Retirement Planning and Employee Benefits for Financial PlannersInterested PartiesEmployeesMyths and FactsEmployersInterested InstitutionsGovernmentPerspective of the Text: A Financial Planner1Chapter 1: Introduction to Retirement PlanningRetirement Planning and Employee Benefits for Financial Planners2Interested PartiesEmployeesEmployersProfessionalsGovernment3EmployeesMoney work instead of youFinancial independenceView benefits as part of overall compensation.Would rather pay costs with pre-tax dollars.Include retirement plans and benefits in their overall financial plan.Defined benefit versus defined contribution4Myths and FactsMyth – 70% say they plan to work in retirement.Fact – Only 28% of retirees actually work.Myth – 25% want to retire at age 65, 25% want to retire at age 66.Fact – Average individual retires at age 62.Myth – Only 13% expect Social Security to be their largest source of retirement income.Fact – 44% of current retirees report that Social Security is actually their largest source of income during retirement.5EmployersView retirement plans and employee benefits as part of overall compensation costs.Costs add an additional 30 - 40% to payroll expenses.Benefits a large part of this (health insurance and vacation)Use employee benefit plans to recruit, hire, and maintain qualified workers.6Interested InstitutionsApproximately $18 trillion in tax-deferred accounts (2011)Sticky moneyBanksMutual FundsInsurance CompaniesFinancial Advisors7GovernmentPromotes social change through tax legislation.Sponsors the Social Security and Medicare systems which act as a safety net for individuals.Has a vested interest in taxing deferred accounts.Sooner rather than later?8Perspective of the Text:A Financial PlannerTo provide clients with appropriate retirement planning, the financial planner must have a thorough knowledge of:Retirement Funding and ForecastingQualified PlansShift from defined benefit to defined contribution plansTax-Advantaged PlansNonqualified PlansMedicare, Social SecurityEmployer-Provided Fringe