Retirement Planning
Writing Prompt   Write one paragraph about the kind of    lifestyle you would like to have when you    retire. Include id...
How much money will you     need when you retire?   Many people stay healthy and    active for 20 years or more after    ...
How much money will you     need when you retire?   One of the basic sources of    retirement income is Social Security. ...
How much money will you need when you retire? How do you react to those you say,“I’ll just live on Social Security.”
How much money will you     need when you retire?   What are the eligibility requirements    to receive Social Security?...
Other sources of retirement         income:Pension plans    401(k), 403(b)    Traditional IRA    Roth IRA    Keogh pla...
Interactive Game
Planning for retirement is       your responsibility!   Traditional employer-funded    retirement plans are disappearing....
Compound Interest   Interest which is calculated not only on    the initial principal, but also the    accumulated intere...
Would You Rather Have, AMillion Dollars Today, Or APenny That Doubles Every   Day For Thirty Days?
I Hope You Chose The       Penny!
Albert Einstein was so impressed with the     principle ofcompounding that he        said…
“It is the  greatestmathematicaldiscovery of  all time.”
IN 2009$121,96,709,346.21
Figure out Compound Interest           $300, 4% interest, 3 years              How much interest?Beginning of Year 1      ...
Figure out Compound Interest           $300, 4% interest, 3 years              How much interest?Beginning of Year 2      ...
Figure out Compound Interest           $300, 4% interest, 3 years              How much interest?Beginning of Year 3      ...
Figure out Compound Interest          $300, 4% interest, 3 years             How much interest?        Total         $337....
Figure out Compound Interest$100, 2% interest, 3 years – How much interest? Year 1: $100 at 2% = $2       $100 + $2 = $1...
Rule of 72   Tells you how long it takes your    money to double in value.   Divide 72 by the interest rate to    determ...
Try It!    Apply the Rule of 72 to Find the Time or Rate   Assume you can earn 6% on your    money. How long will it take...
Try It!  Apply the Rule of 72 to Find the Time or Rate    If you have $200 today and need     $400 in eight years, what i...
The key is toSTARTEARLY!
Assessment   Create a children’s story promoting    saving.
AssessmentAnswer each question then share you answers   with the class in the form of a role play.3.   Norma is considerin...
AssessmentAnswer each question then share you answers   with the class in the form of a role play.2. You were visiting you...
AssessmentAnswer each question then share you answers   with the class in the form of a role play.3. Your friends, Jim and...
AssessmentAnswer each question then share their answers   with the class in the form of a role play.4. You’ve been working...
Let’s Wrap It All Up and Play    Savings & Investment      Fly Swatter Game
Future        Compounding                               Rule of 72   Value           InterestCertificate of               ...
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Retirement Planning PPT

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  • This can be used as a pre-assessment to see how realistic the students are about their retirement, or as an activity to expand on their prior knowledge.
  • Eligibility requirements to receive Social Security: Citizenship You must be a United States citizen or a legal alien to be eligible for Social Security benefits. Social Security Contributions You must work and put money towards Social Security benefits for a period of 10 years before you can collect Social Security benefits upon retirement . Surviving Dependent A surviving dependent (spouse or child) may be eligible to collect the Social Security benefits of a deceased spouse or parent if the deceased spouse or parent was due any Social Security benefits. Dependent Grandchild or Child A dependent grandchild or child (biological, adopted or stepchild) may qualify for a parent's Social Security benefits if that grandchild or child is single and under 18 years of age, is between the ages of 18 and 19 and attending school full time (below grade 12), or was disabled before the age of 22 and is 18 years of age and up. Child Supporting a Senior Parent If a child supports a senior parent and contributes 50 percent to that support, the senior parent may be eligible for the Social Security benefits of that child if that child dies. Ex-Spouse Anyone divorced from someone 62 years of age or older may be eligible for their ex-spouses' benefits. Read more: Social Security Eligibility Requirements | eHow.com http://www.ehow.com/facts_4963569_social-security-eligibility-requirements.html#ixzz1EFuSnmBX Difference between traditional and Roth IRA? Traditional IRA Profile Tax deductible contributions (depending on income level) Withdraws begin at age 59 1/2 and are mandatory by 70 1/2. Taxes are paid on earnings when withdrawn from the IRA Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.) Available to everyone; no income restrictions All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception). Roth IRA Profile Contributions are not tax deductible No Mandatory Distribution Age All earnings and principal are 100% tax free if rules and regulations are followed Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.) Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions). 401(k) vs 403(b) 401k and 403b plans are actually the same thing - 401k plans are for for-profit companies, and 403b plans are for non-profit companies, schools, government agencies, etc.
