Once again, I’d like to thank everybody for joining us. For our webinar and retirement planning regardless of your age. We appreciate you guys taking this time out. We are going to get started immediately. But before I turn this over to Jamie, she’s going to go through a few quick housekeeping rules. If you are on, if you dialed us on a phone, please mute yourself. That way everyone can hear what’s going on. Also, the slides will be available immediately following the presentation if you email us at [email protected] We also hope to have a recording of this webinar available on demand in the next two weeks. Also, I’d like to bring your attention to the fact that we have a survey immediately following the webinar. It will take you 2 to 3 minutes to complete and it really benefits all parties involved because that survey will tell us what we should look into next time. With that I’m going to quickly introduce Jamie. Jamie is really qualified. She’s really passionate about the subject. She is our financial literacy strategist. She’s a certified financial planner. She knows a lot about retirement. She educated me. I know she’s really excited to talk about this. I’m Dan, if I didn’t mention that before. I’m your host. And with that I will turn it over to Jamie. Let’s get started. Thank you, Dan So, thank you guys for joining us. As Dan said. I am going to go ahead and jump right in. So retirement. Regardless of your age, it is definitely a topic that has crossed your mind at least a few times, if not more. But normally there are so many unanswered questions, that it is a topic that gets put on the back burner to worry about later. And sometimes later doesn’t always come until you’re in crunch time. So, I would like to share some statistics that result from retirement being put on the back burner. And people continuously thinking that they have plenty of time to address the matter. But ultimately, I want to make you aware of these statistics so hopefully you don’t become one. So, let’s start out with did you know. One in four 65-year-olds today will live past the age of 90? I know a lot of you guys listening are probably thinking that you will not be that one in four that would live past 90. But the reality is that this number is just going to continue to increase as more advanced medical care becomes available. So the chances of you living past 90 are actually greater than what you probably think. Only 51% of Americans are confident that they’re saving enough. More than one third of Americans expect to work in retirement. Now some of this is is because they need the mental simulation. But the majority of it is simply because they don’t feel as though they have enough saved to live a comfortable retirement without working. This statistic really surprises me. But seniors are the fastest growing group of bankruptcy filers in the country. From what I gather, it’s for a majority of reasons, but mainly because they under plan for retirement and then they live longer than they expect. Almost 60 % of retirees don’t budget for leisure activities when planning for retirement. Now for me, that’s kind of hard to believe because if I’m not working 40 hours a week I’m certainly not going to be sitting at home twiddling my thumbs. So the amount of people that don’t budget for fun activities they don’t have to be expensive, but just don’t budget for fun activities all together being 60% is, is really surprising. The average healthy couple will spend on average about $377,000. $77,000 on medical care and retirement and that number is as of last year Now you might see some different numbers being reported depending on who you’re talking to you But either way it’s going to be somewhere around three hundred and seventy seven thousand That number does not include long-term care and That number is also going to continue driving as life expectancies continue to rise and as health care becomes more expensive and Close to 50% of retired households than more money Not less in retirement And we’ll talk a little bit about that in just a second. I’m a little bit later in the presentation. So What are we going to talk about today? As you can see here, we have an agenda pack I am going to try to keep it on the 20 minute schedule. We are going to talk about getting ready for retirement We’re going to talk about how much you should have saved What you should be doing right now what to do if you’re not on track a little bit about Social Security and Medicare I don’t want to turn the presentation into a Social Security or Medicare presentation. So we will just touch on it I am going to give you some important resources to Preserve it after the webinar and then of course how LG SSP you can help So if you guys look at the quad and these nod things that you you can listed here I’m sure every single one of you regardless of your age have seen some sort of combination of the Checklist items to get you ready for retirement It could be anywhere from five To ten. I’ve seen all numbers in between but either way there going to be some variation of these so to me that is telling you that if you just do these things at Retirement age 65 67 you’re going to be ready for retirement But in reality It’s not that easy Unfortunately, we can’t just go to a checklist and hope that by Geling the six or seven or eight things that people mentioned We’ll be ready for retirement the way that I look at these looks is it’s like a recipe list and That’s all they give you is the ingredient. They don’t give you the amount. They don’t give you the instructions So if you’re like me and