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all right so you can get started whenever you're ready all right good afternoon everyone my name is katrina boyer i'm the investor education coordinator at the pennsylvania department of banking and securities and i am so excited to be talking with you today about how we can make the nest egg that we've saved through our investments last after we retire um one of the biggest questions that i've received in all my years of doing outreach and investor education is how do i know that what i've worked so hard to save is going to last through the next 20 years or 25 years so we really felt that this was an important presentation to bring to um our constituents so um today we're going to break retirement um budgeting you know how to make that last into two different parts the first part is the part where we're going to talk about this is what i have and this is how i'm going to ensure that it lasts me through my golden years the second part is going to really focus on three different scams that often target older adults and tries to separate them from the assets and wealth that they've built so we'll talk about how we can protect our money that we've worked so hard for from the public or from the criminals um so we'll talk about um income sources required minimum distributions well they're going to talk about spending it wisely we have two different um sort of plans that we can take a look at um and then for the scan portion of it we're going to talk about free lunch seminars affinity fraud and ponzi schemes so when we first start to think about retiring or maybe we just retired we need to start stop to think about what are our sources of income going to be um maybe you have an ira or a form of um a 401k or 403 whatever 457 there's so many different numbers um and maybe you have social security and a lot of people who are retired already may even have a pension which is a defined amount um that you'll earn from having worked at a specific um company now i'll tell you that it's important that we really stop to think about all the different sources of income because i know people who have kind of forgotten that they had worked at this old place that had a pension for them and um i know one person who actually realized that he was getting like four hundred dollars more a month than he was anticipating because it turned out that lo and behold he had worked for a union and he had a pension coming from these two unions that he'd worked for so it's really important that we that we assess exactly what we're going to have coming in because that goes a long way in helping us to plan how we're going to move forward and then there are some non-traditional sources of income maybe we have invested in some money market or mutual funds through the years um i know sometimes we we do that for a season and maybe we don't stick to it um so sometimes there are accounts maybe that we've forgotten about another non-traditional source of income are annuities now it's important that we understand that annuities can be incredibly confusing and it's not something annuities are not regulated for the most part by the department of banking and securities because annuities are really considered more of an insurance product so they would be regulated under the department of insurance but you can find more information at investor.org which is the sec's consumer facing webpage and then you can also get from naic.org but a third type of non-traditional source of income i want to talk about are side jobs or owning your own small business um i know that there are some older adults who the thought of not having a job to go to um sort of terrifies them or maybe they're just not quite ready to fully enjoy a vacation you know a travel life for um retirees so maybe they have special talents or they are really good at woodworking or sewing you know that kind of um those types of hobbies can go a long way in helping to subsidize some of those other streams of income and they can also go a long way in helping um us as older adults to stay involved in um you know staying busy and keeping our minds and our hands um in tip-top shape so um you know sometimes we think about um part-time job at our favorite store or like i said taking advantage of some of those special talents or hobbies so once you've kind of figured out what your income is going to look like you also want to make sure that you think about the required minimum distributions now those are um for individual retirement accounts that you may have they require that you withdraw a specific amount of money it's defined based upon the balances that you have and and those types of things i am not a financial planner but i will tell you that there is that required minimum distribution now prior to um 2000 you had to be start pulling that money when you were 70 and a half now that law has changed because americans are living longer we change that to a 72 year old that you have to withdraw when she turns 72. there are two exceptions to the rule um if you're still working um and you own less than five percent of the company i think is what that is but or maybe you have roth iras now roth iras are individual retirement accounts that you have already paid tax on you paid tax you um invested the money after taxes were already pulled from your earnings but i think that it's important to understand if you do not pull your required minimum distribution you may be responsible for up to a 50 penalty on any money that you should have pulled and didn't so let me explain that further if you were required by law to take five thousand dollars a year out from your ira and you didn't you could be charged a penalty of up to twenty five hundred dollars that's a lot of money and i don't want that resp you know i don't want to ever have to pay