Retirement Planning

Cole, Gisselle, Cassie

Defining Terms
Retirement: The planning one does to be prepared for after we stop working. Not
just financially but for all aspects of life.

Asset Allocation: An investment strategy that one uses to balance risks and
rewards by appointing a portfolios assets according to the goals the individual
going into retirement has.

Vesting: Two different types of vesting.

Cliff Vesting: You work at a business for less than 5 years, you lose all of your
pension benefits. Leaving after 5 years, gives you 100% of your promised
benefits.

Graded Vesting: Entitled to a 20% minimum of benefits if you leave after 3 years.
Every subsequent year adds 20% of benefit vests. After 7 years, you will have
Importance of saving early for retirement
Save money in your 20s

Don't withdraw money until you retire, or the bank will take half

Interest rate will be super high so you will get more money

The more money you save the more you will have when you retire

https://www.youtube.com/watch?v=7X7wBEezr3g
Desired retirement age, inflation rates, etc.
The desired retirement age in America right now is for 60-67

Your interest on your savings should beat inflation

You need to have money for healthcare and housing

You should save for every possibility so you are prepared for anything
Benefit Retirement Plans VS Contribution Retirement Plans
Describes specific benefits that will be payable
to you at retirement.
Retirement benefits are based off of a formula
that take into account factors like salary
and number of years worked.
Retirement benefits is provided in a form of a
regular payment beginning at what the
plan considers to be a good age to retire
which is 65.
More people are picking defined contribution retirement plans because of all the
benefits.
Specifies how much money will go into a
retirement plan today.
Amount is either a percentage of an
employees salary or specific dollar amount.
Funds are sometimes invested into mutual
funds or annuities available in the
retirement plan.
Amount of money you have at the time you
retire depends on how well you save,
employers contribution, and how long you
leave the funds invested.
Protections for retirement plans
The ERISA (Employee Retirement Income Security Act) protects retirement
plans

Sets minimum standards for most voluntarily established pension and health
plans

Gives people the right to sue for benefits and breaches of fiduciary duty
SS Benefits & Benefit Retirement Plan
Social Security is a pay-as-you-go system.

Social Security has a disability insurance program

Both give you a chance to be eligible to receive a monthly benefits check.

Social Security does not fully replace your income or take care of financial
expenses.

Both depend on the same factors.

Private pensions are taking over

SS Benefits at Retirement
Benefits depend on retirement age & life earnings

The full benefit age is 66 at the moment

There is early retirement options!

Starting at 62 yrs old

PERMANENT REDUCTION up to 80% of the full benefit amount

Full benefit age will rise to 67 for those born in 1960 or later

To receive benefits you must work at least 57 years of your life! CRAZY right?

Your amount of benefits are calculated by a retirement age calculator found on

https://www.ssa.gov/
Asset Allocations
DEFINITION: the process of deciding how to divide your investment $ across several asset categories.

Stocks, bonds, and cash or cash alternatives are the most common components of an asset allocation
strategy.

Goal: to minimize volatility while maximizing return (though asset allocation alone can't ensure a profit
or eliminate the risk of a loss).

Balances risks

Each asset class has different levels of return and risk

Each will behave differently over time

Closing the Gap Between Retirement Savings & Expenses
Some techniques include:

INCREASE YOUR SAVINGS

Cut down at least $100 from monthly household expenses

Increase contribution to your 401k/ any employer sponsored retirement plan

Save your tax refund

Strive for a raise and/or bonus

Start saving early

Save enough for 25-30+ years of retirement

Sources
https://www.ssa.gov/pubs/EN-05-10070.pdf

https://moneyfacts.co.uk/guides/savings/what-does-inflation-mean-for-your-savings/

http://money.cnn.com/retirement/guide/basics_basics.moneymag/

https://www.dol.gov/general/topic/health-plans/erisa

http://www.investopedia.com/terms/r/retirement-planning.asp

http://www.investopedia.com/terms/a/assetallocation.asp

https://personal.vanguard.com/us/insights/article/closing-gap-retirement-062015

https://rodgers-associates.com/newsletters/5-ways-close-retirement-gap-increase-savings/

http://www.myretirementpaycheck.org/retirement-plans/defined-benefit-plans.aspx

http://www.investopedia.com/articles/personal-finance/040116/retirement-plans-pensions-vs-social-security.asp