Retirement Planning: Maintaining Momentum

For Investors 36 - 49 yrs old

The focus in this seminar is on Investing for Retirement

Personal Savings are split into:– Taxable Savings• Bank accounts, CD’s• Investments

– Non-taxable, retirement savings• 401(k)

– Traditional & Roth

• IRA

Our focus today

Create a Retirement Vision

• No one knows what the future holds

• Basics– Spend less than you make– Be a great saver – Eliminate debt

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)

Create a Retirement Vision

Get Going• Compound growth

takes time to build• Largest effects felt

after years of saving and investing

• Cannot shortcut process

• Chart based on – 10% contribution rate– 5.14% annual rate of

return– 2% annual salary

increase– 3% annual inflation

35 40 45 50 55 60 67 25,000

275,000

525,000

775,000

1,025,000

Example of Compound Growth

Get Going

35 year old 45 year old 55 year old 25,000

275,000

525,000

775,000

1,025,000

927,764

463,159

197,750

401(k) Scenarios• Beginning salary– 35 yr old: $61,000– 45 yr old: $75,000– 55 yr old: $91,000

• Contributes 10%• Includes Amway

match • Retires at 67 years

old

Focus on Being a Great Saver

• Your contributions today decide your quality of retirement

• Target 12% to 20%• Increase gradually,

but as quickly as possible

6% 10% 15% 20% 25,000

275,000

525,000

775,000

1,025,000

1,275,000

1,525,000

683,036

927,763

1,233,674

1,423,268

Contribution Scenarios(35 yr old)

Manage Spending

• Work on your spending habits and your savings will take care of themselves

• 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 BasicsTraditional 401(k)

• Contribution is taken out of paycheck before tax

• Investments grow tax-deferred• Taxed as ordinary income upon

retirement• Distributions without penalty

allowed after 59-½

Roth 401(k)

• Contribution is taken out of paycheck after tax

• Investments grow tax-free• Tax-free upon retirement• Distributions without penalty

allowed after 59-½

2%3%

4%5%

9%

1%

1%

2%

5%

6%

2%

2%

3%

3%

3%

B & PS

B & PS

B & PS

B & PS

B & PS

Traditional Contribution Roth ContributionAmway Match Amway Base & Profit Sharing

401k Basics – Amway Match

• Amway matches 50% of your contributions in any combination of traditional and Roth, up to your 6%.

• Amway match is always deposited into traditional account.

• Amway’s discretionary base contribution & profit sharing is deposited into traditional account

• 2012 IRS employee contribution limits: – $17,000– $22,500 with “catch-up”

How Your Amway 401k Works

Trad 401(k)

Roth 401(k)

Amway 401(k)• Investment options are

the same for Traditional & Roth

• Select contribution % for each – any combination is allowable

• Accounts shown in 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

• Consider risk• How expensive it is

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

Thank YouSchedule your personal consultation now!

Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780