Keep Your Retirement on Track: Protecting Against the 5 Derailers

Transcription

1 Keep Your Retirement on Track: Protecting Against the 5 Derailers Karen Hofmann, Vice President, Advanced Markets Group and National Partnership Program, Prudential Aliza Freud, Founder and CEO, SheSpeaks Inc. 1

2 Greetings Susan Diamond, Vice President, Chapter Chairs and Chief Learning Officer, WPO Special Thanks to: 2

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4 Today s Presenter Karen Hofmann, Vice President, Advanced Markets Group and National Partnership Program, Prudential Karen Hofmann is a Vice President in the Advanced Markets Group for the Individual Life Division of Prudential. Karen also oversees Prudential s National Partnership Program. In her current position, Karen is responsible for speaking with clients and financial services professionals about ways to effectively accumulate, protect, and distribute wealth. Karen has more than 32 years of experience in the financial services industry. 4

5 Today s Presenter Aliza Freud, Founder and CEO, SheSpeaks Inc. Aliza Freud, the founder and CEO of SheSpeaks Inc., launched the award-winning influencer marketing and media platform with one goal in mind: to build a stage for women and help amplify their voices. SheSpeaks is now the largest female influencer platform with a network reach of over 300 million consumers each month. Aliza has used her vision to help major brands including P&G, L'Oreal, Tyson, American Express, Prudential and Citibank to push the boundaries of innovation and create influencer content that drives awareness, excitement and purchase.prior to SheSpeaks, Aliza was an executive at American Express, where she led worldwide brand innovation initiatives 5 including product management, new product development & co-brand partnerships.

6 Sponsored by Prudential Keeping Your Retirement on Track What are Life s 5 Retirement Derailers? Life insurance is issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (except in NY and/or NJ), and Pruco Life Insurance Company of New Jersey (in NY and/or NJ). All are Prudential Financial companies located in Newark, NJ. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company and do not apply to any underlying investment options. Policy guarantees and benefits are not backed by the broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Life insurance policies contain exclusions, limitations, reductions in benefits and terms for keeping them in force. A financial professional can provide you with costs and complete details. Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances Prudential Financial, Inc. and its related entities Prudential Financial, Inc. and its related entities Ed. 12/2016 Exp. 06/22/2018

7 WOMEN HAVE MADE MUCH PROGRESS Close to 60% of women are in the labor force 1 and 40% are in managerial and professional jobs compared to just 18% in There are 10 MM women-owned businesses in the US and they account for 30% of all businesses 3 And women control $11T of the nation s investable assets 4 7 Sources: 1. Bureau of Labor Statistics. Women in the Labor Force: A Databook. December 2015; 2. Bureau of Labor Statistics. TED: The Economics Daily. August 2016; 3. The State of Women Owned Business Report: Commissioned by American Express OPEN. A Summary of Important Trends, ; 4.

8 KEY CHALLENGES IMPACTING WOMEN S FINANCES Time Gap On average, women in the U.S. spend 28 hours per week on household chores 65 percent more than the average for men. 1 Living Longer and Living Alone 5-6: Approximate number of years by which women outlive men. 2 Behavioral Inhibitors Lower engagement 5 Procrastination Impulse control Optimism bias Wage, Income Gap $.79: Amount that female workers earned for every dollar earned by male workers. 3 Investment Gap 1 Women do not invest to the same degree as men. 4 Sources: 1. Organization for Economic Cooperation and Development, October 2016, 2. National Center for Health Statistics. Health, United States, 2015: With Special Feature on Racial and Ethnic Health Disparities. Hyattsville, MD. 2016; 3. U.S. Census Bureau, Historical Income Tables Table P-40: Women s Earnings as a Percentage of Men s Earnings by Race and Hispanic Origin, Prudential s Financial Experience & Behaviors Among Women Study

9 RETIREMENT INCOME HAS CHANGED YOUR RESPONSIBILITY YOUR RESPONSIBILITY SOCIAL SECURITY SOCIAL SECURITY PENSION PENSION THEN NOW 9

