Financial Strategies for Successful Women The Delta Kappa

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 o Daniel Roccato, MBA, CPM n 21 years Investment Banking experience including non-USA assignments n Business Owner n College Professor n Author n Fox News Analyst n Husband & Dad

Financial Strategies for Successful Women o Good news! We are living longer* n 75. 7 years for men, 80. 6 years for women o 44% chance a 65 year old woman will live past 90 o Bad news! We are living longer n #1 concern of retirees? Living longer than your $ o 75% of you will be the sole head of household o 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 o Today’s discussion n Retirement Income o How much do you need? o Where will it come from? n Special considerations for Women n 10 Commandments for Female Chief Financial Officers n Your questions and ideas

Financial Strategies for Successful Women o Retirement Income - How much do you need? n You can hire a planner and create a detailed budget Or……… n You can use 2 nd grade math*: Current income Mortgage 401 k savings $100, 000 - $ 15, 000 =$ 70, 000 *Example is an oversimplification and should be used for illustration purposes only.

Financial Strategies for Successful Women o Retirement Income - How much do you need? n Myth – Your cost of living will go down in retirement: o Lower tax bracket o No commuting expenses o No more dress clothes n Reality – Your cost of living is unlikely to change: o Future tax increases are likely o Increased health care expenses are likely o “Helping” your kids and spoiling the grandchildren

Financial Strategies for Successful Women o Retirement Income – Where will it come from? n Lottery is not a good strategy. n Inheritance is an uncertain strategy. n Most of us will rely on a 3 legged stool: o Social Security o Employer Pension Plan o Savings (401 k, IRA, etc. )

Financial Strategies for Successful Women o Retirement Income – Where will it come from? n Social Security* o Average for single person is $14, 000, married couple is $23, 000 o Maximum for single is $25, 000, married couple is $38, 000 o Possible changes? n Increase retirement age eligibility n Indexing, caps, etc. o www. ssa. gov/planners/calculators * Minnesota House of Representatives Research 06/10. Numbers are rounded to nearest $1, 000.

Financial Strategies for Successful Women o Retirement Income – Where will it come from? n Employer Pension Plan* o 20% of workers in the private sector o 79% of workers in public sector * U. S. Bureau of Labor Statistics, National Compensation Survey, 2009

Financial Strategies for Successful Women o Retirement Income – Where will it come from? n Savings (401 k, IRA, etc. ) o Shift from Accumulation to Distribution o There are many strategies, let’s focus on two possible approaches: n Personal portfolio n Annuities

Financial Strategies for Successful Women o Retirement Income – Where will it come from? n 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 o Retirement Income – Where will it come from? n Roccato’s Rules o Embrace “simplicity” n e. g. Vanguard Wellesley fund – 6. 4% average annual 10 year return* o Don’t understand it? Don’t buy it. o Aim low n Low expenses – means more for you n Low turnover – good for you, not your broker n 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 o Retirement Income – Where will it come from? n Annuities o Guaranteed lifetime income § But, do you want to give up control? o Tread carefully n 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 o Special Considerations for Women n Social Security o Carefully weigh the start of benefits n Approximately 8% annual benefit increase by waiting to age 70 n How do you decide? § Health § Other income sources o Widow may receive 50% of spouse benefits or her own (whichever is greater)

Financial Strategies for Successful Women o Special Considerations for Women n Employer Pension Plans o Lump Sum option n You are in control – for better or worse n Possibility of leaving a legacy o Annuity option n Guaranteed lifetime income n Consider your “survivor benefit” options

Financial Strategies for Successful Women o Special Considerations for Women n Invest in a Will and Estate Plan o Make sure accounts are properly titled and beneficiaries are correct o Include health care directive and financial power of attorney

Financial Strategies for Successful Women o Special Considerations for Women n Life insurance is for the living n Ideal – pay off mortgage, fund college and provide enough income until retirement n Minimum – cover 5 years of living expenses n Despite what insurance companies say, insurance is not an investment n Consider financial options for nursing care n Be wary of insurance company hype § LTC Insurance may not be best for all

Financial Strategies for Successful Women o 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 401 k 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.