Special Savings Plans and Goals

Pension plans: company plans that provide retirement income for their workers.◦ A portion is withheld from your paycheck◦ Company matches contribution◦ No Federal tax until you withdraw funds (tax

deferred)◦ Maximum Contribution limit

Investing for Retirement

Keogh (pronounced Key-oh) plan-retirement plan for self-employed individuals.◦ Can save up to 15%◦ Can deduct that amount from taxable income◦ Maximum contribution limit

Individual Pension Plans

Private retirement plan for individuals or married couples

Tax-deferred contributions Tax-deferred interest income

• Maximum contribution limit ($4,000 for people making less than $30,000)

Individual Retirement Account

retirement plan for individuals or married couples

Contributions taxed (disadv.) Interest income never taxed (adv.)

• Maximum contribution limit ($4,000)

Roth IRA

Land & Buildings Income Property House (Usually safe) Undeveloped property (usually riskier) Not very liquid – what did liquid mean?

◦ Can’t turn it into cash quickly

Real Estate

Involves a trade-off! Consider:

◦ Risk Tolerance◦ Rate of Return (how much will you get back?)◦ How Liquid is the investment◦ How much income do you make?◦ What are your values?

How much to save and invest?

Diversification-spreading of investments among several different types to lower overall risk

Too much risk and poor decisions can lead to bankruptcy for people at high income levels

Spreading out your Investments

It is important to diversify your saving and investing, especially when looking toward retirement. In general, the greater the risk involved in any venture, the greater the potential return.