Retirement Reimagined®
Your Retirement:
DISCOVER TOMORROW’S NEEDS TODAY A comprehensive plan to build the retirement lifestyle you have envisioned for yourself and your family.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
HOW WILL I PAY FOR MY RETIREMENT? Setting aside the money you will need to provide for you and your family in retirement isn’t easy. Many people underestimate how much it will actually take down the road to live the way they want. We’re living longer, so retirement lasts longer Average life expectancy in the U.S.:
1960
69.7
2015
79.7 0
10
20
30
40
50
60
70
80
Health care costs continue to rise As spending on health care rises, seniors will be asked to devote an increasing share of their own incomes to pay for these expenses. Percentage of income spent on health care by seniors:
17
24
2007
2030
%
%
31
%
2050
Sources: Central Intelligence Agency, The World Factbook 2015. CRS Report for Congress: Life Expectancy in the U.S., August 16, 2006; Liqun Liu, Andrew J. Rettenmaier and Zijun Wang, “The Rising Burden of Health Spending on Seniors,” National Center for Policy Analysis, NCPA Policy Report No. 297, February 2007; Social Security Administration, Monthly Statistical Snapshot, November 2015, www.ssa.gov/policy/docs/quickfacts/stat_snapshot; Median and Average Sale Prices of New Homes Sold in United States, www.census.gov/const/uspricemon.pdf; https://research. stlouisfed.org/fred2/data/ASPNHSUS.txt; http://www.statista.com/statistics/183745/average-price-of-us-new-and-used-vehicle-sales-and-leases-since-1990; http://mediaroom.kbb.com/ new-car-transaction-prices-jump-august-2015; U.S. Bureau of Labor Statistics, Consumer Price Index — Average Price Data as of November 2015. 2
Social Security benefits are not enough
1,227
$
$1,227.10 is the current average monthly Social Security benefit payment, as of November 2015.
Future
Benefits
Benefits may decline in the future as the ratio of workers paying into the system to retirees collecting benefits continues to fall.
Benefits do not typically increase annually, and if they do, they generally do so at a rate that is below inflation.
Inflation reduces your purchasing power A dollar today will almost certainly be worth less at retirement because of inflation.
1990 new home
new car
2015
2040
$153,400 $364,100 $710,385 $16,350
$33,543
$73,704
$2.78
$3.39
$8.55
gallon of milk
The effect of inflation on everyday costs (assuming 3.2% annual rate of inflation) Please refer to page 2 for sourcing information. 3
INVESTIGATE THE OPTIONS Investing for retirement is up to you. It is important to maximize your retirement and personal investments to help ensure you enjoy the lifestyle during retirement that you envision. Leverage the power of tax deferral There are a number of ways to help you achieve the goals you have for retirement.
Individual Retirement Accounts (IRAs) One of the most popular ways is by taking advantage of Individual Retirement Accounts (IRAs), which offer the benefits of tax deferral. With an IRA, any earnings grow on a tax-deferred basis, meaning that you do not have to pay taxes on the earnings until you make withdrawals.† This provision allows the account’s growth potential to increase, which could conceivably generate a greater overall return.
Create an investment strategy
Determine how much you will need Give careful consideration not only to everyday expenses but also to health care expenses.
Review your budget By reviewing your budget, you can determine how you can best save for retirement.
Start investing now The sooner you get started with investing for retirement, the better.
†
Please note that if account proceeds are distributed prior to age 59½, earnings may be subject to an additional tax. 4
The power of time: The high cost of procrastination†† Two hypothetical investors making a $458 monthly contribution that grows at 7% annually.
Starting investing at age...
Invested regularly for...
35 years old
30 years $562,006
45 years old
20 years $239,976
Amount at age 65...
Investor
1
Investor
2
Work with a trusted financial professional
A trusted financial professional A trusted financial professional can work with you to identify your goals, needs and aspirations and help you create a comprehensive retirement savings strategy designed to help you meet your objectives.
