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CHARTING YOUR COURSE TO RETIREMENT National Save for Retirement Week
CHARTING YOUR COURSE TO RETIREMENT
National Save for Retirement Week
STRATEGIC PARTNERS
Your employer has chosen a team of strategic business partners that work together to provide the services your plan needs. This team approach gives you all the resources you need to meet your retirement goals.
INVESTMENT BROKER
• Advises fund selection• Monitors fund and plan performance
CUSTODIAN
• Holds plan assets
RANDALL & HURLEY | TPA
• Compliance testing• Annual reconciliation• Plan design & consulting• Provides reports & forms• Provides website access
PLAN SPONSOR
• Ultimate service provider & fund selection• Transmits information
PLANNINGYOUR ROUTE
RETIREMENT PLANNING
Today’s retirees rely on several income sources. Your retirement plan is a critical component of your retirement income because you are able to control how much is available to you at retirement. By planning ahead, you can achieve your goals.
Your retirement plan is a vital source of retirement income and provides several advantages to traditional savings accounts, including:
• Personal income tax savings•Choiceandflexibilityinplanningforyourfuture• Convenience of automatic reductions from pay• Potential for employer contributions to further bolster your savings
Source: Fast Facts and Figures About Social Security, 2009, Social Security Administration
RETIREMENT INCOME
SOURCES
46%Retirement
Plans
2%Other16%
Savings & Investments
36%Social
Security
START SAVING &STAY THE COURSE
WHY SAVE?Experts Agree that the Best Way to Save for Retirement is to Start Saving Now.
Traditional deferrals are made on a pre-tax basis (but are taxed later) while Roth deferrals are made on an after-tax basis (but aren’t taxed later).
Use the table to see how it works. You can choose to save taxes now or at retirement based on how you choose to defer.
Pre-Tax Deferral
Equal Contribution Roth Deferral
Equal Pay Roth Deferral
Gross Annual Pay $30,000 $30,000 $30,000
401(k) Contribution ($200/mo.) 2,400 2,400 2,040
Taxable Income 27,600 30,000 30,000
Federal Income Taxes (15%) 4,140 4,500 4,500
FICA (7.65%) 2,295 2,295 2,295
Net Take-Home Pay $21,165 $20,805 $21,165
ASSETS AFTER ONE YEAR
After one year of making retirement contributions, your total assets will likely grow due to investment returns and added tax savings.
$26,650 $28,964
NO PLAN INVESTMENT 10% INVESTED IN PLAN
+$26,650Take Home
Pay
-$5,850Taxes
+$23,985Take Home
Pay
-$5,265Taxes
+$585Tax Savings
+$3,250Retirement+$169 Interest
+$975 Employer Contribs
HOW LONG WILL IT TAKE TO SAVE $100,000?
The earlier you start saving, the easier it will be to meet your goals. Starting to save now—even if it’s just a little bit—can make a big difference at retirement.
Starting to save now makes it easier to achieve your retirement goals. When you start saving early, your required savings amount is much smaller.
Illustrations assumes a 7% annual return.
Number of Years
Monthly Savings Required
10 $578
20 $192
30 $82
40 $38
THE MIRACLE OF COMPOUND INTEREST
The earnings you accrue as your account grows makes a dramatic impact on your retirement savings. Many call this phenomenon the miracle of compound interest. No matter what you call it, it’s clear that the sooner you begin to save, the more you can rely on investment earnings—and not just contributions—to help you meet your retirement goals!
Illustrations assumes a 7% annual return.
