1. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Retirement Planning Part Two Strategies for Reaching Retirement Goals Managing for Today and Tomorrow

2. Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women 1. Analyze current and future living expenses 2. Consider financial reliance on income streams from or sale of the farm business assets 3. Develop next financial management steps for a retirement plan Assess Retirement Readiness Options and Strategies

3. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Typical Family Life Cycle Stages Income

4. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women 1. Live beneath your means. 2. Pay off your credit cards. 3. Pay yourself first. 4. Save 6 months living expenses. 5. Make a will. 6. Seek wise counsel. 7. Fund a retirement savings plans. 8. Plan major expenses. 9. Educate yourself. 10. Review progress. Ten Essential Steps to Financial Wellness

5. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Management Priorities for Building Wealth Step 1 Build a nominal emergency savings fund - $1,000 to $3,000 Step 2 Pay off high-interest rate (credit card type) debt, using the “debt snowball” (paying off smallest balance account first) or concentrating on the highest rate debt first, whichever provides the greatest emotional motivation. Step 3 Revisit the emergency fund, building it to an amount equal to 6-12 months worth of living expenses. Step 4 Contribute to retirement savings at a level that represents 10-15% of household income. Employer plans, ROTH, SEP, etc. Step 5 If applicable, consider savings plans for education such as Coverdell or 529 Savings Plans, Coverdell, etc. for children/grandchildren. Step 6 Retire low-interest debt. Step 7 Enjoy prosperity as you define It!

6. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Employee Benefit Research Institute Survey 4 out of 10 workers say they saved nothing whatsoever for the future. 4 out of 10 people admit they never took steps to calculate the actual cost of a comfortable retirement, their “Number.” Of those who calculated their Number, 1 out of 3 doesn’t remember what those calculations revealed. 45% saved less than $25K for retirement. Only 18% saved more than $100K in reserves for retirement.

7. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Assessing Current and Future Living Expenses Work through Retirement Needs Worksheet. Incorporate your desired retirement lifestyle into your projections. –General rule is 75 – 80% of pre-retirement income will be needed. –However, that does not factor in your individual preferences for how you’d like to spend retirement. You may find that you need close to 100% of pre-retirement income to do the things on your bucket list.

8. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Assess Sources of Retirement Income 1.Work through Retirement Planning Asset Worksheet. –OR complete the Retirement Income Calculator. –OR complete the 5 questions in the Assessing Retirement Readiness My Plan Snapshot. 2.Consider earned Social Security benefits. 3.Ongoing Farm/Ranch related income that will be generated through cash/share rents and asset sales of resources no longer needed for your desired role in retirement. 4.Examine how much income can be generated and withdrawn from your retirement savings. –General rule of thumb is 4% withdrawal rate. –Look at the Retirement Nest Egg Calculator to see how alternative withdrawal rates impact the likelihood you’ll outlive your money.

9. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women www.ssa.gov/estimator Estimate life expectancy and assess when to begin drawing benefits. Estimate social security benefits earned.

10. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Retirement Needs Calculators T. Rowe Price's Retirement Income Calculator: https://www3.troweprice.com/ric/ricweb/public/ric.do Fidelity's My Plan Snapshot: 5 Questions to Assess Retirement Readiness: http://personal.fidelity.com/planning/retirement/content/myPlan http://personal.fidelity.com/planning/retirement/content/myPlan Vanguard's Nest Egg Calculator: https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/ RetirementNestEggCalc.jsf?cbdForceDomain=false Fidelity's Retirement Income Planner: http://personal.fidelity.com/planning/retirement/income_planner.shtml

11. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Determine Financial Reliance on Farm Business as Source of Income Generation Determine what role you want to continue to play in retirement as it relates to the farm business. –Do you prefer the stability of cash rents or do you prefer the added risks/rewards that may come from share leases? Keep in mind that if the focus is on income-generating capabilities, equity acquired over time can only be converted into income by renting or selling the asset. –Closely consider the farm/ranch assets and decide whether renting or selling best fits your required income-generating needs with other motivations that might exist (semi-retirement, passing the farm to heirs, etc.).

12. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Defining your own Retirement “Number” Assuming a 4% drawdown, every $100,000 in retirement savings will provide $4,000 per year during retirement. $1 million provides $40K per year; $1.5 million - $60K Assets generating post-retirement income or other benefit programs should be factored into your calculation. Consider a part-time, post-retirement job. –$100 per month is equivalent to $30K in retirement savings. –Minimum wage job, 20 hrs/wk – 50 wks/yr. – makes up for a $150K retirement savings deficiency.

13. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Retirement Savings Plan Alternatives Thrift Savings Plan, 401(k), 403(b) etc. – pre-tax contribution, tax-deferred growth, may have “matching” contributions. ROTH IRA – after-tax contributions, tax-free growth. Traditional, Deductible IRA – deductible contributions, tax-deferred growth. Traditional, Nondeductible IRA – tax-deferred growth. SEP, SIMPLE IRAs – tax deductible contributions, tax- deferred growth. Taxable Investment Account – long-term capital gains and dividends get preferred tax treatment, no restrictions.

14. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Retirement Savings Mistakes Choosing not to participate in any savings program. Improper asset allocation, the guideline for retirement: 100 - Age = % Stock Allocation. Improper use of “dollar cost averaging” with monthly contributions. Failure to periodically rebalance. Incurring penalties, early/late withdrawals. Failure to keep beneficiary info updated.

15. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Early Savers (30) – Asset Class Categories U.S. Equity – 40% International Equity – 20% Real Estate – 10% Aggregate Bond – 30% Retirement Savings Allocation Guidelines

16. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Mid-Life Savers (45) – Asset Class Categories US Equity – 30% International Equity – 15% Real Estate – 10% Aggregate Bond – 45% Retirement Savings Allocation Guidelines

17. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Pre-Retirees and Active Retirees (50) – Asset Class Categories US Equity – 35% International Equity – 10% Real Estate – 5% Aggregate Bond – 35% US Treasuries – 15% Retirement Savings Allocation Guidelines

18. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Mature Retirees (65) – Asset Class Categories US Equity – 25% International Equity – 10% Real Estate – 5% Aggregate Bond – 35% US Treasuries – 25% Retirement Savings Allocation Guidelines

19. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Develop Next Steps/Actions for a Retirement Plan That Satisfies Your Goals 1) Estimate living costs using the sheet on pages 251 and 253 2) After calculating annual costs, schedule the big ticket items to see when the associated costs will be incurred

20. Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women 3) Determine farm and non-farm assets to be used to generate revenue - land, annuities, bonds, dividend reliable stocks be a source of income through draw down - depreciable assets and off farm investments be protected and sold as a last resort - home farm and legacy personal property Develop Next Steps/Actions for a Retirement Plan That Satisfies Your Goals