Hello, and welcome.

If you are one of the nearly 40 million Americans who are nearing retirement within the next decade, then you are likely tuning into this presentation for one of two reasons. One, reassurance and confirmation that you're headed in the right direction with all of your tees crossed and all of your eyes dotted or two, perhaps

You are not certain and you want to know what your next step should be to financially prepare you. Hi, I'm Jen Cooper Rivera, Senior Employee Education Advisor with PNC Institutional Asset Management. I want to let you know that NO matter which camp you fall into.

This presentation, looking forward to retirement, is designed to walk you through key financial areas of focus to help you prepare to pay for life's longest vacation, your retirement. Over the next 20 min, I'll be walking you through.

Three essential steps that are designed to help you understand and ideally improve your retirement outlook, starting with determining your total retirement budget, determining how much to withdraw and resources that will help you evaluate your overall financial strength as well as other important things to consider.

This retirement comes closer. Let's begin. If you are nearing retirement, it is important to carefully consider your future retirement income needs and how you will meet them. Seems logical I know, but for many, it really is about knowing where to start.

And it begins with step one. Determining your total retirement budget. Step one is the most important step because if you know this, which is your sources of retirement income, then the next steps are easier.

Shown here are six primary sources of retirement income that's available to most all of us. Social security, with 88% of workers expecting to receive it as a source of income for retirement and 94% of retirees actually using it now as a source of income. Employment.

Yes, working through retirement, e.g., a part time job, 73% of workers are expecting to do this, but only 23% of those who are retired today are using that as a source of income. So why the disconnect?

For many, it's health reasons because while many may plan to continue to work through their retirement, health issues may eventually prevent that from happening because health does deteriorate as we age. The 2nd most expected retirement income source, not surprisingly, with 84% expecting to use it.

As retirement income is the employer sponsored retirement savings plan like perhaps your 401(k) or 403(b). IRAs or other personal savings and investments you may have could also be a source of income for you in retirement. And if so.

Be sure to include them in your retirement income budget forecast, including any pension income if you have it. Social Security, as a primary source of income, it's still here and it's currently still paying. Have you analyzed your Social Security options yet?

Yes, you do have options. If you are eligible to receive Social Security, the timing of when you begin to take it can affect how much you could expect to receive as a payment each month. Generally speaking, you can begin taking Social Security as early as age 62.

But you will receive it at a reduced monthly benefit by about 6% for each year that you take it before your full retirement age, and that age depends on your birth year. Also, if you continue to work while collecting Social Security before your full retirement age.

Then your monthly benefit maybe reduced if you exceed certain IRS annual income limits that are set each year. But if you can wait and delay collecting your Social Security benefit until the year's.

After your full retirement age, then your monthly benefit can increase by 8% for each year that you wait to take it until a maximum age of 70. When determining your retirement budget, some of you.

Delaying Social Security maybe a good idea, and it may help you close any income gap or shortage that you might have forecasted when you did your monthly retirement bus budget. For others, you might prefer to collect your Social Security benefits sooner rather than later, even though it maybe at a reduced monthly amount.

Work with a financial advisor. The decision on when to collect Social Security may require care careful calculation. There is also a benefit calculator that can be used to help you decide. It can be found on the Social Security website.

At SSA.gov. When planning for a secure retirement, sometimes it's best to plan for the worst and hope for the best, especially as it relates to the future of social security as an income source.

While a large part of retirement income today is Social Security with the average retiree receiving 40%, having multiple income sources in addition to Social Security can help create a more secure retirement. Social Security reserves are expected to be exhausted by 2023, which could mean.

Be less reliance on it. And that's why it's important to have other income sources like those mentioned earlier. In determining your total retirement budget, I've talked about money coming in. Now let's discuss money going out. What expenses are you likely to have?

Imagine your lifestyle in retirement, make a list. Think about it. What expenses will be reduced? What will probably even go away, like maybe a mortgage payment or credit card debt? What will you spend your money on?

Will your lifestyle change? Will you live larger with expensive hobbies or traveling more or will you spend less than what you currently do now because you no longer have to work for, workflows or commuting costs, e.g.? How you spend your time in retirement is how you will spend your money in retirement. So plan for it.

And don't forget to factor in taxes and inflation. Social security checks can be taxed and inflation will stay with you through retirement as we know, it can be unpredictable. So make sure that any calculations that you perform account for those variables and the assumptions.

If you are not sure whether you have the right assumptions or variables or calculations, work with the financial pro professional to help you set realistic expectations. When creating your budget, list out your essential.

And your non essential expenses, just as you perhaps do now, but this time you're creating what we call a pro forma budget, which is a future budget for a lifestyle that's coming up, but not here yet. Essential expenses, like some of those shown here are typically reduced in the early phase of retirement.