you’re not a baker or a cook you’re sitting there looking at these ingredients Spending more time trying to figure out if you’re going to be baking the cake brownies or cookies Then actually acting upon it and trying to solve the problem of how am I going to get to retirement? So then as a result just nothing gets done So let’s talk about how much you should have saved Now I do want you to take this part with a grain of salt. And the reason I say that is because various institutions have various figures for you to go by and these figures often change with inflation and the cost of living just in general so You could Completely be on track right now and then look at the chart again six months from now and find that you’re behind Or vice versa you could completely be ahead of schedule right now, look at the chart six eight months from now and find that you’re not quite as ahead as you were originally. But let’s go through how to read this. A 35 year old making $50,000 should have a third of their income saved right now for retirement. So that third equates to about $15,000. While a 55 year old making $200,000 needs six point four times their income or the equivalent of about $1.2 million dollars for retirement. So the amount that you need is so closely correlated with how much you’re making, that there is no magic number. I know that that is a big misconception in the retirement planning world that you throw out this arbitrary number, and once you reach it, you’re going to live this comfortable, happy, healthy retirement. But that’s not the case. I’m going to leave this up for just a second longer so you guys can look at it and think about it. And it’s great to have an idea of what you should have saved and have something to go for, or go off of to create goals to shoot for. But since those numbers can change I don’t want you to feel like, if you aren’t where you need to be, then you’re completely doomed. Because that’s not the case at all. So let’s start breaking down the different things that you need to be doing at the various ages, to ensure that you are able to live that retirement that you are dreaming of or that you have always dreamed of and you’re comfortable in doing so. So you have 40 years until retirement. This is the stage in which you are probably new to the workforce. You’re probably thinking about or have already gotten married. Possibly buying a house. And starting to plan for a family, of some sort. So what do you need to be doing? In general you need to be establishing a systemic savings plan. So this is your emergency savings and whenever we say systemic I’m talking about consistent contributions automatically to a separate account than what you pay your bills and where you spend your discretionary money from. You want to pay down those student loans – if all chances are, if you’re like me you’ve racked up quite a load of those. You want to take a look at your life insurance. And with term and whole life being the two most popular depending on your needs that would probably be one of the two if not both that you purchase. And then you want to start contributing to that 401(k). Now most of you might have a pension of some sort that you’ll be getting from your employer, others of you don’t. So what do you start contributing? You want to make sure that you are contributing at least the employer match. At a very minimum. Whatever that may be. If you can do more, that is fantastic. The rule of thumb is between you and your employer’s match, you’re contributing around 15 percent to a 401(k), starting out. So depending on what that match is, will depend on how much you would need to contribute to get to that 15 percent. But again, that’s just a rule of thumb. So now let’s talk about ten years have past. So you’ve got thirty years to go. This is the time in your life where you’re becoming established in your career. You probably have switched jobs a couple of times but you’re now really figuring out possibly, you know what you want to be doing from now leading up to retirement. You may have decided you wanted to start a family or not. You could possibly be thinking about purchasing a bigger house or moving to a different location from where that starter home was. So the things that you need to be thinking about in this phase of life, is focusing on asset growth. So essentially continuing to make sure that you’re creating that systematic savings plan and you’re continuing to add to it incrementally, as your salary increases. It also is a good time to think about opening an IRA or a Roth IRA depending on what your situation is and what your income is, as far as which one you’ll be able to contribute to. Purchasing disability insurance is a huge, huge thing for you to be looking at. And let me tell you why. A lot of you guys probably have a policy through work. So you feel as though that one policy is going to be fine if you were to ever experience a real disability. But don’t bank on that policy being enough for you to live off of. While it might be a good policy, there still could be some gaps in income coverage. So you really want to take a look at your individual needs and determine if a personal disability insurance policy is appropriate for you. And just another cool statistic, because I really like them according to the Social Security Administration in 2017, there were 2.1 million applications for disability. But only 35 percent of those got approved. So the importance of you having your own policy is just that much higher. Then you want to be increasing your 401(k) and your IRA contributions