This material is not a recommendation to buy, sell, hold, or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation.
Investing involves market risk, including possible loss of principal and possible fluctuations in value. Products may not be available in all states.
The Nationwide Group Retirement Series includes unregistered group fixed and variable annuities and trust programs. The unregistered group fixed and variable annuities are issued by Nationwide Life Insurance Company. Trust programs and trust services are offered by Nationwide Trust Company, a division of Nationwide Bank. Nationwide Investment Services Corporation, member FINRA. Nationwide Mutual Insurance Company and Affiliated Companies, Home Office: Columbus, OH 43215-2220.
Nationwide, My Interactive Retirement Planner, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2017 Nationwide.
PNM-2788AO.4 (11/17)
• Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution• Not insured by any federal government agency • May lose value
Budgeting
Benefits of contributing
Increasing your contribution
Importance of retirement plans
Why should I contribute to my retirement plan?
4
Don’t be a statistic.
Americans aren’t saving enough.
1 http://www.statisticbrain.com/american-family-financial-statistics.2 http://www.statisticbrain.com/retirement-statistics.3 http:// www.statisticbrain.com/retirement-statistics 4 http://time.com/4175048/401k-catch-up-contributions/?iid=sr-link6.
25% of Americans
have no savings. 1
38% of Americans aren’t currently saving. 2
80% believe they won’t
have enough money in retirement. 3
Only 9%contribute the maximum. 4
Importance of retirement plans
5
Less than half of Americans
have calculated how much they will
need for retirement.5
5 http://www.dol.gov/ebsa/publications/10_ways_to_prepare.html.
How much you’ll needImportance of retirement plans
6
6 Your Retirement Lifestyle, kiplinger.com.
78%
How much you’ll need
What’s it going to take?
This is how much of your pre-retirement income is needed to maintain your lifestyle in retirement.6
amount needed to maintain
Importance of retirement plans
7
How much will you need?
10-15% of your annual compensation7, which should equal: 1x by age 35
3x by age 45
5x by age 55
8x at retirement8
7 source: https://www.fidelity.com/viewpoints/retirement/how-much-money-should-I-save8 source: https://www.fidelity.com/viewpoints/retirement/how-much-money-do-i-need-to-retire
How much you’ll needImportance of retirement plans
8
9 Social Security Planner: Learn About Social Security Programs, Social Security Administration (April 2013).10 http://www.ssa.gov/oact/tr/2012.
Social Security
Social Security will likely not cover your expenses.• Social Security benefits typically cover —
at most — 40% of pre-retirement income9
• Social Security can only pay full benefits to retirees until 203310
• Post 2033 through 2086, Social Security can cover 75% of benefits promised10
Importance of retirement plans
9
Full retirement
age
Early retirement
age
Deferredretirement
age
Social Security
Options for takingSocial Security benefits:
– permanently decreases payment
– permanently increases payment
Importance of retirement plans
Importance of retirement plans
Tax benefits
Increasing your contribution
Benefits of contributing
What are the benefits of contributing to a retirement plan?
11 Tax benefitsBenefits of contributing
Tax-deferred investing• Taxes are paid at
withdrawal, not when contributing
• Money has more potential to grow
12 Tax benefits
Other tax benefits:
Potential to be in lower tax bracket at retirement
Contributing to plan lowers taxable income
Benefits of contributing
13 Tax benefits
The power of tax-deferred investingTake a look at the difference between the taxable and tax-deferred account.
Taxable Investment
Tax-deferred Investment
$115,555
$57,581$46,960
$15,822$14,356
$200k
$150k
$100k
$50k
10 years 20 years 30 years$0k
The power of tax-deferred compoundingTotals shown reflect a $100 monthly investment, an 8% annual return, a4% annual wage inflation and a 25% marginal federal income tax bracket. From the taxable investments, taxes are taken each month from deposits and annually upon gains. Taxes are taken on the tax-deferred investment’s end balance. This is a hypothetical compounding example and is not intended to predict or project investment results of any specific investment. Investment return is not guaranteed and will vary depending upon your investments and market experience. If costs were reflected,the return would be less.
Benefits of contributing
$158,981
14 Tax benefits
• Incentive from IRS that gives credit to eligible participants for contributing to a retirement plan11
• Credits 50%, 20% or 10% up to $2,000 ($4,000 if joint filing)11
11 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit
Tax Saver’s Credit
Benefits of contributing
15 Compounding interest
The power of compounding interestThis mathematical principle allows investments to accrue potential earnings.
Benefits of contributing
-
-
16
Compounding interest benefits everyone.
Compounding interest
Those in early stages of
retirement saving have a longer time horizon.
Those nearing retirement can
take advantage of catch-up
contributions.
Benefits of contributing
17
The average company contribution is now
4.5% of pay.12
Employer match
Employer matching helps retirement planning.
86% of companies
offer a matching program.13
Only a third
of employees take advantage of full company match.14
12 http://www.psca.org/401-k-plans-are-working13 http://www.transamericacenter.org/docs/default-source/resources/center-research/tcrs2013_sr_retreadimperative.pdf.14 http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/RetirementAccounts/P121889.
Benefits of contributing
Importance of retirement plans
Benefits of contributing
The Learning CenterIncreasing your contribution
Why should I increase my contribution?
19 Save more.Increasing contribution
Contribute as much as possible.
Maximum contribution limit
for 2017 is
$18,000.
Catch-up contribution for those age 50 and above is
$6,000.15
15
15 IRS Announces 2017 Pension Plan Limitations, Internal Revenue Service, IR-2016-141, Oct. 27, 2016
20
• Set aside retirement savings before paying other expenses
• Automatic deductions from your paycheck make it easy
Pay yourself first.
Save more.Increasing contribution
21
Auto-increase your existing contribution
by 1% each year
Save more.Increasing contribution
Other tips for saving more for retirement:
Save part of your annual raise or bonus
Increase savings after
paying off debt
22 Save more.Increasing contribution
Small increases go a long way and have little impact to your paycheck.
Salary 9% 10%$25,000 $220,178 $244,642$50,000 $440,356 $489,284$75,000 $660,534 $733,926
Assumes biweekly deferrals of 9% and 10%, accumulated at 7% interest for 30 years.
23 The Learning CenterIncreasing contribution
Your online account offers other resources to help you prepare for retirement:
Paycheck impact
calculator
Future value
calculator
Roth retirement plan
analyzer
24
My Interactive Retirement PlannerSet a goal in just 10 minutes.
My Interactive Retirement Planner SMIncreasing contribution
SM
25
Points to remember
Talk to your Plan Sponsor
about making or increasing contributions to your plan.
Nationwide’s online tools and calculators
can help you see the impact of your contributions.
My Interactive Retirement Planner
can be a helpful tool in determining how much you will need in retirement.
Your company’s retirement plan
is important, and so is increasing contributions to it.
SummaryIncreasing contributions