section 1 - The American College Online Learning Center

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(3) Is the client willing to make changes to his or her lifestyle in the future?(4) Can the client make adjustments to his or her current lifestyle to improvehis or her retirement lifestyle?2. Bridging the period of saving for retirement to the retirement income phasea. Saving is simply postponing consumption. But people value consumption todayover consumption later and this creates one of the central paradoxes of retirementincome planning, especially if the client cannot visualize the future.b. The planner and client must work together. Together they can improve futureconsumption by reducing current consumption.c. If the planner can bring about the spending vs. saving decision in a way that theclient can visualize it, then those clients are much more likely to listen and abideby the plan.3. Planning Point: Planners should ask clients to identify categories for different typesof expenses.a. Are the expenses for essential needs, conveniences, or for luxuries?b. Necessities are expenses that are important to sustain good health.(1) Health care(2) Nutrition(3) Exercise(4) Good shelter(5) These expenses are self-identified.c. Another way to frame necessities is what expenditures allow us to live and die indignity. For some clients, covering essential expenses means that they will nothave to rely on others.d. Separately identify convenience items and luxury expenditures that would benice to have. It is also helpful to have a priority plan for which of these expensesare most importante. Depending upon the retirement income approach taken, outside macroeconomicfactors (such as the variability of returns on the stock market) can result in somevariability of income. It is important for the client to understand this and also “buyinto” this possibility or choose an approach that has more income certainty.f. The reality of retirement income planning is that adding more structure anddiscipline around expenses creates a more stable financial future(1) Which can translate to happiness and contentment in retirement(2) Financial security is another way to take care of your health as worry aboutfinances are a factor that can lead to depression and illness.SECTION 2: SOURCES OF INCOMELO 2-2-1: Identify sources of income currently available to meet retirementincome needs1. Inventory income sources2. Planners need to consider the following questions about a source of income:a. What sources of income are available?b. How much will be paid?2.8
c. How long will the income last?d. Is the income source reliable?e. Does the income source have cost-of-living protection?f. Is there flexibility in payout options or other features relevant to the retirementincome plan?3. Social Securitya. Amountb. Durationc. Reliabilityd. Other(1) 86.3 percent of those age 65 or older receive Social Security benefits. 1(2) An individual may be eligible for several types of benefits over his or herlifetime including a worker's benefit, and if married or divorced, a spousalbenefit or a widow's benefit.(3) Planners should note that the general rule for Social Security benefits isthat clients eligible for multiple benefits get the larger benefits but do notget both sets of benefits.(4) In some cases, retirement benefits are also available for dependentchildren and survivor benefits may be paid to other family members.(5) Determining the amount of a client's Social Security benefit is not quiteas easy today as before because Social Security has stopped sendingout benefit estimates. Social Security has a detailed calculator which ismuch better at getting a more accurate estimate based on the client'sunique situation.(6) A client can quite easily obtain the same information that was on theestimate, by going to the Social Security website, using the estimatorcalculator and entering his/her Social Security number.(7) However, this calculator does not take into consideration the governmentoffset provisions for those who have worked outside of the Social Securitysystem for part of their working careers.(8) Social Security also has a detailed calculator which is much better atgetting a more accurate estimate based on the client's unique situation.(1) Social Security retirement benefits are payable for life.(2) Both spouses in a couple can receive Social Security benefits. At thedeath of the first spouse, the survivor can receive the deceased spouse’sbenefit if it is higher. This is one reason to encourage the higher wageearner to defer benefits since this is the benefit that is paid over the jointlives of the couple.(1) Reliability is definitely a concern with Social Security. The 2011 TrusteesReport indicated that according to current estimates, in about 2036, SocialSecurity would not have sufficient assets to pay all promised benefits.At that time, Social Security will then only have the income to pay aboutthree-fourths of promised benefits.1. Income of the Population 55 or Older, 2010, Social Security Administration, March 2012.2.9
Page 1: Huebner School SeriesHS 353 STUDY O
Page 6: THEAMERICANCOLLEGE.EDUThrough The A
Page 10 and 11: c. But it is more comprehensive bec
Page 12 and 13: (3) Work part-time during retiremen
Page 14 and 15: SECTION 2: UNDERSTANDING RETIREMENT
Page 16: d. Solutions(1) The model considers
Page 19 and 20: . Other sources of retirement incom
Page 21 and 22: c. Another option for solving cash
Page 23 and 24: (b) Net worth statements that ident
Page 25 and 26: d. Be ready to reengage with the cl
Page 27 and 28: (b) In financial planning(c) In inv
Page 29 and 30: j. Planning Point: Planners can use
Page 31 and 32: e. We also need them to have a bett
Page 33 and 34: Assignment 2IDENTIFY RETIREMENT INC
Page 35 and 36: (2) Income4. Determining risk toler
Page 37 and 38: collaborative experience which focu
Page 39: 6. Asset allocation and risk tolera
Page 43 and 44: . Durationc. Reliabilityd. Other6.
