TOPIC 8: RISKS YOU FACE WHEN ENTERING THE WORKFORCE Group 6:
Reasons to Start Only 4% of Americans have adequate capital stowed away for retirement 63% are dependent on Social Security, friends or charity 62% of people retire with less than $25,000 in assets Only 4% of young workers are taking full advantage of their workplace retirement plans
Common Mistakes Procrastination Plan to just rely on Social Security benefits Fail to seek expert financial and retirement guidance
Entering the Workforce Marriage/Children/Divorce Investor Education Buyouts/Mergers Risks That You May Face
Why Marriage? The Average age of a Bride in the USA is 25.3 People start their careers between ages The Average age of a Groom in the USA is 26.9
Risks of Marriage Average wedding cost is $20,000 30% of couples pay for their own wedding A couple needs more money to retire than one person alone One spouse could become disabled or unfit to work Credit Ratings and Accumulated Debt Divorce Number of children and when you have them
Mitigate Marriage Risk Contributions are not tax deductible in current year People are most likely in a lower tax bracket at the beginning of their career Not taxed when withdrawn in retirement Protects you from unpredictable tax increases in the future Roth IRA
Mitigate Marriage Risk Insurance Some employers offer disability insurance Workers Compensation Life Insurance Credit Checks Know your spouse’s credit history and debt accumulation Responsible Financing
Mitigate Marriage Risk Children reduce total household wealth by 3% per child May reduce household to one income Delay retirement savings Save early for all your children Be aware of the expenses and the timeline on which they occur Risks of ChildrenMitigate the Risks
Mitigate Marriage Risk Potentially lose accumulated savings and assets Become self sufficient when not prepared to do so Prenuptial Agreement Know the benefits of having your name on marital assets Separate retirement plans Establish your own credit Risks of DivorceMitigate the Risks
Why Investor Education? Prevent common mistakes from occurring When, what, where and how will you invest? Comfortable managing large sums of money
Investor Education Risks Do you know how to maximize your investments? There are many routes to take when planning for retirement, each one suiting a different individual Can you trust someone else with your money? In a world filled with greed, an individual or whole company may cut corners for their benefit and not your own Manage your Own Account Consult with Professionals
Mitigate Investor Education Risks Take advantage of workshops and classes that offer insight into the world of investments Weigh the options of each potential investment before deciding Keep informed on what is happening with your own accounts Use recommendations when making decisions on who to trust with investments Place retirement assets in several locations, diffusing risk Educate Yourself Remember, It is Your Money
Mitigate Investor Education Risks Do not require a large up-front investment Come with some degree of risk, along with stability Has flexibility to move money into other funds Mutual Funds
Why Buyouts and Mergers? The business world is not stable May cause changes in company policy Mergers and acquisitions frequently occur
Buyouts and Mergers Expansion of market share Acquisition of new lines of distribution or technology Reduction of operating costs A company’s assets may be undervalued and sold for a profit Reasons Companies May Merge or Face a Buyout
Buyouts and Mergers 70% of mergers fail to increase shareholder value Retirement plans may change if the company you work for changes hands during your employment Risks
Buyouts and Mergers You can have your own IRA to which you contribute and have full control, regardless of the situation of your employer Don’t make assumptions that policies will remain constant Being flexible while you are still young may provide greater opportunities Mitigate risks
Our Advice To You Never too Early to Start Saving Educate Yourself