Power Preservation

37 Retirement - Insurance - Investments37 Short-term money Use Short-term Money to Cover Necessary Expenses Typical income needs: Food Housing Utilities Taxes Insurance Emergency reserves Essential living expenses Short-term: Checking Account, Emergencies

38 Retirement - Insurance - Investments38 Mid-term money Fill the Mid-term Money Source Next Typical income needs: Money needed to refill the short- term money account and pay for: Travel Entertainment Housing Car/repairs Education Mid-term: Income Producing

39 Retirement - Insurance - Investments39 Long-term money Stash Some Cash Away for the Long-Term Typical income needs: Money needed to refill the mid-term money account and provide for: Potential long-term growth Additional income to compensate for inflation and longevity Using asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets Long- term: Growth Potential

40 Retirement - Insurance - Investments40 Be Methodical When Cashing in Your Savings 1.Taxable investments 2.Tax-deferred funds 3.ROTH IRA money Early in Retirement Later in Retirement

41 Retirement - Insurance - Investments41 Upon separation from service, you have the following options: Keep your money in your retirement plan Rollover to an IRA Take an income payout option Options for Defined Contribution Plans

42 Retirement - Insurance - Investments42 Itinerary for Your Retirement Income Journey Cover short-term needs first Be ready for emergencies Convert personal savings to income, if needed Hold back money for niceties Invest some money for growth

43 Retirement - Insurance - Investments43 15 Retirement… You Can Get There from Here

44 Retirement - Insurance - Investments44 Road-Side Assistance When You Need It Gary L. Witten, CFP, ChFC ING


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