  • Keogh Plan- A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined contribution. Contributions are generally tax deductible up to 25% of annual income with a limit of $47,000 (as of 2007). Keogh plan types include money-purchase plans (used by high-income earners), defined-benefit plans (which have high annual minimums) and profit-sharing plans (which offer annual flexibility based on profits).
  • http://www.practicalmoneyskills.com/english/flash/countdown/countdown.html
  • Albert Einstein, arguably one of the most intelligent people who ever lived, was asked what he thought was the greatest of mankind’s discoveries. His answer: “compound interest.” He went so far as to call it the eighth wonder of the world. As an example of just how powerful this can be, consider the following scenario. Let’s say Christopher Columbus made an investment in the new world’s future in 1492. If Chris had places a single penny in a 6% interest-bearing account and instructed someone to remove the interest every year, the value of the interest earned by 2005 would be almost 31 cents. Not too much to write home about, is it? But if the young explorer had placed the same paltry investment of one cent into the same interest-bearing account but LEFT the earned interest to compound – earning interest upon interest – the results would be drastically different. What would you guess the account would be worth now? $10,000? $100,000? A million? 10 million? 100 million? In actuality, the resulting balance of a penny invested at 6% COMPOUND interest for 513 years would be $95,919,936,112. That’s 95 BILLION! Not bad for a single penny. Do you se what Al Einstein was so worked up about? It’s powerful. We may not have 513 years to make compound interest work for us, but we can employ it nonetheless. Comparable article http://investingcaffeine.com/2009/10/16/compounding-a-penny-saved-is-billions-earned/
  • Principal times interest rate = interest earned Add interest earned to principal = ending balance at the end of the year.
  • Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
  • Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
  • Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
  • Year 1: $100 x .02 = 2 Add the $2 of interest to the principal of $100, which equals $102 Year 2: $102 x .02 = $2.04 Add the $2.04 to the beginning principal from the beginning of year 2 = $104.04 Year 3: $104.04 x .02 = $2.08 Add the $2.08 to the beginning principal from the beginning of year 3 = $106.12
  • This page is from the NEFE (National Endowment for Financial Education Order Free student and teacher manuals http://hsfpp.nefe.org/loadFile.cfm?contentid=321
  • See instructions on the last slide.
  • To play the Fly Swatter Game, project this page of the PPT on a wall (not recommended to be projected on a screen). Divide students into two teams. The first person in each team holds a fly swatter while facing the screen. When the teacher reads the definition or a question to which the students can identify the answer on the screen, they swat the answer with the fly swatter. Keep track of points, Rotate through the team. Change the PPT terms/answers as needed for items you need to review with your students.
  • Transcript of "Retirement Planning PPT"

    1. 1. Retirement Planning
    2. 2. Writing Prompt Write one paragraph about the kind of lifestyle you would like to have when you retire. Include ideas on how much you think it will cost to maintain this lifestyle. (Do you want to live on the amount of money you have been used to, more than they are used to, or less then they are used to?) Write a second paragraph on where their income will come from after retirement.
    3. 3. How much money will you need when you retire? Many people stay healthy and active for 20 years or more after they retire. If you start planning and investing soon enough, you can spend those years enjoying yourself instead of worrying about paying the bills.
    4. 4. How much money will you need when you retire? One of the basic sources of retirement income is Social Security.  Social Security Benefits Calculator  Could you live comfortably on Social Security benefits only?
    5. 5. How much money will you need when you retire? How do you react to those you say,“I’ll just live on Social Security.”
    6. 6. How much money will you need when you retire? What are the eligibility requirements to receive Social Security? What is the difference between a traditional IRA and a Roth IRA? What is the difference between a 401(k) and a 403(b).