a penalty let alone a 50 penalty so i would encourage you to go to the irs.gov and search for required minimum distributions to make sure that you know what you're required to do another good resource is to talk to your financial investment planner your financial advisor or your um you know whoever you're trusting with your finances and your taxes so maybe even a tax professional would be the right course but just make sure that you do it so let's talk about the fun stuff right we don't want to talk about penalties let's talk about how we can work to spend down what we've saved without running out of money at the end you know the goal is that i'm going to work till i retire at 72 or 75 or however old but i'm going to live to be in my 90s so how am i going to make what i've saved last through that time frame so one way um that people often plan their expenses is what's called the four percent rule now the four percent rule really just sort of bases what you're living off of by withdrawing four percent of your total savings in that first year so if you've got two hundred and fifty thousand five hundred thousand whatever it is you want to try to live on four percent of what you saved now that's not taking into consideration any um social security um any of your other sources of income so keep that in mind when we think about the four percent rule um now while the four percent rule is a great starting point it's okay to adjust that um percentage every year based on inflation based on you know how have your as how have your investments performed if it's been a really lousy year and you haven't had much of a return on your investment maybe you want to tailor back a little bit and pull less than that four percent um so it's important with the four percent role if you're looking to make it last you want to make sure that you're not spending more than your accounts are earning because what happens when we spend more than we earn we run out of money right so keep that in mind when you start to think about that four percent rule you can adjust every year um you just want to be careful not to over adjust yourself into a position where in 10 years you're going to not have anything left in your investment accounts yet you've still got another 10 or 15 years of an exciting life to live because that's the goal right um so let's talk then about this other thought process that a lot of people like to use and this is called the bucket strategy i love the bucket strategy because i'm kind of this visual person and i like the way this looks and it makes sense to me in my head so budget strat the bucket strategy really is a long-term solution for planning out what we're going to do so the theory is that you're going to have these three buckets of money now each of those buckets of money is actually going to be an account because i don't want anybody just to keep a bucket full of money you know laying around so we want to make sure that we have that understanding that each bucket represents an account um just a different stage in this process so our bucket number one is going to have what we call the current living expenses that's where we want to keep a balance of living expenses that will get us through for the next one to two years we want to make sure that we keep it in a financial institution that has the appropriate insurance whether it's fdic for a bank or ncua for credit unions and you want to make sure that the amount that's in those accounts is not over the insured threshold for individuals it is a hunt it's 250 000 per institution if you're a married couple it can be up to 200 and or it can be up to 500 000 but remember it's per institution not per account um but you want to make sure that you keep these in those financial institutions because that gives you easy access in the event that something comes up that you simply can't live without you want to be able to get to it quickly without having to pay penalties like you may have to in some of your other investment accounts um any money that comes in from your regular streams of income so remember i talked about um your social security maybe a pension or 401k or ira those monthly streams of income that you know that you can count on need to go direct deposited right into that bucket number one and you need to consider that as part of the balance that you're keeping in there just because you want to make sure again you want to keep yourself with liquid finances that you can get to easily for one to two years so that medium bucket or bucket number two is money that we're going to be needing soon now i say soon with air quotes because that's the money that you're going to need in the next three to five years now you may not want to keep that in a traditional deposit account like a checking or savings you may want to actually look at putting it into a more conservative investment account because that money is going to be there for three to five years and in three to five years you don't want to miss out on the amount of interest that you can earn or the return on those investments and you're using your bucket number two to refill bucket number one so you're just kind of moving funds from one bucket to the other or from one account to the other so keeping those um the money for three to five years in a more conservative investment account is going to help you to earn interest returns on your investments but hopefully um because it's in a more conservative account um when you when it's time to access those accounts they won't be in the middle of a down market um where you may have experienced heavy losses so make sure that you keep again that three to five years worth of living expenses now let's talk about bucket number three bucket number three is that bucket of money it's going to hold them the big the majority of your investment accounts um