1.  The earlier you begin to plan and save for retirement, the better financially prepared you will be.

2.  How much money do you need annually?  When do you plan to retire?  How long do you plan to live?  What will inflation be?

3.  Needs $50,000 per year in todays dollars  Retire at 65  Live until 90  Expect Inflation to average 3% per year Total money spent during retire: $1,822,963.22

5. Who’s providing the plan? IRA: Individual retirement account 401(k) & 403(b): Retirement account provided by employer What kind of plan? Defined benefit Check a month starting at retirement for life Defined contribution Tax advantaged retirement portfolio

6. IRA Investment Options Cash Stocks Bonds Mutual Funds Options (sometimes limited) Traditional IRA Pre-tax dollars Lowers taxable income Capital appreciation & earnings taxed when distributed Roth IRA Post-tax dollars No taxes on capital appreciation & earnings

7. 401(k) & 403(b): Defined Contribution Plan Wall Street Journal MatchEmployee Contribution Employer Contribution Total Plan Contributions $0.50:$1$5,000$2,500$7,500 $1:$1$5,000 $10,000 $2:$1$5,000$10,000$15,000 401(k) Maximum Employee Elective Deferrals ($18,000) Catch up provision for over 50 years old (Additional $6,000) Annual Defined Contribution Limit ($53,000)

8. Vesting Schedule Employer Contributions Year 1Year 2Year 3Year 4Year 5Year 6 3 Year Cliff $10,000$0 $10,000 6 Year Graduated $10,000$0$2,000$4,000$6,000$8,000$10,000

9. When can I take distributions? Must be at least 59 ½ Defined benefit – Can be taken out earlier for reduction in benefits When do I have to? By April 1 of the year following the year in which the participant attains the age of 70 ½ Exception: Roth IRA What If I take distributions early? 10% early withdrawal penalty Exceptions Death Disability Job loss after age 55 (401(k)) Medical expenses in excess of 10% of AGI Used to pay higher education expenses (IRA’s) $10,000 towards a first- time home purchase (IRA’s) Making Withdrawals

10. Nick’s IRA Tina’s IRA Interest rate 9% Years contributions were made 10 years (age 22 to age 31)35 years (age 33-67) Amount contributed $2,000 per year For 10 years = $20,000 $2,000 per year For 36 years = $70,000 Value of IRA at age 67 $30,385.86 at age 31; this lump sum then compounds: At age 67 equals: $736,973.87 At age 65 equals: $431,421.51 Tina pays an extra $50,000 but Nick ends up with $305,552.36 more

11. DaveDannyGeorgeBritney Interest rate 9% Years contributions were made 45 years (age 23 to age 67) 35 years (age 33- 67) 25 years (age 43- 67) 15 years (age 53- 67) Amount contributed $5,000 per year For 45 years = $225,000 $5,000 per year For 35 years = $175,000 $5,000 per year For 25 years = $125,000 $5,000 per year For 15 years = $75,000 Value of IRA at age 65 $2,629,293.67$1,078,553.77$423,504.48$146,804.58

12. 3 Common Formulas  Final average earnings  Average salary of last 3 or 5 years  Career average earnings  Average salary over entire career  Flat benefit  Salary not a factor Example (Final Average Earnings) ​ Benefit percentage: ​ 2% Average salary of last three years: $50,000 ((45,000+50,000+55,000)/3) Years of plan membership: 30 Formula calculation $50,000 x 2% x 30 ​ Annual pension: $30,000 Monthly check: $2,500

13.  Active Investing – buying and selling an asset within one calendar year. (Short Term Capital Gains)  Passive Investing – buying and selling an asset after holding for over a year. (Long Term Capital Gains)  Trading in retirement accounts don’t trigger capital gains tax

14. Example Bought stock for $10,000 Sold for $15,000, Gain $5,000 SingleMFJ Adjusted Gross Income $75,000$150,000$470,000 Tax Bracket25%28%39.6% Short Term CG 25% ($1,250) 28% ($1,400) 39.6% ($1,980) Long Term CG 15% ($750) 15% ($750) 20% ($1,000) Step 1 Step 3 Step 2

15. Credentials CFP – Certified Financial Planner CFA – Chartered Financial Advisor Payment Structure Assets under management - Recurring cost based on % of assets (on going relationship) Commission – 1 time cost, receives % of original investment (relationship ends after transaction) Fee only – hourly cost or by assignment (relationship ends after transaction) Investment Assets Under Management (2%) Commission (5%) $100,000Annual:$2,000 Quarterly:$500 $5,000 $200,000Annual:$4,000 Quarterly:$1,000 $10,000 $50,000Annual:$1,000 Quarterly:$250 $2,500