10 5 RETIREMENT DERAILERS RISING HEALTHCARE COSTS OUTLIVING RETIREMENT SAVINGS LOW INTEREST RATES MARKET VOLATILITY TAXES YOUR RESPONSIBILITY SOCIAL SECURITY PENSION 10

11 RISING HEALTHCARE COSTS 245,000 Estimated average out-of-pocket medical costs for a 65-year-old couple that retired in 2015 and even more if CHRONIC ILLNESS CARE IS NEEDED 11 Source: Health Care Costs for Couples in Retirement Rise to an Estimated $245,000. Fidelity Investments. October 8, Based on a hypothetical 65-year-old couple with average life expectancies of 85 for a male and 87 for a female, with costs in 2015 dollars.

12 ONE OUT OF EVERY TWO PEOPLE WILL DEAL WITH A CHRONIC ILLNESS LATER IN LIFE. WOMEN 58% MEN 47% 12 Favreault M, et al. Long-term Services and Supports for Older Americans: Risks and Financing. ASPE Issue Brief. Department of Health and Human Services. July 2015, p.3, 9.

13 LONGEVITY Will my money last as long as I do? LONGEVITY IS A GIFT AND A CHALLENGE LIVE TO AGE 90 LIVE TO AGE 95 LIVE TO AGE in 10 Men 1 in 7 Men 3 in 100 Men Half of Women 1 in 4 Women 7 in 100 Women Valuation Basic Table, Nonsmoker Select and Ultimate mortality rates, Age Last Birthday Basis. American Academy of Actuaries and Society of Actuaries.

14 DECREASING INTEREST RATES = DECREASING INTEREST INCOME 10 YEAR TREASURY BOND ANNUAL INCOME FROM $100,000 12/31/ % $4, /31/ % $3, /31/ % $2, Data source: Federal Reserve Board, FRB H15, June 8, HOW WILL YOU COVER A GAP LEFT FROM LOW INTEREST RATES? 14

15 1/2/51 1/2/53 1/2/55 1/2/57 1/2/59 1/2/61 1/2/63 1/2/65 1/2/67 1/2/69 1/2/71 1/2/73 1/2/75 1/2/77 1/2/79 1/2/81 1/2/83 1/2/85 1/2/87 1/2/89 1/2/91 1/2/93 1/2/95 1/2/97 1/2/99 1/2/01 1/2/03 1/2/05 1/2/07 1/2/09 1/2/11 1/2/13 1/2/15 STOCK MARKET VOLATILITY IS INEVITABLE Volatility in the Market: Monthly returns for the S&P 500 Index (From January 1951 to January

16 THESE SOURCES OF INCOME MAY BE TAXABLE NOW Certificates of Deposit Stocks Mutual funds Bonds LATER Pensions IRAs Annuities 401(k)s, 403(b)s and other employersponsored retirement plans Social Security Likely NEVER Municipal Bond Interest* Life Insurance Death Benefit and cash value** Roth IRAs, 401(k)s, and 403(b)s Health Savings Accounts used for medical expenses ** May have Alternative Minimum Tax (AMT) consequences and may impact taxation of Social Security benefits. ** Access to cash value is through loans and withdrawals. In general, loans are not taxable and withdrawals are taxable only when more money is taken out of the policy than has been paid in premiums. Loans and withdrawals may impact the ultimate death benefit payable to beneficiaries. If a policy lapses or terminates with an outstanding loan, the loan becomes immediately taxable to the extent of gain in the policy. Policies classified as MECs receive less favorable tax treatment. 16

17 CONSIDER THIS 1. What are your chances of becoming chronically or terminally ill? 2. How will you prevent a long life from becoming a financial burden? 3. How will you cover a gap resulting from low interest rates? 4. Do you have a plan in place to protect you in case of a volatile market? 5. What will you do to address the impact of taxes? 17

18 PRUDENTIAL CONTACT INFORMATION For additional information and to find a Prudential Financial Advisor near you, please visit: ownmyfuture.pru The Prudential Insurance Company of America and its affiliates Newark, NJ. Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances. "Prudential Advisors" is a brand name of The Prudential Insurance Company of America and its subsidiaries

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