Will You Be Retirement Ready? Quarterly Webinar October 25, 2018 - PowerPoint PPT Presentation

WELCOME Will You Be Retirement Ready? Quarterly Webinar October 25, 2018

TODAY’S SPEAKERS G. Leonard Teitelbaum Chair, RPB Board of Trustees David Baskin President and Founder, Baskin Wealth Management (BWM) Michael Kimmel Executive Director, RPB Stephanie Berger Director of Marketing and Communications, RPB

AGENDA Opening Remarks Market and Plan Update Will You Be Retirement Ready? Q&A

OPENING REMARKS

MARKET & PLAN UPDATE

Key Themes: 2018 Year-To-Date Varied market returns year-to-date as US equities have performed better than non-US equities and fixed income Growth continued to outperform globally Increasing inflation concerns have weighed on interest rates and have been a source for equity volatility Political focus increasing with upcoming US mid-term elections and ongoing trade discussions Return to volatility after two years of stable/rising markets

Equity Market Volatility Continued return to normal volatility in 2018 40% 34% 31% 30% 27% 30% 26% 23% 20% 20% 19% 20% 14% 13% 13% 11% 10% 9% 10% 5% 4% 3% 0% 0% -1% -3% -3% -10% -6% -7% -7% -8% -11% -8% -8% -10% -10% -13% -10% -10% -12% -11% -12% -14% -20% -16% -19% -17% -19% -23% -30% -28% -30% -34% -40% -38% S&P 500 Annual Return -50% -49% S&P 500 Largest Drawdown -60% 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Source: JPMorgan. As of 10/12/2018.

2018 Asset Quilt – Diversification Matters YTD Description 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Core Core US US MLP MLP EM REITs EM REITs EM EM MLP MLP EM REITs REITs MLP EM Best Performing Bonds Bonds Equities Equities US Large and Small Stock Index 45.7% 43.7% 55.8% 31.5% 34.0% 35.9% 39.4% 78.5% 35.9% 13.9% 18.2% 30.4% 2.5% 18.3% 37.3% 10.3% 5.2% 33.6% 10.6% High US Core High REITs REITs REITs MLP EM EAFE EM MLP MLP REITs REITs REITs MLP EAFE MLP Yield Equities Bonds Yield Master Limited Partnerships (Pipelines) Index 26.8% 12.8% 3.7% 44.5% 25.6% 13.5% 32.2% 12.7% 76.4% 28.5% 8.7% 17.8% 27.6% 25.0% 5.9% -26.2% 12.6% 0.6% 17.1% Core Core High High Core Core US US US High EAFE EAFE REITs EAFE EAFE MLP EM EAFE EAFE High Yield Bonds (Non-Investment Grade Bonds) Bonds Bonds Yield Yield Bonds Bonds Equities Equities Equities Yield 38.6% 20.3% 12.1% 26.3% 11.2% -36.9% 18.9% 17.3% 22.8% Index 11.6% 8.4% -1.4% 58.2% 7.8% 6.0% 0.5% 12.7% 21.1% 2.6% High High Core US US High US High High MLP REITs MLP MLP MLP EAFE MLP EAFE EM REITs Yield Yield Bonds Equities Equities Yield Equities Yield Yield Real Estate Investment Trust Index -3.4% 36.8% 16.7% 6.3% 26.1% 31.8% 4.8% -0.8% 11.2% 2.3% -5.9% 5.3% 7.0% -37.3% 16.9% 5.0% 16.4% 7.4% 7.5% US US US US US US High US High High High EM EM REITs REITs REITs REITs REITs EAFE Equities Equities Equities Equities Equities Equities Yield Equities Yield Yield Yield Developed Market International Stock Index -2.6% -6.2% -38.0% 28.6% 2.5% 8.6% 5.1% -1.4% -7.5% 31.1% 12.0% 6.1% 15.7% 5.1% 15.1% 1.0% 15.8% 2.5% -4.5% US High High High US Core Core Core Core EAFE EAFE High Yield High Yield EAFE EAFE EAFE MLP EM EM Worst Performing Equities Yield Yield Yield Equities Bonds Bonds Bonds Bonds Diversified US Investment Grade Bond Index -14.2% -15.9% 29.0% 11.1% -43.4% 7.8% -12.1% 4.8% -2.2% -14.9% -11.5% 2.7% 11.9% 1.9% 28.3% -2.0% 2.7% 3.5% -1.6% US Core Core Core Core Core Core Core EM EAFE REITs EM EM EM EAFE MLP EAFE MLP EM Equities Bonds Bonds Bonds Bonds Bonds Bonds Bonds Emerging Market Stock Index -30.8% -21.4% -16.8% -53.3% -18.4% -2.6% -4.9% -32.6% 1.0% -6.5% -7.7% -21.5% 4.1% 4.3% 2.4% 4.3% 5.9% 6.5% 4.2%

