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Retirement Planning:
 Nearing the Finish
    (Of accumulating, of course!)




For Investors 50+ yrs old
The focus in this seminar is on
  Investing for Retirement

Personal Savings are split into:
  – Taxable Savings                   Our
     •   Bank accounts, CD’s          focus
     •   Investments                  today
  – Non-taxable, retirement savings
     •   401(k)
         –     Traditional & Roth
     •   IRA
Perspective on Retirement

• We are responsible for
  our retirement
  success, no one else
• Harsh realities require
  focus, attention and
  more ownership of our
  retirement account(s)
Retirement 2.0 – A New Look
• Your retirement is unique;
  don’t be pressed into an
  obsolete mold
• Retiree’s are
  healthier, living
  longer, more active
• Consider need for extra
  income or benefits
• Working longer, part-time
  work, consulting or other
  self-employment
Create a Retirement Vision
• No one knows what the
  future holds
• Basics
  –   Spend less than you make
  –   Be a great saver
  –   Eliminate debt
  –   Be creative
Create a Retirement Vision
Keep Going
• Compound growth
  takes time to build                  Example of Compound Growth
• Largest effects felt       575,000
  after years of saving
  and investing              475,000

• Cannot shortcut
                             375,000
  process
• Chart based on             275,000
   – 10% contribution rate
   – 5.14% annual rate of    175,000
     return
                              75,000
   – 2% annual salary
     increase                          50       55       60         65
   – 3% annual inflation
Get Going
                                          401(k) Scenarios
• Beginning salary
                            575,000
   – 50 yr old: $82,000
   – 55 yr old: $91,000     475,000
                                       520,490

   – 60 yr old: $100,000
• Contributes 10%           375,000
• Includes Amway                                     344,417
  match                     275,000

• Retires at 67 years
                            175,000                                212,357
  old

                             75,000
                                      50 year old   55 year old   60 year old
Focus on Contributions
                                    Contribution Scenarios
                                          (50 yr old)
                          825,000
• Your contributions
                                                                  779,311
  today decide your
  quality of retirement                                 649,901
                          575,000
• Target 12% to max
  allowable of $22,500                        520,491

• Increase                          416,962
  gradually, but as       325,000
  quickly as possible


                           75,000
                                     6%        10%       15%       20%
Manage Spending

• Work on your spending
  habits first; then your
  savings
• Use a personal financial
  management tool
   –   Mint.com
   –   Quicken Books
   –   Excel spreadsheet
   –   Paper / Envelopes
401k Basics – Traditional 401k

• Pre-tax savings provide highly efficient
  savings tool for building your nest egg

• Taxed as income when you withdraw
  from account (available without
  penalty anytime after 59 ½ yrs old)
401k Basics – Roth 401k

• Post-tax savings provide highly
  efficient savings tool for creating tax-
  free income upon retirement

• Tax-free income when you withdraw
  from account (available without
  penalty anytime after 59 ½ yrs old)
401k Basics
       Traditional 401(k)                  Roth 401(k)

• Contribution is taken out of    • Contribution is taken out of
  paycheck before tax               paycheck after tax
• Investments grow tax-deferred   • Investments grow tax-free
• Taxed as ordinary income upon   • Tax-free upon retirement
  retirement                      • Distributions without penalty
• Distributions without penalty     allowed after 59-½
  allowed after 59-½
401k Basics – Roth Distributions
There is no penalty or tax
on a Qualified Distribution
• 5 year rule: to be a
  Qualified Distribution, it
  must be 5 years from Jan 1
  of the year of your first
  contribution
            AND
• You must be at least 59-½
             OR
• Qualify for early distribution
   – First home
   – Disabled
   – Made by your estate
                                   IRS Pub 509
401k Basics – Amway Match                                              B & PS


• Amway matches 50% of
  your contributions in any                                                         3%

  combination of traditional                                         B & PS

  and Roth, up to your 6%.
• Amway match is always                                                             6%
                                                                      3%
  deposited into traditional                             B & PS

