1. Copyright © 2007, The American College. All rights reserved. Used with permission. Planning for Retirement Needs Introduction to Individual Retirement Planning Chapter 20

2. Copyright © 2007, The American College. All rights reserved. Used with permission. Chapter 20 Translating pension knowledge into solutions for individual clients The retirement planning process Critical issues that affect retirement

3. Copyright © 2007, The American College. All rights reserved. Used with permission. Transferable Skills Understanding the benefit or contribution formula Understanding the plan’s key provisions (hardship withdrawals, loans etc.) Identifying documents (SPDs, personal benefit statements) Appreciating the importance of before tax contributions Ramifications of starting social security early

4. Copyright © 2007, The American College. All rights reserved. Used with permission. Transferable Skills Choosing a Keogh plan for clients with Schedule C income Recognizing the importance of ESOP diversification Determining IRA options Explaining the rules for social security and nonqualified plans Cataloging fiduciary protection, QDRO assurance, PBGC refuge, and bankruptcy protection

5. Copyright © 2007, The American College. All rights reserved. Used with permission. Transferable Skills Identify the contribution limit, salary deferral limit, and compensation cap Understanding death and disability benefits Spotting desirable investment vehicles Distinguishing the retirement security risks with nonqualified plans

6. Copyright © 2007, The American College. All rights reserved. Used with permission. The Role of the Retirement Planner Requires wide-ranging expertise Involves many different tasks Integrate retirement planning with –Tax –Estate –Investment planning –Planning is more art than science –No average retiree –Never too early to late, but always different because of a variety of goals, objectives, starting times and financial resources

7. Copyright © 2007, The American College. All rights reserved. Used with permission. Aspects of a Retirement Planning Practice Incorporate retirement planning with comprehensive financial planning Deal with other financial advisors with different expertise Deal with young clients Monitor and update a client’s plan Conduct seminars for employee groups Network through organizations –SFSP –FPA –NCOA –ASA –AARP

8. Copyright © 2007, The American College. All rights reserved. Used with permission. Steps in the Retirement Planning Process Establish client-planner relationships Determine goals Analyze and evaluate financial status Develop and present the plan Implement the plan Monitor the plan

9. Copyright © 2007, The American College. All rights reserved. Used with permission. Critical Issues that Affect Retirement Planning Private Pension availability –better in medium and large companies Women and retirement—unique problems –Less likely to have a pension at work –Lower earnings higher turnover –Greater longevity –Caregivers –More likely to be widowed –Conservative investments

10. Copyright © 2007, The American College. All rights reserved. Used with permission. The Need for Education and Planners Seminar presentations increase 401(k) participation rates and contribution rates Over 50 percent cash out when they change jobs

11. Copyright © 2007, The American College. All rights reserved. Used with permission. Changing Face of Retirement Tax changes Work Caregiving

12. Copyright © 2007, The American College. All rights reserved. Used with permission. Baby Boomers 1946 – 1964 Retirement is maturing with baby boomers

13. Copyright © 2007, The American College. All rights reserved. Used with permission. Spendthrift lifestyles Unexpected expenses Inadequate insurance coverage Divorce (see QDRO) Not covered under a company pension Fail to roll over company pension Lack of financial literacy Diverting funds to other financial goals Roadblocks to Retirement Saving

14. Copyright © 2007, The American College. All rights reserved. Used with permission. Retirement Objectives Maintain standard of living Maintain self- sufficiency Minimize taxes Retire early Pass on wealth Adapt to lifestyle change Improve lifestyle Care for dependents Other

15. Copyright © 2007, The American College. All rights reserved. Used with permission. Retirement Ladder