because that's the money that you're not going to need for at least five years if i'm retiring i wish i could retire in 2020 but or 2021 but you know whatever but if i'm retiring and i've got you know i'm planning to live for 25 years the money in bucket number three is money that i'm planning to be living on for that 25-year time frame minus the one the the one to five years so we can leave that in an account that um can focus more on growth but remember that with growth comes some risk some increased risk than something that's more conservative in our three to five year plan so it's really important um that we understand that this growth bucket maybe in stock or real estate um it may be mutual funds you know it's up to it's up to us and our investment professionals that we work with but what's great to keep in mind about bucket number three is that the money in that bucket has time to recover from any losses that it may experience because again you've got more than five years for that money to come back so it's a lot of people consider that a longer term so they're willing to take more of a risk because with risk comes higher returns but the potential for loss is a little higher so you have to kind of keep that balance in mind and make sure that you're comfortable with the risk associated with the investments that you're involved in so if we take a look if we put this bucket strategy to work um you know you've got your big bucket and your investment accounts you've got your median bucket that three to five years that's got some conservative investments maybe bonds and then you've got your living bucket and what you're doing is you're pulling funds every year and you're just kind of rearranging from one bucket into the next into the next so that you're consistently moving that money and protecting it from big losses by moving it into the smaller account into the smaller buckets but it's a great way to really visualize and see exactly how your money is working um i just really think that the bucket strategy gives us that visual understanding of sort of that big picture so um that is bucket the bucket strategy um so i always like to give some homework we can actually see the impact remember we talked about the four percent rule um the different spend down rate so that four percent rule is considered a spend down rate um and you can actually see what happens with your investments um with different rates so maybe you want to explore four percent versus six percent you can actually go to this website a i e r dot org and they have a calculator that will allow you to kind of play around and experiment with different spend down rates so that you're comfortable with what your decisions are going to be now um the other thing that i always think is so important to mention is that anytime you start to withdraw retirement funds you need to understand the impact that um the taxes are going to have on that um every state has a different tax law when it comes to um you know retirees so it's important that you understand and you get that guidance from your tax professional or you can go to irs.gov and you can find oodles of information just by turn by searching um retirement tax so i always encourage individuals to check that out at irs.gov now this is not all that there is to do it's important that as you start to age and you start to move into this retirement process it's important that you have a strong team of professionals that you trust and we're going to talk about affinity fraud but you know it's one thing to trust our neighbor um to borrow something from us it's an entirely different ballgame when we start to talk about our finances and having people that we trust it's great to trust them but we also it's really important that we research them and make sure that they're legitimate so we need to understand um that we want to have a financial advisor or a counselor who can help us to figure out what that plan is going to look like um so they can or or may they may or may not be a fiduciary fiduciary is someone who is required by law to do what is right for your um bet for your financial best interest um so it's important that you know whether or not your financial advisor is required to be a fiduciary and they're going to help you to protect the assets that you've saved an attorney can be phenomenal in helping you with um estate planning they can help you with you know your your um your last will and those types of things and they can help you with um you know providing for your loved ones and that with um with the best um inheritance with the least amount of taxes um an attorney is great for those types of things but again we have to understand whether or not that person is a fiduciary or not so understanding that doctors attorneys and certified public accountants are always fiduciaries they are always required to be concerned about your financial and your general well-being your insurance professional and your financial services person whether they're an investment advisor whether they are a a like a registered broker dealer or some other title that they may have those individuals may or may not be a fiduciary but it's okay to ask if you are if they are a fiduciary and understand that they are required by law to answer that question truthfully so um you know just be honest and blunt with the person that you're considering and ask them are you a fiduciary and they'll have to tell you i believe they actually have to give at least for financial services they have to give you that information in writing so we wouldn't go to a medical doctor without knowing that they were licensed it's important that we investigate our financial professional and make sure that they are properly registered the department of banking and securities in pennsylvania registers over 200 000 investment professionals