Retirement Accounts

How to Become a Millionaire

Save $20,000 for 47 years with 8% interestWorth $744,640

10% interest, Worth $1,763,949

Every Million saved = $50,000 in retirementWith 8% annual interest rate

Calculate what you want to make in retirementConsider Social Security payoutsConsider retirement account payouts

To Retire

Answer I think and I want on page 32Watch Dave Chapter 3, Part 1Do you have all page 33 to 35 answers?IRS (Internal Revenue Service) codesRetirement account = tax savingsAll names based on tax codeJust a name of account - have all

types of investments in the accountDressed up in a coat

What you think and want to know

RothPay taxes now & Never againMoney grows tax free

Tax Deferred AccountsMake more now than retirementPay taxes latter = pay less in taxes

If take $ early = penalty

Roth

SEPPSelf-employed person may deduct up to

15%How a pension work now days

Tax, employer and (minimum) employee funded

Get to retire without saving much / anyWho gets them?

Politicians, Police, Fire, Teachers – Public Servants

Pension Plan

Companies really do not have pensionsMost are now self-funded and matching plans401(k) = company 403(b) = non-profit

organization2010 median match = 3% of payMeaning, earn $40,000 you put at least 3%

or $1,200 in 401(k) and employer will put in 3% or

$1,200 free money into your accountLaw forces you to enroll or opt outCan usually put up to 15% into 401(k) up to

$17,000

401(k), 403(b)

Deferred compensationFor government employeesDo not use a Guaranteed Investment Contract

Difference between 457 & 401/403No 10% penalty for withdrawal before the

age of 59½Independent contractors can participate

457

You should be funding your plan whether your company matches or not.

You should always rollover retirement plans to an IRA when you leave the companyOr, if allowed roll to your new 401(k)Or, you will be charged more feesUse a direct transfer or may get charged taxes

and penaltiesAnswers:

Pay the taxes separately and you understand all taxes will become due

More on Retirement

Never BORROW on your retirement planWill become a habit

1. Fund 401(k) or other plan up to the Match

2. Above the match, fund Roth IRAs3. Complete 15% of income by going back

to your 401(k) or other plans

Baby Step 4

Date of birth: 6/15/1988Current earnings: $40,000.00Benefit in year-2010 dollarsRetirement month: 6/2049

Social Security

•Estimated monthly benefit •Start at age 62 and 1 month in 2050•$1,061.00

For your estimate, we assumed no future increases in prices or earnings

Worksheet – Watch Dave and answer questions

Will go over

Social Security