The exception to that is healthcare and long term care. Those do not go down historically. In fact, they tend to increase substantially as retirement continues. Non essential expenses are also typically something that we see increase in the early parts of retirement years, the first few years.

But they do tend to level out and slow down as we get later into our retirement years. Your budget is going to change. Just begin with what you know now, but whatever you do, please do not underestimate one of the largest expenses in retirement and that is.

The cost of healthcare. Healthcare is typically the largest expense for a retiree in retirement, and those costs continue to go up. Medicare does help with the costs of those who are available or able to receive it.

You would need to be age 65 year older. You're automatically enrolled in Medicare if you're receiving Social Security benefits at that time. And while Medicare does cover a large portion of healthcare costs, it doesn't cover everything and it rarely pays for long term care.

So how will you cover the rest? There are supplemental sources you can begin securing now, perhaps like funding an HSA health, health savings account or later Medigap extra coverage or purchase long term care insurance. Now the long term care insurance plans can be purchased through an insurance agent or a financial advisor. So far, I've talked about income sources, expenses in retirement being the first step, determining what those are, what they could be.

With this next step, having it in place for your retirement plan after that foundation has been set, is determining how much to withdraw, which is step number two. Withdrawal strategy considerations are important because these factors will determine the best timing or the wind as well as the how much to withdraw during retirement.

The goal is for your money to last as long as you do. Longevity is a big factor, and it's great. As Americans, we are living longer, but it also means that it's just that much longer to be without a paycheck in retirement. So we need to withdraw strategically and increase the.

Chances of our money lasting as long as we do. While in retirement, you will need to rely less on market dynamics. Markets change rapidly, so relying on historical patterns may not be appropriate. Why? Well, because remember, if we are in retirement.

We are now withdrawing our assets and we need our money to be there. We no longer have the luxury of waiting for any anticipated market recoveries. Goals and priorities are different from person to person. They also evolve over time. So any withdrawal strategies you implement will need to change with them. In a moment, I'm going.

To share two popular withdrawal strategies for you to consider, but first, you'll need to have a firm graph on this important concept.

And that is asset allocation. Asset allocation is your mix of the amount of bonds, cash and stocks also known as equities in your retirement investment portfolio. Having more equities may allow for a higher withdrawal rate later.

And throughout your retirement. But for that strategy, it should only be implemented after some careful consideration of the following factors for you. Determining how much to withdraw, first, you've got to know your time horizon. Certainly it is not possible to know it.

Exactly how long your retirement will be, but you can determine a general range based on family longevity or maybe mortality tables and the assumptions that are often built automatically into retirement income calculators. Work with the financial professional to determine and monitor the appropriate asset allocation mix for you. This may gradually change over time, but perhaps not as drastically as was needed in the years leading up to retirement. Once you know your time horizon and your asset allocation, you may now be able to establish an appropriate withdrawal rate.

And there's several methods, but if you have a personal financial advisor, then utilize them. They should be able to help you with this next step. In determining how much to withdraw, remember the end goal is to make your retirement assets last as long as you do.

So start by asking yourself, how much can I withdraw each year without the risk of a, out living my retirement assets? Do you know? Some of you do, you may have heard of it. It's called the 4% rule. And it is a great rule of thumb. It's easy to remember, and it's a starting place perhaps for you to.

Determine your withdrawal strategy. There are two basic options for receiving systematic withdrawals through retirement. One is to set a dollar amount. The second is to set a percentage of your account value.

The dollar amount approach is where the withdrawals are predictable, and they can be a fixed dollar amount each month or each year. It's easy to remember. But the downside to this is that in weaker markets, you may deplete your funds too quickly and withdrawal too much too soon.

The other is the percentage approach, and this is where the popular 4% role can come into play. Studies have shown that if you do not withdraw more than 4% of your earmarked retirement assets within each year during retirement, then your ability to prolong or preserve your account balance, keeping the principle intact is greater than.

You withdrawing a larger percentage amount. The sweet spot to do this has historically been.

4% E.g., if you have $500,000 saved and you don't want to withdraw more than 4%, that would be $20,000 in one year, and that would end up being $1200 each month, give or take.

With the percentage approach, you may have more control over the rate that you, withdraw or draw down on with your retirement assets, but you really should try to aim for 4%, in some years it may need to be higher and others it can be lower. It really does depend on market returns and investment returns.

The problem with this approach though, as you can tell already, is that.

It can be difficult to manage because of the adjustments that need to be made periodically. So it's your retirement. You have spent the years planning for it. It's now time to make sure that the money you've saved lasts as long as possible and that does require, which

drawing from it in the most tax efficient way possible. But since no one strategy is right for everyone, please be sure to discuss the tax ramifications of various withdrawal strategies with the financial advisor or a qualified tax advisor.

And then next consider your order of withdrawals. When you each reach age 73, you may be required to begin taking withdrawals from your pretax retirement accounts and IRAs.

