Make it last PLAN TO SPEND YOUR RETIREMENT SAVINGS WISELY. John Hancock Retirement Plan Services LLC is also referred to as "John Hancock".

Transcription

1 Make it last PLAN TO SPEND YOUR RETIREMENT SAVINGS WISELY John Hancock Retirement Plan Services LLC is also referred to as "John Hancock".

2 Retiring soon 10,000 RETIRING EVERY DAY Make it Last page 2

3 Two phases Accumulation Income Replacement Make it Last page 3

4 Agenda Things to Consider Find Your Numbers Drawdown Strategies Continued Investing Example Next Steps Make it Last page 4

5 Things to consider Success = Not over living your funds Unknowns How long you will live Inflation Investment returns Healthcare expenses Living expenses Make informed decisions Make it Last page 5

6 Living longer: Life expectancy Probability Retirees Should Plan for a Long Retirement Probability of a 65-year-old living to various ages 100% Male Female At least one spouse Age Did you know Longevity risk is the possibility that a person will outlive his or her retirement savings. The risk of retirees outliving their portfolio is especially a concern for those taking advantage of early retirement or those who have a family history of longevity. For a couple aged 65, there is a 25% chance that one of them will live to age 96 a 31 year retirement time horizon! Source: 2012 Individual Annuity Mortality Basic Tables Society of Actuaries, Reports Morningstar. All Rights Reserved. Make it Last page 6

7 Planning Find your numbers What you will need Make it Last page 7

8 Spending habits Fixed Flexible Discretionary Make it Last page 8

9 Poll How do you picture your retirement? Make it Last page 9

10 Consider your retirement expenses Do what you want Spend time with family Hobbies Travel Volunteer work Snow bird Make it Last page 10

11 Spending in retirement High SPENDING Low Early RETIREMENT YEARS Late Us News, August ; 3 Stages if Saving and Spending in Retirement. Make it Last page 11

12 Health care How will you pay for health care? $326,000 for a retired couple* Living to average life expectancy Medicare Medicaid Prescriptions Uncovered expenses * 2014, Employee Benefits Research Institute. Make it Last page 12

13 Medicare Hospital (part A) Medical (part B) Medicare Advantage (part C) Prescription (part D)* Medigap Medicare.gov MEDICARE ( ) Source: medicare.gov, What Medicare Covers. * You can't have prescription drug coverage through both a Medicare Advantage Plan and a Medicare Prescription Drug Plan. If you're in a Medicare Advantage Plan that includes drug coverage and you join a Medicare Prescription Drug Plan, you'll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare. Make it Last page 13

14 Planning Find your numbers Where your $ will come from Make it Last page 14

15 Social Security A B C An estimated 165 million workers are covered under Social Security 1 $1,335 average monthly benefit 1 $2,452 max monthly benefit June Make it Last page 15

16 Social Security Amount depends on age Early AGE 62 On Time AGE 66 Delay AGE 70 75% 100% 132% No longer allowed to file and suspend Nasdaq, Budget Kills 'File and Suspend' Strategy to Maximize Social Security. Make it Last page 16

17 Social Security Other 3.0% Asset Income 10.5% Pensions 17.1% Social Security 35.3% Earnings 33.9% Source: Social Security Administration, Income of the Aged Chartbook, Make it Last page 17

18 Retirement savings Retirement and Benefit Plans 401(k) Pension Roth IRA Bank accounts Insurance policies Personal assets Cars, antiques, jewelry Real estate Sell or downsize Make it Last page 18

19 Part-time work Social interaction Delay Social Security Help with expenses Have a purpose Volunteer Make it Last page 19

20 Draw down strategies Ensure you have enough to last, without leaving too much behind Make it Last page 20

21 DRAWDOWN Common strategies Fixed amount Varying amount Investment based CBS Moneywatch, What s the best retirement drawdown strategy, July 2014 Make it Last page 21

