1. Retirement How much will I need?

2. Introduction How much money will you need at retirement? –Consider: Current Income Rate of Return Inflation Taxes What rate of return is needed to cover inflation and taxes? –6%

3. Retirement Plans What are they? –Plans that help individuals set aside money to be used after they retire How do they work? –Income tax paid when money is withdrawn –Penalty charges if withdrawn early –Tax rate at retirement typically lower because of lower income –Tax deferred Don’t pay taxes on earnings until withdrawn Can put into plan with pre-tax dollars –Show example on board

4. Employer Plans Types? –Defined Benefit Plans Specifies benefits promised to employees at normal retirement age based on income and years of service Employer makes all contributions Early withdrawal may lead to penalties Not common anymore Examples –Railroad, auto workers, airlines

5. Employer Plans Types? –Defined Contributions Plan Specifies amount employer and employee can contribute Most common form of retirement plan from employers Typically includes matching funds from employer –Show on board Examples: –401k –403b –457

6. Personal Retirement Plans Individual Retirement Agreement (Traditional IRA or Roth IRA) –Traditional IRA – deduct from income tax return –Roth IRA – tax free when withdrawn –Maximum amounts to be put in –Withdraw at 59 ½ - penalties if before

7. Personal Retirement Plans Simplified Employee Pension Plan (SEP) –Designed for self-employed individuals and very small business owners –Contributions into an IRA –Only the employer can contribute –If employees are with company for 3 of last 5 years, company must match dollars for employee that owner is getting –Withdraw at 59 ½

8. Government Retirement Plans Social Security –Retirement at 67—may choose to receive benefits earlier at reduced amount Military Benefits –Receive pension after 20 years of service

9. Assignment Retirement Brochure –See guidelines