WPBC Retirement Symposium Retirement Readiness Panel January 14, - PowerPoint PPT Presentation

WPBC Retirement Symposium Retirement Readiness Panel January 14, 2015

Retirement Readiness Matrix GENERATION Millennials Gen X’ers Boomers Do It For Me Opt-out features: Same Same  Auto enroll at 6% + +  Auto escalate to 15%  Competing priorities –  Competing priorities –  Auto invest in TDF high spending years, college savings, aging  Enroll before having mortgages, etc. parents, etc. competing priorities PREFERENCES  Peer comparison  Peer comparison  Lifetime income Help Me Do It  Lifetime income  Lifetime income modeling modeling modeling  Personal advice &  Website and smart  Enroll non-participants, planning phone applications not just new hires  Reduce spending & debt  Educate on cash outs and  One-on-one personal  Work longer loans meetings  Social Security tool  Distribution planning  Financial wellness tools  Super savers  Under savers  Longevity insurance Do It Myself  Financial wellness tools  Financial wellness tools  Deferred annuity  Overly cautious with  Cautious investors (GMWB) investments (dot-com, housing  Immediate annuity  Longest time horizon bubble)  Consolidate disparate  Low confidence in IRA’s, former employer readiness accounts  Long time horizon  Shortest time horizon 1

Retirement Readiness Sensitivity Analysis  Assumptions below - a $40,000 employee who should replace 85% of her pre-retirement income will replace only 65% at retirement for a Retirement Readiness Ratio (R ³ ) of 76% (65/85).  The sensitivity analysis below shows the impact on the R ³ of 76% by changing each of the factors shown in green in the table to the amounts shown in the chart below. Source: Tom Kmak, CEO Fiduciary Benchmarks, Inc. 2011 2

Target Date Versus Do It Yourself - By Age Standardized Three-Year Returns:* High and lows by age Ages: 20-29 Ages: 40-49 Ages: 30-39 Ages: 60 and over Ages: 50-59 30.0% 25.2% 24.4% 23.5% 23.6% 20.8% 20.0% 15.2% 15.2% 14.9% 14.8% 14.1% 10.4% 10.0% 10.3% 10.0% 9.5% 8.6% 0.0% 0.1% -3.2% -5.4% -5.7% -6.1% -10.0% TDF Users Do It Yourself TDF Users Do It Yourself TDF Users Do It Yourself TDF Users Do It Yourself TDF Users Do It Yourself Source: JP Morgan; *Disclaimer available on performance calculation, as provided by JP Morgan 3