Retirement Plans. Participant education program. Managing wealth

Transcription

1 Retirement Plans Participant education program Managing wealth

2 2 Build wealth. Protect it. Plan your estate.

3 Whether or not you ve enrolled in your company s retirement plan, we want you to have access to education that can help you prepare for retirement. Use this brochure to learn how it s possible to help build and protect wealth over the long term. 3

4 Wealth management Wealth management is the process of executing an ongoing plan to keep more assets than you spend, and protect the things you own and the people you love. Keys to building wealth Earning Saving Investing The median household income in the U.S. is $51,371 1 In 2012, more than 50% of Americans spent more than or about the same as what they took in 2 Budgeting Debt management Pay yourself first Mutual fund Stock Global or emerging market fund Real estate Life insurance To get ahead, you not only need to control expenses but also need to know what you re saving for. 4

5 Goal-oriented saving Goal-oriented saving is about tying your saving efforts to specific objectives, so you can choose the best savings vehicle to achieve them. Short-term goals Long-term goals Can be achieved within two years Three- to six-month emergency fund Down payment for a car In most cases, you need to place savings in an account where your money can be quickly accessed, e.g., a savings account. Takes longer than two years to achieve Investing for retirement Saving for college For longer term needs, consider investing your money in vehicles with potential for earnings beyond what savings accounts can offer. 5

6 Saving for retirement Generally speaking, there are two ways to save for retirement: through employer-sponsored plans and/or through personal retirement programs. Before making decisions, consult your tax or financial advisor about which opportunities may be best for your needs and long-term plans. Employer programs Other ways to save Many employers offer retirement-savings programs as part of their compensation package. The most popular among these programs is the 401(k) plan. These plans offer: Tax-deferred contributions Payroll deducted Employer matching 3 Tax credit 4 Not all employers sponsor retirement plans. Fortunately, there are other tax-advantaged opportunities to help you prepare financially for retirement. Individual retirement accounts/ annuities Solo 401(k): business owners with no employees Trusts or custodial accounts Example of an employer match You earn $40,000 a year over 26 pays of $1, each. Your employer offers a 50% match on contributions up to 6% of pay. You elect to contribute 6% of pay ($92.30). Your employer will contribute an amount equal to another 3% of your pay it s essentially free money. Pre pay Annual Your 401(k) contribution $92.30 $2, Your employer s match $46.15 $1, Total contribution $ $3, Fractional amounts rounded down. 6

7 Other long-term considerations Other long-term considerations may include, but not be limited to, saving for a child s college and for retiree health care expenses. These are things you may want to consider once you have defined your retirement-savings strategy. College savings Health care Long-term care (LTC) Saving for a child s college can be an obtainable goal if you start early and stick with it. There are tax-advantaged programs to help you plan. 529 plans Coverdell accounts Roth IRAs Trusts Custodial accounts A 65-year-old couple can expect $220,000 in total out-of-pocket health care expenses throughout retirement. 5 Planning ahead can make a difference, e.g., using an HSA for medical expenses. 70% of Americans will need some form of LTC in their lives. 6 Yet only 10% of Americans over 65 have LTC insurance. 7 Before making decisions, consult your tax or financial advisor about which opportunities may be best for your needs and long-term plans. 7

8 8

9 Protecting wealth Wealth management is as much about protecting what you have and those you love as it is about accumulating assets. Consider these potential wealth protection options Life insurance 85% say they need it but just 62% say they have it 8 Umbrella insurance to protect against accidents you cause Health insurance, especially for what Medicare doesn t cover Long-term care insurance 70% of people will need it 6, yet just 10% have it 7 Consider a separate account for each financial purpose Legally separate any business finances from personal finances 9

10 Protect what s yours Everything you own and have rights to is your estate. As the saying goes, You can t take it with you. An estate plan lets you control how it will be passed on to the next generation. Potential benefits of estate planning Having a formal estate plan can: Help plan for both short-term and long-term financial goals Reduce taxes Ensure your estate is distributed according to your wishes Help plan for future needs or health concerns Help provide financially for the individuals and causes you love most Perhaps most importantly, a formal estate plan can help provide certainty in an otherwise uncertain world. 10

11 Control what happens If you do not have an estate plan when you pass away, you have no control over what happens to what was yours. The experience can be lengthy or drawn out, costly and painful for those you leave behind. Here s how to help them avoid that experience. Consider these four ideas 1. Prepare a will without it, the State decides who gets your wealth, after taking a significant chunk for itself 2. Consider establishing a trust or living will to help safeguard your assets from legal actions when you may be incapacitated 3. Consider life insurance for you and your loved ones 4. Make sure a current beneficiary designation form is on file for each life insurance policy, retirement plan and any other program you have that offers survivor rights or benefits Before making any decisions, consider consulting your tax or legal advisor. Learn more about managing your Nationwide retirement plan account nationwide.com/myretirement 11

12 Learn more about managing your Nationwide retirement plan account nationwide.com/myretirement Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value Eighty-six percent (86%) of large companies offer a matching program. Many smaller employers do as well. Be sure to contribute at least to the level that earns a full match. transamericacenter.org/docs/default-source/resources/centerresearch/tcrs2013_sr_retreadimperative.pdf 4 Depending on filing status and the amount of pay, that credit could be as much as 50% of the first $2,000 you contribute to the plan. 5 Fidelity Benefits Consulting (2013). Based on a hypothetical couple retiring at age 65 years or older, with average (82 male, 85 female) life expectancies. 6 What are the Chances of Needing Long Term Care? LTC Tree (January 2014). 7 Revolutionary Evolution, Life Insurance Selling (November, 2011). 8 This material is not a recommendation to buy, sell, hold or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation. Investing involves market risk, including possible loss of principal. No investment strategy can assure a profit or guarantee against loss in a declining market. Neither Nationwide nor its representatives can offer investment, tax or legal advice. You should consult your own counsel before making decisions. The Nationwide Group Retirement Series includes unregistered group fixed and variable annuities and trust programs. The unregistered group fixed and variable annuities are issued by Nationwide Life Insurance Company. Trust programs and trust services are offered by Nationwide Trust Company, a division of Nationwide Bank. Nationwide Investment Services Corporation, member FINRA. Nationwide Mutual Insurance Company and Affiliated Companies, Home Office: Columbus, OH Nationwide, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company Nationwide PNM-2870AO.2 (03/17)