Chapter 1: Introduction to Retirement Planning

1
Retirement Planning and Employee Benefits for
Financial Planners

• Chapter 1 Introduction to Retirement Planning

2
Interested Parties

• Employees
• Employers
• Professionals
• Government

3
Employees

• Money work instead of you
• Financial independence
• View benefits as part of overall compensation.
• Would rather pay costs with pre-tax dollars.
• Include retirement plans and benefits in their
  overall financial plan.
• Defined benefit versus defined contribution

4
Myths and Facts

• Myth 70 say they plan to work in retirement.
• Fact Only 28 of retirees actually work.
• Myth 25 want to retire at age 65, 25 want to
  retire at age 66.
• Fact Average individual retires at age 62.
• Myth Only 13 expect Social Security to be
  their largest source of retirement income.
• Fact 44 of current retirees report that
  Social Security is actually their largest source
  of income during retirement.

5
Employers

• View retirement plans and employee benefits as
  part of overall compensation costs.
• Costs add an additional 30 - 40 to payroll
  expenses.
• Benefits a large part of this (health insurance
  and vacation)
• Use employee benefit plans to recruit, hire, and
  maintain qualified workers.

6
Interested Institutions

• Approximately 18 trillion in tax-deferred
  accounts (2011)
• Sticky money
• Banks
• Mutual Funds
• Insurance Companies
• Financial Advisors

7
Government

• Promotes social change through tax legislation.
• Sponsors the Social Security and Medicare systems
  which act as a safety net for individuals.
• Has a vested interest in taxing deferred
  accounts.
• Sooner rather than later?

8
Perspective of the TextA Financial Planner

• To provide clients with appropriate retirement
  planning, the financial planner must have a
  thorough knowledge of
• Retirement Funding and Forecasting
• Qualified Plans
• Shift from defined benefit to defined
  contribution plans
• Tax-Advantaged Plans
• Nonqualified Plans
• Medicare, Social Security
• Employer-Provided Fringe Benefits