according to your salary increases. So, ideally you would be increasing your contributions at a minimum of one to two percent a year at this point. Possibly more depending on what your salary is. Because ultimately you want to get to a point where you’re able to max out those contributions for the given year, whatever the IRS happens to set. So we’re going to fast forward and now we’re at 20 years to go. At this phase in your life, you’re probably pretty established in your career. You’re probably not changing jobs as much and you probably won’t be changing positions as much as you were leading up to this phase of your life. And even depending on what you decided to do about a family and getting there, you could possibly be considering downsizing because your children are off to college or out on their own or whatever the case. So here’s the things that you need to be focusing on with twenty years to go. You really need to sit down and develop that formal retirement plan including when you’re going to retire, what your retirement is going to look like what the back-up plan is going to be if something major were to happen. You want to also establish a plan to get that debt paid off. So house, cars, credit cards. You want to re-evaluate your life insurance needs, because what you needed whenever you were 40 years out from retirement you might not need as much now that your children are out of the house or whatever the case is. And this is really where you want to increase this 401(k) contributions to the point that you are as close to maxing out as possible for a given year. So now we fast forward again and we’re 10 years out from retirement. And let’s be honest guys this is the time that you want to be coasting. You don’t want to be thinking about changing jobs. You don’t want to be thinking about buying houses. You don’t necessarily want to have a whole lot of debt hanging over your head. So here is the suggestion for 10 years out – what you should be thinking about and what you should be doing. You should nail down that exact date of retirement. You should re-evaluate the plan that you created 10 years ago, to make sure that you’re still on track to meet your goals. And this is when you need to explore a long-term care insurance. We’ll talk a little bit more about that. But long-term care insurance is inevitably, probably one of the biggest parts of a retirement plan, or a successful one anyway. According to a 2005 study from caregiver.org 8.1 million people will receive some form of long-term care annually. This includes home health care, this includes nursing homes, this includes hospice, residential care communities, adult day services service centers or adult day care. And while I know that no one wants to think about them being put into the situation where they are in a nursing home, or they have to have ongoing home health care. And you definitely don’t want to think about things such as hospice for yourself. But the reality is 69 percent of individuals 65 and older will develop some sort of disability that will require them to use one of those long-term care services. And 35 percent will end up entering into a nursing home facility. So one of the things I hear from people all the time is that they don’t want to be a burden on their family. They want to make sure that they have enough saved so they don’t have to worry about their children taking care of them or another relative. But what they fail to do is properly plan for that healthcare that is going to be needed. And as life expectancies increase, these numbers, these percentages are only going to increase with it. So again, you also want to consider increasing your retirement savings contributions, as close to maxing out as possible. Including any sort of catch-up that you might be able to do. For IRAs, it’s an additional thousand dollars to the $5,500 for 2018. For 401(k) it’s an additional $6,000 dollars on top of the $18,500 that you are eligible to contribute for 2018. And every year those numbers tend to creep up a little bit depending on what the IRS releases as far as contribution limits. So now we are five years out. The anticipation and the excitement is building up. You’ve worked for thirty five plus years. You are five years out from retirement. And if you are like me, you are going to have a countdown on your phone to look at every single day. You will know right down to the second how long it’s going to be until you retire. So this is when you need to really be fine-tuning that retirement plan. And I know that I keep saying that you need to create one, review it and fine-tune it. You need to be reviewing your retirement plan at a minimum of once a year, at this point. Because anything can change. The market could shift. Your health could change. Your family situation could change, you might now be taking care of your children because they moved back in. You might have had to have taken on a larger debt load and you need to make sure that all that is accounted for and the most accurate way possible. This is also the time that you want to consolidate any retirement accounts that you may have. Up until now you might have kept three or four different retirement accounts that the various employers that you might have worked at. Or you might have had two or three different IRAs out there that you’ve opened along the way. Now is a good time to start the consolidation process. Because contrary to popular belief, even though all of your money is in one account it does not mean that all of your money is going to be in the same basket. Because ideally your