200
180
160
140
120
100
80
60
40
20
0
Tota
l A
cco
un
t V
alu
e (
$1,
00
0)
0 10 20 30 40
YearsContribs Earnings
A LITTLE GOESA LONG WAY
509 838 5500 I 888 682 4406
Making Small Changes to Your Spending HabitsMakes it Easier than You Think to Meet Your Retirement Goals
Average Tax Retirement Spent Savings Savings 10 Years 20 Years 30 Years
COFFEE BREAK $4/day $58 $2,010 $27,660 $82,071 $189,107
+ Use a loyalty card Save $146 $2,018 $5,987 $13,795
+ Limit to twice/week Save $1,040 $14,370 $42,637 $98,243
EATING LUNCH OUT $148/mo $68 $2,368 $24,538 $72,808 $167,762
+ Brown bag it 3 times/week Save $1,154 $15,945 $47,310 $109,012
DINING OUT $58/wk $232 $8,043 $111,126 $329,727 $759,748
+ Skip one happy hour/month Save $696 $9,616 $28,533 $65,745
ENTERTAINMENT $225/mo $78 $2,700 $37,304 $110,688 $255,044
+ Watch movies at home Save $300 $4,145 $12,299 $28,338
DIGITAL DOWNLOADS $10/mo $3 $120 $1,658 $4,919 $11,335
INVEST IT INSTEAD WATCH YOUR ACCOUTN GROW
Illustrations assume contributions are made on a pre-tax bi-weekly payroll schedule, the 25% income tax bracket, and interest of 7%, compounded annually. Data Source: www.bls.gov, accountingprincials.com.
A LITTLE GOESA LONG WAY
509 838 5500 I 888 682 4406
Making Small Changes to Your Spending HabitsMakes it Easier than You Think to Meet Your Retirement Goals
Average Tax Retirement Spent Savings Savings 10 Years 20 Years 30 Years
COFFEE BREAK $4/day $58 $2,010 $27,660 $82,071 $189,107
+ Use a loyalty card Save $146 $2,018 $5,987 $13,795
+ Limit to twice/week Save $1,040 $14,370 $42,637 $98,243
EATING LUNCH OUT $148/mo $68 $2,368 $24,538 $72,808 $167,762
+ Brown bag it 3 times/week Save $1,154 $15,945 $47,310 $109,012
DINING OUT $58/wk $232 $8,043 $111,126 $329,727 $759,748
+ Skip one happy hour/month Save $696 $9,616 $28,533 $65,745
ENTERTAINMENT $225/mo $78 $2,700 $37,304 $110,688 $255,044
+ Watch movies at home Save $300 $4,145 $12,299 $28,338
DIGITAL DOWNLOADS $10/mo $3 $120 $1,658 $4,919 $11,335
INVEST IT INSTEAD WATCH YOUR ACCOUTN GROW
Illustrations assume contributions are made on a pre-tax bi-weekly payroll schedule, the 25% income tax bracket, and interest of 7%, compounded annually. Data Source: www.bls.gov, accountingprincials.com.
A LITTLE GOES A LONG WAY
Making Small Changes to Your Spending HabitsMakes it Easier than You Think to Meet Your Retirement Goals.
YOUR RETIREMENT NEEDS
Experts recommend you will need 70%-90% of your annual income to maintain the quality of life you enjoy now.
Annual Income at Retirement $50,000 x Replacement Percent 80%
Annual Retirement Need $40,000 x No. of Years in Retirement 20
Total Retirement Savings Need $800,000
SELECTING INVESTMENTS
Allocate your investments across multiple asset classes to achieve the right balance of growth and security for your risk tolerance. The following tips will keep you on course:
+ FOCUS ON THE LONG-TERM GOAL
+ UNDERSTAND RISK & RETURN
+ DIVERSIFY YOUR PORTFOLIO
UNDERSTAND RISK & RETURN
How much time you have to save for retirement should impact how you investment your retirement plan account.
Retu
rn
Risk
RISK/RETURN RELATIONSHIP RISK/RETURN BY ASSET CLASS
Sho
rt T
erm
Inve
stm
ents
Bon
dsLarge Cap Mid Cap
Int’l.
Sm
all C
ap
Stocks
LO
W
HIG
H
RISK & RETURN BY PORTFOLIO
This chart illustrates how asset allocation can be created with different risk and return characteristics to meet your goals. You should choose your investments based on your particular objectives and situation.
