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Retirement Planning and Employee Benefits for Financial Planners

Retirement Planning and Employee Benefits for Financial Planners. Chapter 1: Introduction to Retirement Planning. Interested Parties. Employees Employers Professionals Government. Employees. Money work instead of you Financial independence View benefits as part of overall compensation.

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Retirement Planning and Employee Benefits for Financial Planners

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  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 Text:A 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

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