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Financial Awareness Series

Financial Awareness Series. Save for Your Future Budgeting Basics, Savings and Investing, Credit and Debt Plan for Your Future Retirement Lifestyle, Expenses, Income and Obstacles Protect Your Future Retirement Distributions, Maximizing and Protecting Income. Please Note.

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Financial Awareness Series

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  1. Financial Awareness Series Save for Your Future Budgeting Basics, Savings and Investing, Credit and Debt Plan for Your Future Retirement Lifestyle, Expenses, Income and Obstacles Protect Your Future Retirement Distributions, Maximizing and Protecting Income

  2. Please Note In today’s session, your CalSTRS benefits specialist will guide you through the basics of financial literacy and retirement planning. All specialists have CalSTRS benefits knowledge and are your resource. We’re committed to CalSTRS’mission: Securing the financial future and sustaining the trust of California's educators. CalSTRS benefit specialists are not financial advisers, so they cannot advise, recommend or influence your financial decisions. In addition, the information we provide is not intended to be financial advice and should not be considered financial advice.

  3. What to Expect? • The Retirement Puzzle • Retirement obstacles • Help with protecting your assets

  4. The Retirement Puzzle Explained

  5. Categorize Your Retirement Expenses

  6. Retirement Expense Worksheet #1, Albert and Marissa’s Expenses • Please turn to page 9 of your workbook

  7. Guaranteed and Non-Guaranteed Income

  8. Retirement Income Worksheet #2, Albert and Marissa’s Income • Please turn to page 13 of your workbook

  9. Putting Together the Pieces #3 • Refer to Albert and Marissa’s puzzle at the bottom of your flap • Notice any red flags regarding Albert and Marissa’s Retirement Puzzle?

  10. Potential Scenario, Potential Solutions

  11. Potential Scenario, Potential Solutions

  12. Potential Scenario, Potential Solutions #4

  13. Retirement Puzzle Obstacles

  14. Retirement Puzzle Obstacle

  15. Inflation Exercise • Turn to workbook pages 20-21 to complete the exercise • In 5 minutes we will discuss as a group how inflation impacted your grocery shopping

  16. The Impact of Inflation on Income

  17. Increasing Health Care Costs Higher or Lower? From 1999 to 2014, monthly healthcare expenses for those 65 years and older have increased by 90%? (monthly healthcare expenses include premiums, services, drugs, and supplies) Higher (just over 93%) Source: http://www.bls.gov/cex/

  18. Increasing Health Care Costs

  19. Succumbing to Overspending Higher or Lower? In the first two years of retirement, 40% of households spent more than what they had spent just before retirement. Higher (almost 46%) Source: https://www.ebri.org/pdf/briefspdf/EBRI_IB_420.Nov15.HH-Exp.pdf

  20. Succumbing to Overspending

  21. Reduce the Risk of Underestimating Expenses

  22. Retirement Puzzle Obstacle

  23. Market Volatility Exercise • Please turn to page 28 of your workbook

  24. Falling Interest Rates Three ways low interest rates hurt retirees: • Low returns on savings • Low rate on fixed annuities • Stokes future inflation

  25. Reduce the Misjudging of Financial Risk

  26. Retirement Puzzle Obstacle

  27. Working in Retirement The percentage of workers planning to work for pay in retirement stands at 67%. What is the percentage of workers that actually end up on working in retirement? • 23% • 52% • 76% • 40%

  28. Working in Retirement

  29. Underestimating Years in Retirement True or False? The average CalSTRS member can expect to be retired for 19.2 years. False

  30. Unexpected Financial Responsibility • Loss of spouse (death or divorce) • Provide financial assistance for family • An accident or illness causes a disability

  31. Reduce the Risk of Failing to Plan #5

  32. Avoiding Scams and Fraud • How to spot and avoid fraud • 8 Common Scams Targeting Retirees • Resources Source: Consumer Financial Protection Bureau (cfpb.gov)

  33. How to Spot and Avoid Fraud

  34. Identify the Persuasion Tactic “Because you’re such a good friend of mine, I’m going to give a break on my commission. Why don’t you join me for lunch, my treat, and we can iron out the details?” Reciprocity

  35. Identify the Persuasion Tactic “Trust me, you need to get in on this now or you’re going to miss out on this exclusive opportunity. The investment is going fast and you need to move on this right away to get that solid return.” Scarcity

  36. Identify the Persuasion Tactic “This investment is risk-free. You honestly can’t go wrong with it. The returns are guaranteed. You’d be crazy to pass this one up!” Phantom Riches

  37. Identify the Persuasion Tactic “As a specialist in senior living issues and an executive at this firm, I would never recommend something that doesn’t produce.” Source Credibility

  38. Identify the Persuasion Tactic “Do you know Betty and Jim from the club? They’ve invested in it, too. I’m telling you, everyone is getting in on this deal.” Social Consensus

  39. Top Scams Targeting Retirees • Turn to workbook page 40 to view the Top Scams • More information in the Resources section #6

  40. Pay For Financial Advice or Do-it-yourself? • Turn to workbook page 45

  41. How to Choose a Financial Professional • Turn to workbook page 47 #7

  42. What Are Your Next Steps? #8-10 • Review and complete your action plan • Sign up and attend next workshops: • Save For Your Future • Plan For Your Future

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