Read slide / introduce seminar.

Transcription

1 Read slide / introduce seminar. Introduce yourself as a Registered Representative of Voya Financial Partners or Voya Financial Advisers (as applicable). 1

2 Retirement Advisory Distribution and Tax Sheltered Annuity representatives, keep this slide. Legacy ING Financial Partners representatives, hide this slide. 2

3 Keep this slide if presenting to the following, otherwise, hide slide. Retail VA market (individual variable annuities) Tax Exempt Market (group healthcare, government, education) TSA Market (individual tax deferred annuity) Corporate Market 3

4 Keep this slide if there will be a solicitation of a security offered by prospectus. Hide this slide when selling products not sold by prospectus, for non-product specific presentations and non-securities related presentations. 4

5 Must be used when the presentation discusses an insurance product. Hide slide for presentations that do not discuss insurance products (for example: those where there is no mention of life insurance or annuities). 5

6 Read slide. 6

7 Today, we ll talk about defining your journey identifying your retirement objectives as you prepare for your retirement. 7

8 When you prepare for your retirement journey, it s a good idea to have a destination a goal, in mind. No matter your age, you no doubt have lots of financial obligations competing for your money: If you re in your 20s, you may be paying off college, or struggling with living expenses. (Ask those in their 20 s for their input). In your 30s and 40s, you may be carrying a mortgage, supporting a family, or saving for college. (Ask year olds for input) Later, in your 40s and 50s, you may be paying for your kids college, footing a bigger mortgage, or supporting expensive hobbies. (Get for audience input) In your 60s and beyond? For lots of people, this may be the first time they get serious about saving for retirement. Yet, healthcare and estate planning may be competing for those same dollars. (Get audience comments) Set Your Goals Before you get too far down the road, it can be good to make a map for yourself by setting your goals and objectives. Without having clearly defined objectives, it s tough to know if you re making progress. So, one way to find out is to determine how much you ll save, for what purpose, and for how long. Then, after you prioritize your goals so you ll be better able to understand what s important for the short- and long-term. Periodically, you may want to stop to check your direction to make sure your goals still make sense and you re still on track. 8

9 A lot may have changed since you first started saving for retirement. On the lifestyle side, things may be looking up people are living longer. Plus today s retirees have more options they re retiring early or late some are choosing a second career, while others are immersing themselves in hobbies and leisure activities. On the financial side, things have changed, too, and not all for the best. Far fewer companies offer employer-pay-all pension plans anymore. But, many employers are making available employer-sponsored retirement plans that allow employees to take greater responsibility for saving for retirement. And, while Social Security is still available, many people do not feel as confident in it as they once did. Healthcare costs are higher now, too and must be a significant factor when planning retirement. What all this means is that individuals often have to depend more on their personal savings to handle a variety of retirement planning issues. 9

10 How long were you expecting to be retired? Here are some eye-opening projections from the National Center for Health Statistics: A woman reaching age 65 today can expect to live to age 86.6 A man reaching age 65 today can expect to live to age 84.3 So, even though it s tricky to estimate exactly how long you ll live, the fact is, most people underestimate how long they ll be around, and how much they ll need to sustain themselves all those years. 10

11 Chances are, your own personal savings will be a large piece of the pie. Your income in retirement could come from four main sources: earned income from working, asset income, pension plans and Social Security. Each of the sources you have will provide a portion of your overall income. What is different today from the previous generation is that you will likely have to provide the lion s share of your income. 11

12 We ve already talked about Defining your Journey that is, setting your goals for retirement, and we ve talked about some of the different ways to help you get there different ways to fund retirement. One convenient way to save toward retirement is an employer-sponsored retirement plan. Generally, contributions to a traditional employer-sponsored retirement plan are made on a pre-tax basis, and are automatically deducted from your pay -- before Federal income tax is withheld. Contributions and any earnings have the potential to grow on a tax-deferred basis. Taxes are due upon withdrawal and will be taxed as ordinary income. That s usually at retirement when you may be in a lower tax bracket. Withdrawals prior to age will be subject to an IRS 10% premature distribution penalty tax unless an exemption applies. 12

13 Here is an example of how tax-deferred saving can help put more of your money to work for you. Because contributions to an employer-sponsored retirement plan are made on a pre-tax basis, spendable income can actually be higher than if the same amount were saved on an after-tax basis outside the plan. Contributions have the potential to grow on a tax-deferred basis. When you retire or take a distribution from the plan, the distribution is subject to ordinary income tax. Withdrawals prior to age will also be subject to an IRS 10% premature distribution penalty tax. And while this example isn t intended to represent any specific investment, it includes assumptions. It s also important to remember that account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than what was originally invested. 13

14 Read slide. 14

15 Some basic investing guidelines: Most financial experts don t advise trying to find the right investment. There simply isn t one investment that will be the ticket to a big payoff. Next, they suggest that investors carefully compose their portfolios based on a number of individual factors. We ll talk more about this in a minute. It is also wise to avoid trying to get in and out of the market at just the right time. This is called "Market Timing and no one not even the most astute Wall Streeter can predict or anticipate what the market will do. And, finally, they recommend that investors stay involved and not be emotional. 15

