www.edwardjones.com Member SIPC Slide 1 MKD-5780C-A-SL MAY 2012 Seminar Overview Why save for retirement? Why save now? How to save Slide 2 Why Save for Retirement? 77% of all Americans between the ages of 50 and 65 have saved less than $37,000 for retirement 47% of these individuals will depend on personal retirement savings as the largest source of their retirement income Source: U.S. Census Bureau Slide 3 1 MKD-5780E-A-NS
Life Expectancy 90 85 80 75 70 Average Life Expectancy 80.2 80.7 81.5 82.4 83.5 65 45 50 55 60 65 Current Age Source: U.S. Census Bureau, The 2010 Statistical Abstract, Table 105 Slide 4 The Role of Social Security Approximately 40% of retirement income typically comes from Social Security benefits Track your Social Security benefit by visiting www.ssa.gov or your local Social Security office Source: Social Security Administration Slide 5 Impact of Inflation Monthly Groceries Health Care (per capita) New Car 1982 $142 $1,386 $9,865 2008 $553 $7,804 $20,600 2033 (est.) $1,947 $38,661 $40,733 Source: Bureau of Labor Statistics; U.S. Department of Agriculture; Centers for Medicare and Medicaid Services; The Wall Street Journal Slide 6 2 MKD-5780E-A-NS
Seminar Checkpoint Why save for retirement? Why save now? How to save Slide 7 The Power of Compounding Age Monthly Investment Saving Goal at Age 65 25 $200.85 $400,000 35 $398.20 $400,000 45 $865.72 $400,000 55 $2,440.82 $400,000 This calculation assumes a hypothetical 6% rate of return compounded annually and is for illustrative purposes only. These calculations do not include fees, commissions and taxes, which would reduce the results. Slide 8 Cost of Waiting This chart assumes a 7% hypothetical rate of return. Returns are calculated annually and are for illustrative purposes only. The chart does not represent any currently available investments. Calculations assume an annual contribution of $5,500 until the age of 65 (the contribution limit for those under age 50) and add $1,000 per year at age 50 and thereafter (the catch-up contribution limit for those age 50 and older). Figures do not include taxes, fees, commissions or expenses, which would have a negative impact on investment results. See page 2 of the Your Retirement Resource handout. Slide 9 3 MKD-5780E-A-NS
Seminar Checkpoint Why save for retirement? Why save now? How to save Slide 10 Contribute to Your 401(k), 403(b) or 457(b) Plan Maximum contribution Lesser of $17,500 or 100% of your compensation Catch-up contribution $5,500 for those age 50 and older Triggering event Early withdrawal penalty Slide 11 Contribute to Your SIMPLE IRA Maximum contribution Lesser of $12,000 or 100% of your compensation Catch-up contribution $2,500 for those age 50 and older Employer contribution Early withdrawal penalty Slide 12 4 MKD-5780E-A-NS
Employer Plan Tax Advantages Pretax contributions reduce taxable income Contributions and earnings grow tax deferred Slide 13 Pretax Contribution No Contribution $100 Contribution Biweekly pay $2,000 $2,000 Pretax $ 0 $ 100 contribution Tax (28% $ 560 $ 532 tax bracket) (28% X $2,000) (28% X $1,900) Take-home pay $1,440 $1,368 Difference of only $72 Beth pays less in taxes Slide 14 Roth After-tax Contribution Tax-free withdrawals of contributions and earnings * *Funds can be withdrawn tax free provided you have reached age 59½ and have owned the account at least five years. You can also withdraw funds tax and penalty free if you become totally disabled or are on long-term disability. Slide 15 5 MKD-5780E-A-NS
Choosing Investments Determine your risk tolerance Consider your life stage Identify your portfolio objective Slide 16 Determine Your Risk Tolerance Find the right balance between the risk you're willing to accept and the return you anticipate receiving Complete Risk Tolerance Questionnaire See pages 2 and 3 of The Importance of Diversification handout. Slide 17 Consider Your Life Stage Early investing Good earnings Higher income & savings Early retirement Late retirement See page 4 of The Importance of Diversification handout. Slide 18 6 MKD-5780E-A-NS
Identify Your Portfolio Objective INVESTOR LIFE STAGES Early Investing Years Good Earnings Years Higher Income & Savings Years Early Retirement Years Late Retirement Years INVESTOR RISK TOLERANCE High Focus Focus Focus Medium to High Focus Focus Focus Medium Focus Focus Low to Medium Low Focus & Income & Income & Income & Income Income & Income Income Income Income Focus The Portfolio Objective Guidance Table as determined by the Edward Jones Investment Policy Committee. Slide 19 Identify Your Portfolio Objective (continued) Slide 20 Options in Addition to Your Employer Plan Traditional IRA Pretax contributions Earnings grow tax deferred Variety of investment choices Roth IRA After-tax contributions Earnings grow tax free * Variety of investment choices Rollovers *Distributions of earnings from a Roth IRA could be subject to taxes and a 10% penalty if the account is less than five years old and the owner is under age 59½. Slide 21 7 MKD-5780E-A-NS
How to Enroll Schedule a one-on-one enrollment meeting Complete Risk Tolerance Questionnaire Identify your investment objective Evaluate investment choices Complete your election form Slide 22 Slide 23 MKD-5780C-A-SL MAY EXP 2012 31 JAN 2015 Please Complete Your Evaluation Now Slide 24 MKD-5780C-A-SL MKD-5780E-ASL MAY EXP 31 2012 JAN 2015 8 MKD-5780E-A-NS