Making Retirement

Funds Last

Making Retirement Savings Last

About the PICPAThe Pennsylvania Institute of Certified Public Accountants (PICPA) is a professional association of more than 22,000 members working together to improve the profession and serve the public interest.

Making Retirement Savings Last

Reality Check• Many are unprepared for the reality of retirement• Life expectancies are going up—retirement may last

longer than you expect (25-30 years) • How much you withdrawal early on in your

retirement will greatly impact your later finances

Making Retirement Savings Last

Delay Taking SS Payments• If you delay receiving your Social Security benefits

until after your retirement age, your check will increase– If you wait until 67, there’s an 8% increase– If you wait until age 70, there’s a 35% increase

• You must start collecting at age 70 ½

Making Retirement Savings Last

Balance Your Portfolio• Put money into a diversified portion of stocks,

bonds, and real estate that pays dividends• Ladder your bonds– In your portfolio, ensure that your fixed income

securities have significantly different maturity dates

Making Retirement Savings Last

Immediate Annuities• Put money in an insurance contract that pays a fixed

rate of return• Comparison shop!• Annuities tie up your money—you’ll have no access

to it for a certain period of time

Making Retirement Savings Last

Other Options• Reverse mortgages• Only collect the interest from certain retirement plans• Longevity insurance

Making Retirement Savings Last

Tips• Get good, objective advice• Monitor your funds yearly• Try to live on non-retirement assets to let your

401(k) and IRAs grow as long as possible

Making Retirement Savings Last

Early 401(k) Withdrawals• There is a 10% penalty for early distributions– Early is anything before the age of 59 ½– Regular income taxes must also be paid on amounts

withdrawn• Some exceptions:– You die and bequeath the account, you become disabled,

you terminate employment and are 55+ years old

Making Retirement Savings Last

Early 401(k) WithdrawalsThings to consider:– Many employers only allow early withdrawals in

cases of financial hardship– You lose the potential investment growth on the

money you withdrawal– You may not be able to reinvest your full

withdrawn amount because of contribution limits

Making Retirement Savings Last

Be Wary Of Fraud• Pyramid Scheme: claims to turn small investments into large

returns• Ponzi Scheme: a central fraudster collects money from new

investors to use as “returns” on other investors • Rx Drug Scam: unsolicited discount drug cards offered• Audit Scam: unsolicited review of documents containing

personal information offered• Plus many more!

Making Retirement Savings Last

Fraud Red Flags• Guaranteed performance on an investment• Unregistered individuals selling unregistered securities• Overly consistent returns• No prospectus, no offerings, no stock symbols on stocks

being sold• Pushy sales people or high pressure situations

Making Retirement Savings Last

Avoiding Fraud• Are your investment professionals licensed?– Check to see if the license was ever suspended or revoked

• Ask questions!– Scammers count on you not bothering to investigate

• Be wary of unsolicited offers!– Emails, phone calls, letters, and more

• If it sounds too good to be true, it probably is!

Making Retirement Savings Last

Resources • The PICPA: www.picpa.org/moneyandlife• Social Security: www.ssa.gov• AARP: www.aarp.org

Making Retirement Savings Last

Questions?