1. READY to RETIRE?! Are You? You Can Be!

2. Retirement sits best on a “three- legged stool.

3. The “Three-Legged” Stool Social Security Employer Pension Plan Personal Financial Preparation

4. Miscellaneous Musings The next several slides are a compilation of Miscellaneous Musings At some point, regardless of your age, you WILL begin to consider retirement As you consider your future you will also have to begin to consider the impact on current finances

5. Worthwhile Statements Earn all you can; Save all you can; Give all you can. John Wesley Money is good to Enjoy, to Invest, and to Give. Dave Ramsey

6. Key Ingredient in Preparation Don’t live UP TO someone else’s standard of living Live BELOW your own standard

7. Really? 80% of Americans believe their standard of living will go UP at retirement 97% of retired Americans cannot write a $600 check

8. Reverse Mortgage A Reverse Mortgage is not a retirement plan It is an abdication of personal responsibility if it is part of your current plan Government came up with this as a means of relief for cash strapped retirees

9. Myth vs. Truth If I do a WILL I might die You ARE going to die – so do it with a will

10. First Leg of the Stool – GOVERNMENT’S CONTRIBUTION Review YOUR SOCIAL SECURITY STATEMENT –Your earnings –Your retirement benefits (age specific) –Your disability benefits –Your age at retirement affects your benefit payment

11. Myth vs. Truth I heard that Social Security is almost broke and I probably won’t get any retirement benefits Solvent through 2041 Subsequently able to support 78% just through current payments from payroll tax

12. Social Security is Socialism! Social Security replaces earnings at… –81% for low income workers –42% for high income workers –60% for average workers Medicare is available at age 65

13. True or False My Social Security payments are based on my last 5 years of earnings –False Social Security payments are affected by the money I earn while drawing benefits –True

14. What Can I Do? Take personal responsibility for SE Tax payments (do you receive SE Tax reimbursement) –Roll reimbursement into your salary (it’s taxable anyway) –Save for annual bills and SE tax –Make your quarterly payments –Benefit: affects bonus, and raises

15. What Can I Do? Realize that the IRS now discounts SE Tax in an attempt to account for the lack of ‘an employer match’ –On SE form total compensation is reduced by 7.65% –On front of 1040 reduce Adjusted Gross Income by ½ of SE tax

16. What Can I Do? Pay full SE Tax –It affects your future benefits –Pay on the total of: Salary Housing allowance Parsonage + Utilities (don’t discount FMRV) SE tax reimbursement Schedule “C” income Any other self-employed income

17. Cautions! Don’t rely on what “someone” tells you about Social Security Do your own research and determine how your decisions affect your SS benefits –www.socialsecurity.gov www.socialsecurity.gov –www.medicare.gov www.medicare.gov

18. Second Leg of the Stool – EMPLOYERS’ CONTRIBUTION The days of DEFINED BENEFIT pensions are fading A growing number of employers are moving to DEFINED CONTRIBUTION pension plans

19. Defined Benefit Pension Employer bears the responsibility to fund and supervise Usually based on a fomula –Employees pay –Years of service –Age at retirement –Etc.

20. Defined Contribution Pension Employee bears the responsibility to fund and supervise Risk and reward are assumed by the employee –Employer may match in a prescribed manner (some dropping match) –Employer may provide the program –Employee must oversee

21. “Company” Pension 50% of working people don’t have pension If this leg is “short” that throws increased burden on the other two –Social Security –Personal Preparation

22. Your Nazarene Pension Is it Defined Benefit or Defined Contribution? Now – Defined Contribution How much do they contribute? How many of you are “grandfathered” from the old Defined Benefit program?

23. My Nazarene Pension P&B APS source balance: $16,829 Assumed Monthly Benefit: $104 Basic Pension Plan: $287 Total Monthly Benefit: $391 What will be my monthly check from P&B? $287

24. It is Your Pension Become Interested Become Educated Become Educated Become Involved Become Involved Become Ready for Retirement Become Ready for Retirement

25. Third Leg of the Stool – MY PERSONAL CONTRIBUTION The other two “legs” are important, but this one is critical –You have greatest control here Know where you are financially – Your Current Net Worth –Assets minus Liabilities Know where you want to go – What You Will Need for Retirement –The size of your “nest egg”

26. Know How Money Works Understand interest on Savings (Rule of 72’s) Understand interest on Debt Understand the impact of Debt on Income

27. Some Practical Steps If you can’t afford it, don’t buy it Be debt-free by the time you retire Build tangible assets Don’t borrow money just because you can Be a Generous Giver

28. Owning a House For most people their home is 60% of their Net Worth Do you have one? Can you afford one? Should you buy one now? If you have never owned a home buying one after you retire may not be the best option

29. Financial Advice Everyone has opinions and advice Filter “professional” advice carefully “Advisors” make their money by selling products –Know what you NEED –BUY only what you NEED

30. Investments Fluctuate “Do they ever!!!” Don’t panic!!!! Realize… –Probably don’t need the money today –Certainly don’t need it all today

31. Investing for Retirement Be debt free (mortgage excluded) Invest 15% of gross earnings for retirement Calculating for your retirement nest egg (handout)

32. Calculating for Retirement Amount you wish to draw annually Divide by.08 Equals total nest egg needed Multiply by “factor” provided Equals amount needed to save each month

33. Calculating for Retirement (con.) Example Target Annual Income = $30,000 Divide by.08 = $375,000 Nest Egg times.001051 (40 yr old) Need to save monthly = $394.12

34. Calculating for Retirement (con.) Example Nest Egg times.001698 (45 yr old) Need to save monthly = $636.75 Nest Egg times.000436 (30 yr old) Need to save monthly = $163.50

35. Calculating for Retirement (con.) P&B is making a maximum of $1000 per year to your 403b, Defined Contribution plan Over 40 years @ 8% = $54,000 If you add $100/mon = $119,000 If you add $200/mon = $183,000 This is in today’s dollars without figuring an inflation factor

36. CONCLUSION Get Ready to Retire Assess where you are in your retirement planning Begin to build a workable plan Consider all three legs of the “stool” Decide on a retirement protocol Expect to enjoy retirement

37. READY to RETIRE? YESIAM!

38. If you want more Information or Interaction Feel free to contact me at: djohnston83@att.netOr 330.604.1270, cell 330.491.0115, office Or Pastor Dave Johnston 82 Waterford Way Tallmadge, OH 44278