  account.
• Amway’s discretionary                     B & PS
                                                          3%          5%
  base contribution & profit    B & PS
  sharing is deposited into
                                              2%          2%
  traditional account                                                               9%
                                1.5%          1%
• 2012 IRS employee              1%                                   5%
                                                          4%
  contribution limits:           2%
                                              3%
    – $17,000
    – $22,500 with “catch-up”      Amway Base & Profit Sharing    Amway Match
                                   Roth Contribution              Traditional Contribution
How Your Amway 401k Works
                                 Amway 401(k)
• Investment options are
  the same for Traditional
  & Roth
                              Roth
• Select contribution %      401(k)
  for each – any
  combination is
  allowable
                                           Trad
• Accounts shown in                       401(k)
  aggregate on Fidelity
  website
Common Amway Myths
• 15% Contribution Max
   – You can contribute up to
     70% of your salary or the
     IRS limits, whichever is
     greater
• You have to roll your $
  into an IRA upon
  retirement
   – Sales technique
   – You can leave your $ with
     the Amway plan if you
     have more than $5k
Glossary of Important Investment
                  Terms
• Stocks - Fractional ownership in company (Equity)
• Bonds - Money lent to company (Debt)
• Mutual Funds - An account consisting of a combination of multiple
  companies’ stocks and/or bonds
• Asset Allocation - The apportioning of investments to the different
  asset classes: stocks, bonds & cash (main 3)
• Diversification - The apportioning of investments to the different
  asset class sub-classes
   – Stocks
       • Large, mid & small cap
       • Value, growth & blend
       • International, specialty
   – Bonds
       • Gov’t & Corporate
       • High yield, inflation protected, low duration, etc
   – Cash
An Analogy for Understanding
            Asset Allocation

• Your Personal
  Investment Recipe
• Mutual funds =
  Ingredients
• Recipe = How you mix
  Ingredients
Determining Your Ingredients

• Make sure the
  ingredients are varied
• How expensive it is
Focus on Risk
• Risk plays a much larger
  role in an account with
  a balance
• A 10% downturn costs
  far more (in dollars and
  cents) now that it did
  10-15 years ago
• Now have fewer years
  until you need the
  money – not enough             www.mutpl.com


  time to recover from
  downturn
Common Misbehaviors
Common Misbehaviors
Common Misbehaviors
Common Misbehaviors
Retirement Fund vs. College Fund
• Adequately funding
  your Retirement
  comes 1st
• College funding must
  be secondary
• Our children will
  probably have
  options available to
  them to help pay for
  college
• This is your ONLY
  retirement funding
  opportunity
A Long Term Outlook
Personal Consultations
• Determine a plan of action
  for to put your retirement
  in focus
• Free for all Amway
  employees
• Spouses are welcome to
  attend
• What to bring:
   –   Fidelity login credentials
   –   Outside asset list
   –   Social Security Statement
   –   Target Retirement Year
   –   Estimate of monthly income
       needs
Thank You
  Schedule your personal consultation now!
     Visit http://amway.bemanaged.com
Contact us at (616) 871-0751 or (888) 738-8780

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Retirement Planning – Nearing the finish (Investors 50+ yrs)

