Posts Tagged With: retirement planning

Treasury’s myRA To Debut in Late 2014

New Retirement Savings Program Will Provide Safe, No-Fee Starter Accounts

According to the Federal Reserve Board’s recent publication, Report on the Economic Well-Being of U.S. Households in 2013, 31 percent of respondents in a national study reported having no retirement savings or pension, and more than half (54 percent) of those with income with incomes under $25,000 reported the same.  Compounding this lack of preparedness is the reality that many employees (35 percent) in the United States who work for private companies also lack access to an employer-sponsored retirement plan, according to the U.S. Bureau of Labor Statistics.  What’s more, access isn’t provided evenly across all wage-earners.  While 85 percent of those in the highest wage-earning quartile had access to retirement plans, only 38 percent of those in the lowest quartile had access in 2014.

For more information, go to:

www.treasurydirect.gov/readysavegrow; or www.myra.treasury.gov

Teaching Suggestions

  • Ask students if the myRA program is available to them whether they are full-time or part-time employees.
  • What are the eligibility requirements for myRA and what is the sign-up process?
  • Can employees who change jobs continue to add savings to an existing myRA account?

Discussion Questions

  1. Why must many individuals, especially those from low-and moderate income households, make reluctant but deliberate choices to meet short-term needs at the expense of long-term goals?
  2. Will the new myRA program be particularly attractive to low-and moderate income households?
  3. What are expected key features of the myRA programs?

 

Categories: Chapter_14, Retirement Planning | Tags: | Leave a comment

Retirement Catch Up: Saving After 50

“. . .more than a third of people 55 and older have saved less than $10,000.”

According to Carrie Schwab-Pomerantz, President of the Charles Schwab Foundation and daughter of Charles Schwab, there are a number of steps anyone can take to get their financial house in order.

For example, Ms. Schwab-Pomerantz suggests that savings should be non-negotiable–it’s that important.  To increase the amount saved, people should take a hard look at where they are spending their money.  For example, do you really need cable television or that new car?

She also suggests that a person in their 20s should save 10 percent of income in order to save the money needed for a comfortable retirement.  If the same person waits until she or he is in their 30s, the percentage for savings increases to 20 percent while someone in their 40s will need to save 30 percent of their income.  Finally, a person in their 50s will need to save 40 percent of income to provide for retirement.   The Bottom Line:  The percentage a person must save for a comfortable retirement increases if they wait to begin a savings and investment program.

For more information go to http://finance.yahoo.com/news/retirement-catch-up–saving-after-50-043631641.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Remind students how small changes in how they manage their financial affairs can change their lives both now and when they reach retirement age.
  • Stress the importance of beginning a savings and investment program sooner rather than later.
  • Use a Time Value of Money calculation to show how regular savings can increase over time.

Discussion Questions

  1. Why is it important to begin a savings and investment program when you are in your 20s?
  2. Where does the money come from to begin a savings and investment program?
Categories: Retirement Planning, Savings, Time Value of Money | Tags: , , | Leave a comment

The Slacker’s Guide to Saving for Retirement

Whether retirement is coming soon or feels far away, it’s something you need to think about.

This article encourages students to make retirement planning a part of their budget and one of their financial goals.   It also points out the benefits of starting early—even if students can contribute only a small amount because of other obligations that include paying off student loans and other debt obligations, paying rent, buying groceries, and establishing an emergency fund.

A very good suggestion included in this article is to start by saving just $25 from each paycheck, and then increase the amount until someone feels they have reached a limit they are comfortable with.

Other suggestions include participating in a 401(k) account at work and using bonuses and salary increases to boost the amount contributed to your retirement account.

For more information, go to

http://finance.yahoo.com/news/slackers-guide-saving-retirement-113005671.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Encourage students to develop a long-term financial plan that includes retirement goals.
  • Discuss time value of money examples that show how small dollar amounts invested on a regular basis can help achieve long-term financial goals.
  • Launch a discussion about the different types of retirement accounts.

Discussion Questions

1.  Many people never begin saving or investing because there is never anything left over at the end of the month.  How can you find the money needed to begin saving and investing?

