YOUR RETIREMENT JOURNEY STARTS NOW.

Transcription

1 YOUR RETIREMENT JOURNEY STARTS NOW. Ritalka, Inc. 401(k)

2 Welcome Today we will be discussing: Why save now Determine an appropriate savings rate Determine your investing approach Completing the necessary forms

3 Your 401(k) Eligibility: age 19 & 6 months of service Contribution Limits: Elect a percentage of your pay up to $18,500 + $6,000 catch up if 50+ (2018 limits) Managing your contribution Stop any time Adjust your contribution rate quarterly Rollovers permitted Partial distributions permitted at age 59.5

4 Why save? Retirement Plans 4

5 You ll be responsible for a larger portion 40% Social Security 60% on your own (retirement plans, part time work, other) Source:

6 You ll need it to last longer

7 Inflation will deflate buying power

8 Let compounding work for you Amount Age Saved Mary $289,937 Bill $211,486 Contribution period (investing $2,000 each year) This is a hypothetical example for illustrative purposes only and does not reflect the performance of any particular investment. Assumes an 7% compound annual rate of return that is net of any fees or expenses. Actual rates of return will vary and when redeemed may be worth more or less than the original investment. Calculations are rounded to the nearest whole dollar. Amount saved does not reflect the impact of income taxes.

9 Retirement Plans Determining an appropriate savings rate

10 How much do I save? Determining savings rate to keep you on pace to creating sustainable income in retirement Evaluate budget and determine what you can afford Use the online calculator to estimate effect on take home pay Consider 10-15%, or start smaller and increase your contribution each year

11 Impact to take-home pay $30,000 Annual Salary Contribution Rate 0% 6% 12% 15% Gross Monthly Pay $2,500 $2,500 $2,500 $2,500 Less Amount Saved $0 $150 $300 $375 Taxable Pay $2,500 $2,350 $2,200 $2,125 Less Taxes $ $ $ $ Take-Home Pay $1, $1, $1, $1, Saving 12% or $300 in this example only costs $225 Examples are for illustrative purposes only and do not reflect the performance of any particular investment. Your actual paycheck may reflect different amounts. Assumes participant is age 25 with a $30,000 salary, making monthly contributions, a 7% annual rate of return net of expenses compounded monthly, a 25% tax rate, and no salary inflation. The actual rate of return for the periods shown will vary and when redeemed, assets may be worth more or less than the original investment. Calculations are rounded to the nearest whole dollar.

12 Think you can t afford to save? Weekly Spending Calculator ITEM COST PER WEEK COST PER YEAR Daily cup of coffee If you save instead of spend potential after 10 YEARS 20 YEARS 30 YEARS $12 $624 $8,621 $25,581 $58,944 Movie Tickets $15 $780 $10,777 $31,976 $73,679 Assumptions: Amounts are based on an annual rate of return of 7% that is net any fees or expenses, a 25% federal tax rate for an annual salary of $38,000 for a single person claiming one deduction. Contributions are made bi-weekly. Results are hypothetical and not indicative of any specific investment. Actual values will fluctuate and may be more or less than the original investment when redeemed.

13 Should you save pre-tax or after-tax? Pre-tax 401(k) Pre-tax savings After-tax Roth(k) After-tax savings Tax-deferred earnings Tax-free* earnings Taxable withdrawals Tax-advantaged* withdrawals * If withdrawn after 5 years and after age 59½

14 Determine your investing approach Retirement Plans 14

15 Which path will you take? Invest based on my age Invest with help Invest on my own

16 Understanding the basics Cash & Cash Equivalents High Risk Risk Spectrum Small Company Stocks High Return Fixed Income/Bonds International Stocks Large Company Stocks Equity/Stocks - Large and Small - Domestic and International - Value and Growth Low Risk Corporate Bonds Government Bonds Cash Equivalents Low Return Source: Ibbotson Associates. This chart is for illustration only and does not predict or guarantee the performance of any investment. Past performance is no guarantee of future results. Investment risks associated with international investing, in addition to other risks, include currency fluctuations, political and economic instability and differences in accounting standards. Investing in smaller and micro-cap companies involves greater risks not associated with investing in more established companies, such as business risk, stock price fluctuations and illiquidity. Both government bonds and treasury bills offer a fixed rate of return if held to maturity and are insured by the U.S. Government. There are many types of risk such as principal risk, purchasing power risk (inflation) and credit risk.

17 Diversification Don t put all your eggs in one basket And some investments Can move like this Then, this is the general effect of diversification If some investments Can move like this Hypothetical example only, not intended as investment advice. Diversification does not guarantee against loss. It is a method used to manage risk.

18 TargetAge Invest based on age TargetAge TM gradually and automatically shifts your account s asset allocation to a more conservative mix of fixed income and equities as you age. Invest based on your age it s that easy!

