What's In It For Me

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  • 1. You are NEVER too Young to think about your Retirement19  Most of you will NEVER have a pension  Social Security benefits will not be enough to have a comfortable retirement  The quality of life you have in retirement depends upon you:  How much you SAVE and when you begin SAVING  How well you INVEST that savings  Take advantage of works retirement savings plans (401k plans, 403b plans, etc.) or open and IRA  START SAVING FOR RETIREMENT AS SOON AS YOU START WORKING
  • 2. Retirement Planning: The Benefits of Starting Early— You maximize the power of compounding20 Starting Early Procrastinating Saving Method Invest $3,000 annually for Do not invest in first 8 (30 year time the first 8 years years. horizon) No additional contributions Invest $3,000 annually for the next 22 years Total Amount $3,000 x 8 years= $24,000 $3,000 x 22= $66,000 Saved Value at the $218,768 $148,268 end of 30 years % of end value 11% 45% of Savings The hypothetical example assumes 8% annual rate of return and does not account for taxes. Source: Social Security Web Site, www.ssa.gov, Social Security Bulletin vol. 68 No. 2, 2008
  • 3. Every Little Bit Counts! Saving just a few dollars a day can add up over time21 Who wants to be a millionaire? Accumulated savings at the age of 65 when the investment begins at: Savings per day Age 25 Age 35 Age 45 $1.00 ($365/yr) $102,120 $44,656 $18,039 $2.50 ($912/yr) $255,300 $111,641 $45,098 $5.00 ($1,825/yr) $510,600 $223,281 $90,197 $10.00 ($3,650/yr) $1,021,201 $446,562 $180,394 The hypothetical assumes and 8% annual return and does not account for taxes. Source: Goldman Sachs http://www.bills.com/ways-to-save/
  • 4. The Rule of 7222  A simple and fairly accurate way to determine how long an investment will take to double. Divide 72 by the rate of return on your savings to see how long it will take to double your money: Rate of Return Year to Double Your Money 2% 36 years 3% 24 years 4% 18 years 6% 12 years 8% 9 years 10% 7.2 years Rule of 72 works for Inflation as well
  • 5. The benefits of tax-free growth in your employer’s plan or an IRA23 Total Assets $101,239 More savings Or 53% more $300,000 $293,630 $250,000 $192,391 $200,000 Total Assets $150,000 $100,000 Assumes an 8% annual return on a $2,400 $50,000 annual investment. Assumes investor in taxable account is in $0 the 28% tax bracket. Source: Goldman Sachs Tax-Deferred Taxable
  • 6. What would you say if I could guarantee you a 100% return on your money?24  Many corporate retirement plans will match you savings: Corporate Employee Corporate Total Annual % Return on Match Plan Savings Match Savings Your Initial Amount Savings 2 to 1 $1,200 $2,400 $3,600 200% 1 to 1 $1,200 $1,200 $2,400 100% 0.5 to 1 $1,200 $600 $1,800 50% Would you throw a $20 bill in the garbage?
  • 7. The BEST RETIREMENT ADVICE ever given…25  When you get a raise put half of it into your retirement savings  Increase the payroll deduction for your retirement plan as soon as you get the raise  Save the money before you get used to having it  Last thought—consider at Target Maturity mutual fund if it is offered—Target Date 2050, 2055 or 2060.
  • 8. Questions?26  Remember—start saving for retirement early  The power of Compound Interest  Take advantage of an employer 401K match  The power of tax-free investing  The Rule of 72  You can be a Millionaire!