retirement accounts are going to be so diversified, that it’s not going to matter if all of your retirement money is at the same institution or not. You definitely want to spend some time determining that retirement income strategy. That is probably the most important to-do item in this list. You want to know how much you’re going to have to draw from your retirement account, how much you’re going to be getting from Social Security, how much you’re going to be getting from any other outside source and you want to have it nailed down to the penny so you will know what you’re going to be working with whenever you enter into retirement. Because one of the worst things that can happen is you enter into retirement, you stay retired for three or four years, your skill set starts to deteriorate because you’re not doing your job every day, you’re not keeping up with the latest and greatest, and now you realize you have to re-enter the workforce. So the income strategy is imperative. You also want to decide when you’re going to start drawing Social Security. We’ll talk a little bit more about that in a minute. And you also want to re-evaluate your life insurance and your long-term care needs at this point, too. Because the chances are you might have different life insurance needs than you did 10 or 15 or 20 years ago and you definitely might have different long-term care needs depending on how your health has held up. So what happens if you’re not on track? And I know that it’s like beating the, beating the horse to death whenever we’re going over these things that you can do, but the reality of it is the number one thing you can do if you’re not on track is to work longer. At least until you’re the full retirement age according to Social Security, which depending on your birthday is between 65 and 67. That number is also slowly increasing as well. But 70 is when you max out your Social Security amount. So I know no one really wants to think about working until 70 but if you really aren’t on track, the longer you work the better. You’re also going to want to turbocharge your savings. Ideally, you will be putting 30 percent or more of your salary away. Now, this could be a combination of retirement account contributions, savings account contributions whatever the case is, you just want to make sure you’re saving as much as possible. You also want to take advantage of the catch-up contributions, because hopefully you will be able to match them out so you will be able to then it contribute this additional amount. And you might want to consider some sources of guaranteed income at this point as well. So sources of guaranteed income are things like annuities, which can be immediate or deferred, depending on what your situation is. And then there’s many different types of annuities within those two categories for you to consider. So if you feel as though money is going to be an issue this is four things that you can do to try to put yourself in a better situation. So now let’s talk a little bit about Social Security. Again, I don’t want to turn this into a Social Security presentation because I’m sure everyone can can understand that you can make an entire presentation out of Social Security, but for those of us who are newer to the workforce and maybe haven’t explored Social Security as much as some of the people that are more close to retirement, here are some facts for you to know. You are eligible for benefits at 62, as long as you have 44 hours of work. However, at 62 if you draw your Social Security, you’re going to take a permanent reduced amount. You will never have the opportunity to have that amount increase to what you would have drawn if you would have waited until 65, 67. Or if you had even waited longer to 70. At age 70, benefits stop accruing. You’re getting your highest payout, it does not matter if you are 20 more years past 70. At 70, they’re going to stop calculating your benefits. So if you haven’t drawn from Social Security by then, you have got absolutely no benefit coming your way by continuing to wait. Normal retirement age, as it stands right now, is between 65 and 67, depending on your birth date. Again, that number is fluctuating closer to the higher end of 67. Whereas for some of our older participants, it is closer to the 65 age range. You also can review your annual Social Security statement to determine how much you will need to save in your personal retirement account because your annual Social Security statement will give you an idea, based on your current work history, how much you can expect to draw from Social Security in retirement. Another cool statistic is as of 2017 23 percent of married couples and 43 percent of unmarried individuals rely on Social Security for over 90 percent of their income. 