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Retirement Income Planning
10 Questions to Ask Before You Retire
SunAmerica may be a sponsor of this seminar. As a sponsor, it would have contributed a fee or services to help defer seminar costs. During the course of this seminar, your financial advisor may recommend variable annuity products that are issued by SunAmerica. Neither SunAmerica nor its representatives may
provide individual investment recommendations or advice. SunAmerica and the Broker Dealer that employs your financial advisor may or may not be affiliated. Please see your financial
advisor for details.
What do I want to do in retirement? What do I want to do in retirement?
PLANNING TIP: Take the time now to think about how you want to spend your retirement.
1
When do I want to retire? When do I want to retire?
PLANNING TIP: Choose short-, intermediate- or long-term investments to match your income needs
Your time horizon is an important factor in determining what investments or
strategies can be used to help achieve your retirement goals
2
How much will I need? How much will I need?
• One study estimates that the average retiree will need 15.7 times their final pay in total retirement resources*
• Assuming a paycheck of $100,000, they’ll need $1.57 million in retirement savings!
PLANNING TIP: Use 70-80% of your current salary to estimate your annual income needs in retirement.
3
*Source: Hewitt Associates, May 3, 2010
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, October 2010.
PLANNING TIP: Focus on investments that can help you generate more income in the early years of retirement
When will I need the most income? When will I need the most income?
4
Overall retirement spending is highest early in retirement and declines with age!
Average Annual Expenditures by Age
How long will my income last? How long will my income last?
5
If you and your spouse are now age 65, there’s a:
PLANNING TIP: To help ensure you won’t outlive your income, plan on a retirement lasting 30 years or more
• 50% chance that one of you will live to age 92• 25% chance that one of you will live to age 97
Source: Society of Actuaries, Annuity 2000 Mortality Table
Do I have an income gap? Do I have an income gap?
Here’s how you can find out: 1. Estimate your retirement expenses
2. Calculate the income you expect from guaranteed sources like Social Security
3. Determine if you’re facing an income gap
PLANNING TIP: Obtain Social Security estimates by using the Benefit Calculator on the Social Security
website (www.ssa.gov/estimator)
6
Source: Dow Jones Industrial Average, daily closes, 1/2/1900-12/31/2011
Stock Market Declines Since 1900
How can I lessen the impact of a down market on my income?
How can I lessen the impact of a down market on my income?
PLANNING TIP: Use investments or strategies with “an income safety net”
7
Will my income keep up with inflation and taxes?Will my income keep up with inflation and taxes?
PLANNING TIP: Capitalize on tax-advantaged products that can help you generate rising income in any market
9.8%
5.7%
3.6%4.6%
0.7%
-0.7%-2%
0%
2%
4%
6%
8%
10%
12%
Stocks Bonds Cash
Before Taxes and Inflation
After Taxes and Inflation
Real rates of return, 1926-2011
Bonds and cash are unlikely to offer the growth potential necessary to achieve your retirement goals!
Source: Ibbotson Associates, 2011. Stocks are represented by the S&P 500 Index; bonds by 20-Year U.S. Government Bonds; cash by 30-day U.S. Treasury Bills; and inflation by the Consumer Price Index. Stocks are often subject to significant price fluctuations and therefore an investor may have a gain or loss in principal when shares are sold. Government bonds and Treasury Bills are subject to interest rate risk but are backed by the full faith and credit of the U.S. government if held to maturity. The data assumes reinvestment of income and does not account for transaction costs. Federal income tax is calculated using the historical marginal and capital gains tax rates for a single taxpayer earning $100,000. No state income taxes are included.
8
When should I start taking Social Security payments? When should I start taking Social Security payments?
• Taking benefits early at age 62 may reduce your initial payment by as much as 30%
• Deferring payments until after your Full Retirement Age (ages 65-67) can increase your benefits by up to 8% per year
Source: Social Security Administration
PLANNING TIP: Waiting can help maximize your retirement income
9
How can I guarantee more income for life? How can I guarantee more income for life?