19 TargetAge disclosures TargetAge allocation portfolios, which are built from the plan s available investment options, are based on generally accepted investment principles and consider an investor s life expectancy. Individuals give prior approval to have their account invested according to their age, rebalanced, and moved (reallocated) to a more conservative allocation portfolio as they age. The final TargetAge allocation is heavily weighted towards fixed income investment options. These portfolios are not guaranteed and may increase or decrease in value. Neither asset allocation nor diversification guarantee against loss. They are methods used to manage risk. Transfer restrictions for the General Account/ Guaranteed Return Account/Stable Value may impact the stated portfolio allocations. The specific plan investments used within the portfolios are subject to change at the discretion of the plan sponsor or due to the closing of an investment. Securian and the plan sponsor may change the allocation model or terminate the service at any time after providing written notice. Making investment allocation changes, transfers, or auto-rebalancing requests will automatically remove a person from TargetAge. A person may cancel TargetAge or make other investment changes at SecurianRetirementCenter.com or by calling TargetAge should not be construed as investment advice. TargetAge portfolios illustrate only some of the possible investment choices. Alternative investment allocations having similar risk and return characteristics can be created from the investment options available in the plan. In applying a particular asset allocation, a person should consider time horizon, risk preference, other assets, income and investments (e.g., equity in a home, IRAs, savings accounts and interests in other qualified and non-qualified plans) in addition to any assets in the retirement savings plan. A financial advisor should be consulted for questions regarding personal financial situations.

20 Invest with help using Model Portfolios Choose from 5 suggested model portfolios Built from your plan s current investment options Use questionnaire to determine which portfolio most closely matches your investing style

21 Model Portfolios disclosures Model portfolios allows individuals to determine how their account is invested by choosing from various pre-mixed portfolios, which are built from the plan s available investment options and considers investors' risk preference and time horizon. Each portfolio is diversified with varying quantities of stock and fixed income investment options. Model portfolios are based on the historic volatility of the asset classes represented in the allocations. These portfolios are not guaranteed and may increase or decrease in value. Neither asset allocation nor diversification guarantee against loss. They are methods used to manage risk. Transfer restrictions for the General Account/ Guaranteed Return Account/Stable Value may impact the stated portfolio allocations. The specific plan investments used within the portfolios are subject to change at the discretion of the plan sponsor or due to the closing of an investment. Securian and the plan sponsor may change the allocation model or terminate the service at any time after providing written notice. Making investment allocation changes, transfers, or auto-rebalancing requests will automatically remove a person from the model portfolio. A person may cancel a model portfolio or make other investment changes at SecurianRetirementCenter.com or by calling Model portfolios should not be construed as investment advice. Model portfolios illustrate only some of the possible investment choices. Alternative investment allocations having similar risk and return characteristics can be created from the investment options available in the plan. In applying a particular asset allocation, a person should consider time horizon, risk preference, other assets, income and investments (e.g., equity in a home, IRAs, savings accounts and interests in other qualified and non-qualified plans) in addition to any assets in the retirement savings plan. A financial advisor should be consulted for questions regarding personal financial situations.

22 Invest on my own Want to decide which investments to use and how much to allocate to each, use the Invest on my own form. Allows flexibility to create your own unique investment portfolio.

23 Take action! Retirement Plans 23

24 Complete the form Find the appropriate form Invest based on my age, Invest with help, or Invest on my own based on your investing approach Complete the Beneficiary Designation form Complete the Document Delivery Request form

25 Invest based on my age Complete your personal information Select a pre-tax savings rate from the ones shown or write in your own Select a Roth(k) aftertax savings rate if desired Sign the form

26 Invest with help Select a pre-tax savings rate from the ones shown or write in your own Complete your personal information Select a Roth(k) aftertax savings rate if desired Select an investment option Sign the form

27 Invest on my own Select a pre-tax savings rate from the ones shown or write in your own Complete your personal information Select a Roth(k) aftertax savings rate if desired Select your investments and rebalancing preference Sign the form

28 Beneficiary designation form Don t forget to fill out your beneficiary designation form

29 Sign up for online statements Convenient Eco-friendly Secure/Private Sign up online at SecurianRetirementCenter.com.

30 You can make changes later Change investments Abusive trading policy applies Change your contribution amount Complete form and returning it to your employer

31 Access your account Quarterly statements Paper, Online Website, Mobile access Phone Automated system (24 hrs) Customer service (7am-7pm CT)

32 Questions? Chapter slide This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances. This presentation was prepared for informational purposes only and is not intended to be viewed as investment advice. This information is provided through Securian Retirement, a unit of Minnesota Life Insurance Company. The English language version of the insurance contract is the official version for purposes of application and interpretation. Materials in languages other than English are for informational purposes only, and may not be construed to modify the insurance contract in the event of a dispute over its provisions. Securian Retirement Securian Retirement s qualified plan products are offered through a group variable annuity contract issued by Minnesota Life Insurance Company, a Securian Financial Group affiliate. 400 Robert Street North, St. Paul, MN Securian Financial Group, Inc. All rights reserved. F79061 DOFU