Workshop #2 Retirement Benjamin Groen February 17, 2011 SAE Financial Planning for Engineers Workshop Series

Planning for Retirement No one will plans like you Average life expectancy was 74 for men and 80 for women in 1997 (and rising) Government programs are not certain Your spiritual development is dependent on your ability to plan for the future

Know Yourself What are your plans? What do you want to accomplish? When do you want to retire? What do you plan on doing? TT 25, TT 6

The Options Government Social Security Employer Pension Retirement Plan (401k) Yourself Retirement Vehicles Roth IRA, Traditional, Keogh, SEP, SIMPLE

Social Security Summary Government pays you money when you are Future of Social Security Until 2015 Benefits can be paid solely from tax revenues until 2015 Until 2025 From SS will have to use the interest on the bonds Beyond 2037 From the SS will have to redeem bonds At current projections social security funds will be exhausted in 2037 (tax revenue still cover 76% Don’t plan for much, but if it still is available, be thankful and use it— you paid into it

Employer Pension (Defined Benefit) You receive a portion of your salary after working for a company for xx years “Golden Handcuffs” Retirement Plan (Defined Contribution) Contributions to an investment vehicle (Cash, Stock Profit Sharing, etc.) Matching = “Free Money” Vesting 401K 16,500 Contribution Limit, Tax Deferred, Required 59 ½, Early withdrawal penalty 10% (Exceptions)

Yourself Traditional IRA $5,000 Contribution Limit, Taxed on Withdrawal, Required 70 ½, Early withdrawal penalty 10% (Exceptions) Roth IRA $5,000 Contribution Limit, Taxed on contribution. Tax Eliminated Growth, No required 70½, No early withdrawal penalty of principal Some extras: Can contribute extra to IRA if over 50. Participation is based on your income You can contribute to as many IRAs as you want, as long as the total is not more than 5000 per year, per person There are other options (these are the most common)

Choosing Assets (Covered in Workshop 6) Bonds, Mutual Funds Stocks, Options, Precious Metals Highest after tax returns Principles of successful investing Diversity Asset Allocation Investment Vehicle (IRA, Roth 401K) Stocks Bonds Mutual Funds

Start Today How do I start? Find out what you need Make a plan Open a Roth IRA today and start saving!

Tools Social Security Statement Quicken Fidelity Personal finance.byu.edu Teaching Tool 25 Teaching Tool 6 Lectures Retirement 1-5 Teachers

BACKUP SLIDES

Quicken

Teaching Tool 25

Teaching Tool 6

Q&A How much do we need? What are the best options? How vigorous do we need to be when starting at age 30? How much does a couples mission cost and how should we save for that? Prices of funerals and how do we pass things along to our children? Wise ways to invest?