90 percent of their income they’re banking on coming from Social Security. And unless you’ve been living under a rock everyone knows the questions that are surrounding Social Security payouts, especially for some of our younger people. And personally, I don’t want 90 percent of my retirement money to be coming from Social Security when there’s so many questions surrounding it. So how are your Social Security benefits calculated. It is not as easy as a three stub equation, like I have here, the three bullet points. It’s actually quite complicated. But I tried to simplify it as much as I could. It is based off of your lifetime earnings, adjusted for inflation. So what they do is they take the last or they take the 35 years in which you earned the most which most people would assume that would be your last 35 years of working and they calculate your average indexed monthly earnings. So if you have any years during that 35 year period that is counted as a zero or is less than what you’ve made in your years previous, that is going to affect the amount of your average indexed monthly earnings. So they take the sum of those 35 years, so your highest 35 years. They divide it by 420, which is 35 times 12. It comes, it give them your AIME. Then based on that a predetermined formula is then applied to arrive at your primary insurance amount. Which is your monthly Social Security benefit payout amount. So, how can you change your your payout, your benefit amount? Well, you can choose to get benefits before your your full retirement age, that’s going to decrease it. You can also receive the cost-of-living benefit increases starting the year you turn 62, whether you are or not taking Social Security, you automatically approve those. Or you can delay your retirement passed your full retirement age. That’s really the only three things that you can do to assess what your payout amounts going to be every month So now let’s talk a little bit about Medicare because the hon Social Security Medicare is probably the second most Important part of someone’s retirement plan. And again, I don’t want to turn this into a Medicare conversation, but these are four important points I feel like everyone should know. So it is absolutely imperative that you enroll on time. For people who choose to take Social Security early – at 62 – you’re going to be automatically enrolled in Social Security. So you don’t have to necessarily worry about the enrollment periods. But for those of us who wait until 65, 67 or older, you have to elect to enroll in some Medicare. If you do not enroll in Part A whenever you’re eligible, you are going to face paying up to a 10% higher premium, for double the number of years that you could have enrolled. So let me actually put that in English for you. If you are eligible for Medicare for two years, but you didn’t sign up then for four years, you will be paying a 10 percent higher premium before it will go back down, if you’re not already getting Part A for free. For Part B, because Part A and Part B are the two most popular if you do not enroll, whenever you’re eligible, you will be faced with up to a 10% increase of your premium for each 12-month period you could have enrolled, but didn’t. So if you were eligible to enroll two years ago and you didn’t enroll, you’re looking at possibly a 20% increase, 10% for each year and that is permanent. It will never decrease from that amount. And then Part C and Part D are optional. As you can see here, Medicare comes in several forms. Part A is hospital; Part B is medical; Part C is Medigap and then Part D is prescription drugs. Part C is supposed to be covering the gap in between hospital and doctor office visits and there are a ton of options for Medigap. So it is not as clear-cut as Part A and Part B or even Part D. Medicare covers a lot, but it doesn’t cover everything. Medicare does not cover vision, hearing or dental. And then there’s going to be some long-term care coverage that will also come into play, but they don’t cover. But again, that’s a little bit of a gray area. I didn’t want to get too much into that. And then Medicare of course is not always free. Part A can be for most people, but it can have a deductible, even if it is free – that you have to meet. So let’s talk about some resources. Most of you are probably already familiar with the different websites listed here, but if you are not I would highly recommend you going to all of them. The first one is the Social Security Administration. This is going to give you some great information about Social Security, just in general. Especially the people who might be a little skeptical of Social Security – is going to be around whenever you retire? You can find all the information you want to know there. My Social Security is where you create an account for you, and it compiles your work history. So at any given time, you can see what your projected payout is based on your previous work history. And then of course the medicare.gov website. Again Medicare is incredibly complicated. It’s incredibly complex. So after you look at medicare.gov, if you have any additional questions, there’s plenty of help lines that you will be able to call and get your questions answered, if needed. And so let’s talk about how LGFCU is here to help. While we can’t magically make your retirement account show the amount that you need, and while we can’t magically make you, or put you in a position where you are able to retire when you want to, if you aren’t in that position already. There are some things we can offer, and we do offer, that can help you along the way in this retirement planning. So every single one of you guys listening, you are eligible to become an LGFCU member. Which means you are also eligible to enroll in Compass after becoming an LGFCU member. Compass is a great way for you to start budgeting and tracking your expenses and your debt and your spending over time. And to set goals. Because some of you might want to set retirement as a goal. Or it could be paying off debt in a certain period of time. So Compass is a great way for you to visualize all that. You can link all of your accounts, for all of your different institutions, whether you could have only LGFCU accounts or whether you have accounts with four different institutions, including your retirement account, all of them can be linked you can see all of your