Transcript Financial Strategies for Successful Women

Financial Strategies for Successful Women
The Delta Kappa Gamma Society
International
Daniel Roccato, MBA, CPM
President, Quaker Wealth Management
Professor, Rutgers University
www.quakerwm.com
Securities & Advisory Services Offered through VSR Financial Services, Inc., A Registered Investment Adviser
and Member FINRA/SIPC. Quaker Wealth Management is Independent of VSR.
Financial Strategies for Successful Women
 Daniel Roccato, MBA, CPM
 21 years Investment Banking experience
including non-USA assignments
 Business Owner
 College Professor
 Author
 Fox News Analyst
 Husband & Dad
Financial Strategies for Successful Women
 Good news! We are living longer*
 75.7 years for men, 80.6 years for women
 44% chance a 65 year old woman will live
past 90
 Bad news! We are living longer
 #1 concern of retirees? Living longer than your $
 75% of you will be the sole head of household
 Financial literacy is a major issue for women
* Centers for Disease Control 02/11. Employee Benefits Research Institute 03/20. QWM client data.
Financial Strategies for Successful Women
 Today’s discussion
 Retirement Income
 How much do you need?
 Where will it come from?
 Special considerations for Women
 10 Commandments for Female Chief Financial
Officers
 Your questions and ideas
Financial Strategies for Successful Women

Retirement Income - How much do you need?
 You can hire a planner and create a detailed budget
Or………
 You can use 2nd grade math*:
Current income
Mortgage
401k savings
$100,000
- $ 15,000
- $ 15,000
=$ 70,000
*Example is an oversimplification and should be used for illustration purposes only.
Financial Strategies for Successful Women

Retirement Income - How much do you need?
 Myth – Your cost of living will go down in retirement:
 Lower tax bracket
 No commuting expenses
 No more dress clothes
 Reality – Your cost of living is unlikely to change:
 Future tax increases are likely
 Increased health care expenses are likely
 “Helping” your kids and spoiling the grandchildren
Financial Strategies for Successful Women

Retirement Income – Where will it come from?
 Lottery is not a good strategy.
 Inheritance is an uncertain strategy.
 Most of us will rely on a 3 legged stool:
 Social Security
 Employer Pension Plan
 Savings (401k, IRA, etc.)
Financial Strategies for Successful Women

Retirement Income – Where will it come from?
 Social Security*
 Average for single person is $14,000, married
couple is $23,000
 Maximum for single is $25,000, married couple is
$38,000
 Possible changes?
 Increase retirement age eligibility
 Indexing, caps, etc.
 www.ssa.gov/planners/calculators
*
Minnesota House of Representatives Research 06/10. Numbers are rounded to
nearest $1,000.
Financial Strategies for Successful Women
 Retirement Income – Where will it come from?
 Employer Pension Plan*
 20% of workers in the private sector
 79% of workers in public sector
* U.S. Bureau of Labor Statistics, National Compensation Survey,2009
Financial Strategies for Successful Women
 Retirement Income – Where will it come from?
 Savings (401k, IRA, etc.)
 Shift from Accumulation to Distribution
 There are many strategies, let’s focus on two
possible approaches:
 Personal portfolio
 Annuities
Financial Strategies for Successful Women
 Retirement Income – Where will it come from?
 Personal portfolio - The 4% Rule*
65 year-old female
$1 million portfolio
60% stocks/40% bonds
4% annual withdrawal ($40,000 in year one)
3% annual “pay raise” each year
10% chance of running out of money at age 97
But do you want to be in control?
* T Rowe Price Group, Retirement Readiness Guide 07/09
Financial Strategies for Successful Women

Retirement Income – Where will it come from?

Roccato’s Rules
 Embrace “simplicity”
 e.g. Vanguard Wellesley fund – 6.4% average
annual 10 year return*
 Don’t understand it? Don’t buy it.
 Aim low
 Low expenses – means more for you
 Low turnover – good for you, not your broker
 Low taxes – tap the IRA last
* Morningstar data 02/11. The performance data shown represent past performance, which is not a guarantee
of future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold,
may be worth more or less than their original cost. Current performance may be lower or higher than the
performance data cited. Please read the prospectus prior to investing in any mutual fund.
Financial Strategies for Successful Women

Retirement Income – Where will it come from?
 Annuities
 Guaranteed lifetime income

But, do you want to give up control?
 Tread carefully

Beware of fees, penalties, restrictions, salesmen and
small print:
Variable annuities are subject to surrender charges and involve risk, including possible loss of principal invested.
Guarantees are based on the claims paying ability of the issuing insurance company. Variable annuities are sold
only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before
investing. The prospectus, which contains this and other information about the investment company, can be
obtained from the annuity company. Withdrawals of earnings from an annuity are taxed as ordinary income and,
if taken prior to age 59 1/2 may be subject to a 10 percent penalty. Generally, annuity contracts have mortality
and expense charges, as well as other account and administrative fees. Variable annuities used within qualified
plans do not offer additional tax deferral benefits.
Financial Strategies for Successful Women
 Special Considerations for Women
 Social Security
 Carefully weigh the start of benefits
 Approximately 8% annual benefit increase by
waiting to age 70
 How do you decide?
 Health
 Other income sources
 Widow may receive 50% of spouse benefits or
her own (whichever is greater)
Financial Strategies for Successful Women
 Special Considerations for Women
 Employer Pension Plans
 Lump Sum option
 You are in control – for better or worse
 Possibility of leaving a legacy
 Annuity option
 Guaranteed lifetime income
 Consider your “survivor benefit” options
Financial Strategies for Successful Women
 Special Considerations for Women
 Invest in a Will and Estate Plan
 Make sure accounts are properly titled and
beneficiaries are correct
 Include health care directive and financial
power of attorney
Financial Strategies for Successful Women
 Special Considerations for Women

Life insurance is for the living
 Ideal – pay off mortgage, fund college and provide
enough income until retirement
 Minimum – cover 5 years of living expenses
 Despite what insurance companies say, insurance is
not an investment

Consider financial options for nursing care
 Be wary of insurance company hype

LTC Insurance may not be best for all
Financial Strategies for Successful Women
 10 Commandments for Female Chief
Financial Officers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Trust but verify
Simplicity is a virtue
Fads are for fashion, not money
Save 15% of gross income – Emergency, Retirement, College
Maximize your 401k
Put 20% down and pay off mortgage ASAP
Buy term insurance
Buy, don’t lease
Invest in health & fitness
Splurge, we're all renters!
Financial Strategies for Successful Women
Your questions and ideas!
Daniel Roccato, MBA, CPM
President, Quaker Wealth Management
Professor, Rutgers University
www.quakerwm.com
Securities & Advisory Services Offered through VSR Financial Services, Inc., A Registered Investment Adviser
and Member FINRA/SIPC. Quaker Wealth Management is Independent of VSR.