2. Special Savings Plans and Goals

4. Investing for Retirement
Pension or 401K plans: company plans that provide retirement income for their workers.
A portion is withheld from your paycheck
Company matches contribution
No Federal tax until you withdraw funds (tax deferred)
Maximum Contribution limit
$18,000 maximum for an employee in 2016

5. Individual Pension Plans
Keogh plan-retirement plan for self- employed individuals.
Can save up to 25%
Can deduct that amount from taxable income
Maximum contribution limit
25% of compensation or $53,000 in 2016

6. Individual Retirement Account (IRA)
What is a Traditional IRA?
Private retirement plan for individuals or married couples
Tax-deferred contributions
Tax-deferred interest income
Maximum contribution limit ($5,500 for people making less than $183,000)
The contribution limit for the 2016 tax year is $5,500 for taxpayers under 50 years of age. For people over the age of 50, higher annual contribution limits apply, allowing a contribution of up to $6,500 during the 2016 tax year.
the taxpayer would only be eligible to take the full IRA deduction if the annual salary received was under $61,000 if he files as an individual or $98,000 if he files jointly with an eligible spouse. Read more: Traditional IRA Definition | Investopedia  Follow us: Investopedia on Facebook Read more: Traditional IRA Definition | Investopedia  Follow us: Investopedia on Facebook

7. Roth IRA Retirement plan for individuals or married couples
Contributions taxed (disadv.)
Interest income never taxed (adv.)
Maximum contribution limit ($5,500)
Difference between Traditional and Roth IRA

8. Real Estate Land & Buildings Income Property House (Usually safe)
Undeveloped property (usually riskier)
Not very liquid – what did liquid mean?
Can’t turn it into cash quickly

9. How much to save and invest?
Involves a trade-off!
Consider:
Risk Tolerance
Rate of Return (how much will you get back?)
How Liquid is the investment
How much income do you make?
What are your values?

11. Spreading out your Investments
Diversification-spreading of investments among several different types to lower overall risk
Too much risk and poor decisions can lead to bankruptcy for people at high income levels

12. It is important to diversify your saving and investing, especially when looking toward retirement. In general, the greater the risk involved in any venture, the greater the potential return.