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Is Retirement Within Your
Reach?
Is a retirement plan really necessary?
Your Retirement GoalsWhat’s your choice?
Retire by age ?
Work part-time?
Travel?
Buy home in warmer climate?
Reduce lifestyle?
Maintain or increase current lifestyle?
Which one will you be driving when you
retire?
When do you plan to retire?
How much to save?
Age 35 Age 55
$1 $4
How long will your
retirement last?
What will retirement
cost?
What are your sources of retirement
income?
Sources of Retirement Income Company
Retirement/Pension Plans
Social Security
Individual savings
Tax deferred or taxable
Part time work
How much have you currently set
aside for retirement?
Estimating the Amount to Save
$ Retirement income goal
$ Social Security and Pension income
$ Additional income needed
$ Value of assets currently owned
$ Revised amount to save
Retirement Calculators
Social Security
Contribute for 40 quarters
Replacement rates between 59% and 24% depending on income earned
Collect full benefits at designated retirement age
Full Retirement Age by Year of BirthYear of Birth Full Retirement Age
1937 & earlier 65 years1938 65 years, 2 months1939 65 years, 4 months1940 65 years, 6 months1941 65 years, 8 months1942 65 years, 10 months
1943 - 1954 66 years1955 66 years, 2 months1956 66 years, 4 months1957 66 years, 6 months1958 66 years, 8 months1959 66 years, 10 months1960 & after 67 years
Check Social Security Records
SSA will automatically mail your statement of retirement, disability & survivor benefits 90 days before your birthday
Use “Requests for Earnings and Benefits Form” from Social Security office or
call1-800-772-1213 or consult web site
www.ssa.gov
Save IRS W-2 Forms
Retirement Plans
Company Retirement Plans
Salary Reduction Retirement Plans
Individual Retirement Accounts (Traditional or Roth)
Plans for the self-employed
Contributions with pre-tax dollars lowers taxable
income.
Maximize benefits from your Retirement Plans
$ Begin contributions as soon as possible.
$ Make maximum contributionsallowed, if possible.
$ Choose investments that pay high earnings
Saving in a Tax Deferred versus a Taxable Account
Years
10
20
30
40
Taxable Account
$ 24,420
$ 59,201
$108,740
$179,279
Tax Deferred
$ 26,414
$ 69,414
$139,679
$253,679
Individual Retirement Accounts
Tax-deferred retirement program
Must have earned income or alimony
Contribute up to *: $4,000 in 2005-07
$5,000 in 2008*Amounts shown are for individuals. Amounts double for couples.
Traditional Individual Retirement Accounts
Fully deductible from income taxes if no retirement plan at work.
OR May be partially or fully deductible based on Adjusted Gross Income.
Deductible IRA Income Limits
Year
200520062007
Joint Return $70,000-$80,000$75,000-$85,000$80,000-$100,000
Individual Return
$50,000-$60,000$50,000-$60,000$50,000-$60,000
Deductible IRA Contributions
Reduce taxable income
Report on 1040 tax form
Traditional Non-deductible IRA Contributions
File IRS Form 8606 with Federal Tax return
Retain copy
permanently
Investing in Investing in Traditional IRAsTraditional IRAs
Investing in Investing in Traditional IRAsTraditional IRAs
Check yearly maintenance fees.
As IRA grows in value see if fee can be removed.
10% penalty plus taxes on amount withdrawn before
age 59 1/2.
Roth IRARoth IRARoth IRARoth IRAContributions made with after-tax dollarsNo mandatory age for withdrawals
No mandatory age limit for contributionsContributions (after-tax dollars) always available for withdrawal without penalty
Roth IRA RulesRoth IRA RulesRoth IRA RulesRoth IRA RulesWithdrawals of earnings are not taxed if…
Account is 5 years old and You are at least 59 ½ or Earnings up to $10,000 are being
used for first time home purchase or
Higher education for self, family & grandchildren
Roth IRA Contributions
Make contribution to Roth IRA until April 15 for previous year.
The 5 year waiting period for tax free withdrawal of earnings begins with the year of the first contribution.
Ordinary IRA funds converted to Roth IRA must remain at least 5 years or a 10% penalty will apply.
Investing in IRAs
Don’t have $4,000 all at once? Consider making automatic monthly payments from checking account or payroll deduction.
Contributions held in a custodial account
Accounts can be at any financial institution, bank, credit union,
mutual fund company, brokerage account.
Invest for high return.
Timing IRA Contributions
Make contributions as early in year as possible
Can make previous year’s
contribution until April 15th, but
tell account custodian it is for the previous year
IRAs - An Example of Return on Investment
Contributions made only between ages 22-30 (9 years)
$2,000 contributed each year
Total investment of $18,000
At an interest rate of 9% by age 65 will have $579,471
IRAs - An Example of Return on Investment
Contributions made only between ages 31-65 (35 years)
$2,000 contributed each year
Total investment of $70,000
At an interest rate of 9%, by age 65 will have $470,249
E. M. I. L. Y.Early money is like yeast, it helps your dough rise!
IRA Direct Transfers –
transfer of IRA funds from one IRA custodian to another
How to save $3,000 per
year
Finding Money to Finding Money to SaveSave
One cup of coffee at $1.00/cup x 5 days x 50 weeks = $250/yr.
One soft drink at $1.00/each x 5 days x 50 weeks = $250/yr.
2 video rentals/week @ $3.00 each x 50 weeks = $300/yr.
One fast food meal/week @ $5.00 = $250/yr.
TOTAL SAVED = $1,050/year
Other ideas?
Retirement Planning Has Changed!
$ More self-directed
$ No “guarantees”
$ Living longer
$ Portable plans
$ Inflation & taxation
Think of retirement as a vacation -- take half as
much baggage and twice as much money!
Is Retirement Within Your
Reach?