re thinking retirement consumer
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USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.
Rethinking your retirement[Name, Title]
Allianz Life Insurance Company of North America
© Copyright 2010 Allianz. All rights reserved.
Insurance and annuities are issued by Allianz Life Insurance Company of North America
Neither Allianz, its agents, or representatives offer tax or legal advice. Clients should always consultwith qualified tax/legal advisors concerning their own situation.
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ENT-913 (1/2010) 2AAS Team
Retirement dream
• We are living longer, healthier lives
• Retirement is an opportunity to pursue hobbies, travel, visit with loved ones, etc.
• But, for many of us, the real retirement dream may be to be financially independent
• Need realistic retirement strategies to make that a reality
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ENT-913 (1/2010) 3AAS Team
Retirement reality
• Planning ahead can be difficult. We do not plan to fail, we fail to plan.
• Other issues are given higher priorities
• Longer you wait, the harder to make up the difference
• Even a few years can make a big difference
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ENT-913 (1/2010) 4AAS Team
Retirement reality
With $200/month additional savings at 5% per year over 10 years
Year Start Add Rate Year end
1 $40,000.00 $200/month 5% $44,512.50
2 $44,512.50 $200/month 5% $49,255.80
3 $49,255.80 $200/month 5% $54,241.90
4 $54,241.90 $200/month 5% $59,483.00
5 $59,483.00 $200/month 5% $64,992.30
6 $64,992.30 $200/month 5% $70,783.40
7 $70,783.40 $200/month 5% $76,870.80
8 $76,870.80 $200/month 5% $83,269.70
9 $83,269.70 $200/month 5% $89,995.90
10 $89,995.90 $200/month 5% $97,066.20
http://www.dol.gov/ebsa/publications/nearretirement.htmll, as of December 1, 2009
This hypothetical example is shown for demonstration purposes only.
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ENT-913 (1/2010) 5AAS Team
Retirement reality
• Procrastination today is common. We do not plan to fail, we fail to plan.
• Longer you wait, the harder to make up the difference
• Even a few years can make a big difference
• Never too early to start
• Withdrawal rates also important to consider
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ENT-913 (1/2010) 6AAS Team
Retirement reality
This chart shows how long retirement savings will last at a 4%, 5%, 6%,and 8% annual year-end withdrawal rate. The chart is a hypothetical example and assumes $500,000 beginning balance in retirement, a 3% annual inflation rate, and a 6% annual interest rate. This does not represent the performance of any specific investment product.
Rate of withdrawal
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
65 80 88 95 112
8%
6%
5%4%
This chart is for illustrative purposes only.
Withdrawal rates important
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ENT-913 (1/2010) 7AAS Team
Retirement today
Taking action
Refocusing/repairing/rebuilding
Putting it all together
Options
Agenda
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ENT-913 (1/2010) 8AAS Team
Recent market turmoil adding to the fears of running out of money
Afraid to take action
- Don’t know where we are at in our retirement strategies
- Are often afraid to find out
Job losses a reality
- Fear of losing job or have recently lost job
Other needs take priority
Retirement today
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ENT-913 (1/2010) 9AAS Team
Refocus/repair/rebuild your retirement strategies
- Walk through where you are at financially today
- Walk through where you want to be to have a reasonable retirement tomorrow
- Focus on what you can control
Retirement today
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ENT-913 (1/2010) 10AAS Team
1. Save more now
- Why don’t we save?
• It’s hard to do and includes unpleasant things like budgeting and doing without. However, it is often a necessity.
- Save regularly through a variety of sources (401k, etc.)
- Increasing savings now can mean less retirement income replacement needed later
Moving forward
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ENT-913 (1/2010) 11AAS Team
Saving more now can reduce the amount of income needed later
Moving forward
$45,000
$5,000 401(k)
Pension
401(k)
$16,000
$7,000
$10,000
74%
Today Retirement
Social Security
The visual is a hypothetical example only. Retirement income numbers used is for demonstration purposes only.
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ENT-913 (1/2010) 12AAS Team
Saving more now can reduce the amount of income needed later
Moving forward
$45,000
$5,000 401(k)
Pension
401(k)
$16,000
$7,000
$10,000
74%
Today Retirement
Social Security
$15,000
$42,000
$3,000
90%
Assumes hypothetical 5% rate of distribution over 20 yearsThe visual is a hypothetical example only. Retirement income numbers used is for demonstration purposes only.
