DISCOVER TOMORROW S NEEDS TODAY

Transcription

1 Retirement Reimagined Your Retirement: DISCOVER TOMORROW S NEEDS TODAY A comprehensive plan to build the retirement lifestyle you have envisioned for yourself and your family INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

2 HOW WILL I PAY FOR MY RETIREMENT? Setting aside the money you will need to provide for you and your family in retirement isn t easy. Many people underestimate how much it will actually cost down the road to live the way they want. We re living longer, so retirement lasts longer Average life expectancy in the U.S. (total population): Health care costs continue to rise As spending on health care rises, seniors will be asked to devote an increasing share of their own incomes to pay for these expenses. Percentage of income spent on health care by seniors: 17 % 24 % 31 % Sources: Central Intelligence Agency, The World Factbook (last updated January 2018). CRS Report for Congress: Life Expectancy in the U.S., August 16, 2006; Liqun Liu, Andrew J. Rettenmaier and Zijun Wang, The Rising Burden of Health Spending on Seniors, National Center for Policy Analysis, NCPA Policy Report No. 297, February 2007; Social Security Administration, Monthly Statistical Snapshot, November 2017, Median and Average Sale Prices of New Homes Sold in United States, pdf/uspricemon.pdf; The U.S. Energy Information Administration Regular Conventional Retail Gasoline Prices ; U.S. Bureau of Labor Statistics, Consumer Price Index Average Price Data as of November

3 Social Security benefits may not be enough $ 1,261 $1,261 is the current average monthly Social Security benefit payment, as of November Will this be enough for you and your family? Inflation reduces your purchasing power A dollar today will almost certainly be worth less at retirement because of inflation. new home 1992 $147,200 $377, $828,799 gallon of gas $1.11 $2.47 $5.42 gallon of milk $2.81 $3.15 $6.92 The effect of inflation on everyday costs (assuming 3.2% annual rate of inflation) Please refer to page 2 for sourcing information. 3

4 INVESTIGATE THE OPTIONS Investing for retirement is up to you. It is important to maximize your retirement and personal investments to help ensure you enjoy the lifestyle during retirement that you envision. Leverage the power of tax deferral There are a number of ways to help you achieve the goals you have for retirement. Traditional Individual Retirement Accounts (IRAs) Roth Individual Retirement Accounts (Roth IRAs) A Traditional Individual Retirement Account (IRA) offers the benefits of tax deferral. With an IRA, any earnings grow on a tax-deferred basis, meaning that you do not have to pay taxes on the earnings until you make withdrawals. 1 This provision allows the account s growth potential to increase, which could conceivably generate a greater overall return. Contributions to a Traditional IRA may be tax-deductible, depending on your income and whether you and your spouse are covered by a retirement plan at work. A Roth Individual Retirement Account (Roth IRA) is an alternative to a Traditional IRA for taxpayers whose income falls beneath certain limits. Roth IRA contributions are not tax-deductible, but distributions in retirement from a Roth IRA are generally tax-free. Create an investment strategy Determine how much you will need Give careful consideration not only to everyday expenses but also to health care expenses. Review your budget By reviewing your budget, you can determine how you can best save for retirement. Start investing now The sooner you get started with investing for retirement, the better. 1 The earnings and deductible contribution portions of IRA distributions from a Traditional IRA are subject to federal income tax. Please note that if account proceeds are distributed prior to age 59 1/2, earnings may be subject to an additional 10% federal tax. 4

5 The power of time: The high cost of procrastination 2 Two hypothetical investors making a $458 monthly contribution that grows at 7% annually. Starting investing at age... Invested regularly for... Amount at age Investor 1 Investor 2 35 years old 30 years $562, years old 20 years $239,976 Work with a trusted financial professional A trusted financial professional A trusted financial professional can work with you to identify your goals, needs and aspirations and help you create a comprehensive retirement savings strategy designed to help you meet your objectives. 2 Source: Legg Mason. This illustration assumes a $458 monthly contribution that grows (earns interest) at 7% annually. The contribution amount has been calculated to contribute the maximum annual amount of $5,500 into a traditional IRA. This chart is for illustrative purposes only and does not represent an actual investment or the performance of any specific investment. Actual investments may include fees, charges and other expenses that would affect an investment s return. The earnings and deductible contribution portions of IRA distributions from a Traditional IRA are subject to federal income tax. Distributions prior to age 59 1/2 may be subject to an additional 10% federal tax. 5

6 YOUR RETIREMENT: PLAN FOR YOUR FUTURE TODAY 1Carefully consider the goals for your retirement. 2Contact your financial professional. 3Consider the investment opportunities offered by Legg Mason. 6

7 INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Both Traditional and Roth IRAs allow investors to build and manage investment portfolios without owing any current taxes on any interest, dividends and capital gains generated by investments while inside the IRA. While both types of IRAs offer this tax advantage, there are significant differences between Traditional and Roth IRAs. INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE One of the most consistent elements of life is change career changes, family changes, and life changes as you transition to your retirement. And while change can sometimes be unsettling, it always presents new opportunities, challenges and dreams. INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Additional resources Retirement Reimagined QUICK REFERENCE For retirement GUIDE accounts Retirement and Education Account Quick Reference Guide Provides a side-by-side comparison of Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, 403(b)(7) and 401(k) accounts. Includes contribution limits. Retirement Reimagined YOUR OPTIONS FOR LUMP SUM DISTRIBUTIONS Your life may change......your plans for retirement don t have to. Your Options for Lump Sum Distributions Compares the pros and cons of cashing out, remaining in a previous employer s plan, moving assets to a new employer s plan, and consolidating all retirement assets into a Rollover IRA. Retirement which type of ira is right for you? Individual Retirement Accounts (IRAs) help investors save for retirement by providing a significant tax advantage over conventional investment accounts. Which Type of IRA Is Right for You? Compares the pros and cons of a Traditional IRA versus a Roth IRA, including information about deductions and contribution limits. We offer resources geared toward small businesses, including: Which Type of IRA Is Right for Your Business? Advantages of a SEP IRA Plan Advantages of a SIMPLE IRA Plan Advantages of a 403(b)(7) Account Advantages of a 401(k) Plan 7

8 Brandywine Global Clarion Partners Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long-term, actively managed investment strategies. ClearBridge Investments EnTrustPermal Martin Currie QS Investors RARE Infrastructure A broad mix of equities, fixed-income, alternatives and cash strategies invested worldwide A diverse family of specialized investment managers, each with its own independent approach to research and analysis Over a century of experience in identifying opportunities and delivering astute investment solutions to clients Royce & Associates Western Asset LeggMason.com Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional. This document does not address state or local tax rules concerning IRAs or other accounts. Legg Mason, Inc., its affiliates and its employees are not in the business of providing estate planning, tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. Information contained herein is current as of January 2018, is subject to legislative changes and is not intended to be legal or tax advice. Investments are not insured by the FDIC or any other government agency; are not a deposit or other obligation of Legg Mason, Inc., or any depository institution; and are subject to investment risks, including loss of principal amount invested. Retirement Reimagined is a registered trademark of Legg Mason Investor Services, LLC Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC and all entities mentioned above are subsidiaries of Legg Mason, Inc TAPX /18