  • 1. Retirement Planning: Nearing the Finish (Of accumulating, of course!) For Investors 50+ yrs old
  • 2. The focus in this seminar is on Investing for Retirement Personal Savings are split into: – Taxable Savings Our • Bank accounts, CD’s focus • Investments today – Non-taxable, retirement savings • 401(k) – Traditional & Roth • IRA
  • 3. Perspective on Retirement • We are responsible for our retirement success, no one else • Harsh realities require focus, attention and more ownership of our retirement account(s)
  • 4. Retirement 2.0 – A New Look • Your retirement is unique; don’t be pressed into an obsolete mold • Retiree’s are healthier, living longer, more active • Consider need for extra income or benefits • Working longer, part-time work, consulting or other self-employment
  • 5. Create a Retirement Vision • No one knows what the future holds • Basics – Spend less than you make – Be a great saver – Eliminate debt – Be creative
  • 7. Keep Going • Compound growth takes time to build Example of Compound Growth • Largest effects felt 575,000 after years of saving and investing 475,000 • Cannot shortcut 375,000 process • Chart based on 275,000 – 10% contribution rate – 5.14% annual rate of 175,000 return 75,000 – 2% annual salary increase 50 55 60 65 – 3% annual inflation
  • 8. Get Going 401(k) Scenarios • Beginning salary 575,000 – 50 yr old: $82,000 – 55 yr old: $91,000 475,000 520,490 – 60 yr old: $100,000 • Contributes 10% 375,000 • Includes Amway 344,417 match 275,000 • Retires at 67 years 175,000 212,357 old 75,000 50 year old 55 year old 60 year old
  • 9. Focus on Contributions Contribution Scenarios (50 yr old) 825,000 • Your contributions 779,311 today decide your quality of retirement 649,901 575,000 • Target 12% to max allowable of $22,500 520,491 • Increase 416,962 gradually, but as 325,000 quickly as possible 75,000 6% 10% 15% 20%
  • 10. Manage Spending • Work on your spending habits first; then your savings • Use a personal financial management tool – Mint.com – Quicken Books – Excel spreadsheet – Paper / Envelopes
  • 11. 401k Basics – Traditional 401k • Pre-tax savings provide highly efficient savings tool for building your nest egg • Taxed as income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)
  • 12. 401k Basics – Roth 401k • Post-tax savings provide highly efficient savings tool for creating tax- free income upon retirement • Tax-free income when you withdraw from account (available without penalty anytime after 59 ½ yrs old)
  • 13. 401k Basics Traditional 401(k) Roth 401(k) • Contribution is taken out of • Contribution is taken out of paycheck before tax paycheck after tax • Investments grow tax-deferred • Investments grow tax-free • Taxed as ordinary income upon • Tax-free upon retirement retirement • Distributions without penalty • Distributions without penalty allowed after 59-½ allowed after 59-½
  • 14. 401k Basics – Roth Distributions There is no penalty or tax on a Qualified Distribution • 5 year rule: to be a Qualified Distribution, it must be 5 years from Jan 1 of the year of your first contribution AND • You must be at least 59-½ OR • Qualify for early distribution – First home – Disabled – Made by your estate IRS Pub 509
  • 15. 401k Basics – Amway Match B & PS • Amway matches 50% of your contributions in any 3% combination of traditional B & PS and Roth, up to your 6%. • Amway match is always 6% 3% deposited into traditional B & PS account. • Amway’s discretionary B & PS 3% 5% base contribution & profit B & PS sharing is deposited into 2% 2% traditional account 9% 1.5% 1% • 2012 IRS employee 1% 5% 4% contribution limits: 2% 3% – $17,000 – $22,500 with “catch-up” Amway Base & Profit Sharing Amway Match Roth Contribution Traditional Contribution
  • 16. How Your Amway 401k Works Amway 401(k) • Investment options are the same for Traditional & Roth Roth • Select contribution % 401(k) for each – any combination is allowable Trad • Accounts shown in 401(k) aggregate on Fidelity website
  • 17. Common Amway Myths • 15% Contribution Max – You can contribute up to 70% of your salary or the IRS limits, whichever is greater • You have to roll your $ into an IRA upon retirement – Sales technique – You can leave your $ with the Amway plan if you have more than $5k
  • 18. Glossary of Important Investment Terms • Stocks - Fractional ownership in company (Equity) • Bonds - Money lent to company (Debt) • Mutual Funds - An account consisting of a combination of multiple companies’ stocks and/or bonds • Asset Allocation - The apportioning of investments to the different asset classes: stocks, bonds & cash (main 3) • Diversification - The apportioning of investments to the different asset class sub-classes – Stocks • Large, mid & small cap • Value, growth & blend • International, specialty – Bonds • Gov’t & Corporate • High yield, inflation protected, low duration, etc – Cash
  • 19. An Analogy for Understanding Asset Allocation • Your Personal Investment Recipe • Mutual funds = Ingredients • Recipe = How you mix Ingredients
  • 20. Determining Your Ingredients • Make sure the ingredients are varied • How expensive it is
  • 21. Focus on Risk • Risk plays a much larger role in an account with a balance • A 10% downturn costs far more (in dollars and cents) now that it did 10-15 years ago • Now have fewer years until you need the money – not enough www.mutpl.com time to recover from downturn
  • 26. Retirement Fund vs. College Fund • Adequately funding your Retirement comes 1st • College funding must be secondary • Our children will probably have options available to them to help pay for college • This is your ONLY retirement funding opportunity
  • 27. A Long Term Outlook
  • 28. Personal Consultations • Determine a plan of action for to put your retirement in focus • Free for all Amway employees • Spouses are welcome to attend • What to bring: – Fidelity login credentials – Outside asset list – Social Security Statement – Target Retirement Year – Estimate of monthly income needs
  • 29. Thank You Schedule your personal consultation now! Visit http://amway.bemanaged.com Contact us at (616) 871-0751 or (888) 738-8780

Editor's Notes

  1. Retirement investing vs non-retirement investmentsFocus on retirement in this seminar
  2. Focus on being mortgage-free upon retirement (imagine what you could do without that payment)
  3. The longer your money is invested, the more compounding you have for it to grow.
  4. NOTE: The amount you contribute to your account is the #1 reason for the outcome of your retirement, not how you invest it.Target 12% - 20% of your salary
  5. Get your spending habits in line, and your savings will take care of itself – PAY YOURSELF FIRSTHighly recommend a personal financial management toolMint.comQuickenSpreadsheets
  6. Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
  7. Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
  8. Taxes are “pre-paid” with your contributions, investment and contributions come out tax free upon retirement (after 59 ½ yrs old)Allows you to create more flexibility upon retirement by creating a ‘tax free income’ retirement bucket
  9. Investment options are identical for each plan, you simply need to determine what % goes in pre-tax (traditional) and after-tax (Roth)
  10. Buy High Sell Low
  11. AnchoringHead in the sandConfirmation Bias
  12. AnchoringHead in the sandConfirmation Bias
  13. AnchoringHead in the sandConfirmation Bias