Page 45 and 46: c. Supplemental Security Income (SS
Page 47 and 48: . An unused emergency fund can supp
Page 49 and 50: 5. Inflation(2) The expense method
Page 51 and 52: Assignment 3CHOOSE APPROPRIATE STRA
Page 53 and 54: . Save as a percentage of income an
Page 55 and 56: (1) Note that 38% of second income
Page 57 and 58: (4) The AARP website has a national
Page 59 and 60: 4. Contributions to IRAs and Roth I
Page 61 and 62: carve out the nondeductible contrib
Page 63 and 64: (2) Plus salary deferrals (for an i
Page 65 and 66: a. Example:(1) Save $10,000 in 25%
Page 67 and 68: (a) This requires knowing four fact
Page 69 and 70: . Solution(1) Li and Lin Lin are bo
Page 71 and 72: (1) The increase in dollar amounts
Page 73 and 74: 9. In some circumstances, an indivi
Page 75 and 76: 2. Reverse mortgage basicsa. Almost
Page 77 and 78: 5. Planning considerations(b) Keep
Page 79 and 80: (2) Some funds that are promoted as
Page 81 and 82: (1) Berstresser, Chalmers, and Tufa
Page 83 and 84: RESOURCES FOR COMPETENCY 3: CHOOSE
Page 85 and 86: (2) From the previous employer(s) p
Page 87 and 88: 8. IRA funded plans (IRAs, SEPs, SI
Page 89 and 90: . Does the distribution election fi
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6. Net unrealized appreciation rule
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a. Tax-exempt plans include Roth IR
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8. Calculating required distributio
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(2) Exception: If there are separat
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5. Impactc. Tax rates are low in ea
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(7) Based on ordering rules, identi
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7. A married couple who file jointl
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(1) Needed to provide the appropria
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13. Transfers at deatha. Wills(2) A
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(1) The Retirement Equity Act manda
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(2) Beneficiary designation of bene
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13. Overview14. Types(2) The donor
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(1) Charity needs only to payout in
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c. Access should be granted to an a
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nightmare of living probate might h
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(6) Powers to represent their princ
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c. If the policy is term coverage w
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e. Factoring personal and family he
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problem. On the other hand, we can
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d. Adding a cost of living adjustme
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g. Planning Point: Sometimes a high
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(2) Clients may not be able to “a
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c. Ensure that the client is receiv
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a. Example: Because of physical and
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options about where to get his/her
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(2) Facilities, monthly fees, and s
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8. Other strategies that help to co
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standard deviations of the returns
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a collapse in the real estate marke
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a. In a later competency we will di
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years of service with the employer)
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a. Planning Point: Planners should
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(2) If you have locked in food, ren
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(4) Loss-of-spouse risk—Deferred
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(1) Excess withdrawal risk—The us
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(5) Frailty risk—Managing assets
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7. Practice good career management:
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Assignment 6CHOOSE APPROPRIATE STRA
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c. Example: Chuck and Sarah divide
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e. The bucket approach can be thoug
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3. Understanding systematic withdra
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(1) The time horizon used in the ca
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12. Four percent is not the number.
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markets have declined by a specifie
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(2) Annuities and long-term care an
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anticipates ramping down her activi
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c. Each of the three portfolios wil
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SECTION 4: THE ESSENTIAL VERSUS DIS
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d. Clients give up investment contr
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geared toward long-term growth. Thi
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. Trade-offs involve:(1) Irrevocabl
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(1) Rate at which banks lend to the
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. Dollar-denominated liabilities of
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(a) Dividend taxed in year paid out
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4. Taxationtheir return generating
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. Close ended(1) IPO style launch(2
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(3) Tax control17. Conversations in
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(3) Mutual funds provide lower cost
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way to obtain increasing payments t
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protection from the downside risk w
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6. Today’s annuitization rates ar
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h. Planning Point: Markets are very
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a. The client may not be clear abou
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a. Problems with implementation are
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c. Product solutions work together
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(1) A problem is that if the client
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(b) A traditional fund company(c) A
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d. Evelyn is in great health and he
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RESOURCES FOR COMPETENCY 7: INTEGRA
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