that do business in the commonwealth that's a lot of people um you can actually go directly to brokercheck dot finra.org and you can type in the name of the person that you're considering working with and if you know the city or state or zip code that they're in that's great you can put that information in when you hit that search button it's going to give you first it's going to bring up the list of everybody who's licensed or registered um within those parameters um that is registered so you find your person take a look and you can find out if they're registered to do what they claim they're doing you can see which tests which series tests they've passed it gives you it actually gives you a really long work history it will even provide you with history that's not necessarily related to the finance industry i thought that was very cool because you know knowing that your professional has only you know has only ever had these two or three jobs and they've been there for a really long time shows some longevity um and then you can also see if complaints have been filed in your state or in other states as well as other actions so sometimes federal and state agencies have to take an action against an investment professional who has maybe not followed the rules the way they're supposed to it's important that when you're looking at that that you really take a look at what um the allegations were and what uh what action was taken you know maybe sometimes it's a slap on the wrist sometimes it's a strong action and you need to understand um it's kind of like pulling a a driving report you know um you need to understand and feel comfortable with your professional record that goes a really long way in in giving us that peace of mind that we can trust those individuals or maybe it will throw us the other way that says maybe i want to find a new professional um so it's important that we check those things out pretty regularly um just like you can investigate um investment professionals and medical professionals you actually want to check out your attorney you can contact the county bar association to get information if you're looking for a a referral to an attorney the county bar association can be a great resource they actually are able to give you information about specific attorneys or they can give you referrals the prior finra isn't able to provide you with a referral and state agencies state regulators are not able to refer um clients you know to a specific investment professional but the bar associations can so contact your county bar association and if you can't locate that person if you can't locate your county you can always go to pabar.org and they'll have that information for you to reach out to your county once you've done that you can actually go to padisplinaryboard.org and you can actually find out if your attorney has had actions taken against them again that can be a really important thing to know when we're looking at hiring um you know a professional an attorney to represent us um and steer us in the right direction as we start to plan for um you know our next steps so you can also find information about your investment professionals um the pennsylvania department of insurance can be found at insurance.pa.gov you can verify just like you can verify a professional through the department of banking and securities or through broker check you can verify the person that you're working with is licensed and registered you can make sure that the insurance company that you're working with is also licensed and registered and you can check about um those annuities you know make sure the person if you're if you're considering an annuity make sure that the person that's trying to sell you the annuity is registered with the insurance department again you don't want to trust your hard-earned money to someone who isn't properly registered or licensed so we've talked about how to make that money last we've talked about you know the four percent rule the bucket strategy and how to hire professionals who are going to help you to make sure that you're making the right financial decisions for your retirement let's talk now about um how can we protect what we have from investment scams because the reality is that older adults are typically the number one or number two target for frauds and scams and investment frauds in particular because they're older individuals think that they've accumulated more wealth so they can be prime targets and criminals don't care that you're a granddaughter that you have you know 14 grandchildren or um that you know you're living on a really fixed and limited income um they're out to get every last penny so it's important that we take into consideration these next three types of fraud um investment fraud so first i want to talk about affinity fraud because you know we talked about you know being able to trust our neighbors to lend them small things but we need to understand that many criminals many scam artists rely on affinity fraud to convince unsuspecting individuals to donate um to to invest their hard-earned money into whatever pitch it is that they're offering now affinity fraud happens when someone comes into comes into an organization and develops these really quick relationships and it's built all on trust um and they're pretty common within church organizations um you know civic clubs rotary clubs um athletic um golfers associations um you know baseball leagues those types of things where you know you have a lot of things in common and so you've got someone who comes in and they spend some time you know they're good they'll even they'll spend a year or two you know creating these relationships all the while their ultimate goal is to convince you to invest in some you know far out investment opportunity and and the problem is we've built this trust