Retirement Retirement PlanningPlanning
Writing PromptWriting Prompt Write one paragraph about the kind of Write one paragraph about the kind of
lifestyle you would like to have when lifestyle you would like to have when you retire. Include ideas on how much you retire. Include ideas on how much you think it will cost to maintain this you think it will cost to maintain this lifestylelifestyle. . (Do you want to live on the amount of money (Do you want to live on the amount of money you have been used to, more than they are used to, or less you have been used to, more than they are used to, or less then they are used to?)then they are used to?)
Write a second paragraph on where Write a second paragraph on where their income will come from after their income will come from after retirement.retirement.
How much money will How much money will you need when you you need when you
retire?retire? Many people stay healthy and Many people stay healthy and
active for 20 years or more after active for 20 years or more after they retire.they retire.
If you start planning and If you start planning and investing soon enough, you can investing soon enough, you can spend those years enjoying spend those years enjoying yourself instead of worrying yourself instead of worrying about paying the bills.about paying the bills.
How much money will How much money will you need when you you need when you
retire?retire? One of the basic sources of One of the basic sources of
retirement income is Social retirement income is Social Security.Security. Social Security Benefits CalculatorSocial Security Benefits Calculator Could you live comfortably on Could you live comfortably on
Social Security benefits only?Social Security benefits only?
How much money will How much money will you need when you you need when you
retire?retire? How do you react to those you How do you react to those you
say, say,
““I’ll just live on Social Security.”I’ll just live on Social Security.”
How much money will How much money will you need when you you need when you
retire?retire? What are the eligibility What are the eligibility
requirements to receive Social requirements to receive Social Security?Security?
What is the difference between a What is the difference between a traditional IRA and a Roth IRA?traditional IRA and a Roth IRA?
What is the difference between a What is the difference between a 401(k) and a 403(b).401(k) and a 403(b).
Other sources of Other sources of retirement income:retirement income:
Pension plansPension plans 401(k), 403(b)401(k), 403(b) Traditional IRATraditional IRA Roth IRARoth IRA Keogh planKeogh plan Social SecuritySocial Security
Interactive GameInteractive Game
Planning for retirement Planning for retirement is your responsibility!is your responsibility!
Traditional employer-funded Traditional employer-funded retirement plans are retirement plans are disappearing.disappearing.
Social Security benefits may not Social Security benefits may not insure a comfortable lifestyle.insure a comfortable lifestyle.
Without a retirement plan, you Without a retirement plan, you could face a future of financial could face a future of financial uncertainties and hardships.uncertainties and hardships.
Compound InterestCompound Interest
Interest which is calculated not only Interest which is calculated not only on the initial principal, but also the on the initial principal, but also the accumulated interest of prior accumulated interest of prior periods.periods.
Would You Rather Would You Rather Have, A Million Dollars Have, A Million Dollars Today, Or A Penny That Today, Or A Penny That Doubles Every Day For Doubles Every Day For
Thirty Days?Thirty Days?
I Hope You Chose The I Hope You Chose The Penny!Penny!
Albert Einstein was Albert Einstein was so impressed with so impressed with
the principle of the principle of compounding that compounding that
he said…he said…
““It is the It is the greatest greatest
mathematicmathematical discovery al discovery of all time.”of all time.”
IN 2009
$121,96,709,346.21
Figure out Compound Figure out Compound InterestInterest
$300, 4% interest, 3 years $300, 4% interest, 3 years
How much interest?How much interest?
Beginning of Year 1
End of Year 1
$300
+ 12
$312
$300
x. 04
$12
Figure out Compound Figure out Compound InterestInterest
$300, 4% interest, 3 years $300, 4% interest, 3 years
How much interest?How much interest?
Beginning of Year 2
End of Year 2
$312.00
+ 12.48
$324.48
$312
x. 04
$12.48
Figure out Compound Figure out Compound InterestInterest
$300, 4% interest, 3 years $300, 4% interest, 3 years
How much interest?How much interest?
Beginning of Year 3
End of Year 3
$324.48
+ 12.98
$337.46
$324.48
x. 04
$12.98
Figure out Compound Figure out Compound InterestInterest
$300, 4% interest, 3 years $300, 4% interest, 3 years
How much interest?How much interest?
$337.46
-300.00
Total
-Principal
Total Interest
Figure out Compound Figure out Compound InterestInterest
$100, 2% interest, 3 years – How much $100, 2% interest, 3 years – How much interest?interest?