Required minimum distributions are not required from Roth accounts, so it may be better for you to wait before pulling from the Roth balances and give time for your tax-deferred assets to continue to grow over time. Generally speaking, when it comes to the order or the sequence of which bucket of. assets to begin with drawing first, the rule of thumb is.

To draw on your taxable assets first your taxable accounts and assets are non-retirement accounts, e.g., a regular savings account or an investment account. Next, you can move into those tax deferred vehicles like your 401(k)s, 403(b)s, Traditional IRAs, and then finally.

If you have them withdraw from any tax exempt accounts, these are investments that are tax free or free from tax at the federal, state, or local level. E.g., municipal bonds, municipal bond funds, or even municipal exchange traded funds if you have those.

When you retire, you'll have decisions to make on the best method for withdrawing from each of the income sources that maybe available to you. Your employer sponsored retirement plan may allow you to leave the money in the plan and not take it until you're ready to withdraw it depending on the type of plan you have and.

Your employer, you may be able to take periodic withdrawals even after retirement, but most plans allow for a lump sum distribution, which of course you can take and roll it into an IRA at a financial institution or a brokerage.

Pension income is a regular payment that you may receive throughout your retirement from either an employer, the government or military. Every pension is different. So be sure to check out all of the distribution options that comes with it, including any survivor benefit options if it offers.

This also applies to annuities as well. An annuity, which is similar to a pension, can also provide a regular payment to you throughout retirement. You can choose to withdraw in one month sum or over a certain period of time through regular or irregular withdrawals. Your annuity is purchased at.

A Contract from an insurance company, and this allows you to opt in for annuitization, which really means the account value.

Is converted into a stream of payments providing you with guaranteed periodic income. You might also receive income from other sources like real estate investments, veterans' benefits, and investment income. And if you like many retirees today, as I mentioned before income, coming from employment, part-time or full-time jobs. That income can be factored in as well.

The closer retirement is, the more you may need to take bold moves to prepare yourself. This includes continuing to save and invest up to and yes, even through retirement. In addition to saving as much as you can, if you have a shortfall, perhaps taking action to pay off mortgage or downsizing your home that can help close any shortfall or gaps that you may have saw.

After you calculated your pro forma retirement budget remember what your budget will look like as in retirement before you get to retirement. Remember inflation still exists. So consider maintaining a small portion of stocks in your investment portfolio.

Yes, they maybe riskier, but over the long term, they have been one of the best hedges against inflation and they have provided higher returns than bonds. If your health allows, consider working part time or full time for a few extra years. And again.

As part of envisioning your future retirement budget, plan to reduce any non essential spending today in preparation for freeing up cash flow in the future for retirement. Any well meaning budget can go off the rails unless you are prepared for emergencies. So if you haven’t done so already. Let’s create an emergency savings account be your very first step.

After that foundation is laid, you can consider boosting your retirement savings contributions. The IRS limits for 2024 are $23,000 for deferral contributions for those under the age of 50, and for those 50 or over an additional $7,500 can be made as catch up contribution. for a total of $30,500.

There's NO age limit for making contributions to a Traditional IRA or Roth IRA account. Having and keeping your estate planning documents shown here, up to date and accessible for loved ones is important even before retirement.

But as you near retirement and especially through retirement, it is even more important. So check that these documents shown here are in place, that they're updated, and that your loved ones know where to find them, should they need to.

Speaking of a estate planning and other important considerations, it is now a good time to ask yourself these questions. If you have life insurance, do you need it? Do you still need it? Because for some it can play an important role for example liquidity and estate planning. But for others the expense of the premium may out way the benefits of the policy. Be sure to evaluate the pros and the cons before discontinuing any coverage that you may currently have.

Another question you should be asking, who are my beneficiaries? Are my designations current? What about a will? Do you have one? If not, now is the time to write one. And that advice also applies to those of you who may also still may not have those foundational estate.

Planning documents I just showed earlier, e.g., the health care or financial power of attorney. Be sure to talk about these documents with your spouse children or any named errors in your preparation of them.

Something else to consider. Are you protected against elder fraud and identity theft? If you have not yet taken these steps shown here, today is the day. Elder fraud and identity theft occurrences are becoming more frequent. You can protect yourself by taking some or ideally all of the following steps shown here. The best way to combat identity theft is to take steps to prevent it from occurring in the first place. Looking

Things that you want to do and now you get the time back with which to do it.

Get ready by reviewing each of these three steps covered in this presentation and apply them to your own circumstances. If you need help, there are many resources, including a few of them shown here that are available to help you.

Especially as you are nearing life's longest vacation. Now is the time to solidify and begin making real all that you've perhaps been working towards your whole career. It's your retirement. Make plans to secure it. And enjoy it. Thanks for listening.

Okay.