2.  Why should you begin to save for retirement now instead of waiting until later in life?

Categories: Chapter 1, Chapter 3, Chapter 4, Chapter_11, Chapter_14, Financial Planning, Investments, Retirement Planning, Savings, Taxes | Tags: , , , , , , , | Leave a comment

Stock Investing at Lower Risk: A Guide for Beginners

Here’s a simple breakdown of key points for investing in stocks

For the beginner, stock investing can seem like an uncharted mine field because of terms, regulations, and fear. This article provides five important pieces of information that can help students understand stocks and become better investors. Here goes:

  1. Owning stock is owning a company. As an owner, you have rights and responsibilities.
  2. Stocks grow two ways because they can increase in value and they pay dividends.
  3. Stocks rise and fall in value. Keep in mind what goes up can come down.
  4. You will pay taxes unless your stocks are held inside some type of tax deferred retirement account.
  5. Stocks can be volatile. Volatility is different than the typical rise and fall in price described above because volatility occurs when an investment has major price swings in a short period of time.

For more information go to

http://www.forbes.com/sites/mitchelltuchman/2013/08/09/stock-investing-at-lower-risk-a-guide-for-beginners/

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Provide basic information to students who are studying stock for the first time.
  • Help students understand the process of stock investing.
  • Compare stocks with savings accounts, certificates of deposit, bonds, mutual funds, and other investment alternatives.

Discussion Questions

  1. How can you profit from a stock investment?
  2. What are the risks associated with stock investments?
  3. How can you avoid paying taxes on stock and other investment alternatives?
Categories: Chapter_12, Chapter_14, Investments, Retirement Planning | Tags: , , | Leave a comment

Do You Need the Retirement Estimator?

Are you saving enough for your retirement?  The Retirement Estimator gives you an estimate based on your Social Security earnings.  However, be aware that it is only an estimate since your earnings may increase or decrease in the future.  Moreover, your benefit amount may be affected by military service, railroad employment or pensions earned through work on which you did not pay Social Security tax.  Remember, your estimated benefits are based on current law and the law may change because by 2033, the payroll taxes collected will be enough to pay only 77 cents for each dollar of scheduled benefits.

For additional information about who can use Retirement Estimator and how you can estimate your retirement benefits go to http://www.socialsecuirity.gov/estimator/.

Discussion Questions

  1. How do you decide which calculator to choose?
  2. What are some other possible sources of income for retirees?
  3. How can the Internet assist you in your retirement?

Teaching Suggestions

You may want to use the information in this blog post and the original resource to discuss

  • What are the two primary reasons for increasing the normal retirement age?
  • What are some factors that may, or may not, affect your retirement benefits?
Categories: Chapter 1, Chapter 3, Chapter_14, Retirement Planning, Taxes | Tags: , , , | Leave a comment

Can the Government Get Us to Save More for Retirement?

Millions of Americans aren’t saving enough for retirement. Now the President is getting involved and has proposed a new way to help workers save more!

According to a survey by the Employee Benefit Research Institute, 46 percent of American workers had less than $10,000 saved for retirement. The survey also revealed that half of all workers and the majority of part-time workers didn’t receive any retirement benefits from their employer.

To encourage workers to save more, President Obama proposed the “MyRA” plan that allows workers to invest $5,500 a year in government savings bonds that earn 2% to 3% until their balance reaches $15,000. At that point, the money in the account can be rolled over to a private sector Roth IRA, where the money can continue to grow tax-free.

While MyRA accounts are seen as a first step to encourage workers to begin saving, critics argue that the tax-free withdrawals encourage workers to withdraw money before reaching retirement.

For additional statistics on how much Americans save or more information about MyRA accounts, go to http://money.cnn.com/2014/02/11/retirement/retirement-savings/index.html?section=money_pf.

Discussion Questions
1. Many people never begin saving or investing because there is never anything left over at the end of the month. How can you find the money needed to begin saving and investing?
3. Why should you begin to invest money now instead of waiting until later in life?
3. What are the advantages of a MyRA savings plan? of a Roth IRA plan?

Teaching Suggestions
You may want to use the information in this blog post and the original article to discuss
• Why students should develop a long-term financial plan that includes both savings and investments.
• Time Value of Money examples to show how small dollar amounts invested on a regular basic can help achieve long-term financial goals.
• Different types of retirement accounts.

Categories: Chapter 1, Chapter 3, Chapter 4, Chapter_14, Financial Planning, Investments, Retirement Planning, Savings, Taxes | Tags: , , | Leave a comment

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