Slides presented November 6, 2010 at LDS Self-Reliance Fair, Rexburg Idaho

1. Retirement Planning

4. As we obey the counsel to avoid
and get out of debt now, we use
our agency and obtain liberty to use
our disposable income for helping
and blessing others.
- Robert D. Hales, October 2010

5. To those of you who are not yet to
the season of life when you might
serve a couple mission, I urge you
to prepare now for the day you and
your spouse may do so. As your
circumstances allow, as you are are
eligible for retirement, ....
- Thomas S. Monson, October 2010

6. Social Security
Defined Benefit
Plans
Personal Savings
(IRAs / 401k)
Employment
Earnings

7. Defined Benefit Only
Defined Contribution Only
Both DB and DC Plans
26
67
7
22
16
62
Worker Participation Percentage by Plan Type
Source: Employee Benefits Research Institute
1979 2008
%
%
%
%
%
%

8. Social Security
Employer Pension
401(k) - IRA Savings
66
11
13
49
19
21
21
21
42
Largest Source of Retirement Income
Source: Pew Research Center
Current Retirees Baby Boomers Ages 41-49
Adults Ages 18-40
%
%
%
%
%
%
%
%
%

9. How Much?

10. Inflation Longevity Market
Spending Income Issuer
Healthcare
Household
Shock
Public Policy
Retirement Risks
Source: Retirement Income Industry Association

11. Inflation Longevity Market
Spending Income Issuer
Healthcare
Household
Shock
Public Policy
Investment Related Retirement Risks
Source: Retirement Income Industry Association

12. How Long?

13. For healthy 65 year-old couples
50% chance one spouse will live to age 92
Source: Annuity 2000 Mortality Tables, NewYork Life

14. For healthy 65 year-old couples
25% chance one spouse will live to age 97
Source: Annuity 2000 Mortality Tables, NewYork Life

15. Mind the Gap

16. Gap = Living Expenses less
Social Security & Pension
$50,000 - $20,000 = $30,000

17. Social Security Estimate
www.ssa.gov/oact/
quickcalc/index.html

18. Spending Rate =
Gap / Nest Egg
$30,000 / $750,000 = 4%

19. 0
10
20
30
40
50
60
70
80
2% 3% 3.5% 4% 4.5% 5% 6% 7% 8% 9% 10%
30% Equity 70% Fixed 50% Equity 50% Fixed 70% Equity 30% Fixed
Annual Spending Rate
Probability of Retirement Ruin - 65Year Old
%
%
%
%
%
%
%
%

20. 0
10
20
30
40
50
60
70
80
2% 3% 3.5% 4% 4.5% 5% 6% 7% 8% 9% 10%
60Year Old 65Year Old 70Year Old
Annual Spending Rate
Probability of Retirement Ruin - 50% Equity / 50% Fixed
%
%
%
%
%
%
%
%

21. 13.1%
29.2%
Probability
of Ruin
50% Equity 50% Fixed Income Portfolio
6.3%
4.5%-28.0%
Spending RateReturn

22. 1%

23. 10%

24. Single Premium Immediate
Annuity
also know as
Lifetime Income Annuity

25. Lifetime Income Annuity
Estimate
www.immediateannuities.com

26. Joint Life Income (100% to
Survivor)
65Year Old Couple
$30,000 annual = $504k

27. Real interest rate (i.e. net of inflation) 3%
Years until retirement 25
Current Savings $150,000
Annuity Cost $504,000
Additional Savings for Inflation Protection $100,000
Minimum Annual Savings to Fund Annuity $9,427
Min Annual Savings to Fund Annuity + Protection $12,090
Simple Retirement Calculator

28. Simple Retirement
Calculator
bit.ly/aqDyWn

29. 3% ???

35. Questions and Answers