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January 2017 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

VARIED OPINIONS – 19% of Americans were not financially impacted by our nation’s 2008 recession. Another 20% was negatively impacted by the downturn but have since fully recovered. The remaining 61% have either “somewhat recovered” (41%), “have not yet begun to recover” (13%) or “may never recover” (7%). 4,200 Americans were surveyed in April 2016 for this report (source: Transamerica Center for Retirement Services).

HALF MISSED OUT – The S&P 500 gained +12.% in 2016, higher than the index’s trailing 50-year average performance of +10.2% per year. An estimated 52% of American adults were invested in the US stock market last year, either in personal accounts or through their retirement portfolios. The S&P 500 consists of 500 stocks chosen for their market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: Gallup).

WHEN? – Social security trustees announced on 6/22/16 that the trust fund backing the payment of Social Security benefits (OASI benefits) would be zero in 2035. When the trustees released their report in 2003, the Social Security Trust Fund was projected to be depleted in 2042 (source: Social Security Trustees Report).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

 

November 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

A SMALL RAISE – Beginning in 1975, adjustments to Social Security retirement benefits for the following year have been pegged to changes in the Consumer Price Index (CPI). Limited national inflation has resulted in no “cost-of-living adjustment” (COLA) to retirement benefits just 3 times since 1975, i.e. 2010, 2011 and 2016. The COLA boost for 2017 was announced in late October at +0.3% (source: Social Security).

AWESOME, KEEP GOING – The S&P 500 has gained +285.4% (total return) from it 3/09/09 bear market low through the close of trading as of last Friday 11/25/16. This ongoing bull market is in its 93rd month. Only the 1990-2000 bull market that was into it 114 month before it peaked on 3/24/00 has lasted longer among the 11 bulls that have occurred in the last 70 years (source: BTN Research).

EVERY DAY – An estimated 9,900 Americans will turn 65 years old each day next year (2017). This group represents the 7th year of 19 years of “Baby Boomers turning age 65. An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

October 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

NOT UNTOUCHABLE – When a 1983 Social Security Committee (chaired by Alan Greenspan) implemented changes that gradually increased the age from 65 to 67 at which a retiree would receive full social security benefits, only Americans that were 20 or more years from turning 65 were impacted (source: Social Security).

AT LEAST THAT MUCH – 24% of 1,000 pre-retirees surveyed in the first quarter 2016 believe they will need to accumulate at least $1 million in order to “live comfortably” during their retirement years, up from 15% in 2005 (source: EBRI Retirement Confidence Survey).

NO PENSION – 72% of “Baby Boomers” do not have a corporate pension plan, a total of 56 million “boomers”. “Baby Boomers” are traditionally defined as the 78 million Americans ages 52-70 in 2016, i.e. born from 1946-1964 (source: Insured Retirement Institute).

MOST EVER – US retirement assets (DB plans, DC plans, IRAs) reached a record $24.5 trillion as of 6/30/16, up +76% from its $13.9 trillion total as of 12/31/08 (source: Investment Company Institute).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

September 2016 Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

ENOUGH – Just 1 in 7 workers surveyed (14%) have accumulated retirement assets of at least $250,000 not counting the value of their primary residence or the present value of any pension they have (source: EBRI).

ON YOUR OWN – More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

JUST TRYING TO HELP – 8 American states (California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon and Washington) have passed legislation that created state-sponsored retirement plans for private sector workers. Another 20 states are considering legislation that would enact a similar plan (source: Pension Rights Center).

DOLLARS IN, DOLLARS OUT – Chicago has more retired policemen and survivors of policemen than they have active police officers. As of 12/31/15, Chicago had 12,061 working policemen but had 12,528 retired officers and survivors of deceased officers (source: Policemen’s Annuity and Benefit Fund of Chicago).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

Start Up 401k Plans – Retirement Benefit Options are More Accessible than ever through Your Local Bank

Many small business owners put off starting a retirement benefit program because there is a widely perceived notion that it is expensive and complicated to administer. However, for many industries, a competitive benefit package is becoming the norm, and companies of all sizes are trying to find ways to recruit, retain, and reward employees. We sat down with the folks at Hook Studios LLC to talk about their experience in creating a start-up plan with Ann Arbor State Advisors, a local firm that offers advice to existing plans, or can assist in the creation of a plan. Read more! 

August 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

MORE OUT THAN IN – The trust fund backing Social Security retirement benefits took in payroll tax contributions that exceeded retirement benefit payments made to retirees for the 26 consecutive years of 1984-2009. Since 2010, benefits paid have exceeded payroll taxes collected. In 2015, covered workers paid in $679.5 billion of payroll taxes, but retirees received $742.9 billion of benefit payments (source: Social Security Trustees).

IMPACT OF BOOMERS – There are 2.8 workers (paying payroll taxes) for every 1 Social Security beneficiary in 2016, i.e., there are 36 Social Security beneficiaries for every 100 covered workers today. There will be an estimated 2.3 workers (paying payroll taxes) for every 1 Social Security beneficiary in 2030, i.e., there will be 44 Social Security beneficiaries for every 100 covered workers in 2030 (source: Social Security Trustees).

