1. RetirementRetirement Accounts How long will you live?

2. Save $20,000 for 47 years with 8% interest Worth $744,640 10% interest, Worth $1,763,949 Every Million saved = $40,000 in retirement With 4% annual interest rate (Do NOT touch the principle) Calculate what you want to make in retirement Consider Social Security payouts Consider retirement account payouts

3. Employee benefits package include non-wage items Free car Free phone Insurance Retirement savings: What company did we find that offered really good retirement benefits? Retirement savings: Personal accounts can be started on your own IRA Roth IRA Michigan Educational Savings Program (MESP) 529 accounts

4. Retirement account = tax savings All names based on tax code IRS (Internal Revenue Service) codes Just a name of account - have all types of investments in the account Dressed up in a coat Pre-Tax: invest before taxes, pay taxes later After-Tax: invest after taxes, never pay taxes again Both grow tax FREE NOTE: IRA is max of $5,500 per year

5. Roth = After-Tax Pay taxes now & never again Money grows tax free Tax Deferred Accounts Make more in retirement, pay taxes now! Pay taxes now = pay less in taxes If take $ early = penalty

6. SEP Self-employed person may deduct up to 15% How a pension work now days Tax, employer and (minimum) employee funded Get to retire without saving much / any Politicians, Police, Fire – Public Servants (new teachers do NOT have a pension)

7. Companies really do not have pensions Most are now self-funded and matching plans 401(k) = company 403(b) = non-profit organization 2010 median match = 3% of pay Meaning, earn $40,000 you put at least 3% or $1,200 in 401(k) and employer will put in 3% or $1,200 free money into your account Law forces you to enroll or opt out Can usually put up to 15% into 401(k) up to $18,000

8. Deferred compensation For government employees (i.e., politicians) Do not use a Guaranteed Investment Contract Difference between 457 & 401/403 No 10% penalty for withdrawal before the age of 59½ Independent contractors can participate

9. You should be funding your plan whether your company matches or not. You should always rollover retirement plans to an IRA when you leave the companyrollover Or, if allowed roll to your new 401(k) Or, you will be charged more fees Use a direct transfer or may get charged taxes and penalties

10. Never borrow on your retirement plan (page 178) Will become a habit 1. Fund 401(k) or other plan up to the Match 2. Above the match, fund Roth IRAs 3. Complete 15% of income by going back to your 401(k) or other plans

11. Worksheet – What is Social Security? What is FICA? Who gets it Note: NOT unemployed, NOT a form of welfare or entitlement Where does the money come from? At what point do you stop paying into it? What are the problems and solutions? How do they figure out how much you will get?

12. Estimate Life Expectancy How long you want to work How much you make (figure out average) Chart is for my retirement based on current earnings If you start your benefits: And you earn an average of: Your benefit will be about: At full retirement (age 67)full retirement $52,000 a year (from now until full retirement) $1,859 a month At age 70$52,000 a year (from now until age 70) $2,306 a month At age 62$52,000 a year (from now until age 62) $1,302 a month