1. 401K IRA SEP SIMPLE KEOGH 403B What do these letters and numbers represent?

2. Retirement A period during which you do not earn income from a job The majority of your income comes from investments or a pension A pension is paid by your former employer(s) You may also receive Social Security (we hope) You can save for retirement a number of ways  401(k), Roth 401(k) or 403(b) – you save a portion of your salary  IRA or Roth IRA – you save a portion of your earned income  Keogh, SEP, SIMPLE – you save a portion of your salary from own business

3. Company Retirement Plans 401(k) and Roth 401(k)  Payroll deductions are taken out of each paycheck “pre-tax”  Account grows tax-free (you pay no taxes on the earnings)  Taxes are paid on all money when withdrawn  You can start withdrawing at age 59 ½ (but you don’t have to)  Mandatory withdrawals must begin by age 70 ½ or you pay penalties Roth 401(k)  You payroll deduction is taken after taxes  Account grows tax-free  No taxes are paid on withdrawals  You can withdraw from the account  Contribution limit for 2016 is $18,000 for both  You choose the investments in the account  Many companies match a portion of your contribution – free money!

4. Public Retirement Plans 403(b) Almost exactly like a 401(k) but offered by the government Teachers and police officers use a 403(b) instead of a 401(k) There is no Roth 403(b) – yet Typically no “matching contribution” Usually a minimum contribution is required For teachers, you must contribute at least 3% of your salary by law It is not an optional plan – you have to participate, unlike a 401(k)

5. Pensions Pensions are calculated by the company  Typically a combination of years of service, age and salary  Example: Work 25 years, age 65, salary $200,000  Pension formula: Service + Age x 0.25  Pension payment: (25+65) x 0.25 = 90 x 0.72 = $64,800 A pension can also be paid to a surviving spouse if you die  Lower rate during your lifetime  Helps to support your spouse if you die first If you select to have your pension paid to you without a survivor benefit, they lose they income when you die You are guaranteed a benefit amount – you do not choose your own investments

6. Retirement Plans for Entrepreneurs Keogh, SEPs and SIMPLEs Each of these plans allows a business owner to defer (save pre- tax) income for retirement The Keogh and SEP allow the most money to be put aside The 2016 contribution limit is up to $53,000 The SIMPLE is for small business owners with less income Limit is $12,500 for 2016 All of these plans allow you to choose your own underlying investments All of these plans allow you to choose your own underlying investments Mutual funds, stocks, bonds, annuities, insurance, etc.

7. Social Security Paid by the Federal Government Taken out of every paycheck on income up to $100,000 You do not receive the actual amount you put in You could receive more, if you live a long time You could receive less, if you die early Social Security is calculated in a way similar to a pension You can start receiving it, at a reduced rate, at age 62 “Normal Retirement Age” is currently 65 years old For me, it will be 67 years old For you, it will most likely be 70 years old You benefit is guaranteed – you do not choose your own investments

8. IRAs Offered by the Federal Government You can put aside up to $5,000 per year tax deferred (before taxes) Penalties are assessed if you take the money out prior to age 59 1/2 Exceptions include medical expenses and buying a first home Penalty is typically 10% of the withdrawal PLUS taxes The account grows tax free – but you can’t withdraw without penalty Taxes are paid on the earnings when you withdraw Education IRA – same principal as regular IRA, but to be used solely for education Limit on contribution is $2,000 per year Roth IRA – money is put aside after taxes No taxes paid on withdrawals – at all You can withdraw any contribution you made after 5 years, but not earnings You choose your own investments

9. Annuities You make an up-front investment “after-tax” You receive monthly payments until the annuity runs out The monthly payments consist of the principal you invested, plus interest or earnings, depending on the underlying investments  Annuities can invest in stocks, bonds, or other instruments  Annuities can lose money just like stocks, bonds or other investments – you choose your own investments  You cannot liquidate the annuity and get your money back without penalty – your money is locked in

10. Please rank from most to least risky 401(k) Roth 401(k) IRA Roth IRA Keogh SEP SIMPLE Annuity Pension Social Security

11. What if you change jobs? What happens to your plan when you start a new job?  You can keep the old plan where it is, but you can’t contribute to it  You can start a new plan with the new employer  You can “roll-over” the old plan into the new one  You can “roll-over” the old plan into an IRA  IRAs and 401(k)’s have different rules, so if you choose to do an IRA rollover, it can change your withdrawal options in the future

12. What if I don’t like the investments? If your retirement plan is not earning enough of a return, you can “rebalance” your account whenever you wish Most plans have a limit on how many trades you can make within a calendar year Many retirement plans allow you to own company stock You should never have more than 10% of your retirement account in company stock – in fact, you shouldn’t risk even that much!

13. Taxes Will your tax rate be higher or lower when you retire? Many folks believe it will be lower For some people, it may actually be higher Is it worth it to tax defer, or is the Roth a better option?

14. My Family Situation My husband has a pension from his job at Phillip Morris, and one from Cablevision I have a pension from my job at Westvaco (now called RockTenn), and I will get another from NY State for teaching We both have an IRA and I have a Roth IRA as well I have a 403(b) from NY State Education Dept. We both have 401(k)’s  He has 3 – Phillip Morris, Cablevision, and Motorola/Zebra  I have 3 – Universal, Westvaco, Diesel