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Workshop #2
RetirementBenjamin GroenFebruary 17, 2011SAE Financial Planning for Engineers Workshop Series
Planning for Retirement• No one will plans like you
• Average life expectancy was 74 for men and 80 for women in 1997 (and rising)
• Government programs are not certain
• Your spiritual development is dependent on your ability to plan for the future
Know Yourself• What are your plans?• What do you want to accomplish?• When do you want to retire?• What do you plan on doing?• TT 25, TT 6
The Options• Government• Social Security
• Employer• Pension• Retirement Plan (401k)
• Yourself• Retirement Vehicles
• Roth IRA, Traditional, Keogh, SEP, SIMPLE
Social SecuritySummary•Government pays you money when you are 67•www.ssa.gov/mystatement. Future of Social Security•Until 2015• Benefits can be paid solely from tax revenues until 2015
•Until 2025• From 2016-2025 SS will have to use the interest on the bonds
•Beyond 2037• From 2026-2037 the SS will have to redeem bonds• At current projections social security funds will be exhausted in 2037
(tax revenue still cover 76%• Don’t plan for much, but if it still is available, be thankful and use it—
you paid into it
Employer• Pension (Defined Benefit)• You receive a portion of your salary after working for a company
for xx years• “Golden Handcuffs”
• Retirement Plan (Defined Contribution)• Contributions to an investment vehicle (Cash, Stock Profit
Sharing, etc.)• Matching = “Free Money”• Vesting• 401K
• 16,500 Contribution Limit, Tax Deferred, Required distributions @ 59 ½, Early withdrawal penalty 10% (Exceptions)
Yourself
Traditional IRA• $5,000 Contribution Limit, Taxed on Withdrawal, Required distributions @
70 ½, Early withdrawal penalty 10% (Exceptions)
Roth IRA• $5,000 Contribution Limit, Taxed on contribution. Tax Eliminated Growth, No
required distributions @ 70½, No early withdrawal penalty of principal
Some extras: • Can contribute extra to IRA if over 50. • Participation is based on your income• You can contribute to as many IRAs as you want, as long as the total is not
more than 5000 per year, per person• There are other options (these are the most common)
Choosing Assets (Covered in Workshop 6)
• Bonds, Mutual Funds Stocks, Options, Precious Metals • Highest after tax returns• Principles of successful investing• Diversity• Asset Allocation
Investment Vehicle (IRA, Roth 401K)
Stocks
Bonds
Mutual
Funds
Start Today
How do I start?•Find out what you need•Make a plan
•Open a Roth IRA today and start saving!
Tools• Social Security Statement• Quicken• Fidelity• Personal finance.byu.edu• Teaching Tool 25• Teaching Tool 6• Lectures Retirement 1-5• Teachers
BACKUP SLIDES
Quicken
Quicken
Teaching Tool 25
Teaching Tool 6
Q&A• How much do we need? • What are the best options? • How vigorous do we need to be when starting at age 30? • How much does a couples mission cost and how should we
save for that? • Prices of funerals and how do we pass things along to our
children?• Wise ways to invest?