Taking the Mystery out of
Retirement Planning
Financial Planning for Women
September 2006
Presented by Jean Lown, Tiffany Smith,
& Karissa Berndt
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September is College of Education
& Human Services month
• Who is affiliated with the College?
– Give away personal finance books
• Who is here for first time?
– Welcome packet
• Who brought someone new with them?
– PF book
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Personal Finance Action Plan
handout
• Make a commitment to yourself to take
action as a result of today’s program
• Anyone want to share about a personal
finance action they took recently?
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Workbook
• for people who are 10 years from
retirement, but still excellent for anyone to
work through.
• With this workbook you can stop worrying
if you have enough saved and start planning
to get to what you need.
– If you don’t have enough saved now, you still
have time and options to make it up.
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Planning for a Lifetime
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Start NOW
Pensions are a thing of the past.
Prepare now for retirement.
You don’t want to out live your savings.
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Chapter 1: Tracking Down
Today’s Money
• Did any of your previous jobs have a 401(k)
or pension that remained with the company?
– You might have retirement investments you
forgot about.
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Tracking Down Today’s Money
• Get statements from:
– Your financial institution
– Any place that you have money invested.
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Tracking Down Today’s Money
• Figure out your Home Equity (largest asset)
– Current Market Value
– Current Mortgage Balance
– Home equity debt
• Consult an Appraiser for current market
value or look at sale prices of comparable
homes in your neighborhood.
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Ch. 2: Tracking Down Future
Money at Retirement and After
• Use the information from Ch. 1 to fill out
worksheets to calculate how much your
current investments will grow in 10 years.
• The 10 year information will help you
figure out a 30 year estimate.
– Will you live more than 30 years?
– Utahns live long lives!
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Tracking Down Future Money at
Retirement and After
• Look at where your money is now.
– Are you earning very low interest for guaranteed
security?
– Would you fare better in the long run with a higher risk
investment for higher return?
• These depend on your goals and how close or far
away your retirement is.
• Would you do better with a different asset
allocation? (see FPW website for PPT)
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Tracking Down Future Money at
Retirement and After
• Investing too much of your assets in one
investment can be very risky.
– If you’re invested in your employer’s stock
what happens if the company goes under?
• Remember Enron, WorldCom & Adelphia
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Long-term Average Annual Returns
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Stocks = 10%
Bonds = 6%
Cash (CDs, Treasury bills) = 3%
Inflation = 3.1%
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Chapter 3: Tracking Down Future
Expenses
• What are your day-to-day expenses and
how they will change over time?
– Determine if the money you have saved will be
enough to last through retirement.
• Inflation is one of the biggest factors.
– Historically the average inflation has been 3.1%
– Use a higher number, 3.5% - 4% to be
conservative
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Tracking Down Future Expenses
• Medical costs are an exception.
– Medical expenses have risen faster than inflation for
more than 20 years.
• Medicare will not cover everything.
– Currently additional Medicare part B insurance runs
about $79 a month and will continue to rise.
• Consider long term care insurance ONLY if you
have adequate assets to cover estimated expenses.
– 40% of 65 and older spend some time in a nursing
home (mostly women)
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Chapter 4: Comparing Income
and Expenses
• Now it’s time to compare!
– Will your estimated income meet your
estimated expenses?
• Most people don’t have enough invested.
• If your expenses outstrip your income then
it’s time to make some changes.
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Comparing Income and Expenses
• Max out your contributions to your IRA.
– See FPW website
• Cut expenses.
• Contribute as much to your 401(k) as your
company will match; more if you can afford it.
• You may have to work longer than anticipated
• Figure out when to begin Social Security.
• Invest to stay ahead of inflation!
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Comparing Income and Expenses
• Set up a budget for before & after you retire
• 3 phases of retirement (Prosperous Retirement)
– Go-go (expenses > income)
– Slow-go
– No-go (living expenses very low UNLESS long
term care is needed)
• Medical & LTC expenses are the BIG
unknown
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Chapter 5: Making Your Money
Last
• The whole point is to discover any gaps in your
savings now, while you still have time to do
something about them.
• DON’T Take unsolicited advice on where to put
your money.
– If you want advice consult a financial professional that
you choose.
– Don’t be a target for scams!
• Don’t forget about taxes.
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Making Your Money Last
• Choose what you want to withdraw from which
savings vehicle.
– Roth IRAs: you’ve already paid taxes so it is a good
place to leave your money to grow.
• Reverse Mortgage to stretch your money
– essentially a bank loan based on the amount of
home equity.
– It can provide a monthly check, but at a cost. You
are spending down the value of your home.
– The loan does have to be repaid if your heirs want
to keep the house.
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Chapter 6: Tracking Down Help
for Retirement Resources
• In the past there weren’t a lot of choices in
retirement, but that has changed dramatically.
• It is up to you to choose how you want to live
in retirement & work toward your goals.
• Redo these worksheets at least once a year to
make sure that you’re still on track.
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Tracking Down Help for
Retirement Resources
• The workbook has a large list of resources
to help you plan and save for retirement.
• Late Savers Guide to Retirement
– www.nefe.org/latesaver
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Questions?
• October 11 FPW: Who gets grandma’s
yellow pie plate? A guide to passing on
personal possessions.
– Presented by Dr. Barbara Rowe, USU
Extension Specialist
• 12:30-1:30 Family Life 318
• 7-8:30 p.m. at the Family Life Center, 500N 700E
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