22 FIXED AMOUNT Common strategies 4% Rule Savings = $500,000 Year Year 1 2 $20,000 $20,400 Year 3 $20,808 Based on a portfolio of 60% large-cap stocks and 40% bonds There is no guarantee that any investment strategy will achieve its objectives. Make it Last page 22

23 VARIABLE AMOUNT Common strategies Variable Percentage 5% 6% 5% Year 1 Portfolio $500,000 Total $25,000 Year 2 Portfolio $550,000 Total $33,000 Year 3 Portfolio 450,000 Total $22,500 There is no guarantee that any investment strategy will achieve its objectives. Make it Last page 23

24 INVESTMENT BASED Common strategies Asset allocation strategy Bucket 1 Bucket 2 Bucket 3 Years Years Years Cash Bonds Equity/Stocks There is no guarantee that any investment strategy will achieve its objectives. Make it Last page 24

25 Common strategies Tax considerations Required Minimum Distributions (RMDs) begin at age 70½ Taxable accounts IRA Roth IRA Kiplinger, How 6 Types of Retirement Income Are Taxed, Jan Make it Last page 25

26 CUSTOMIZE Flexible strategy No Rule Adjustments Increase - positive market Decrease - down market Combination of methods There is no guarantee that any investment strategy will achieve its objectives. Make it Last page 26

27 Other considerations Annuities Longevity Insurance Reverse Mortgage Downsize home Sell for $300,000 and spend $150,000 Research cost of living if moving to new location Inheritance Make it Last page 27

28 Emergency fund Unexpected expenses Easy access Avoid credit Make it Last page 28

29 Example: Dave and Mary Make it Last page 29

30 Meet Dave All scenarios shown are hypothetical in nature. The scenarios are illustrative and only intended to demonstrate the various strategies. Make it Last page 30

31 Meet Dave Fixed Dollar Strategy $500,000 Expect to have 25 years in retirement $20,000 per year $1,666 per month Make it Last page 31

32 Dave Yearly Income Needed in $50,000 Retirement Retirement Plan $20,000 Social Security $16,020 Pension $14,000 Roth IRA $0 Annuity 1 $0 Hypothetical example for illustrative purposes only. 1 Tax rules vary based on the type of annuity Make it Last page 32

33 Meet Mary All scenarios shown are hypothetical in nature The scenarios are illustrative and only intended to demonstrate the various strategies. Make it Last page 33

34 Mary Yearly Income Needed in $50,000 Retirement Retirement Plan $20,000 Social Security $0 Pension $14,000 Roth IRA $1,000 Annuity 1 $5,000 Work Part-Time $10,000 Hypothetical example for illustrative purposes only. 1 Tax rules vary based on the type of annuity Make it Last page 34

35 What s next? Make a plan Calculate how much you will need for retirement Review where your retirement income will come from Create a strategy Contact John Hancock Retirement Plan Services mylife.jhrps.com or * and download the app * For your protection, all calls to our representatives are recorded. Make it Last page 35

36 Additional resources Social Security ssa.gov or Medicare medicare.gov or MEDICARE ( ) Certified Financial Planner cfp.net finra.org fee-based or commission-based Required Minimum Distributions Minimum-Distributions John Hancock Retirement Plan Services mylife.jhrps.com or Make it Last page 36

37 Thank you IMPORTANT INFORMATION A fund s investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact John Hancock Retirement Plan Services LLC at or visit our website at mylife.jhrps.com. Please read the prospectus carefully before investing or sending money. Prospectus may only be available in English. The content of this document is for general information only and is believed to be accurate and reliable as of posting date but may be subject to change. John Hancock does not provide investment, tax, or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein. John Hancock Retirement Plan Services, LLC offers plan administrative services and service programs through which a sponsor or administrator of a plan may invest in various investment options on behalf of plan participants. These investment options have not been individually selected by John Hancock Retirement Plan Services, LLC. John Hancock Trust Company, LLC provides trust and custodial services to such plans. NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED NOT INSURED BY ANY GOVERNMENT AGENCY 2015 All rights reserved. S-P28814-GE 11/ RS Make it Last page 37