to plan your retirement income from your deferred compensation plan

1
to plan your retirement income(from your
deferred compensation plan)

• For those who have one year or less until
  retirement

NRM-2958AO.1
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The three steps

• How much income will you need?
• How do you make it last?
• How do you get it?

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How much income will you need?
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Look at your other income resources

• Pension
• Social Security
• Retirement accounts
• Earnings from part- or full-time job
• Investment income

Examine your income need
Call for help1-877-677-3678
Action step
5
Know your pension benefit

• Contact your Benefits Office
• Ask for accrued and projected benefits
• Be prepared to ask questions
• Benefits are based on years of service, age,
  income
• Ensure that information on file is correct
• Ask how to begin receiving benefits

Examine your income need
Action step
6
Research Social Security
Expected income
Examine your income need
73 more if you wait
Estimate based on workers 2004 annual earnings
at age 62 of 33,000 - 39,000.
Source Stenken, J. F., (Ed.) (2004). Social
Security Manual.Cincinnati, OH., National
Underwriter.
7
Contact Social Security

• To find out if you have a benefit
• Call 1-800-772-1213
• Social Security Web site www.SSA.gov
• Request Social Security Earnings and Benefit
  Estimate Statement

Examine your income need
Action step
8
Estimate your expected retirement expenses

• Some retirement expenses
• Health care
• Housing utilities
• Transportation food
• Anticipated travel hobby costs
• Other

Examine your income need
Call for help1-877-677-3678
Action step
9
Calculate your in-retirement income
Monthly retirement income

• Income - expenses

Examine your income need
Shortfall You DO need to use deferred
compensation dollars right away Surplus You do
NOT need to use deferred compensation dollars
right away
Call for help1-877-677-3678
Action step
10
How do you make it last?
Call for help1-877-677-3678
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Ways to help stretch your income

• Be ready for risks to your retirement dollars
• Stay in deferred compensation
• Plan for taxes in advance
• Know about RMD
• Divide your resources into buckets

Stretch your income
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Be ready for risks

• Long-term care costs
• Longevity
• Inflation
• Investments
• Health care costs

Stretch your income
Call for help1-877-677-3678
Action step
13
You can stay in the deferred compensation plan!
Do you have to move your money? NO!

• No new fees or sales commissions
• No early withdrawal penalties
• More of your money keeps working for you
• Help by phoneno additional charges!

Stretch your income
Call for help1-877-677-3678
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Reasons to combine other retirement dollars into
this plan

• Simplifies paperwork
• Personal help now and after you retire
• May pay less in annual account fees
• Nationwide is an industry leader in both 457(b)
  and 401(k) markets

Stretch your income
Qualified retirement plans, deferred compensation
plans and individual retirement accounts are all
different, including fees and when you can access
funds. Assets rolled over from your account(s)
may be subject to surrender charges, other fees
and/or a 10 tax penalty if withdrawn before age
59½. Neither Nationwide, nor any of its
representatives give legal or tax advice.
Call for help1-877-677-3678
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Know the types of accounts you can combine

• You can move dollars from a
• Qualified 401(k) retirement plan
• Qualified 403(b) retirement plan
• Rollover IRA, Contributory IRA or SIMPLE IRA
  account

Stretch your income
Call for help1-877-677-3678
Action step
16
Plan for taxes BEFORE electing income

• Know how much you will pay
• plan so that you pay the least amount
• There are taxes due when selling some assets
• Social Security benefits are taxable
• Consult a tax advisor. Neither Nationwide, nor
  any of its representatives give legal or tax
  advice.