16 Now, there are some guidelines that most financial experts suggest may be worthwhile: 1. Understanding the investment options available to you. 2. Becoming familiar with some basic risk management strategies, such as diversification, asset allocation, and dollar cost averaging*. It can be good to become informed about the features of Diversification - This means purposefully choosing investments from many asset classes and even within an asset class, tailoring an Asset Allocation Strategy This is done by weighing how much risk you re willing to take and how long you have to invest, and then by selecting an investment style suited to your preferences. However, using diversification/asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets. 3. Dollar Cost Average Most people saving in employer-sponsored plans do this automatically and may not realize it. We ll explain in a minute how this works. Using a Dollar Cost Average strategy does not ensure a profit nor guarantee against loss. Investors should consider their financial ability to continue their purchases through periods of low price levels. 4. And, finally, once a year, you may want to Revisit, Review and Rebalance. It s a way to doublecheck that your investment plan is still on track. Now, let s look at each of these strategies in more detail. 16

17 There are many types of investments, but we can categorize them into three basic building blocks: stocks, bonds and short-term investments. Each of these investments has different characteristics and different levels of risk and return over time. Stocks equal ownership of shares in a particular company. Although past performance is no guarantee of future results, history has shown that stocks can help grow your money over the long-term. Bonds act like IOU s. Through bonds investors lend money to another organization and then receive fixed income each year plus the return of the original principal when the bond matures. These assets may perform better during periods of falling interest rates. Cash equivalents are generally considered to be lower risk and offer lower returns. They may earn a small amount of interest, and they can be converted into cash relatively quickly. The most common examples of cash equivalents are: Savings deposits Certificates of Deposit (CDs) Money market instruments Knowing the differences about these asset classes is an essential step in creating a diversified portfolio. Note that all investments carry a degree of risk and past performance is not a guarantee of future results. Generally, the greater an investment s possible reward over time, the greater its level of price volatility, or risk

18 Now, let s talk about the different mix of investments on the risk/reward spectrum. There are all kinds of investments out there, so how does an investor choose? One consideration is how much risk the investor is willing to take. In short, risk tolerance is all about how willing the investor is to trade the potential to earn more for the risk of losing some. When there are a variety of investment choices available learning more about asset allocation and diversification may help an investor to make better investing decisions. 18

19 Asset allocation and diversification are risk management strategies. Asset allocation is designed to help balance risk and reward by distributing dollars invested according to individual goals, risk tolerance and investment horizon. Diversification is the practice of spreading dollars among a variety of investments to better manage investment risk. According to a landmark study published in 1996, the asset allocation decision is the largest single factor in performance*. * Source: A landmark study, Determinants of Portfolio Performance, by Brinson, Hood and Beebower, presented in Financial Analysts Journal (May June, 1992), and its update in 1996 While using asset allocation and/or diversification neither assures nor guarantees better performance, and cannot protect against loss in declining markets, both are recognized as traditional risk management strategies. 19

20 Some people think that diversifying only means evenly investing money across the three basic classes of investments. But, it may also be worthwhile deciding how much to allocate to each of those asset classes, and even more significant understanding that the right mix is different for every investor. It all also depends on how much time there is until the money is needed and how comfortable you are with risk. All investments carry a degree of risk. Generally speaking, the greater an investment s possible reward over time, the greater its level of price volatility, or risk. Selecting the proper mix, or asset allocation, takes into account your goals, time horizon and tolerance for risk. 20

21 Many employer-sponsored plans offer or utilize dollar cost averaging as a risk management strategy. Dollar cost averaging is a system for investing a fixed amount of money at regular intervals over a period of time, in an effort to reduce market timing risk. It means investing smaller amounts of money in the market at regular intervals rather than large amounts all at once. As this chart shows, Investor A let emotions get the best of him. He had $1200 left over at the end of the year and made a snap decision to buy an investment his buddy recommended. He purchased 150 shares all at once at $8 a share. Investor B took a steady approach....systematically buying shares with $100 each month. The orange circles show the different stock prices he paid each month. At the end of the year, he spent $1200 too....but had 240 shares to show for his effort. The money he invested over time lowered the average cost of each share. Dollar cost averaging does not ensure a profit or guarantee against loss in declining markets. Investors should consider their financial ability to continue their purchases through periods of low price levels. 21

22 Here s another basic investment guideline Remember periodically to revisit your goals, review your portfolio, and rebalance when necessary. Let s take a closer look at why it may be good to rebalance your portfolio periodically over time. Let s say you allocated the majority of your money to aggressive investments. Initially, your portfolio looked like the pie on the left, with 50 percent allocated to aggressive investments. A year down the road, however, your portfolio could look like the pie in the middle. If your aggressive investments had good returns, over time they could come to represent a larger piece of your pie. Instead of 50 percent devoted to aggressive investments, your aggressive holdings could surge to 75 percent of your overall holdings. So what s wrong with that? Well, you may never have intended to have that much money allocated to high-risk investments. So, taking the time to periodically revisit and reassess your portfolio can help you decide when you might need to "rebalance" your portfolio, perhaps back to original allocation preferences. Rebalancing neither assures nor guarantees better performance and cannot protect against loss in declining markets 22

23 Read slide. 23

24 That s it for my part of the program today. Now I d like to hear from you. First, did you find the information useful? [DISCUSS AUDIENCE INPUT.] I d like to add a few thoughts of my own to the mix. For the readers in the audience, you may want to pick up some books on these topics at your local book store or library, or perhaps go online. [SPEAKER TO MENTION BOOKS HE/SHE FINDS USEFUL.] Something else that may prove valuable is to find out more about your company s benefits. Talk to your benefits manager or go to your employer s intranet site for more information about your employer-sponsored retirement plan. Or, get on the Internet. It s a storehouse of information right at your fingertips. Just be sure you know who s hosting the site and that they re qualified to address the topic you re interested in. For instance the U.S. government has many Web sites, including ssa.gov, that are reliable. 24

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