with them and so suddenly here's this great opportunity and i know that you know what i have is going to be a challenge to make it less so if i have this great opportunity you know it's easy to fall into that trap where we give all of our money to somebody who um you know promises these great returns so it's important that we keep that in mind and don't assume that just because somebody comes into an area and has great opportunities that they're scam artists but go back to broker check and make sure that they're licensed to offer the types of investments that they're trying to convince you to do or you can even check and make sure that the investment itself is registered because you can't just offer an investment to the public without registering it through the proper regulators and again the proper regulators are the state securities regulators so that would come under the pennsylvania department of banking and securities so the next type of investment scams that i want to talk about are the free lunch invitations or the free lunch um the free lunch and dinner um invitations and offers so they come in there these there's they're these beautiful beautiful these are ugly but they're these beautiful invitations and you know you've got this free admission to this great lunch you've got you know maybe it's surf and turf they're offering um but there's always small print and that's what you have to know and understand because the reality is that nothing in this world is really free right we have to remember that um so some things that we want to take a look at and some red flags for free lunch or free dinners you know are that they come on these again these bright and glossy invitations um sometimes they even put them as color ads in local newspapers um because they don't have um they're willing to spend as much money as they need to because the amount of money that they can scam and steal from unsuspecting investors is infinitely more than they'll spend on your 50 a meal you know dinner um so they'll also tell you that they're going to be giving you free advice and it's going to guarantee you a higher rate of return now first of all you need to understand that a return on investment can never be guaranteed um an investment is just that it's an investment there's always a risk that an investment isn't going to do as well as it's anticipated especially if you look at you know typically the market performs at you know six to eight percent if someone's telling you that you're guaranteed a 25 return on your investment or a 50 return i've heard people even say that you're guaranteed 100 return on your investment that is simply not true it's important that you keep that in mind when you go and listen to these types of sales pitches sometimes they'll advertise that it's strictly educational that you're not going to be it you're not going to be um pushed into buying anything um it is strictly educational no sales but the reality is they may just give you the um the information but what they don't tell you is that by the time you get home from that dinner and you're full on your tummy and you're ready to go to bed or ready to watch that movie they start with follow-up calls and they want to schedule an appointment so they can talk just with you that's when the sales pitches get hard um so they give you this expensive meal they tell you that there's no risk you can't lose money i'm always amazed when somebody says this investment absolutely can't lose oh wow you know there's the reality is when you're investing nothing is risk-free even bonds that you know everybody assumes are completely safe the reality is sometimes the municipalities or the governments who issue those bonds can't make good on them or sometimes they go bankrupt and guess what even though you hold a bond if they don't have the money they can't pay you so that's something that's really important that we keep in mind um so let's talk then about whoops i gotta get back to the right screen let's talk then about ponzi schemes um so it's been asked if we are going to mention any specific names and the only names that we'll be mentioning are um such much older and um well-known um ponzi pyramid schemers um so ponzi schemes were named um after charles ponzi from the 1920s who created the first ponzi scheme and you know if you think about it if you're early on in the investment program that's a pretty sweet deal right there's no actual business um and money is paid to the original investors from funds that come from new investors but at the end of the day only the very top is going to make any money and the money they're making is money that's basically being stolen from newer investors so ponzi schemes promise these great returns that are much higher than any other opportunities and the reality is there's actually not a not even a little bit of actual investment um there is a movie with um the polka king on netflix um if you search on netflix um the polka king was actually a well-known um polka artist um in the um north northeast northeastern pa um and he stole millions of people of money from individuals who invested in his um his ponzi scheme that was basically he was going to um invest it in polish artifacts and um you know at the end of the day the movie is fantastic it's hysterical it's got jack black in it but you know it really does help to show how all of these things kind of come together how um affinity fraud comes together with a ponzi scheme and you've got this great friend who's suddenly offering you this great investment um but let's talk about bernie madoff he stole billions with a b from individuals he was arrested in 2008 um and what's really sad to me is that originally he had a legitimate investment business um he actually was licensed as an investment professional he was a mortgage or a uh an investment broker