Is Retirement Within Your

Reach?

Is a retirement plan really necessary?

Your Retirement GoalsWhat’s your choice?

Retire by age ?

Work part-time?

Travel?

Buy home in warmer climate?

Reduce lifestyle?

Maintain or increase current lifestyle?

Which one will you be driving when you

retire?

When do you plan to retire?

How much to save?

Age 35 Age 55

$1 $4

How long will your

retirement last?

What will retirement

cost?

What are your sources of retirement

income?

Sources of Retirement Income Company

Retirement/Pension Plans

Social Security

Individual savings

Tax deferred or taxable

Part time work

How much have you currently set

aside for retirement?

Estimating the Amount to Save

$ Retirement income goal

$ Social Security and Pension income

$ Additional income needed

$ Value of assets currently owned

$ Revised amount to save

Retirement Calculators

Social Security

Contribute for 40 quarters

Replacement rates between 59% and 24% depending on income earned

Collect full benefits at designated retirement age

Full Retirement Age by Year of BirthYear of Birth Full Retirement Age

1937 & earlier 65 years1938 65 years, 2 months1939 65 years, 4 months1940 65 years, 6 months1941 65 years, 8 months1942 65 years, 10 months

1943 - 1954 66 years1955 66 years, 2 months1956 66 years, 4 months1957 66 years, 6 months1958 66 years, 8 months1959 66 years, 10 months1960 & after 67 years

Check Social Security Records

SSA will automatically mail your statement of retirement, disability & survivor benefits 90 days before your birthday

Use “Requests for Earnings and Benefits Form” from Social Security office or

call1-800-772-1213 or consult web site

www.ssa.gov

Save IRS W-2 Forms

Retirement Plans

Company Retirement Plans

Salary Reduction Retirement Plans

Individual Retirement Accounts (Traditional or Roth)

Plans for the self-employed

Contributions with pre-tax dollars lowers taxable

income.

Maximize benefits from your Retirement Plans

$ Begin contributions as soon as possible.

$ Make maximum contributionsallowed, if possible.

$ Choose investments that pay high earnings

Saving in a Tax Deferred versus a Taxable Account

Years

10

20

30

40

Taxable Account

$ 24,420

$ 59,201

$108,740

$179,279

Tax Deferred

$ 26,414

$ 69,414

$139,679

$253,679

Individual Retirement Accounts

Tax-deferred retirement program

Must have earned income or alimony

Contribute up to *: $4,000 in 2005-07

$5,000 in 2008*Amounts shown are for individuals. Amounts double for couples.

Traditional Individual Retirement Accounts

Fully deductible from income taxes if no retirement plan at work.

OR May be partially or fully deductible based on Adjusted Gross Income.

Deductible IRA Income Limits

Year

200520062007

Joint Return $70,000-$80,000$75,000-$85,000$80,000-$100,000

Individual Return

$50,000-$60,000$50,000-$60,000$50,000-$60,000

Deductible IRA Contributions

Reduce taxable income

Report on 1040 tax form

Traditional Non-deductible IRA Contributions

File IRS Form 8606 with Federal Tax return

Retain copy

permanently

Investing in Investing in Traditional IRAsTraditional IRAs

Investing in Investing in Traditional IRAsTraditional IRAs

Check yearly maintenance fees.

As IRA grows in value see if fee can be removed.

10% penalty plus taxes on amount withdrawn before

age 59 1/2.

Roth IRARoth IRARoth IRARoth IRAContributions made with after-tax dollarsNo mandatory age for withdrawals

No mandatory age limit for contributionsContributions (after-tax dollars) always available for withdrawal without penalty

Roth IRA RulesRoth IRA RulesRoth IRA RulesRoth IRA RulesWithdrawals of earnings are not taxed if…

Account is 5 years old and You are at least 59 ½ or Earnings up to $10,000 are being

used for first time home purchase or

Higher education for self, family & grandchildren

Roth IRA Contributions

Make contribution to Roth IRA until April 15 for previous year.

The 5 year waiting period for tax free withdrawal of earnings begins with the year of the first contribution.

Ordinary IRA funds converted to Roth IRA must remain at least 5 years or a 10% penalty will apply.

Investing in IRAs

Don’t have $4,000 all at once? Consider making automatic monthly payments from checking account or payroll deduction.

Contributions held in a custodial account

Accounts can be at any financial institution, bank, credit union,

mutual fund company, brokerage account.

Invest for high return.

Timing IRA Contributions

Make contributions as early in year as possible

Can make previous year’s

contribution until April 15th, but

tell account custodian it is for the previous year

IRAs - An Example of Return on Investment

Contributions made only between ages 22-30 (9 years)

$2,000 contributed each year

Total investment of $18,000

At an interest rate of 9% by age 65 will have $579,471

IRAs - An Example of Return on Investment

Contributions made only between ages 31-65 (35 years)

$2,000 contributed each year

Total investment of $70,000

At an interest rate of 9%, by age 65 will have $470,249

E. M. I. L. Y.Early money is like yeast, it helps your dough rise!

IRA Direct Transfers –

transfer of IRA funds from one IRA custodian to another

How to save $3,000 per

year

Finding Money to Finding Money to SaveSave

One cup of coffee at $1.00/cup x 5 days x 50 weeks = $250/yr.

One soft drink at $1.00/each x 5 days x 50 weeks = $250/yr.

2 video rentals/week @ $3.00 each x 50 weeks = $300/yr.

One fast food meal/week @ $5.00 = $250/yr.

TOTAL SAVED = $1,050/year

Other ideas?

Retirement Planning Has Changed!

$ More self-directed

$ No “guarantees”

$ Living longer

$ Portable plans

$ Inflation & taxation

Think of retirement as a vacation -- take half as

much baggage and twice as much money!

Is Retirement Within Your

Reach?