††
Source: Legg Mason. This illustration assumes a $458 monthly contribution that grows (earns interest) at 7% annually. The contribution amount has been calculated to contribute the maximum annual amount of $5,500 into an IRA. This chart is for illustrative purposes only and does not represent an actual investment or the performance of any specific investment. Actual investments may include fees, charges and other expenses that would affect an investment’s return. 5
YOUR RETIREMENT: PLAN FOR YOUR FUTURE TODAY
1 6
Carefully consider the goals for your retirement
2
Contact your financial professional
3
Consider the investment opportunities offered by Legg Mason
Additional resources Retirement Reimagined ®
2014 –2015
QUICK REFERENCE GUIDE For retirement accounts
2015–2016 Retirement and Education Account Quick Reference Guide Provides a side-by-side comparison of Traditional, Roth, SEP and SIMPLE IRAs, 403(b)(7) accounts, 401(k) plans and Coverdell ESA. Includes contribution limits.
Which Type of IRA Is Right for You? Retirement
which type of ira is right for you? Individual Retirement Accounts (IRAs) help investors save for retirement by providing a significant tax advantage over conventional investment accounts. Both Traditional and Roth IRAs allow investors to build and manage investment portfolios without owing any current taxes on any interest, dividends and capital gains generated by investments while inside the IRA. While both types of IRAs offer this tax advantage, there are significant differences between Traditional and Roth IRAs.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
What Will Your Retirement Look Like? Retirement
what will your retirement look like? What do you imagine for your retirement? The possibilities are almost endless. Your retirement may include traveling to far-flung destinations, indulging in your favorite hobbies, enjoying unhurried time with friends and family, devoting more time to volunteering, or maybe even starting your own business — the one you’ve always dreamed about but never had the time or money to launch.
Illustrates the changing nature of retirement and the financial responsibilities that accompany an active and fulfilling lifestyle. Includes a discussion of how to use every life stage to build a future of wealth and security.
Take Control with a Rollover IRA Retirement
TAKE CONTROL T WITH A ROLLOVER IRA Your life may change... ...your plans for retirement don’t have to. One of the most consistent elements of life is change — career changes, family changes and life changes as you transition to your retirement. And while change can sometimes be unsettling, it always presents new opportunities, challenges and dreams.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Retirement
HOW DO YOU DEFINE A SUCCESSFUL RETIREMENT? A step-by-step guide to help you plan for your future
Compares the strengths and limitations of a Traditional IRA versus a Roth IRA, including information about deductions and contribution limits.
Compares the pros and cons of cashing out, remaining in a previous employer’s plan, moving assets to a new employer’s plan, and consolidating all retirement assets into a Rollover IRA.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
How Do You Define a Successful Retirement? Helps investors visualize their ideal retirement, estimate living expenses and calculate how much they need to save to retire comfortably.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
We offer resources about small business accounts, including: •
Which Type of IRA Is Right for Your Business?
•
Advantages of a SEP IRA Plan
•
Advantages of a SIMPLE IRA Plan
•
Advantages of a 403(b)(7) Account
•
Advantages of a 401(k) Plan
7
Brandywine Global ClearBridge Investments Martin Currie Permal QS Investors
Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long-term, actively managed investment strategies. •
A broad mix of equities, fixed-income, alternatives and cash strategies invested worldwide
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leggmason.com
•
A diverse family of specialized investment managers, each with its own independent approach to research and analysis
•
Over a century of experience in identifying opportunities and delivering astute investment solutions to clients
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This document does not address state or local tax rules concerning IRAs or other accounts. Legg Mason, Inc., its affiliates and its employees are not in the business of providing estate planning, tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. Information contained herein is current as of January, 2016, is subject to legislative changes and is not intended to be legal or tax advice. Investments are not insured by the FDIC or any other government agency; are not a deposit or other obligation of Legg Mason, Inc., or any depository institution; and are subject to investment risks, including loss of principal amount invested. Retirement Reimagined® is a registered trademark of Legg Mason Investor Services, LLC. © 2016 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc. 579089 TAPX014185 2/16 FN1610003