but he got money hungry he eventually pled guilty to 11 felonies including money laundering perjuring he filed false documents with the securities and exchange commission and committed outright fraud he was sentenced to 150 years in prison clearly he's not going to do that he's not going to serve that many years because nobody lives that long and he's old already but i think it was really um i think it went a long way to show you know he got absolutely no leniency they didn't offer him a plea bargain at all he got what he deserved um now if you do any research into bernie madoff he actually almost brags in interviews that um that people were so gullible he he said that people would ask how he was guaranteeing these rates of return and he simply decided not to answer them and people continued to invest their hard-earned money into him um i just you know if we ask those types of questions and we don't get an answer it's really important that we question that um and individuals could have verified the offerings that bernie offered if they would have checked with their regulator so it's important even if it's somebody we've had a long time relationship with it's important that we verify not only the professional but the thing that they're offering because that thing that investment that they're offering likely has to be registered with the state or it's exempt and the state has to know that it's exempt so i would encourage anyone to make sure that you're researching and verifying any investment opportunity okay enough of that um so we do want to protect ourselves before we invest in anything um with the hard-earned money that you have investigate the information before you trust someone with your assets make sure that you can trust them by investigating their license and before you invest make sure that you research the product making sure that you use trustworthy resources like my office the department of banking and securities the pennsylvania attorney general's office finra and i'm going to actually provide you with all of those um websites now so i always first like to provide with pennsylvania resources the department of banking and securities has a really robust list of free publications at dobs.pa.gov or you can call us at 800 pa banks um we do have four individuals on staff that answer that phone when someone calls so when you call 800 pa banks a real life person is going to answer your call there's not going to be 14 buttons that you have to push before you actually get to speak to a human if all four staff are on the phone at the same time there is a voicemail that asks you to leave a message and our staff will call you back typically within the within 24 business hours the pennsylvania attorney general also has publications available at attorney general.gov if you become a victim of an investment fraud it's critical that you report it to my office the department of banking and securities if you become a victim of another type of fraud or scam the attorney general is where you want to take that information now let's talk about some other resources um you can check broker check remember you can check to make sure that your professional is properly registered at brokercheck.finra.org or you can call the 800 number that's listed there on the screen there's also a website wi65.org there were some public tv stations that put together a phenomenal um documentary for planning for retirement and what's really great about it is you have the ability to watch on that web page you can watch the whole event from start to finish or they actually took it and broke it down into sections for based upon where you are in your career if you're just starting out if you're in the middle of your career how you can make the most of everything um and then planning for retirement and retirement and beyond so they have some really great publications and then if you go to investorprotection.org they also have a plethora of publications that are available for consumers to download and print um and so there they have publications similar to the one on 65 but they also have some that are more specific to the type of investing that you want to do so maybe there's uh there's actually a publication that is all about stocks there's another one that's mutual funds and exchange traded funds and then there's another one that's bonds and bond funds and then there are um there are i don't know five or six other ones that sort of are are more detailed um and specific to um you know think very specific topics that you want to make sure that you get so i always encourage people you know the more knowledge we have the better we will do with um investing and um making those assets last so i hope that um you will check out some of those other publications and resources as well um so this brings us almost to the close of our session today um i will open the floor to questions but i think that we're on facebook live um have there been any questions on facebook live i'm gonna go check on that right now thank you and i do not see any questions well i'm going to go to the next slide my contact information is here if you see this recording later you can reach me at katr boyer pa.gov or you can give me a call at 717-214-5565 um i hope as you're viewing this that you found the information helpful and that if you have questions you'll feel free to reach out thank you so much thank you katrina we have several more presentations uh scheduled with katrina and her colleague george uh uh from the department of banking and securities um so we'll we'll have one program a month for the next several months and hope that you'll be able to join us for those absolutely it was a pleasure to to chat with you today and i'll look forward to some of those other sessions thank you very much katrina have a great day thanks you too okay bye-bye