accounts in one place. And then you can see the transactions that are being processed for all of the accounts. So if you have two or three accounts for two or three different institutions, and you use two or three debit cards this is a good place for you to have everything all in one place. And so you can see where all those transactions are and you don’t run into surprises. You can track your monthly spending, and as you can see here, it puts it in a very pretty color coded chart for you to look at. And it will give you a visual breakdown of how much you’re spending on each individual category. This particular example the majority of the spending for that month was on the home. But you can set your categories as you wish. They will predetermine based on your spending, but you can always go in and change them as necessary. And you can also create budgets. So for you guys who know that you need to start spending more wisely, so you can start saving more for retirement, starting with budgets is probably going to be your biggest benefit. And having this visual to show you where you’re at with all of your budgets is always a big help. So you can check it at any point, either on the desktop or mobile app. And see where you are at any given point in time during the month. And then also, if you just feel like you are in over your head with debt and spending and you just don’t know where the start even for retirement planning if you are a member of LGFCU, we offer financial counseling at our local branches. So you’re able to go in and talk to an accredited financial counsellor. And they will take a look at your overall situation including but not limited to, your spending; your debt load; what your future financial goals will be. And keep in mind guys, depending on where you’re at in the spectrum of planning for retirement that we’ve talked about your needs are going to be different. But our financial counselors are going to be here to help walk you through every step of the way. You also have to your ability to print out two different text sheets or two different handouts that we’re making available. This is LGFCU’s retirement checklist. So going back to the list of three to five to ten things that institutions come out with you, need to be doing to prepare for retirement. You can print this out from the webinar. I think the link for the invite you will be able to go in and print this out. You might need a password and the password is all lowercase: retirement. So you have this one available to you and you also have the four challenges here in retirement available to you. This is really going to go through the four biggest challenges that retirees face and at a very minimum it will make you aware of things to consider as you are making these retirement plans, and as you are working towards retirement. So all in all slow and steady wins the race. This is probably one of my favorite graphics when it comes to retirement because you can’t start whenever you were 40 or 45 years old and get to a position, or the average person can’t do this anyway, and get to a position where you’re going to be able to live a comfortable retirement. You need to start as soon as you enter in the workforce and have a continuous, systematic plan in place from day one to the very last day that you work. Now not everyone had the ability to do that or not everyone was in a position to do that. So then that is when we have to start looking at some of those things that you can do to catch up and put yourself in a better position. But for those of you guys who are just starting out, it is so important for you to utilize your employer’s retirement plan to the absolute max that you can. Because even though you might be taking a hit in paycheck now, it is going to pay off tenfold whenever you get ready to walk into work for the very last day, forty years from now. So I’m going to turn it back over to Dan so he can filter through any questions that we may have gotten throughout the webinar, and I do want to thank everyone for their attendance. And just remind you about the survey that will be displayed at the end of the webinar. We would really appreciate it if you would take a few minutes to complete that. All right .Thank you, Jamie. You know, you said a lot of great things. We’ve got a lot of questions, but due to us being at the time that we are in, and within the hour, we don’t want to take up too much time. I will highlight one question that I got four times. If you have any other questions, we can’t answer them right now, but I would suggest that you actually submit those questions to [email protected] I will also work to make sure that all the handouts are, if you need the handouts, and that those questions too we’ll send them out. But one question that we’re going to, we have time to answer I thought it was a very interesting question is, “Will I still need to pay taxes after I retire?” What can you give me? That is a very good question and the answer is possibly. So depending on what your income is in retirement, you could potentially owe taxes. And to the point that your Social Security may even be taxed depending on what your income is. So I would not bank on not having to file taxes at all because there is a very good possibility that unless Social Security is your only source of income Or you have Social Security and a very minimum amount of other income, there’s a very good possibility you will be paying taxes. And some people it is not unusual for them to actually end up being in a higher tax bracket in retirement if they planned accordingly.