Retirement Planning

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Retirement Planning
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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.

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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.

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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?

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How much money will you need when you retire?

• How do you react to those you say,
• Ill just live on Social Security.

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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).

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Other sources of retirement income

• Pension plans
• 401(k), 403(b)
• Traditional IRA
• Roth IRA
• Keogh plan
• Social Security

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Interactive Game
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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.

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Compound Interest

• Interest which is calculated not only on the
  initial principal, but also the accumulated
  interest of prior periods.

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Would You Rather Have, A Million Dollars Today,
Or A Penny That Doubles Every Day For Thirty Days?
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I Hope You Chose The Penny!
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Albert Einstein was so impressed with the
principle of compounding that he said
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It is the greatest mathematical discovery of all
time.
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IN 2009 121,96,709,346.21
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Figure 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
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Figure 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
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Figure 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
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Figure out Compound Interest

• 300, 4 interest, 3 years
• How much interest?

337.46 -300.00
Total -Principal Total Interest
37.46
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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

6.12
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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.

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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?

12 years
72 6
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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?

9 interest
72 8 years
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The keyis toSTART EARLY!
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Assessment

• Create a childrens story promoting saving.

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Assessment

• 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.

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Assessment

• 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.

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Assessment

• 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?

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Assessment

• 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.

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Lets Wrap It All Up and Play Savings
Investment Fly Swatter Game
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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