1. MoneyCounts: A Financial Literacy Series
Retirement Planning
11-A Grange Building
University Park, PA 16802
financialliteracy.psu.edu

2. Description
Young people are busy starting careers, families, or settling in new locations, so it is extremely challenging to think about retirement planning.
However, life goes by so fast. Every year that you waste postponing retirement planning means adding a year of depriving yourself of retiring early and enjoying the golden years.

3. Learning Outcomes Discuss most common retirement plans available
Understand the similarities and differences of various plans
Understand how to create your own retirement plan
Discuss how to avoid common mistakes
Understand how to forecast a retirement budget

4. Retirement!

5. Stages of Retirement Planning
Accumulation of assets
Saving and Investing
Time Value of Money!
Protection of assets
Diversification
Risk management
Distribution of assets
Longevity – Making money last & ends meet
Tax impact/bracket

6. Interest
Risk
Income
Length
Investment
Retirement Planning
Tax

7. Retirement plans Self-employed & Small Business Owners Plans
Individual Plans
Employer-Sponsored Plans
Self-employed & Small Business Owners Plans
Traditional IRAs
Roth IRAs
SIMPLE
SEP
Benefit Plans
Thrift Savings
Contribution Plans

8. IRAs Plans comparison Traditional IRAs Roth IRAs Age to contribute
Anyone younger 70½
No age restriction
Tax
Contribution: Tax-deductible
Contribution: Taxed
Withdrawal: Taxed
Withdrawal: Tax-deductible
Withdrawal
No Penalty after age 59½
Required at age 70½
No age requirement

9. It is all about YOU! Retirement Planning Budget Lifestyle Health &
Income
Lifestyle
Health &
medical issues
Assets
Debts
Legal status
Family

10. Your lifestyle Do you know what you want to do after retirement?
Will you be starting a new career?
Will you volunteer or work from home?
Will you be traveling or keeping the status quo?
You may even postpone retirement for as long as you can.
Think about which lifestyle you would like to pursue. 

11. Budget Did you forecast a budget for your golden years?
Is it based on your current standard?
Will you downsize your house and trim expenses?
Can you estimate your future fixed and variable expenses?
What is the minimum you will need to sustain to be comfortable in your golden years? 

12. Health & medical issues
Do you enjoy good health?
Do you expect chronic medical problems as you get older?
Do you have a contingency plan if you need to retire early?
Will you have or be able to get medical insurance?

13. Income What will be the primary source of your income?
Do you have a pension?
Do you have an employer-sponsored retirement plan, if yes, when will you reach eligibility?
Will you qualify for social security benefits?
Do you have personal saving, investments, or emergency funds you can liquidate?

14. Assets
Do you have an inventory listing of all of your assets over the years?
Did you have financial relationships with prior employers?
Can you account for your investments?
If not, you will need to create a life-long dossier of your financial wealth.

15. Debts Will you be free of all consumer debts?
What about your mortgage or student loans?

16. Legal Do you have your legal status in check?
How do you ensure your wishes will be respected if anything happens to you?
If not, you will need to create a life-long dossier of your legal documents, such as a will, trust, power of attorney, living will, medical directive, general or specific power of attorney, estate executor, or guardian (as needed).

17. Family matters
Do you have your beneficiaries updated on all your documents?
Do you plan to provide for family members after you are gone?
Do you need to invest in life insurance?

18. When planning retirement plan

19. Forecasting a Budget! State & Divide Examine & Adjust Allocate Delete
Add “wants”
Add “needs”

20. Where to start? State & Divide Examine & Adjust
State all your current expenses
Divide them into fixed, mixed, and variable ones
Examine & Adjust
Examine each category and note adjustments
For example, if you plan to stay in your current home, you can easily determine if you will be mortgage free at retirement or not.
You know approximately the cost of keeping your house and all related expenses such as real estate tax, repair, maintenance, etc.

21. Allocate up or down! Allocate
Allocate a dollar amount to each adjustment, up or down
For example, you allocate zero amount for a mortgage on your house, but you state an amount of real estate tax, insurance, repair, and maintenance.

22. Delete what you don’t need!
Delete items from your budget that you will no longer need after retirement
For example, professional clothes or work transportation may not be necessary after you retire.

23. Add what you will need! Add “needs” Add “wants”
Add items to your budget that will be deemed necessary after your retirement
For example, you may need more budget for medical expenses or a special diet after you retire.
Add “wants”
Add items to your budget that you will want to do after retirement
For example, if you want to travel or play golf more often after retirement, such things should be included in your list. 

24. Make adjustments as needed!
Make all other adjustments until you reach a minimum dollar amount you must have at retirement
Be honest with your calculations and careful not to over or undershoot
This amount will help you and your financial adviser formulate a plan to determine the present value of your investment so your future will be protected accordingly

25. Current budget
Future budget

26. MoneyCounts: A Financial Literacy Series
Comments and questions
11A Grange Building
University Park, PA 16802
financialliteracy.psu.edu