Retirement Planning - PowerPoint PPT Presentation

1 / 27
About This Presentation
Title:

Retirement Planning

Description:

Vesting how long before I can take the money with me if I leave? ... Funding is it funded or not? Qualifying does it qualify for tax deductibility? ... – PowerPoint PPT presentation

Number of Views:10791
Avg rating:3.0/5.0
Slides: 28
Provided by: sergeiti
Category:
Tags: back | does | get | how | it | long | planning | refund | retirement | take | tax | to

less

Transcript and Presenter's Notes

Title: Retirement Planning


1
Retirement Planning
2
Pitfalls in Retirement Planning
  • Starting too late.
  • Putting away too little.
  • Investing too conservatively (especially when you
    are younger).

3
Steps in Retirement Planning
  • Set Your Goals
  • At what age do you want to retire?
  • How much annual income do you need/want in
    retirement?

4
Estimate Your Needs
  • Determine household expenditures.
  • Estimate income.
  • Consider the effects of inflation.
  • Decide how you will provide for the difference
    between income and needs.

5
Principal Sources of Retirement Income
  • Social Security
  • Pension plans
  • Income-producing assets
  • Wages

6
Government still provides the largest portion--rig
ht now.
7
Social Security
  • Benefits are provided by taxes you and your
    employer pay.
  • Amount of benefits may be insufficient by the
    time you retire.
  • Think of it as an insurance system rather than a
    retirement plan.

8
Why SS may be in trouble
  • The number of people retiring is increasing.
  • The number of people who work and to pay the
    taxes for retirement benefits is decreasing .
  • Eventually more people will be taking out than
    paying in.

9
When can you collect SS?
  • Retirement age is being pushed back--you will
    probably have to be 67.
  • You must have been paying in for 40 quarters or
    10 years.
  • If you retire early (age 62), you receive a lower
    percentage of your total benefits.
  • If you retire later (age 70), you receive an
    increased benefit.

10
What are the benefits?
  • Old-age benefits (traditional SS retirement
    benefits).
  • Survivor's benefits for spouses who are age 60 or
    greater.
  • Survivor's benefits for dependent children.

11
  • Reductions in SS benefits
  • If you have elected to receive SS benefits but
    continue to work

12
  • For those age 62-65, SS benefits benefits are
    reduced 1 for every 2 of earnings over the
    9,120 annual threshold.
  • For those age 65-70, SS benefits benefits are
    reduced 1 for every 3 of earnings over the
    14,500 annual threshold.

13
  • Are SS benefits subject to taxes?
  • Yes, if your annual income exceeds 25,000 if
    single (32,000 for married filing jointly).

14
Pension PlansandRetirement Programs
  • Employer-sponsored retirement programs
  • Self-directed retirement programs

15
  • Features of Employer-Sponsored Plans
  • Participation requirementsare you eligible?
  • Contributionsam I required to contribute or not?
  • Vestinghow long before I can take the money with
    me if I leave?
  • Retirement agewhen can I retire?
  • Fundingis it funded or not?
  • Qualifyingdoes it qualify for tax deductibility?

16
  • Defined Benefit vs.
  • Defined Contribution Plans
  • Defined contribution company guarantees a
    contribution, but not a return on the
    contribution.
  • Defined benefit company guarantees the benefit
    in retirement despite good or bad performance of
    the pension fund.

17
  • Supplemental Plans
  • Profit-sharing plansemployees benefit from
    company's earnings.
  • Thrift and savings plansemployer contributes to
    employee's fund.
  • Salary reduction plansemployee contributes part
    of salary employer may also contribute as in a
    401(k).

18
  • Self-Directed Retirement Plans
  • Keogh Plansfor self-employed or small business
    owners and employees.
  • SEP Plansfor self-employed or small business
    owners with few or no employees simple to
    administer.
  • IRAsanyone can open one maximum 2000
    contribution per year other plans allow more.

19
  • Types of IRAs
  • Traditional Tax-Deductible IRAfor those with no
    employer-sponsored plan or with incomes below a
    certain level.
  • Traditional Non-Deductible IRAfor those with an
    employer-sponsored plan and incomes over a
    certain level.
  • Roth IRAcontributions not deductible for those
    with incomes below a much higher level regardless
    of employer-sponsored plans.

20
For all IRAs
  • Maximum total yearly contribution to all IRAs
    combined is 2000 or your earned income
    (whichever is less).
  • Non-working spouse can also contribute up to
    2000.
  • An IRA is not an investment it is the container
    and can hold a variety of types of investments.

21
For Qualified Retirement Plans in General
  • Contributions are allowed to grow tax free.
  • If contributions were initially tax deductible,
    money withdrawn at retirement is taxed as current
    income.
  • In general, you must be 59 1/2 to start taking
    distributions.
  • Early withdrawals subject to 10 penalty plus
    income taxes.

22
Annuities
  • Tax-sheltered investment vehicles administered by
    life insurance companies
  • An agreement to make contributions now in return
    for a series of payments later

23
Before Retirement
  • Accumulation Periodannuitant purchases annuity
    by paying premiums into the account.
  • During Retirement
  • Distribution Periodinsurance company makes
    payments to annuitant. Portion not returned to
    annuitant prior to death goes to beneficiaries.

24
  • Classification of Annuities
  • Single Premium vs. Installmentsone large
    lump-sum payment or a series of payments to
    purchase the annuity.
  • Immediate vs. Deferredbegin receiving payments
    immediately or wait to receive payments after
    purchasing annuity.
  • Fixed vs. Variableinvestment grows at a low
    guaranteed fixed rate or at a presumably higher
    variable market-based rate with no guarantee of
    return.

25
  • Common Disbursement Options
  • Life annuity with no refundpayments made for
    life nothing to beneficiaries.
  • Guaranteed minimum annuityat least a total
    minimum amount will be paid out beneficiaries
    receive any remainder.
  • Annuity certainpayments made for a set number of
    years and cease.
  • Temporary life annuitypayments made for a set
    number of years but only for as long as annuitant
    lives.

26
Remember
  • Annuities are life insurance products which
    usually mean higher fees.
  • Annuities are only as good as the companies which
    issue them.
  • Retirement accounts are already tax sheltered.
  • Withdrawals made before age 59 1/2 are subject to
    10 penalty and income taxes.

27
  • Annuities can be an attractive means for higher
    income individuals who have fully funded their
    retirement accounts to tax shelter even more
    money.
Write a Comment
User Comments (0)
About PowerShow.com