Title: Retirement Planning
1Retirement Planning
2Writing 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.
3How 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.
4How 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?
5How much money will you need when you retire?
- How do you react to those you say,
- Ill just live on Social Security.
6How 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).
7Other sources of retirement income
- Pension plans
- 401(k), 403(b)
- Traditional IRA
- Roth IRA
- Keogh plan
- Social Security
8Interactive Game
9Planning 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.
10Compound Interest
- Interest which is calculated not only on the
initial principal, but also the accumulated
interest of prior periods.
11Would You Rather Have, A Million Dollars Today,
Or A Penny That Doubles Every Day For Thirty Days?
12I Hope You Chose The Penny!
13Albert Einstein was so impressed with the
principle of compounding that he said
14It is the greatest mathematical discovery of all
time.
15IN 2009 121,96,709,346.21
16Figure out Compound Interest
- 300, 4 interest, 3 years
- How much interest?
Beginning of Year 1
300 12 312
300 x. 04 12
End of Year 1
17Figure out Compound Interest
- 300, 4 interest, 3 years
- How much interest?
Beginning of Year 2
312.00 12.48 324.48
312 x. 04 12.48
End of Year 2
18Figure out Compound Interest
- 300, 4 interest, 3 years
- How much interest?
Beginning of Year 3
324.48 12.98 337.46
324.48 x. 04 12.98
End of Year 3
19Figure out Compound Interest
- 300, 4 interest, 3 years
- How much interest?
337.46 -300.00
Total -Principal Total Interest
37.46
20Figure 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
6.12
21Rule 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.
22Try 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?
12 years
72 6
23Try 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?
9 interest
72 8 years
24The keyis toSTART EARLY!
25Assessment
- Create a childrens story promoting saving.
26Assessment
- Answer each question then share you answers with
the class in the form of a role play. - 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.
27Assessment
- Answer each question then share you answers with
the class in the form of a role play. - 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.
28Assessment
- Answer 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?
29Assessment
- Answer each question then share their answers
with the class in the form of a role play. - 4. Youve 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.
30Lets Wrap It All Up and Play Savings
Investment Fly Swatter Game
31 Future Value Compounding Interest Rule of 72
Certificate of Deposit Quarterly Education (college)
Interest True 9 years
False Principal Shorter
Savings Account 12 years Emergency