| Retirement Planning Vocabulary | Adjusting for Inflation | Retirement Income Sources | Building a Nestegg | Retirement Know-How |
| 10 | 10 | 10 | 10 | 10 |
| 20 | 20 | 20 | 20 | 20 |
| 30 | 30 | 30 | 30 | 30 |
| 40 | 40 | 40 | 40 | 40 |
| 50 | 50 | 50 | 50 | 50 |
| Final Question | ||||
This FICA program provides modest retirement income for American workers who contributed to the system through paycheck withholdings during their working years.
This FICA program provides modest retirement income for American workers who contributed to the system through paycheck withholdings during their working years.
Social Security
This is the typical rise in the cost of consumer goods and services over time.
This is the typical rise in the cost of consumer goods and services over time.
Inflation
What does I.R.A. stand for?
What does I.R.A. stand for?
Individual Retirement Account
This source of retirement income is supplied by a former employer and the amount is typically formulated based on earnings and total years of service.
This source of retirement income is supplied by a former employer and the amount is typically formulated based on earnings and total years of service.
Pension
This retirement savings plan is made available by a for-profit employer and contributed to through tax-deferred paycheck withholdings.
This retirement savings plan is made available by a for-profit employer and contributed to through tax-deferred paycheck withholdings.
401(k)
What is the typical annual rate of inflation that we have used in our calculations during the unit?
What is the typical annual rate of inflation that we have used in our calculations during the unit?
3 percent
A trip to the grocery store this week cost $155. Adjusted for inflation, the same cart full of groceries will cost approximately _________ in 30 years.
A trip to the grocery store this week cost $155. Adjusted for inflation, the same cart full of groceries will cost approximately _________ in 30 years.
$376
Nancy's salary was $23,200 when she started her career. She received a 4 percent annual raise after each of the first 8 years on the job. What was her salary after those first 8 years?
Nancy's salary was $23,200 when she started her career. She received a 4 percent annual raise after each of the first 8 years on the job. What was her salary after those first 8 years?
$31,750
When a person retires and begins to draw Social Security benefits, the annual amount increases by a small percentage each year to keep up with inflation. These adjustments are known as COLA's, which stands for ____________.
When a person retires and begins to draw Social Security benefits, the annual amount increases by a small percentage each year to keep up with inflation. These adjustments are known as COLA's, which stands for ____________.
Cost of Living Adjustments
Edgar finished his 40 year career with a salary of $78,235. If he earned an average annual raise of 3.5 percent each year, what was his salary when he began his career 40 years ago?
Edgar finished his 40 year career with a salary of $78,235. If he earned an average annual raise of 3.5 percent each year, what was his salary when he began his career 40 years ago?
$19,760
What is the minimum age that a person can begin to receive a Social Security retirement benefit?
What is the minimum age that a person can begin to receive a Social Security retirement benefit?
Age 62
Jerry has a pension for his job as a state trooper. The benefit is determined by multiplying the average earnings of his 3 highest-paid years by his years of service by 0.022. What will his pension benefit be if he works as a state trooper for 28 years and the average of his top 3 highest-paid years is $66,440?
Jerry has a pension for his job as a state trooper. The benefit is determined by multiplying the average earnings of his 3 highest-paid years by his years of service by 0.022. What will his pension benefit be if he works as a state trooper for 28 years and the average of his top 3 highest-paid years is $66,440?
$40,927
What type of steady-stream retirement income source is an insurance industry product that can double as a permanent life insurance policy?
What type of steady-stream retirement income source is an insurance industry product that can double as a permanent life insurance policy?
Annuity
401(k)'s and IRA's are examples of what type of retirement income source?
401(k)'s and IRA's are examples of what type of retirement income source?
Nestegg
According to many financial planners, what percent of a person's nestegg can be SAFELY withdrawn in the first year of retirement, then adjusted to keep up with inflation in the years to follow?
According to many financial planners, what percent of a person's nestegg can be SAFELY withdrawn in the first year of retirement, then adjusted to keep up with inflation in the years to follow?
4 percent
$5,000 is invested in 1990 and is allowed to grow at an average annual rate of return of 8.2 percent. What should the value of the investment be in the year 2025?
