UMB Employee Benefits UMB Employee Benefits Retirement PlanningRetirement Planning

How To Achieve Your Retirement Dreams How To Achieve Your Retirement Dreams

Basics of Planning and InvestingBasics of Planning and Investing

Features of your XYZ Profit Sharing PlanFeatures of your XYZ Profit Sharing Plan

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AgendaAgenda

Introduction Retirement Goals Retirement Obstacles Key Strategies Investments Plan Features Questions?

What Is Your Retirement What Is Your Retirement Dream?Dream?

RetiremenRetiremen

t Plant Plan

1. Win the

Lottery

2. Retire!

Does saving for retirement seem Does saving for retirement seem like like Mission Impossible?Mission Impossible?

Sources of retirement incomeSources of retirement income

Social Security Personal savings IRA or other

retirement savings Your XYZ Profit

Sharing Plan

Customize

Why you should save for Why you should save for retirementretirement

You could spend 25% of your lifetime in retirement--20 or 30 years or more!

When you retire, you will probably need 70-90% of your existing salary

New Car Today - $20,000

New Car in 2031 - $94,200

Dinner for 2 Today - $32

Dinner for 2 in 2031 - $151

Fast Food Today - $4

Fast Food in 2031 - $19

Examples assume an inflation rate of 5.3%

The potential impact of inflationThe potential impact of inflation

Little savings add upLittle savings add up Your savings after 20 years*

*Assumes you save the cost of each item, plus 27% assumed tax rate every week for 20 years, and earn an annual 8% on your investments

$17,599

Rent a video instead of going to the

movies- $5 per week

$35,203

Morning coffee - $10

per week

$52,802

Large pizza - $15 per week

Time Is Your Greatest AllyTime Is Your Greatest Ally

Pat, the Procrastinator Lives the high life Starts saving at age 45 Contributes $4,200 each

year for 20 years to the Company Plan ($350 per month)

Terry, the Planner Lives more modestly at first Starts saving at age 25 Contributes $2,100 for 40 years

to the Company Plan ($175 per month)

Time Is Your Greatest AllyTime Is Your Greatest Ally

Pat saves twice as much each year and at age 65 ends up with $300,000 for retirement

Terry sets aside the same total sum of money but accumulates $1,200,000 for retirement.

Assuming an average rate of return of 8%.

Who would you rather be?Who would you rather be?

Pat, the Procrastinator,at retirement

Terry. The Planner, at retirement

Make Your Savings Goals Make Your Savings Goals Reachable Reachable Start as early as you can Save as much as you can Select investments that have growth

potential

Advantages to Saving in a Advantages to Saving in a 401(k)401(k) Contributions are made before taxes Earnings are tax deferred 401(k) contributions are payroll deductions Contribution rate may be changed at the

beginning of each quarter Plan specific Your investment portfolio is selected by you

Stocks Outperform other Securities Stocks Outperform other Securities over Timeover Time

Inflation

90-day US Treasury Bills

Bonds

Stocks

Growth from 1970-2000

$6,832

$4,383

$12,539

$44,912

Financial Analysts Journal, B.G.P. Brinson,

B.D. Singer & G.L. Beebower, May - June 91

The Importance of The Importance of DiversificationDiversification

91.5% of your return is based on your investment diversification

Individual Investments Investment DiversificationMarket Timing Other

The PlanThe Plan

401(k) - eligibility Enter the first day of the month following

the completion of one year of service Defer up to 15% of compensation Change deferral rate quarterly Minimum age - 21

Customize

Profit Sharing PlanProfit Sharing Plan Employer discretionary

Company MatchCompany Match Up to 4% of compensation Last day - 1000 hour requirement

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When Can I Get My Money?When Can I Get My Money?

Termination of service

Retirement Disability Elective deferrals -

age 59½ Hardship

withdrawals Loans

QuestionsQuestions

Consult with your UMB team of experts Plan questions - call your HR contact

at Tax questions - see financial planner or

CPA

Customize

Plan YOUR tomorrowPlan YOUR tomorrow