RETIREMENT

The student will be able to

explain and evaluate the
importance of planning for
retirement.

Write down the TWO numbers do we need to

think about in preparing for retirement:

80%

8xs

If you want to maintain the same

lifestyle when you retire, you need to
be bringing 80% each year of what you
earned your last year working or you
need 8xs your final years salary in
savings.

How much do you need to put away NOW

each year if you hope to retire at

65 with

80% of your
pre-retirement income?
Use the link ABOVE the Powerpoint and the
information on the next slide to figure out
how much each person needs to save based
on their age and income. Put the data on
your worksheet.

Jack is 57. He
makes $75,000 as
a business owner.

He has no savings
because he used it all
to open his business.

Frank is 43 years
old. He makes
$24,500 a year as
a handyman. He
has $1,500 in
savings.

SCENARIOS

Samantha is 36
years old. She
makes about
$120,000 a year
as a doctor. She
has $12,500 in
savings right now.

Carla is 37 years
old. She makes
about $35,000 a
year as a teacher.
She has $5000 in
savings right now.

LESSON:
The sooner, the better.
LESS now, or MORE later.

Employee Retirement
Retirement plans Through your job
401 (k), 403 (b) The name comes from the tax law
number: Law # 401, section K, which talks about
employee retirement plans.
Money invested A little is taken from your
paycheck each month and invested. So your
money makes more money. Then when you retire,
you get small paychecks from the earnings.
The employer may match it If they take $100 from
my pay each month, the employer may throw in an
extra $100 in my account.

Employee Retirement
The law limits your 401k
contributions to $18,000 a year
TRUE OR FALSE:
Employers are
required to offer
retirement plans.
FALSE!!!

$18,000 limit
per year (2015)

Social
Security

1935

Started in 1935
FDR, after the depression
A tax that is required to come from your
paycheck

Social
Security

1935

Originally you received a LUMP SUM when you retired

1937 1st Lump Sum Payment

Cleveland streetcar worker Ernest Ackerman

retired one day after Social Security began
had a nickel withheld from his check
2 years later, got his SS lump sum = 17 (an increase of 240%)
Originally you received a LUMP SUM when you retired
Originally you received a LUMP SUM when you retired

Later switched to MONTHLY PAYMENTS

Jan 31, 1940 1st Monthly Benefit Check
Ida May Fuller - $22.54
Thats equal to $372.81 today

Social
Security

1935

Today, people are living much longer, and more

people are of retirement age.

How much does it

cost to live for one
year? About $25,000

Social Security

g
n
i
v
i
!
l
!
!
d
R
n
E
A
G
N
LO
What problems can you see with the Social Security plan?

Social Security
Watch the I Love Lucy video. Write down in
your notes how you think that could apply to the
current situation with Social Security. Do you
think the system can keep up with all the people
living longer?

Social
Security

1935

Today Soc. Security collects payroll

taxes from 210 million workers
Pays out $800 billion in annual
benefits
60 million retired and disabled
beneficiaries
Provides 90% or more of the income
of 22% of elderly couples and 47% of
elderly singles.

Saving vs. Investing

How will you pay for things when you
retire?
Social Security
+ Employee Retirement

= 25%
Some say that your social security and your employee
retirement will only pay for about 25% of what youll need
to live off of.

Saving vs. Investing

How will you pay for things when you
retire?
Social Security

= 25%

+ Employee Retirement

That means you will need to come up with about 75% of

your retirement income on YOUR OWN! Its not the
governments responsibility and its not your employers!
+ Personal Investments (75%)

100

Sources of Retirement Income

25%
75%

Retirement and
Social Security
Personal
Investments

Retirement Realities
Watch the Retirement Realities video. Write down
some things to think about for retirement that are
mentioned in the video.