PLANNING TIP: Consider supplementing your guaranteed income with investments like variable annuities
10
Sources of Retirement Income
Source: Income of the Aged Chartbook, Social Security Administration, April 2010
Creating your Personal Income PlanCreating your Personal Income Plan
• CDs/Treasuries• Bonds• Dividend-paying stocks• Fixed annuities• Immediate annuities• Variable annuities
• Mutual funds • Systematic withdrawals• Income buckets• Delaying Social
Security• Post-retirement job
There are many income investments and strategies to consider:
We’ve highlighted a few of these investments here…
BondsBonds
Income Benefits• Predictable income• Opportunity for fixed
rate of return• Potential income
protection• Potential tax
advantages
Potential Disadvantages• Low current yields• Income sensitive to
interest rate changes, as well as credit, default and other risks
• Income may not keep up with inflation and taxes
Dividend-Paying StocksDividend-Paying Stocks
Income Benefits • Dividend income• Growth potential• Qualified dividends
may be taxed at a lower rate
Potential Disadvantages• Income and principal
sensitive to market risk• Dividend income may
be reduced or eliminated in tough economic times
Mutual FundsMutual Funds
Income Benefits • Broad diversification• Professional
management• Potentially better
cash flow • Opportunity for more
income and growth potential
Potential Disadvantages• Same risks as those of
the underlying assets• Unlike individual
bonds, bond funds don’t have a fixed yield or a contractual obligation to repay principal
Variable Annuitieswith an optional income benefitVariable Annuitieswith an optional income benefit
Income Benefits• Tax deferral • Income flexibility• Guaranteed lifetime income
through annuitization or optional benefits
• Some optional benefits guarantee rising income for a certain number of years
Potential Disadvantages• Income may be guaranteed,
but principal continues to fluctuate with the market
• Potentially higher fees and charges
• Withdrawal charges• Possible loss of investment
control and access upon annuitization
Systematic WithdrawalsSystematic Withdrawals
Income Benefits• Make withdrawals based on
strategy, not emotion• Generate income that has
the potential to outpace inflation
• Provide a level of income that can help maintain your retirement lifestyle
Potential Disadvantages• Fluctuating income• You may need to take less
income to help ensure your assets are not depleted
Which income investments or strategies are best for you?
We’ll work together to come up with an income plan that’s personalized for you.
Thank You for Attending!Thank You for Attending!You can obtain a prospectus for the variable annuity you may be considering from the seminar speaker or by calling 1-800-445-7862. The prospectus contains the objectives, risks, fees, charges, expenses and other information regarding the contract and underlying funds, which should be considered carefully before investing. Please read the prospectus carefully before investing. Variable annuities are designed for long-term retirement investing. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Early withdrawals may be subject to withdrawal charges. Partial withdrawals may also reduce benefits available under the contract as well as the amount available upon a full surrender. An investment in a variable annuity involves investment risk, including the possible loss of principal. The contract, when redeemed, may be worth more or less than the total amount invested. Guarantees that help protect against market downturns are optional, subject to conditions, limitations and an additional fee. All contract and optional benefit guarantees are backed by the claims-paying ability of the issuing insurer.
This material was prepared to support the marketing of the SunAmerica Variable Annuities. Please keep in mind that neither SunAmerica, nor its distributors and representatives, may give tax, accounting or legal advice. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. Please seek the advice of an independent tax advisor or attorney for more complete information concerning your particular circumstances and any tax statements made in this material.SunAmerica Variable Annuities are issued by SunAmerica Annuity and Life Assurance Company. Products are marketed by SunAmerica, The Retirement Specialist. The purchase of a variable annuity is not required for and is not a term of the provision of any banking service or activity.
Distributed by SunAmerica Capital Services, Inc., 21650 Oxnard Street, Suite 750, Woodland Hills, CA, 91367, 1-800-445-7862.
M5170SS1 (3/12)Not FDIC or NCUA/NCUSIF Insured
May Lose Value • No Bank or Credit Union Guarantee • Not a Deposit • Not insured by any Federal Government Agency