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 What vehicle will get you to your retirement goals?

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Presentation on theme: " What vehicle will get you to your retirement goals?"— Presentation transcript:

1  What vehicle will get you to your retirement goals?

2  The earlier you start saving, the more time your money has to grow because of compounding interest…  Helping you reach your retirement savings goals.

3  Types of retirement savings accounts… o Social Security o Pension Funds o 401(k) o 403(b) o IRAs

4  Social Security o Government Sponsored Program o You pay in a percentage o Your employer matches that percentage o You can receive Social Security checks at age 62 (at discount) or full benefits at age 67  This will change by the time you retire

5  Employer-sponsored pension plans o A plan where an employer makes contributions toward a pool of funds set aside for an employee's future benefit. The pool of funds is then invested on the employee's behalf, allowing the employee to receive benefits upon retirement. o Received at normal retirement age (62) paid monthly amount based on wages earned and years of service

6  A 401(k) is a type of retirement plan offered through your workplace. If your employer offers a 401(k) plan it makes a lot of sense to participate! 1. 401(k)s may offer huge tax advantages. Contribution come out of your paycheck before income taxes are deducted. 2. The chance to get "free" money from your employer in the form of matching contributions. 3. A long-­term personal plan by investing in a mix of mutual funds, stocks, and bonds. 4. Many 401(k) providers offer help and guidance.

7  Making the most of your retirement savings… 1. Take the FULL Company Match 2. Increase your contributions by 1% each year 3. Increase your contributions when you get a raise  How much can you contribute… o This changes each year, currently the maximum contribution is $17,500 per year o Age 50+ can contribute an additional $5,500 per year = total of $23,000 per year

8  Not everyone needs $1 million in their 401(k) when they retire, but here’s a hypothetical example of what it could take to become a 401(k) millionaire. o Start contributing to a 401(k) plan at age 25, with a salary of $40,000, and plan to retire at age 67… o Contribute 12% of your salary pretax annually with an employer match of 4%... o NEVER take any loans or withdrawals from your 401(k)!!! o Say you get a salary increases of 1.5% per year… o A hypothetical rate of return of 4.7% each year… o At age 67, your salary is $73,650… o Your 401(k) plan balance will be more than $1 million! This is a hypothetical example. The ending salary of $73,650 and the $1 million balance are in today’s dollars—inflation is not included in this example. Your own account may earn more or less than this example. Taxes will be due upon withdrawal.


10  A 403b is used by nonprofit companies, religious groups, school districts, and governmental organizations.  The law allows these organizations to be exempt from certain administrative processes that apply to 401k plans.  In other words, administrative costs for a 403b are lower. This allows organizations with very small budgets to help their employees save for retirement.

11  How much can you contribute (same as 401k)… o This changes each year, currently the maximum contribution is $17,500 per year o Age 50+ can contribute an additional $5,500 per year = total of $23,000 per year

12 “One of the smartest money moves a young person can make is to invest in a Roth IRA. When you're just getting started investing, the Roth should be your first stop -- even before you open a regular, taxable account, or contribute to a workplace retirement-savings plan. The only exception is if your employer offers a match on your 401(k) contributions.”

13  IRA: Individual Retirement Accounts o Traditional IRAs o Roth IRAs

14  It allows an individual to make annual tax-deductible contributions to one’s retirement fund, but does not allow for earnings to grow tax-free.  If you invest $5,000 annually, you can claim a $5,000 tax deduction. This tax deduction will lower your adjusted gross income which lowers your tax liability.  You do not have to pay any taxes on your contributions until you withdraw funds or at the age of 70 ½.

15  Tax Free Growth. Earnings are not subject to income tax as long as you have held the account for at least 5 years, and you are at least 59 1/2.  Easy Withdrawal Process. Direct contributions can be withdrawn at any time, tax free.

16  Know what your company Match is  Know when you are fully vested  Research companies you invest with  Research fees for investing  Diversify your investments  Know your “Risk” level o Age/Retirement Date o Age Targeted Modules


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