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ENT-913 (1/2010) 13AAS Team
1. Save more now
2. Control debt
3. Working longer
- Pension delays
- Social Security delays
4. Look at options to protect your assets
Moving forward
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ENT-913 (1/2010) 14AAS Team
REFOCUS on retirement expense strategies
- Focus on what you can control
- Help manage expenses
• Survival income
• Desired income
Refocusing, repairing, rebuilding
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ENT-913 (1/2010) 15AAS Team
Three levels of retirement expenses
Desired
Expenses
Legacy
Survival Expenses to cover your most basic needs
Lifestyle “extras”
Funds remaining for your beneficiaries
Refocusing, repairing, rebuilding
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ENT-913 (1/2010) 16AAS Team
REPAIR sources of income
- Help you gain control over sources by knowing where they are
• Social Security
• Defined Benefit plans
• 401(k)s
Refocusing, repairing, rebuilding
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ENT-913 (1/2010) 17AAS Team
Roth IRA
Seven sources of retirement income
Sources of Income
Welfare - charity
Nonqualified Assets (NQA)
Traditional IRA
Qualified ERISA
Social Security
Continued employment
The base
Employer sponsored plans (ERISA)
Contributions and rollovers from ERISA plans
Tax deferred / tax free
Mutual funds, CDs, stocks, bonds
Phase into retirement gradually
Not desirable
Refocusing, repairing, rebuilding
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ENT-913 (1/2010) 18AAS Team
REBUILD income protection strategies
Supplementing defined benefit pension plans
- More optional guarantees
- Reliability of future income
Survival income is where you place your guarantee vehicles
Refocusing, repairing, rebuilding
Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America, and do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions. Premium or similar taxes may apply upon annuitization, full withdrawal, or at the time of death.
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ENT-913 (1/2010) 19AAS Team
Retirement accumulation stage
Retirement accumulation
stage
Retirement income stage
Financial objective
Have enough money to retire
Asset allocation Portfolio allocation
Time horizon
Known to retirement
Options
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ENT-913 (1/2010) 20AAS Team
Retirement income stage
Retirement accumulation
stage
Retirement income stage
Financial objective
Have enough money to retire Not outlive assets
Asset allocation Portfolio allocation Withdrawal
allocation
Time horizon
Known to retirement
Unknown to date of death
Options
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ENT-913 (1/2010) 21AAS Team
Retirement accumulation
stage
Retirement income stage
Financial objective
Have enough money to retire Not outlive assets
Asset allocation Portfolio allocation Withdrawal
allocation
Time horizon
Known to retirement
Unknown to date of death
Rethinking retirement
strategy
Rethinking retirement expenses
Rethinking portfolio with longer-term guarantees
Rethinking retirement income protection vehicles
Options
Rethinking retirement strategy
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ENT-913 (1/2010) 22AAS Team
Start with a clean mental slateRefocus overall retirement strategyRefocus on additional retirement issues
- Beneficiaries updated/correct
- Legacy
- Life insurance
• Some policies can guarantee replacement income if either primary wage earner dies
- Health care and long term care
Options
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ENT-913 (1/2010) 23AAS Team
Health care and long term care
We often look at our retirement strategies based on our current good health status
Fail to prepare for possible future health issues or health care needs
Estimated median savings needed to cover a couple’s health costs in retirement at age 65
in the year 2018?1
1 EBRI Issue Brief No. 317, May 2008, www.ebri.org
$325,000
Options
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ENT-913 (1/2010) 24AAS Team
What if gaps between accumulation and income needs?
Considering financial strategies
Putting it all together
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ENT-913 (1/2010) 25AAS Team
Putting it all together
5 options for income/expense gaps
Sources of Income
Welfare – charity
Nonqualified Assets
Roth IRA
Traditional IRA
Company retirement programs
Social Security
Continued Employment
Survival
Desired
Legacy
ExpensesOptions
Lower your expectations
Spend less and save more now
Decide to work longer.
Take on more risk
Combination (or all) of above
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ENT-913 (1/2010) 26AAS Team
How do the 5 options work?
$ n
eed
ed t
o s
up
ple
men
t in
com
e
$ now (401(k))
$ additional (401(k)) $ more
70?
Conservative 4 - 6%
Moderate 6 - 8%
Aggressive 8 - 10%
Combination of all options
Current standardof living
Age45 65
Retirement
This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.
Putting it all together
Time
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ENT-913 (1/2010) 27AAS Team
Putting it all togetherCurrent standard
of livingCombination most effective
Age
$ n
eed
ed t
o s
up
ple
men
t in
com
e
$ additional (401(k)) $ more
65 68?
Conservative 4 - 6%
Moderate 6 - 8%
45 65This example is shown for illustrative purposes only and is not intended to predict or project future results. Your actual results will vary. Please note that with the potential for greater returns comes greater risk and volatility.
Time
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ENT-913 (1/2010) 28AAS Team
• Rethink your retirement strategies
• Let’s refocus on what you can control
Use the worksheet
• Let’s repair your existingretirement strategies
• Start to rebuild your retirement future
Putting it all together
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ENT-913 (1/2010) 29AAS Team
Retirement today
Taking action
Refocusing/repairing/rebuilding
Putting it all together
Options
Summary
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ENT-913 (1/2010) 30AAS Team
Products issued by Allianz Life Insurance Company of North America. For variable annuities, products are distributed by Allianz Life Financial Services, LLC. 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. www.allianzlife.com
Not FDIC insured May lose value No bank or credit guarantee Not a deposit Not insured by any federal government agency or NCUA/NCUSIF
Wrap up
Questions?
This presentation is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives do not give legal or tax advice. Encourage your clients to consult their tax advisor or attorney.
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USA-1274a (R-8/2007) For Broker/Dealer use only – Not for use with the public.
Rethinking your retirement
© Copyright 2010 Allianz. All rights reserved.
[Name, Title][Contact information]
Allianz Life Insurance Company of North America