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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 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. 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. 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. 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. One of the basic sources of retirement income is Social Security. Social Security Benefits Calculator Social Security Benefits CalculatorSocial Security Benefits CalculatorSocial Security Benefits Calculator Could you live comfortably on Social Security benefits only? 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, How do you react to those you say, “I’ll 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 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 traditional IRA and a Roth IRA? What is the difference between a 401(k) and a 403(b). What is the difference between a 401(k) and a 403(b).

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Other sources of retirement income: Pension plans Pension plans 401(k), 403(b) 401(k), 403(b) Traditional IRA Traditional IRA Roth IRA Roth IRA Keogh plan Keogh plan Social Security Social Security

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Interactive Game Interactive Game

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Planning for retirement is your responsibility! Traditional employer-funded retirement plans are disappearing. Traditional employer-funded retirement plans are disappearing. Social Security benefits may not insure a comfortable lifestyle. Social Security benefits may not insure a comfortable lifestyle. Without a retirement plan, you could face a future of financial uncertainties and hardships. 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. 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 End of Year 1 $300 + 12 $312 $300 x. 04 $12

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Figure out Compound Interest $300, 4% interest, 3 years How much interest? Beginning of Year 2 End of Year 2 $312.00 + 12.48 $324.48 $312 x. 04 $12.48

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Figure out Compound Interest $300, 4% interest, 3 years How much interest? Beginning of Year 3 End of Year 3 $324.48 + 12.98 $337.46 $324.48 x. 04 $12.98

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Figure out Compound Interest $300, 4% interest, 3 years How much interest? $337.46 -300.00 Total -Principal Total Interest

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Figure out Compound Interest $100, 2% interest, 3 years – How much interest? Year 1: $100 at 2% = $2 Year 1: $100 at 2% = $2 $100 + $2 = $102 $100 + $2 = $102 Year 2: $102 at 2% = $2.04 Year 2: $102 at 2% = $2.04 $102 + $2.04 = $104.04 $102 + $2.04 = $104.04 Year 3: $104.04 at 2% = $2.08 Year 3: $104.04 at 2% = $2.08 $104.04 + $2.08 = $106.12 $104.04 + $2.08 = $106.12 (Total) $106.12 – (Principal) $100 = (Interest) $6.12 (Total) $106.12 – (Principal) $100 = (Interest) $6.12

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Rule of 72 Tells you how long it takes your money to double in value. 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 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. 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? Assume you can earn 6% on your money. How long will it take $100 to grow to $200? 72 ÷ 6% = 12 years

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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? If you have $200 today and need $400 in eight years, what interest rate do you need to earn? 72 ÷ 8 years = 9% interest

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The key is to START EARLY!

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Assessment Create a children’s story promoting saving. Create a children’s story promoting saving.

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Answer each question then share you answers with the class in the form of a role play. 1. 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. Assessment

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Answer each question then share you answers with the class in the form of a role play. 2. 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. Assessment

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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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Answer each question then share their answers with the class in the form of a role play. 4.You’ve 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. Assessment

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Let’s Wrap It All Up and Play Savings & Investment Fly Swatter Game

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FutureValue Compounding Interest Rule of 72 Certificate of Deposit Quarterly Education (college) InterestTrue 9 years FalsePrincipalShorter Savings Account 12 years Emergency

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Determine the amount saved if $375 is deposited every month for 6 years at 5.9% per year compounded monthly. N = 12 X 6 = 72 I% = 5.9 PV = 0 PMT = -375.

Determine the amount saved if $375 is deposited every month for 6 years at 5.9% per year compounded monthly. N = 12 X 6 = 72 I% = 5.9 PV = 0 PMT = -375.

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