$5,000 is invested in 1990 and is allowed to grow at an average annual rate of return of 8.2 percent. What should the value of the investment be in the year 2025?
$78,870
Beginning in 1990, $5,000 is invested each year in a mutual fund that has returned 9 percent annually on average. If the mutual fund continues to perform at this rate, what should the value of the investment account be in the year 2025?
Beginning in 1990, $5,000 is invested each year in a mutual fund that has returned 9 percent annually on average. If the mutual fund continues to perform at this rate, what should the value of the investment account be in the year 2025?
$1,078,550
Jerry just began investing $220 per month in his company's 401(k) plan, and his employer matches his investment at 50 percent. If he keeps up this investment routine for 30 years and his 401(k) investments return 8 percent on average annually, what should the value of his nestegg be in 30 years when he's ready to retire?
Jerry just began investing $220 per month in his company's 401(k) plan, and his employer matches his investment at 50 percent. If he keeps up this investment routine for 30 years and his 401(k) investments return 8 percent on average annually, what should the value of his nestegg be in 30 years when he's ready to retire?
$448,600
How much would need to be invested each year in order to have a $1,000,000 nestegg at retirement? Given: 37 years to invest, 8.8 percent average annual rate of return.
How much would need to be invested each year in order to have a $1,000,000 nestegg at retirement? Given: 37 years to invest, 8.8 percent average annual rate of return.
$4,063
How much would need to be invested in a 401(k) each month in order to have a $1,000,000 nestegg at retirement? Given: 36 years to invest, 8.6 percent average annual rate of return, 50 percent employer match.
How much would need to be invested in a 401(k) each month in order to have a $1,000,000 nestegg at retirement? Given: 36 years to invest, 8.6 percent average annual rate of return, 50 percent employer match.
$260
Why would a person likely NOT need 100 percent of their end-of-career salary in order to live their same lifestyle in retirement?
Why would a person likely NOT need 100 percent of their end-of-career salary in order to live their same lifestyle in retirement?
no longer contributing a percentage of income to retirement savings, mortgage and other large debts will be paid off, kids will be grown and off on their own, no longer contributing to Social Security, etc.
What type of investment is ideal for retirement savings because investments and earnings are NOT taxed until they are drawn as income in retirement?
What type of investment is ideal for retirement savings because investments and earnings are NOT taxed until they are drawn as income in retirement?
Tax-Deferred Investment
Dan has figured that a monthly investment of $720 into his 401(k) account will be necessary in order to have a nestegg that is adequate for his retirement. If his employer matches at 50 percent, how many dollars should Dan contribute to his 401(k) for each of his semi-monthly pay periods?
Dan has figured that a monthly investment of $720 into his 401(k) account will be necessary in order to have a nestegg that is adequate for his retirement. If his employer matches at 50 percent, how many dollars should Dan contribute to his 401(k) for each of his semi-monthly pay periods?
$240 per pay period
What source of retirement income is neither Steady-Stream nor Nestegg?
What source of retirement income is neither Steady-Stream nor Nestegg?
A Part-Time Job!
John invests $400 per month over his 38-year career and retires with a nestegg of over one million dollars! Why is it that a monthly investment of $400 for HALF the time (19 years) doesn't even amount to $200,000?
John invests $400 per month over his 38-year career and retires with a nestegg of over one million dollars! Why is it that a monthly investment of $400 for HALF the time (19 years) doesn't even amount to $200,000?
That's the nature of exponential growth with compound interest! The earlier you start saving, the better!
John invested $5,190 per year for 35 years and retired with a $1,000,000 nestegg! Kate also retired with a million dollars in her nestegg, but she only invested for 30 years. If both John and Kate earned an average annual rate of return of 8.5 percent on their investments, how much did Kate invest each year?
John invested $5,190 per year for 35 years and retired with a $1,000,000 nestegg! Kate also retired with a million dollars in her nestegg, but she only invested for 30 years. If both John and Kate earned an average annual rate of return of 8.5 percent on their investments, how much did Kate invest each year?
$8,050 per year
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