Increasing contributions presentation
Investing involves market risk, including possible loss of principal and possible fluctuations
in value. Products may not be available in all states.
Certain funds are only available as investment options in variable life insurance or variable
annuity contracts issued by life insurance companies. They are NOT offered or made
available to the general public directly.
Before investing, understand that mutual funds are not insured by the FDIC, NCUSIF or
any other Federal government agency and are not deposits or obligations of, guaranteed by
or insured by the depository institution where offered or any of its affiliates. Mutual
funds involve investment risk and may lose value.
The Nationwide Group Retirement Series includes unregistered group fixed and variable
annuities and trust programs. The unregistered group fixed and variable annuities are
issued by Nationwide Life Insurance Company. Trust programs and trust services are
offered by Nationwide Trust Company, FSB, a division of Nationwide Bank. The general
distributor for variable products is Nationwide Investment Services Corporation, member
FINRA. Nationwide Mutual Insurance Company and Affiliated Companies, Home Office:
Columbus, OH 43215-2220.
Nationwide, the Nationwide N and Eagle, Nationwide is on your side and On Your Side
Interactive Retirement Planner are service marks of Nationwide Mutual Insurance
Company. © 2015 Nationwide
PNM-2788AO.2 (05/15)
• Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution
• Not insured by any federal government agency • May lose value
Budgeting
Importance of retirement plans
Benefits of contributing
Increasing your contribution
Why should I contribute
to my retirement plan?
Importance of retirement plans
4
Americans aren’t saving enough
5%
36%
25%
of Americans aren’t
currently saving2
of Americans
have no savings1
1
http://www.statisticbrain.com/american-family-financial-statistics.
http://www.statisticbrain.com/retirement-statistics.
3 http://www.bls.gov/ore/pdf/ec100020.pdf.
4 http://business.time.com/2013/01/08/how-to-rock-your-401k-in-2013.
2
Only
contribute the
maximum4
68%
of Americans
have access to
a 401(k) plan3
Importance of retirement plans
5
How much you’ll need
Less than half
of Americans
have calculated how
much they will
need for retirement5
5
http://www.dol.gov/ebsa/publications/10_ways_to_prepare.html.
6
Importance of retirement plans
How much you’ll need
78%
6 "Your
Retirement Lifestyle" www.kiplinger.com.
Importance of retirement plans
7
How much you’ll need
10-15% of your annual compensation7,
which should equal: 1x by age 35
3x by age 45
5x by age 55
8x at retirement
7
8
source: https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings
source: http://www.fidelity.com/inside-fidelity/employer-services/age-based-savings-guidelines
8
Importance of retirement plans
8
Social Security
• Social Security benefits typically cover —
at most — 40% of pre-retirement income9
• Social Security can only pay full benefits
to retirees until 203310
• Post 2033 through 2086, Social Security
can cover 75% of benefits promised10
9 "Social
10
Security Planner: Learn About Social Security Programs, Social Security Administration (April 2013).
http://www.ssa.gov/oact/tr/2012.
9
Importance of retirement plans
Full
retirement
age
Social Security
Early
retirement
age
– permanently
decreases payment
Deferred
retirement
age
– permanently
increases payment
Importance of retirement plans
Benefits
of contributing
Tax
benefits
Increasing your contribution
What are the benefits
of contributing to a
retirement plan?
11
Benefits of contributing
Tax benefits
• Taxes are paid at
withdrawal, not
when contributing
• Money has more
potential to grow
12
Benefits of contributing
Tax benefits
Potential to be in
Contributing to plan
lower tax
bracket at
retirement
lowers
taxable
income
13
Benefits of contributing
Tax benefits
The power of
tax-deferred compounding
Totals shown reflect a $100 monthly
investment, an 8% annual return, a
4% annual wage inflation and a 25%
marginal federal income tax bracket.
From the taxable investments, taxes
are taken each month from deposits
and annually upon gains. Taxes are
taken on the tax-deferred investment’s
end balance. This is a hypothetical
compounding example and is not
intended to predict or project
investment results of any specific
investment. Investment return is not
guaranteed and will vary depending
upon your investments and market
experience. If costs were reflected,
the return would be less.
Benefits of contributing
14
Tax benefits
• Incentive from IRS
that gives credit to
eligible participants
for contributing to
a retirement plan11
• Credits 50%, 20%
or 10% up to $2,000
($4,000 if joint filing)11
11
"http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-SavingsContributions-Credit-(Saver%E2%80%99s-Credit).
15
Benefits of contributing
Compounding interest
-
-
16
Benefits of contributing
Compounding interest
Those in
early stages of
retirement saving
Those nearing
retirement can
take advantage of
have a longer
time horizon
catch-up
contributions
Benefits of contributing
17
Employer match
86%
The average company
contribution is now
4.5% of pay
12
12
13
14
of companies
offer a matching
program13
http://www.psca.org/401-k-plans-are-working
http://www.transamericacenter.org/docs/default-source/resources/center-research/tcrs2013_sr_retreadimperative.pdf.
http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/RetirementAccounts/P121889.
Only a
third
of employees take
advantage of full
company match14
Importance of retirement plans
Benefits of contributing
The
Learning
Center
Increasing
your
contribution
Why should I increase
my contribution?
Increasing contribution
19
Save more
Maximum
contribution limit
for 2015 is
$18,000
15
15
IRS Announces 2015 Pension Plan Limitations, Internal Revenue Service, IR-2014-99 (Oct. 23, 2014).
Catch-up
contribution for
those age 50
and above is
$6,000
15
20
Increasing contribution
Save more
• Set aside retirement
savings before paying
other expenses
• Automatic deductions
from your paycheck
make it easy
21
Increasing contribution
Save more
Auto-increase
your existing
contribution
by 1%
each year
Save part
of your annual
raise or bonus
Increase
savings after
paying off debt
22
Increasing contribution
Save more
Salary
9%
10%
$25,000
$220,178
$244,642
$50,000
$440,356
$489,284
$75,000
$660,534
$733,926
23
Increasing contribution
Paycheck
impact
calculator
The Learning Center
Future
value
calculator
Roth
retirement plan
analyzer
24
Increasing contribution
On Your Side Interactive Retirement Planner
SM
25
Increasing contributions
Summary
Talk to
your Plan Sponsor about making or
increasing contributions to your plan
The On Your Side
Interactive Retirement
Planner
can be a helpful tool in determining
how much you will need in retirement
Nationwide’s online tools
and calculators
Your company’s
retirement plan
can help you see the impact of
your contributions
is important, and so is
increasing contributions to it
Access your
retirement account
nationwide.com/myretirement
1- 800-772- 2182