1. Retirement Planning

2. Writing Prompt
Write one paragraph about the kind of lifestyle you would like to have when you retire. Include ideas on how much you think it will cost to maintain this lifestyle. (Do you want to live on the amount of money you have been used to, more than they are used to, or less then they are used to?)
Write a second paragraph on where their income will come from after retirement.
This can be used as a pre-assessment to see how realistic the students are about their retirement, or as an activity to expand on their prior knowledge.

3. How much money will you need when you retire?
Many people stay healthy and active for 20 years or more after they retire.
If you start planning and investing soon enough, you can spend those years enjoying yourself instead of worrying about paying the bills.

4. How much money will you need when you retire?
One of the basic sources of retirement income is Social Security.
Social Security Benefits Calculator
Could you live comfortably on Social Security benefits only?

5. How much money will you need when you retire?
How do you react to those you say,
“I’ll just live on Social Security.”

6. How much money will you need when you retire?
What are the eligibility requirements to receive Social Security?
What is the difference between a traditional IRA and a Roth IRA?
What is the difference between a 401(k) and a 403(b).
Eligibility requirements to receive Social Security:
Citizenship
You must be a United States citizen or a legal alien to be eligible for Social Security benefits. Social Security Contributions
You must work and put money towards Social Security benefits for a period of 10 years before you can collect Social Security benefits upon retirement. Surviving Dependent
A surviving dependent (spouse or child) may be eligible to collect the Social Security benefits of a deceased spouse or parent if the deceased spouse or parent was due any Social Security benefits. Dependent Grandchild or Child
A dependent grandchild or child (biological, adopted or stepchild) may qualify for a parent's Social Security benefits if that grandchild or child is single and under 18 years of age, is between the ages of 18 and 19 and attending school full time (below grade 12), or was disabled before the age of 22 and is 18 years of age and up. Child Supporting a Senior Parent
If a child supports a senior parent and contributes 50 percent to that support, the senior parent may be eligible for the Social Security benefits of that child if that child dies. Ex-Spouse
Anyone divorced from someone 62 years of age or older may be eligible for their ex-spouses' benefits.
Read more: Social Security Eligibility Requirements | eHow.com
Difference between traditional and Roth IRA?
Traditional IRA Profile
Tax deductible contributions (depending on income level)
Withdraws begin at age 59 1/2 and are mandatory by 70 1/2.
Taxes are paid on earnings when withdrawn from the IRA
Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
Available to everyone; no income restrictions
All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception).
Roth IRA Profile
Contributions are not tax deductible
No Mandatory Distribution Age
All earnings and principal are 100% tax free if rules and regulations are followed
Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually.
Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).
401(k) vs 403(b)
401k and 403b plans are actually the same thing - 401k plans are for for-profit companies, and 403b plans are for non-profit companies, schools, government agencies, etc.

7. Other sources of retirement income:
Pension plans
401(k), 403(b)
Traditional IRA
Roth IRA
Keogh plan
Social Security
Keogh Plan- A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined contribution. Contributions are generally tax deductible up to 25% of annual income with a limit of $47,000 (as of 2007). Keogh plan types include money-purchase plans (used by high-income earners), defined-benefit plans (which have high annual minimums) and profit-sharing plans (which offer annual flexibility based on profits).

8. Interactive Game

9. Planning for retirement is your responsibility!
Traditional employer-funded retirement plans are disappearing.
Social Security benefits may not insure a comfortable lifestyle.
Without a retirement plan, you could face a future of financial uncertainties and hardships.

10. Compound Interest
Interest which is calculated not only on the initial principal, but also the accumulated interest of prior periods.

11. Would You Rather Have, A Million Dollars Today, Or A Penny That Doubles Every Day For Thirty Days?

12. I Hope You Chose The Penny!

13. Albert Einstein was so impressed with the principle of compounding that he said…

14. “It is the greatest mathematical discovery of all time.”

15. IN 2009
$121,965,709,346.21
Albert Einstein, arguably one of the most intelligent people who ever lived, was asked what he thought was the greatest of mankind’s discoveries. His answer: “compound interest.” He went so far as to call it the eighth wonder of the world.
As an example of just how powerful this can be, consider the following scenario.
Let’s say Christopher Columbus made an investment in the new world’s future in If Chris had places a single penny in a 6% interest-bearing account and instructed someone to remove the interest every year, the value of the interest earned by 2005 would be almost 31 cents. Not too much to write home about, is it?
But if the young explorer had placed the same paltry investment of one cent into the same interest-bearing account but LEFT the earned interest to compound – earning interest upon interest – the results would be drastically different.
What would you guess the account would be worth now? $10,000? $100,000? A million? 10 million? 100 million?
In actuality, the resulting balance of a penny invested at 6% COMPOUND interest for 513 years would be $95,919,936,112. That’s 95 BILLION!
Not bad for a single penny. Do you se what Al Einstein was so worked up about? It’s powerful.
We may not have 513 years to make compound interest work for us, but we can employ it nonetheless. Comparable article

16. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 1
$300
x. 04
$12
$300
+ 12
$312
Principal times interest rate = interest earned
Add interest earned to principal = ending balance at the end of the year.
End of Year 1

17. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 2
$312
x. 04
$12.48
$312.00
$324.48
Principal times interest rate = interest earned
Add interest earned to beginning principal for that year = ending balance at the end of the year.
End of Year 2

18. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 3
$324.48
x. 04
$12.98
$324.48
$337.46
Principal times interest rate = interest earned
Add interest earned to beginning principal for that year = ending balance at the end of the year.
End of Year 3

19. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Total
-Principal
Total Interest
$337.46
$37.46
Principal times interest rate = interest earned
Add interest earned to beginning principal for that year = ending balance at the end of the year.

20. Figure out Compound Interest
$100, 2% interest, 3 years – How much interest?
Year 1: $100 at 2% = $2
$100 + $2 = $102
Year 2: $102 at 2% = $2.04
$102 + $2.04 = $104.04
Year 3: $ at 2% = $2.08
$ $2.08 = $106.12
(Total) $ – (Principal) $100 = (Interest) $6.12
Year 1: $100 x .02 = 2 Add the $2 of interest to the principal of $100, which equals $102
Year 2: $102 x .02 = $2.04 Add the $2.04 to the beginning principal from the beginning of year 2 = $104.04
Year 3: $ x .02 = $2.08 Add the $2.08 to the beginning principal from the beginning of year 3 = $106.12
$6.12

21. Rule of 72 Tells you how long it takes your money to double in value.
Divide 72 by the interest rate to determine number of years to double.
Divide 72 by years to determine rate needed to double your money in a given time period.

22. Try It! Apply the Rule of 72 to Find the Time or Rate
Assume you can earn 6% on your money. How long will it take $100 to grow to $200?
12 years
72 ÷ 6% =

23. Try It! Apply the Rule of 72 to Find the Time or Rate
If you have $200 today and need $400 in eight years, what interest rate do you need to earn?
9% interest
72 ÷ 8 years =

24. The key is to START EARLY!
This page is from the NEFE (National Endowment for Financial Education
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