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UMB Employee Benefits Retirement Planning How To Achieve Your Retirement Dreams Basics of Planning and Investing Features of your XYZ Profit Sharing Plan.

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Presentation on theme: "UMB Employee Benefits Retirement Planning How To Achieve Your Retirement Dreams Basics of Planning and Investing Features of your XYZ Profit Sharing Plan."— Presentation transcript:

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2 UMB Employee Benefits Retirement Planning How To Achieve Your Retirement Dreams Basics of Planning and Investing Features of your XYZ Profit Sharing Plan Customize

3 Agenda uIntroduction uRetirement Goals uRetirement Obstacles uKey Strategies uInvestments uPlan Features uQuestions?

4 What Is Your Retirement Dream?

5 Retirement Plan 1. Win the Lottery 2. Retire!

6 Does saving for retirement seem like Mission Impossible?

7 Sources of retirement income uSocial Security uPersonal savings uIRA or other retirement savings uYour XYZ Profit Sharing Plan Customize

8 Today’s Salary Retirement Goal 80% Social Security 42% Your Share 58% Another reason to save for retirement uSocial Security will NOT be enough

9 Why you should save for retirement uYou could spend 25% of your lifetime in retirement--20 or 30 years or more! uWhen you retire, you will probably need 70-90% of your existing salary

10 New Car Today - $20,000 New Car in $94,200 Dinner for 2 Today - $32 Dinner for 2 in $151 Fast Food Today - $4 Fast Food in $19 Examples assume an inflation rate of 5.3% The potential impact of inflation

11 Little savings add up uYour savings after 20 years* *Assumes you save the cost of each item, plus 27% assumed tax rate every week for 20 years, and earn an annual 8% on your investments $17,599 Rent a video instead of going to the movies- $5 per week $35,203 Morning coffee - $10 per week $52,802 Large pizza - $15 per week

12 Time Is Your Greatest Ally Pat, the Procrastinator uLives the high life uStarts saving at age 45 uContributes $4,200 each year for 20 years to the Company Plan ($350 per month) Terry, the Planner uLives more modestly at first uStarts saving at age 25 uContributes $2,100 for 40 years to the Company Plan ($175 per month)

13 Time Is Your Greatest Ally uPat saves twice as much each year and at age 65 ends up with $300,000 for retirement uTerry sets aside the same total sum of money but accumulates $1,200,000 for retirement. Assuming an average rate of return of 8%.

14 Who would you rather be? uPat, the Procrastinator, at retirement uTerry. The Planner, at retirement

15 Make Your Savings Goals Reachable uStart as early as you can uSave as much as you can uSelect investments that have growth potential

16 Advantages to Saving in a 401(k) uContributions are made before taxes uEarnings are tax deferred u401(k) contributions are payroll deductions uContribution rate may be changed at the beginning of each quarter Plan specific uYour investment portfolio is selected by you

17 Stocks Outperform other Securities over Time Inflation 90-day US Treasury Bills Bonds Stocks Growth from $6,832 $4,383 $12,539 $44,912

18 Financial Analysts Journal, B.G.P. Brinson, B.D. Singer & G.L. Beebower, May - June 91 The Importance of Diversification u91.5% of your return is based on your investment diversification

19 Investing Allocations Age Risk profile Moderate 50-60% 10-20% 5-15% Aggressive 55-65% 10-20% 5-15% Conservative 40-50% 10-20% 5-15% 0-10% Large Cap Bonds, Money Mkt Internat’l Small Cap

20 The Plan u401(k) - eligibility uEnter the first day of the month following the completion of one year of service uDefer up to 15% of compensation uChange deferral rate quarterly uMinimum age - 21 Customize

21 Profit Sharing Plan Profit Sharing Plan uEmployer discretionary Company Match uUp to 4% of compensation uLast day hour requirement Customize

22 When Can I Get My Money? uTermination of service uRetirement uDisability uElective deferrals - age 59½ uHardship withdrawals uLoans

23 Questions uConsult with your UMB team of experts uPlan questions - call your HR contact at uTax questions - see financial planner or CPA Customize

24 Plan YOUR tomorrow


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