© 2017 Million Dollar Round Table Million Dollar Round Table 325 West Touhy Ave. Park Ridge, IL 60068 USA

2017 MDRT Annual Meeting e-Handout Material Title: Do Your Clients Know What Their Income Will Be

in Retirement? They Should! Speaker: Clay Gillespie, CFP, CIM Presentation Date: Monday, June 5, 2017 Presentation Time: 2:00 - 3:00 p.m. Session Room: Hilton - Orange Ballroom DE The Million Dollar Round Table® (MDRT) does not guarantee the accuracy of tax and legal matters and is not liable for errors and omissions. You are urged to check with tax and legal professionals in your state, province or country. MDRT also suggests you consult local insurance and security regulations and your company’s compliance department pertaining to the use of any new sales materials with your clients. The information contained in this handout is unedited; errors, omissions and misspellings may exist. Content may be altered during the delivery of this presentation.

5/17/2017

1

Clay Gillespie, CFP, CIMDo Your Clients Know What Their Income Will

Be in Retirement? They Should!

Retirement is not about sitting on

the beach looking at sunsets.

That is called a vacation, not retirement.

“You retire once and I help people retire every

day, so I have seen the good and the bad, both

emotionally and financially about retirement.”

5/17/2017

2

Retirement?

Transition into retirement

What to do – golf?

The first 2 years

Emotional Risks

Loss of Identity

Boredom

No longer feeling of value

Grey Divorce

Retirement Planning Issues

Longevity Risks

Inflation Rate

Market Volatility

5/17/2017

3

Withdrawal Rate Risk

Risk of Loss of mental capacity

Health Risks

Retirement Planning Issues

Life Expectancy

Male age 65: 19 years – (age 84)

Female age 65: 22 years - (age 87)

Couple age 65: 26 years - (age 91)

Therefore, you should plan for

your clients to live beyond their life expectancy.

5/17/2017

4

Inflation Rate

“You will need to spend more

every year to maintain your standard of living.”

Example:

At a 4% inflation rate, you would

need $109,556 in 20 years to buy what you can purchase today

for $50,000.

Market Volatility

When you are working and accumulating

retirement savings, market volatility is dealt with by having a properly diversified portfolio.

Different in Retirement?

Investor Behavior

5/17/2017

5

Withdrawal Rate Risk

One of the greatest risks in retirement

income planning is having the stock market drop substantially just before, or just

after, you retire.

Accumulation Math

Accumulation Math

$100,000 investment after 10 years = $196,715

5/17/2017

6

Withdrawal Math

$100,000 investment – withdraw $7,000 / year

Withdrawal Math

$100,000 investment – withdraw $7,000 / year for 10 years

Withdrawal Math

$100,000 investment – withdraw $7,000 / year

5/17/2017

7

Withdrawal Math

$100,000 investment – withdraw $7,000 / year

Mental Capacity & Estate Planning Risks

Planning versus default (Government)

Family Meeting?

Health Care Risk (LTC?)

Client Management Strategy

First Meeting

Charge a fee?

• Give them a chance to say no

• Easier Implementation

• Differentiate

• Prequalify

5/17/2017

8

Over a typical 10 year period based on investment

returns - you’re going to love us twice, hate us twice, and be indifferent to us six times.

What this actually means is that over a 10 year period the market typically goes up dramatically twice (the years you love us), goes down dramatically twice (the years you hate us) and six of the 10 times you get an average return and that’s when you think we are doing an “ok” job.

Thus, you need to have a strategy to deal with

typically widely varying investment results”

5/17/2017

9

Client Management Strategy

IPS

Retirement Income Illustration

• Real Rate of Return, Life Expectancy, etc.

Financial Planning Issues (Wills, POAs, Debt, Insurance)

Income Strategy

Income Strategy

1. Invest one year’s income in a money market account

2. Invest one year’s income in a 1 year bond or GIC

3. Invest one year’s income in a 2 year bond or GIC

4. Investment the remainder in a diversified portfolio based on the IPS (a document that analyses risk tolerance and key investment objectives)

5/17/2017

10

Ongoing Monitoring

Benchmark against the assumptions made in the financial plan

Redo illustrations every two years

Annual Meetings

Quarterly Updates

Retirement Planning Issues

Initial withdrawal rate

Stages of retirement

Life annuities

Current strategies

Conclusion

Educate your clients on both the emotional and

financial aspects of retirement.

You need to start speaking the language of retirement

5/17/2017

11

Questions?