Data Source: Ibbotson Associates, 2011 (1926-2011). Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative purposes only and does not represent actual or implied performance of any investment option.
Annual Range of Return (%)
Average Return
Short-Term Conservative Balanced Growth Aggressive Growth
Most Aggressive
14%
50%
30%
6% 15%
35%
40%
10%21%
49%
25%
5%
25%
60%
15%30%
70%
Short-Term/Cash
Bonds
Domestic Stocks
Int’l. Stocks
15.20
-0.04
11.13
0.06
31.06
-17.67
17.24
-0.37
76.57
-40.64
23.14
-6.18
109.55
-52.92
27.27
-10.43
136.07
-60.78
31.91
-13.78
162.89
-67.56
36.12
-17.36
3.58% 6.04% 7.90% 8.81% 9.42% 9.85%
DIVERSIFY YOUR PORTFOLIO
By allocating your account across multiple asset classes, you balance your risk for a variety of market conditions.
Diversification does not ensure a profit or protect against a loss in a declining market.
Larg
e-C
ap
Cash
LT-Bonds
TIPS Fixed Inco
m
e
Mid
-Cap
R
eal Esta
te Small-Cap Inte
rnatio
nal
ASSET CLASS DIVERSIFICATIONCertain asset classes do better in different market conditions. For example, stocks tend to rise when bond rates fall.
Past performance is no guarantee of future results.
ASSET CLASS DIVERSIFICATION
Certain asset classes do better in different market conditions. For example, stocks tend to rise when bond rates fall.
Past performance is no guarantee of future results.
SAMPLE ASSET ALLOCATIONSThe diagram below illustrates how asset allocations change based on your risk tolerance and time horizon.
Short Term Investor0 - 15 Years
Mid Term Investor5 – 15 Years
Long Term Investor15+ Years
Conservative Moderate Aggressive
50%
10%
40%40%
20%
40%
30% 30%
40%
10%
50%40%
20%
40%
40%
30%20%
50%
20%
10%
70%
20%
80%
10%
90%
PERIODIC REVIEW
At least once each year, you should complete a plan review to verify:
CONTACT INFORMATION Is your street address and email current?
CONTRIBUTION LEVEL Can you save a little more?
BENEFICIARY DESIGNATIONS Marriage, divorce and children may necessitate a change.
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+
+
+
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INVESTMENT ELECTIONS Is your current investment strategy a goodfitforyourlong-termgoals?
REBALANCE OPTIONS Should you rebalance your account to align with your investment strategy?
ANYTIME ACCOUNT ACCESSANYTIME ACCOUNT ACCESS
1-888-454-0334
VRU System (888) 454-0334
Basic Account Inquiry
Online & Mobile Website www.randall-hurley.com
Comprehensive Account Management VRU SYSTEM (888) 454-0334 Basic Account Inquiry
ONLINE & MOBILE WEBSITE www.randall-hurley.com Comprehensive Account Management
ANYTIME ACCOUNT ACCESS
1-888-454-0334
VRU System (888) 454-0334
Basic Account Inquiry
Online & Mobile Website www.randall-hurley.com
Comprehensive Account Management
YOUR PLANHIGHLIGHTS
YOUR PLAN HIGHLIGHTS
+ TRUSTEES
+ ELIGIBILITY & ENTRY DATES
+ INVESTMENTS AVAILABLE
+ EMPLOYEE CONTRIBUTION TYPES
+ EMPLOYER CONTRIBUTION TYPES
+ VESTING SCHEDULE
+ NORMAL RETIREMENT AGE
+ DISTRIBUTIONS
CUSTOMER SERVICE
PHONE
888.682.4406
Monday–Friday8 am–5 pm PST
[email protected] will be routed
Monday–Friday8 am–5 pm PST
WEB
www.randall-hurley.com
For general questions, from the home page, click For Individuals/Resources.