NOT ONE PENNY – 44% of the households in the United State headed by a currently employed individual (i.e., a “working” household) do not have any money invested on a pre-tax basis in a defined contribution plan, e.g., a 401(k) retirement savings plan (source: Government Accountability Office).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

July 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

LONG-TERM ISSUE – The estimated Social Security shortfall today (i.e., a present value number) between the future taxes anticipated being collected and the future benefits expected to be paid out over the next 75 years is $11.4 trillion. The entire $11.4 trillion deficit could be eliminated by either an immediate 2.58% increase in the combined Social security payroll tax rate (from 12.40% to 14.98%) or an immediate 16% reduction in benefits that are paid out to current and future beneficiaries (source: Social Security Trustees).

PENSION PROBLEMS – The 5 separate New York City pension plans for the city’s civil workers, teachers, police and fire fighters have assumed a 7% annual rate of return (aka the discount rate) on pension assets since 2013. The discount rate is used to calculate the present value of pension liabilities and has historically been benchmarked to high-quality corporate bond yields. If NYC was to lower its discount rate from 7%, that action would produce a higher present value amount of liabilities and would force greater annual pension plan contributions by the city (source: NY State Control Board).

NOT MUCH DIFFERENCE – A dual working couple in America making a combined $95,600 that turned 65 years old in 2015 is projected to receive $616,000 in Social Security benefits over their lifetime (a 2015 present value number), +13% more than the $543,000 they paid in Social Security payroll taxes (also a 2015 present value number) during their working years (source: Urban Institute).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

June 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

MANY YEARS, NO CHANGE – The Social Security payroll tax rate paid by employees has been 6.2% since 1990 except for a 2% reduction in the rate during the 2 years of 2011-12 (source: Social Security).

FUNDING A RETIREMENT – The S&P 500 has averaged +9.8% per year (total return) over the 25 years ending 12/31/15. A lump sum of $862,112 (in a pre-tax account) will sustain a 20-year payout of $100,000 per year (gross before taxes and paid at the end of the year) assuming the funds continue to earn +9.8% annually (source: BTN Research).

RETIREES ARE MILLIONAIRES – The maximum retirement benefit paid by Social Security to an individual retiring in 2016 at the full retirement age of 66 is $2,639 per month. $3.167 million invested in a pre-tax account earning 1% annually on a tax–deferred basis would generate $31,668 per year of $2,639 per month of taxable income (source: Social Security).

MANY DON’T HAVE THE OPTION – 58% of American workers have access to an employer sponsored retirement plan, i.e., either a defined benefit pension plan or a defined contribution plan such as a 401(k) plan (source: The Pew Charitable Trusts).

Ann Arbor State Advisors provides advisory services for employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

May 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

DON’T STOP NOW – A 40 year-old employee that invests $1,000 at the beginning of every month in a tax-deferred 401(k) account will accumulate $510,406 by age 60 if the funds grow at +7% per year. If that person was forced to suspend their monthly deferral for just 5 years from ages 45-49, the account is worth just $369,561 at age 60 (source: BTN Research).

JUST TAKES LONGER TODAY – 25 years ago (1991), 89% of American workers expected to be retired by at least age 65. Today (2016), only 57% of American workers expect to be retired by at least age 65 (source: EBRI).

VERY LITTLE54% of 1,500 American adults surveyed have accumulated less than $25,000 of savings and investments (in both pre-tax and post-tax accounts), a total that does not include the value of personal possessions, any real estate or the present value of a defined befit pension plan or Social Security benefits (source: EBRI).

CAN’T GET AHEAD 45% of the 118 million households in the United States live “paycheck-to-paycheck” (source: National Endowment for Financial Education).

Ann Arbor State Advisors provides advisory services for both individual wealth management and employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments managed or advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

April 2016 – Retirement Plan Insights

It is never too early or too late to plan for your retirement needs. The following facts illustrate the need for saving for retirement:

CAN’T WAIT – 35% of American males and 40% of American females elect to take their Social Security retirement benefits at age 62, the earliest age at which a worker has access to benefits albeit at a permanent 25% discount (source: Social Security Administration).

LOOKING AHEAD – The total of pre-tax retirement plans in the USA as of 12/31/15 was $24.0 trillion, comprised of $7.3 trillion of IRAs, $6.7 trillion of defined contribution plans (e.g. 401ks), $5.1 trillion of government defined benefit plans, $2.9 trillion of private sector defined benefit plans and $2.0 trillion of other annuity contracts (source: Investment Company Institute).

GROWING CONFIDENCE – 21% of current workers in the United States surveyed in January 2016 are “very confident” that they will have accumulated sufficient assets before they stop working to enjoy a “comfortable retirement”. Only 13% of workers surveyed in early 2013 had similar emotions (source: EBRI).

SHORT OF CASH – Only 1 in 7 (14%) American Workers have accumulated savings and investments (both pre-tax and post-tax combined) of at least $250,000, not counting the value of the worker’s primary residence or the present value of any pension plan he/she earned (source: EBRI).

Ann Arbor State Advisors provides advisory services for both individual wealth management and employer sponsored retirement plans. Please feel free to contact me if I can be of assistance to you.

Investments managed or advised by Ann Arbor State Advisors: a) are not insured by the FDIC; b) are not deposits or obligations of Ann Arbor State Advisors, Ann Arbor State Bank or their affiliates; c) are not guaranteed by Ann Arbor State Bank, Ann Arbor State Advisors or their affiliates; and d) are subject to investment risk including possible loss of principal.

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