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How do you link lifestyle choices to retirement savings…. And what are the other issues do you need to consider?

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Presentation on theme: "How do you link lifestyle choices to retirement savings…. And what are the other issues do you need to consider?"— Presentation transcript:

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2 How do you link lifestyle choices to retirement savings…. And what are the other issues do you need to consider?

3 In this phase, we will discuss… How much will you need to save to fund your lifestyle choices? How can you see whether you are on track to achieve your savings goals? How much can you expect to receive from social security and when? How much tax will you pay in retirement?

4 Not an exact measurement Help you understand the issues Help you assess the likely cost of each aspect of retirement Guide to what you need to save for So, what does your “number” mean?

5 What we are told Most retirement advisors and financial planners tell us we will need about 80 percent of our pre- retirement earnings to maintain our current standard of living in retirement.

6 The reality In reality, data from the United States Department of Labor - Bureau of Labor Statistics shows that the average retiree actually spends 60% of their pre-retirement earnings.

7 Your “number” helps you determine your retirement saving goal Use this equation – 60 X your “number” 100

8 Let’s look at a couple of examples!

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11 Saving for Retirement 401k Pension Social Security Savings (IRAs)

12 How much tax will you pay in retirement? It depends on a range of factors Your savings strategies will affect the amount of tax you will pay It is important to get good advice…..now!

13 Some basic taxation information If you are married and your combined income exceeds $44,000, then up to 85% of your Social Security benefits may be taxable. If you are married and your combined income falls between $32,000 and $44,000 then up to 50% of your Social Security benefits may be taxable.

14 Some basic taxation information Withdrawals from traditional IRAs, 401ks or other retirement plans if funded with pre-tax dollars whether funded by you or your employer will result in taxable retirement income when withdrawn.

15 Are you on the right road?

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31 "74 percent of companies offer outside investment advisory services to employees, up from 50 percent in However, most employees (75 percent) are not taking advantage of this help. Aon Hewitt Consulting Research Take advantage of any help you can get

32 Nearly 30 percent of employees did not contribute enough to their employer provided Defined Contribution plan to receive the full company match. Aon Hewitt Consulting Research Savings Strategies

33 Delaying retirement for even two years can help workers make up their savings shortfall. For an average 40 year old worker currently saving at a rate of 8 percent per year, retiring at age 65 is expected to result in a savings shortfall. However, by extending employment just two years to age 67, that worker may be able to close the savings gap. Aon Hewitt Consulting Research Savings Strategies

34 Workers who choose to increase their yearly contribution rate by just a few percentage points can dramatically improve their situation. If a 40 year old worker, saving at a rate of 8% of pay, increased their savings rate to 12% per year, they would close their savings gap and should be on track to retire at age 65. Aon Hewitt Consulting Research Savings Strategies

35 Stages of life 20’s 30’s 40’s 50’s 60’s

36 Your action plan 1.Gather your financial records 2.If applicable, review your retirement resources, tools, and goals with your significant other 3.If applicable, meet with your human resources department to explore retirement options your company may participate in (e.g. 401k, life insurance, etc.) 4.Meet with a financial planner or counselor to review your retirement goals 5.Meet with your credit union to understand what retirement solutions are available to you


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