    7. 7. Other sources of retirement income:Pension plans  401(k), 403(b)  Traditional IRA  Roth IRA  Keogh plan  Social Security
    8. 8. Interactive Game
    9. 9. Planning for retirement is your responsibility! Traditional employer-funded retirement plans are disappearing. Social Security benefits may not insure a comfortable lifestyle. Without a retirement plan, you could face a future of financial uncertainties and hardships.
    10. 10. Compound Interest Interest which is calculated not only on the initial principal, but also the accumulated interest of prior periods.
    11. 11. Would You Rather Have, AMillion Dollars Today, Or APenny That Doubles Every Day For Thirty Days?
    12. 12. I Hope You Chose The Penny!
    13. 13. Albert Einstein was so impressed with the principle ofcompounding that he said…
    14. 14. “It is the greatestmathematicaldiscovery of all time.”
    15. 15. IN 2009$121,96,709,346.21
    16. 16. Figure out Compound Interest $300, 4% interest, 3 years How much interest?Beginning of Year 1 $300 $300 x. 04 + 12 $12 $312 End of Year 1
    17. 17. Figure out Compound Interest $300, 4% interest, 3 years How much interest?Beginning of Year 2 $312 $312.00 x. 04 + 12.48 $12.48 $324.48 End of Year 2
    18. 18. Figure out Compound Interest $300, 4% interest, 3 years How much interest?Beginning of Year 3 $324.48 $324.48 x. 04 + 12.98 $12.98 $337.46 End of Year 3
    19. 19. Figure out Compound Interest $300, 4% interest, 3 years How much interest? Total $337.46 -Principal -300.00Total Interest
    20. 20. Figure out Compound Interest$100, 2% interest, 3 years – How much interest? Year 1: $100 at 2% = $2  $100 + $2 = $102 Year 2: $102 at 2% = $2.04  $102 + $2.04 = $104.04 Year 3: $104.04 at 2% = $2.08  $104.04 + $2.08 = $106.12 (Total) $106.12 – (Principal) $100 = (Interest) $6.12
    21. 21. Rule of 72 Tells you how long it takes your money to double in value. Divide 72 by the interest rate to determine number of years to double. Divide 72 by years to determine rate needed to double your money in a given time period.
    22. 22. Try It! Apply the Rule of 72 to Find the Time or Rate Assume you can earn 6% on your money. How long will it take $100 to grow to $200? 72 ÷ 6% = 12 years
    23. 23. Try It! Apply the Rule of 72 to Find the Time or Rate  If you have $200 today and need $400 in eight years, what interest rate do you need to earn?72 ÷ 8 years = 9% interest
    24. 24. The key is toSTARTEARLY!
    25. 25. Assessment Create a children’s story promoting saving.
    26. 26. AssessmentAnswer each question then share you answers with the class in the form of a role play.3. Norma is considering buying a certificate of deposit with the $500 she has in a regular savings account. Explain to her what factors she could consider when choosing a certificate of deposit.
    27. 27. AssessmentAnswer each question then share you answers with the class in the form of a role play.2. You were visiting your Grandpa and you happened to find $5000 stashed in an old shoe box. He told you that he had been saving this money for over 20 years. a. Explain to him other options he has. b.Explain and demonstrate the principles of compounding interest.
    28. 28. AssessmentAnswer each question then share you answers with the class in the form of a role play.3. Your friends, Jim and Joey (16) are twin brothers and just received a $1000 inheritance from a wealthy aunt. Jim wants the two of them to put their money together and buy a 4- wheeler. Joey says he wants to put his money in a savings account. Jim comes to you to ask you to help persuade Joey to buy the 4- wheeler. What is your best financial advice?
    29. 29. AssessmentAnswer each question then share their answers with the class in the form of a role play.4. You’ve been working for a while, but your sister just got a job and is excited to have some of her “own” spending money. Money burns a hole in her pocket and you need to give her some ideas on how to save some money.
    30. 30. Let’s Wrap It All Up and Play Savings & Investment Fly Swatter Game
    31. 31. Future Compounding Rule of 72 Value InterestCertificate of Education Quarterly Deposit (college) Interest True 9 years False Principal Shorter Savings 12 years Emergency Account
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