PREPARING FOR A WONDERFUL RETIREMENT By Courtney Courter

PREPARING FOR A WONDERFUL RETIREMENT By Courtney Courter Email me at courtneymarie@comcast. net

OVERVIEW In order to have an enjoyable retirement without financial stress it is vital to prepare early. This presentation will show you why this is so important through the use of personal examples.

FACTORS TO CONSIDER At what age do you start your new career? How many years will you work until retirement? What average inflation rate do you expect over your working career? What savings rate do you expect to get on your money saved? How many years beyond retirement do you expect to live? What is your starting salary equivalent value at the time of your retirement? How much do you have to save annually (until retirement) such that the amount saved at the time of retirement will provide an annuity for the number of years you expect to live beyond retirement (at which time the amount saved is drawn down to zero)?

AT WHAT AGE WILL I START MY CAREER ? Career: Pediatrician Graduate College: (19+4) = 23 Begin College: 19 Start Career: 27 Graduate Medical School: (23 + 4) = 27 Source: http: //www. ruralmedicaleducation. org/age_divisions. htm Average online: 25 - 30

AT WHAT AGE WILL I RETIRE Average Retirement of physician: >50 I hope to retire at age 66 Source: http: //pediatrics. aappublications. org/cgi/content/abstract/125/1/158

WORKING YEARS 66 - 27 = 39

CONSIDER • What average inflation rate do you expect over your working career? • What savings rate do you expect to get on your money saved? • How many years beyond retirement do you expect to live? • What is your starting salary equivalent value at the time of your retirement? 2. 15% 5. 5% 18 $100, 000 Sources: Inflation - Savings rate - Life Expectancy - Stating Salary

MINIMUM AMOUNT YOU ARE WILLING TO RETIRE ON Salary equivalent = (Starting Salary)*(1 + i)n “i” = inflation rate “n” = number of years until retirement. (target annual retirement income) (100, 000)*(1 + 0. 0215)39 = $229, 243. 20

CALCULATING FUTURE VALUE “pymnt” = amount you save each year (the same amount for each year) “i” = interest rate you expect to get for your money over the entire saving period (your career) “n” = the number of years you will work (229, 243. 20)*((1 + 0. 055)39 – 1 / 0. 055) =29, 466, 033. 09 Source: Rate

CALCULATING ANNUITY “FV” = Future value “i” = interest rate you expect to get for your money over the entire saving period (your career) “k” = the number of years you expect to live beyond 70 29, 466, 033. 09*((0. 055)/(1 -(1+0. 055)) -14 ) =$120, 141. 80

RESULTS – SALARY AND SAVINGS $ 350, 000. 00 Salary Compared to Savings $ 300, 000. 00 Salary $ 250, 000. 00 $ 200, 000. 00 Salary $ 150, 000. 00 Savings $ 100, 000. 00 $ 50, 000. 00 $Start Savings Immediately Start Savings 10 Start Savings 15 Start Savings 20 Start Savings 25 Years Later The sooner you start saving the less you will need to save to meet your annuity. If you wait long you will need to save much more

RESULTS – PERCENT SAVINGS 70. 00 Percent Salary Saved 60. 00 Percent 50. 00 40. 00 30. 00 20. 00 10. 00 Start Savings Immediately Start Savings 10 Years Start Savings 15 Years Start Savings 20 Years Start Savings 25 Years Later The percent of your salary you need to save increases the longer you wait to start saving

WHY IS IT SO IMPORTANT TO START SAVING NOW ? You want to make the most of your retirement If you save early you will have money to travel when you retire You will have money to go out to eat and vacation

MAINTAIN STABILITY If you save early than you will be able to have a stable retirement income. Plan ahead incase of economy problems You will not be burdened with trying to make ends meet If you plan ahead you will not have to be anxious about your retirement

Save Early Retire Early

SOURCES http: //www. ruralmedicaleducation. org/age_divisions. htm https: //pooledmoneyinvestmentboard. com/Monthly_ Rate_Comparison. pdf http: //www. westegg. com/inflation/ http: //www. bankrate. com/calculators. aspx http: //en. wikipedia. org/wiki/List_of_countries_by_life _expectancy http: //pediatrics. about. com/cs/pediatriccareers/a/pe di_interview_2. htm http: //pediatrics. aappublications. org/cgi/content/abstract/ 125/1/158