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Four Pillars to Retirement

Four Pillars to Retirement. Kehoe Financial Advisors. October 1, 2014. Steve Kehoe. Social Security. 1. Past . Inception August 14, 1935 President Franklin Delano Roosevelt signed the Social Security Act into law. Objective Three “R”s: 1 . Relief for the poor 2. Recovery of the economy

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Four Pillars to Retirement

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  1. Four Pillars to Retirement Kehoe Financial Advisors October 1, 2014

  2. Steve Kehoe Social Security

  3. 1. Past • Inception August 14, 1935 President Franklin Delano Roosevelt signed the Social Security Act into law. • Objective Three “R”s: 1. Relief for the poor 2. Recovery of the economy 3. Reform of the financial system to prevent future depressions

  4. 2. Present • Eligibility Anyone who is: • aged (age 65 or older); • blind; or • disabled. And, who: • has limited income; and • has limited resources; and • is a U.S. citizen or national, or in one of certain categories of aliens

  5. Review Social Security Statement

  6. 3. Future • Life Expectancy of 65 male: 1940 = 77.7 years old 2009 = 82.5 years old B. Life Expectancy of 65 female: 1940 = 79.7 years old 2009 = 85.2 years old *Source: Center for Disease Control and Prevention, http://www.cdc.gov/mchs/hus/contenst2013.htm#018

  7. Solvency On July 15 the Congressional Budget Office rolled out updated projections that show a precipitous decline in Social Security's solvency. The program's 75-year deficit has nearly quadrupledsince 2008, and the trustfund's exhaustion date has moved forward by nearly 20 years. Remarkably, the response by progressives is to expand Social Security's benefits while leaving its multi-trillion-dollar unfunded obligations largely unaddressed.1

  8. Today, CBO projects a 75-year deficit not of 1% of payroll but of 4%. And in place of its earlier prediction that the trust fund would remain solvent until midcentury, CBO today projects that it will run dry by 2030.1 In dollar terms, the program would need an additional $15 trillion—in the bank today, earning interest—to pay full benefits over 75 years. For those in denial about the trust fund's insolvency: CBO projects a 90% chance that Social Security's trust fund will be exhausted by 2037.1 1Biggs, Andrew. “Liberals for Social Security Insolvency Democrats want to expand benefits even as the retiree program's finances worsen.” Wall Street Journal, 18 August 2014. 19 August 2014. http://online.wsj.com/articles/andrew-biggs-liberals-for-social-security-insolvency-1408403712

  9. 4. Summary • Purpose of Social Security • When to Start Social Security • Changes to Social Security?

  10. Tom Keller - Investments

  11. How Do You Invest in Retirement? Past Investment Strategies for Retirement At Retirement move all assets to 60% Stocks & 40% Bonds As you grow in retirement years, your allocation shifts from Equities to Bonds.

  12. What About Today? What has changed the traditional strategy? We are a global economy now. Interest Rates are at historic lows. People are living longer.

  13. What About Today continued: • Markets have been more volatile the past 20 years. • Information is more accessible and creates immediate responses.

  14. What can you do to have a successful Retirement Investment Plan? FLEXIBILITY Key word is: • Interest Rates will return to average numbers.

  15. The markets will continue to be volatile and patience is more important than ever.

  16. Create a plan and keep your discipline. • You need to maintain investment earning power.

  17. Larry Blundred Long-Term Care

  18. Not your typical “night out” conversation. Date Night Night out with Donna – Discuss Long-Term Care

  19. 4 Kinds of people 1. Those that have been caregivers. 2. Those that currently are caregivers. 3. Those that will be caregivers. 4. Those that will need caregivers. Rosalynn Carter, 1997

  20. Addressing Long-Term Care Rely Upon Family Self Insure – Rely Upon Assets Accumulated Long-Term Care Insurance Hybrid Long-Term Care Concepts

  21. Why Long-Term Care Matters Provides Dignity Beyond $ Protect Assets Helps Reduce Family Disruption Plans for Care of “Healthy” Spouse Supports Financial Plan

  22. If you are not planning to rely on family or “self insure” – spending down your own assets to cover future long term care (LTC) expenses • LTC insurance can be obtained through different funding instruments: • Traditional stand-alone long-term care insurance • (annual premiums – not fixed) – better known as “indemnity” plan.

  23. Long-Term Care Policies Emerge • Mid ’70’s • InsureUnknowns: L: Longevity H: Our Health • Learning Curve for Carriers • Today: Fewer Carriers/Steep Premiums Jumps • Nursing Home “Insurance”

  24. Hybrid Plans EmergeLTC Benefits Funded By: • Non-qualified annuity • Life insurance (whole or universal life) • Qualified funds in traditional IRA (exception: Roth IRA)

  25. How Are Hybrids Funded? Single premium or multiyear premiums – or combination Rollover – transfer IRA 1035 Exchange of values in annuity or life insurance policy

  26. With Any LTC Policy – Consider Checkpoints: • Activities of Daily Living (ADL’s) – know which ones trigger the benefits • Compare and Contrast Cost or the LTC “benefit base/balance” at various ages • Remember what you seeking to insure – a portion of your assets • Cost increases, or benefits derived shrink, as you become more “seasoned” • Know in advance the “screening criteria” to be approved • (full medical exam or phone interview, or both) • Consider the benefits of an inflation rider

  27. More Considerations: • Think about “worst case” “best case” scenarios in your family situation. • Look at family longevity history • Know that LTC and health care costs rise at higher rate than core inflation. • Know the catches (early surrender penalty … can you get your premium back if circumstances changed?

  28. Finally: • Consider what kind of care is most important to you in relation to where you are now living, or could consider living 5, 10, 15 or 20 years from now. • Get opinions from people you know and trust, or others that have purchased or receiving policy benefits. • Take your time. Because you are making a decision based upon unknowns, explore how the decision and the investment fits your overall financial plan and situation.

  29. Conclusion • No “Silver Bullets” • Everyone’s situation and LTC needs are different • Process – “Plan Centric” • Always Have “Unknowns” • Health Care Issues Remain • Industry Adapts – New Options (Hybrids) • Questions?

  30. Kevin Webb E-Money

  31. Home Page Features

  32. SpendingTab

  33. Investment Tab

  34. Vault Tab

  35. Reports Tab • 5YearCash Flow

  36. Security: • Non transactional • Account locks for 10 minutes after 3 unsuccessful login attempts, blocking programmed hackers information on the site is encrypted with 256-bit encryption, the highest level currently available today • 3rd party sites are hired to try to hack into the software daily

  37. Benefits: • Saves time by signing on to one website to view all your financial accounts • Allows for better decision making by viewing the interplay of all the accounts together • Workshops help users follow progress toward major goals, such as retirement, in real-time

  38. The Kehoe Team Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), member FINRA/SIPC.  NFPAS is not affiliated with Kehoe Financial Advisors.

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