Stretch your income
Call for help1-877-677-3678
17
Use Order of taxation

• Taxable
• You already paid the taxes before investing No
  taxes due on dollars you invested, but due on the
  earnings
• Tax deferred
• You did NOT yet pay taxes on either the
  investment or the earnings. You now need to pay
  tax as you use the money
• Roth IRA (generally tax free)

Stretch your income
Action step
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Know Required Minimum Distribution (RMD) rule
The IRS requires you take money from your
employer-sponsored retirement plan by the later
of
Stretch your income

• April 1 in the calendar year after you turn age
  70½
• OR
• At retirement

Call for help1-877-677-3678
Action step
19
Sample way to structure resources (based on
withdrawal need)
Up to age 70-½ Conservative investments
Stage I
Stretch your income
Age 70-½ - 80 Moderately aggressive investments
Stage II
Age 80 plus Most aggressive investments
Stage III
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How do you get it?
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Choose an income option

• Income options
• Future payout election date
• Lump sum withdrawal
• Systematic withdrawal
• Annuitization
• A combination of systematic withdrawal and
  annuitization

Begin receiving income
Call for help1-877-677-3678
Action step
22
Income option a. Future payout election date

• Future payout election date
• Defer withdrawing your funds dollars in the plan
  continue to work for you
• Good legacy planning for family, charity
• Above all, enjoy retirement!

Begin receiving income
CAUTION RMD applies! Begins at age 70-1/2 50
penalty if amount withdrawn is less than required
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Income option b. Lump-sum withdrawal

• Lump-sum withdrawal
• Receive the value of your account as a lump sum
• Opt for initial, partial lump-sum and receive the
  remainder as a stream of regular payments

Begin receiving income
CAUTION! Taxes are paid on whatever is not rolled
into another qualified account large-sum
withdrawals may throw you into a higher tax
bracket!
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Income option c. Systematic withdrawal

• Systematic withdrawal
• Regular income and opportunity to invest to beat
  inflation
• Money has the opportunity to grow tax-deferred
• Ability to select investments
• Remaining balance can be left to designated
  beneficiaries
• Taxes paid only on what is withdrawn as it is
  withdrawn

Begin receiving income
Caution! Chance you could run out of money!
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Income option d. Annuitization

• Annuity
• An insurance contract
• Provides periodic income at regular intervals for
  a defined period of time
• Guaranteed lifetime income with some options
• Guarantees are subject to the claims paying
  ability of Nationwide Life Insurance Company
• Tax-deferral on growth of undistributed assets

Begin receiving income
Caution! Limited access to your money! Once
chosen, this option cannot be changed!
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Income option e. Combining income types

• Lifetime income with some options
• Your choice of fixed or variable income
• Money has the opportunity to grow tax-deferred
• Legacy planning capability
• Taxes paid only on what is withdrawn
• More

Begin receiving income
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Begin receiving income
What do I do to get started?
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How do you get started?

• Who must be notified upon separation of service,
  and when?
• Benefit receipt date
• When can I start drawing money from my plan?

Begin receiving income
Call for help1-877-677-3678
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Frequently asked questions

• How soon do contributions stop?
• Can payment options be changed?
• Can my checks be direct deposited?
• How often should I review my finances?
• Should I ever change my beneficiary?

Begin receiving income
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Use other tools. . .

• Answers to retirement questions
• Financial education workshops
• Website
• Statements and newsletters

Begin receiving income
Call for help1-877-677-3678
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Follow-through with your To do steps

• Calculate your withdrawal need
• Review benefits coverage
• Determine insurance needs
• Direct AccessReps on Call!
• Help with investment allocation, income option
  choices, combining accounts and more!
• Schedule a yearly financial review

Begin receiving income
Call for help1-877-677-3678
Action step
32
Need help?

• Call Direct AccessReps on Call
• 1-877-677-3678
• Monday-Friday 8 a.m. to 9 p.m.
• No additional charges to Nationwide customers!

Information from Retirement Specialists is for
educational use only, and should not be deemed
investment advice.
Call for help1-877-677-3678
Action step
33
Congratulationsand thank you!
Direct AccessReps on Call! 1-877-677-3678 www.NRS
Foru.com
Information provided in this workshop is for
educational purposes only and is not intended as
investment advice.