Strong Growth Stock Performance Over long periods Value has historically outperformed Growth Current 10-year period is unique; last experienced in the 1990s As of S eptember 30, 2018 1 Y ear 3 Y ear 5 Y ear 10 Y ear 20 Y ear R ussell 1000 Value 9.5% 13.6% 10.7% 9.8% 7.6% R ussell 1000 G rowth 26.3% 20.6% 16.6% 14.3% 7.2% MS C I E AFE Value -0.4% 8.1% 3.1% 4.5% 5.7% MS C I E AFE G rowth 5.8% 10.3% 5.6% 6.2% 4.6% MS C I E M Value 2.3% 11.6% 2.0% 4.5% 10.0% MS C I E M G rowth -3.9% 13.0% 5.1% 6.2% 9.5% Source: Bloomberg

Increasing Inflation Concerns Inflation continues to drift higher Oil prices continue to recover Federal Reserve increasing interest rates in response Consumer Price Index (YoY, Headline) Oil Price / Barrel ($) 6% 160 5% 140 4% 120 3% 100 2.3% 2% 80 73.3 1% 60 0% 40 -1% 20 -2% 0 -3% -20 ep-98 ep-00 ep-02 ep-04 ep-06 ep-08 ep-10 ep-12 ep-14 ep-16 ep-18 ep-98 ep-00 ep-02 ep-04 ep-06 ep-08 ep-10 ep-12 ep-14 ep-16 ep-18 S S S S S S S S S S S S S S S S S S S S S S Source: Bloomberg

Year-To-Date Tier 1 Investment Returns January 1, 2018 through September 30, 2018 6.00% 3.7% 4.00% 3.3% 2.0% 2.00% 1.4% 1.4% 1.3% 0.5% 0.00% -2.00% -1.6% Capital Appreciation Fund MSCI ACWI IMI Index Appreciation and Income Fund 55% MSCI ACWI IMI/45% Fixed Income Composite** Income Focused Fund Fixed Income Composite*** Capital Preservation Fund FTSE 3 Month T-Bill * Net of investment management fees. ** 50/50 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through March 31, 2015; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through September 30, 2016; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg through September 30, 2017; 55/45 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg thereafter. *** Barclays Global Aggregate January 1, 2013 through September 30, 2016, Barclays US Aggregate thereafter. .

Since Inception Volatility – Lower is Less Risky January 1, 2013 through September 30, 2018 12.0% 9.7% 10.0% 9.0% 8.0% 6.2% 6.0% 6.0% Standard Deviation 3.9% 4.0% 2.9% 2.0% 0.0% Capital MSCI ACWI Appreciation 55% MSCI Income Fixed Income Appreciation IMI & Income ACWI Focused Fund Composite** Fund Fund IMI/45% Fixed Income Composite* * 50/50 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through March 31, 2015; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through September 30, 2016; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg through September 30, 2017; 55/45 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg thereafter. ** Barclays Global Aggregate January 1, 2013 through September 30, 2016, Barclays US Aggregate thereafter. .

MSCI AC World Index (Net) Blmbg. Barc. U.S. Gov/Credit Float Adj: 1-5 Year Vanguard Short-Term Bond Index Fund (VBIRX) Reform JVI Fund 3.8% 3.8% Vanguard ST Inflation-Protected Index (VTAPX) Blmbg. Barc. U.S. TIPS 1-5 Year -0.1% Year-to-Date Tier 2 Investment Returns Blmbg. Barc. U.S. Credit 5-10 Year Index -0.1% Vanguard Int-Term Corp Bond Index (VICSX) 0.6% 0.8% Vanguard Total Bond Index Fund (VBTLX) -2.1% -2.0% Blmbg. Barc. U.S. Aggregate Vanguard Spliced Real Estate Index -1.6% FTSE EM Mkts All Cap China A Inclusion Index Vanguard REIT (VGSNX) -1.6% Vanguard EM Markets Index Fund (VEAMX) 0.6% 0.6% Vanguard Developed Mkts Idx Fund (VTMGX) FTSE Developed All Cap ex-U.S. Index -8.8% -8.7% Vanguard Small Cap Index Fund (VSMAX) -1.6% -1.6% CRSP US Small Cap TR Index January 1, 2018 through August 30, 2018 Vanguard S&P 500 Instl Index Fund (VIIIX) 11.0% *Net of investment management fees. 11.0% S&P 500 10.6% 10.5% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00%

WILL YOU BE RETIREMENT READY?

Retirement Planning is Changing: Key Trends New vision: Longer lifespans Rising health Focus on adequacy continuing to ‘work’ care costs and income after retirement

Your Retirement Readiness Retirement Retirement Income What You Control Standard of Living Taxable Tax-deferred Contributions Tax-advantaged How much of my Retirement Age income will I Annuities Social Security Age need in retirement? Retirement Budget Social Security Asset Allocation Real Assets Salary Multiple Sources Income Replacement Ratio Readiness Factors Longevity

The Income Replacement Ratio RULE OF THUMB • 80% of final pre-retirement gross salary KEEP IN MIND: Spending in Retirement doesn’t remain stable • Go-go, slow-go, and no-go years • Avoid overspending when first retired • Some spending categories slowly Social Security decline (essentials/discretionary) Social Security 20% 30% • While other categories rise Retirement (health care) Retirement Savings 60% Savings 50% • Expect some decrease in spending in later years Consensus RPB Participant