Year 1: $100 at 2% = $2Year 1: $100 at 2% = $2 $100 + $2 = $102$100 + $2 = $102
Year 2: $102 at 2% = $2.04Year 2: $102 at 2% = $2.04 $102 + $2.04 = $104.04$102 + $2.04 = $104.04
Year 3: $104.04 at 2% = $2.08Year 3: $104.04 at 2% = $2.08 $104.04 + $2.08 = $106.12$104.04 + $2.08 = $106.12
(Total) $106.12 – (Principal) $100 = (Total) $106.12 – (Principal) $100 = (Interest) $6.12(Interest) $6.12
Rule of 72Rule of 72 Tells you how long it takes your Tells you how long it takes your
money to double in value.money to double in value. Divide 72 by the interest rate Divide 72 by the interest rate
to determine number of years to determine number of years to double.to double.
Divide 72 by years to Divide 72 by years to determine rate needed to determine rate needed to double your money in a given double your money in a given time period.time period.
Try It!Try It!Apply the Rule of 72 to Find the Time or Apply the Rule of 72 to Find the Time or
RateRate
Assume you can earn 6% on Assume you can earn 6% on your money. How long will it your money. How long will it take $100 to grow to $200?take $100 to grow to $200?
72 ÷ 6% =
12 years
Try It!Try It!Apply the Rule of 72 to Find the Time or Apply the Rule of 72 to Find the Time or
RateRate
If you have $200 today and need If you have $200 today and need $400 in eight years, what interest $400 in eight years, what interest rate do you need to earn?rate do you need to earn?
72 ÷ 8 years =
9% interest
The keyThe keyis tois to
START START EARLY!EARLY!
AssessmentAssessment
Create a children’s story Create a children’s story promoting saving.promoting saving.
Answer each question then share you Answer each question then share you answers with the class in the form of a answers with the class in the form of a role play.role play.
1.1. Norma is considering buying a certificate Norma is considering buying a certificate of deposit with the $500 she has in a of deposit with the $500 she has in a regular savings account. Explain to her regular savings account. Explain to her what factors she could consider when what factors she could consider when choosing a certificate of deposit.choosing a certificate of deposit.
AssessmentAssessment
Answer each question then share you Answer each question then share you answers with the class in the form of a answers with the class in the form of a role play.role play.
2.2. You were visiting your Grandpa and you You were visiting your Grandpa and you happened to find $5000 stashed in an old happened to find $5000 stashed in an old shoe box. He told you that he had been shoe box. He told you that he had been saving this money for over 20 years.saving this money for over 20 years.a.a. Explain to him other options he has.Explain to him other options he has.b.Explain and demonstrate the principles b.Explain and demonstrate the principles of compounding interest.of compounding interest.
AssessmentAssessment
AssessmentAssessment
Answer each question then share you answers Answer each question then share you answers with the class in the form of a role play.with the class in the form of a role play.
3.3. Your friends, Jim and Joey (16) are twin Your friends, Jim and Joey (16) are twin brothers and just received a $1000 brothers and just received a $1000 inheritance from a wealthy aunt. Jim wants inheritance from a wealthy aunt. Jim wants the two of them to put their money the two of them to put their money together and buy a 4-wheeler. Joey says together and buy a 4-wheeler. Joey says he wants to put his money in a savings he wants to put his money in a savings account. Jim comes to you to ask you to account. Jim comes to you to ask you to help persuade Joey to buy the 4-wheeler. help persuade Joey to buy the 4-wheeler. What is your best financial advice?What is your best financial advice?
Answer each question then share their Answer each question then share their answers with the class in the form of a answers with the class in the form of a role play.role play.
4.4. You’ve been working for a while, but your You’ve been working for a while, but your sister just got a job and is excited to sister just got a job and is excited to have some of her “own” spending have some of her “own” spending money. Money burns a hole in her money. Money burns a hole in her pocket and you need to give her some pocket and you need to give her some ideas on how to save some money.ideas on how to save some money.
AssessmentAssessment
Let’s Wrap It All Up and Play Let’s Wrap It All Up and Play Savings & Investment Savings & Investment
Fly Swatter GameFly Swatter Game
FutureFutureValueValue
CompoundinCompounding Interestg Interest Rule of 72Rule of 72
Certificate Certificate of Depositof Deposit QuarterlyQuarterly Education Education
(college)(college)
InterestInterest TrueTrue 9 years9 years
FalseFalse PrincipalPrincipal ShorterShorter
Savings Savings AccountAccount 12 years12 years EmergencyEmergency