Lesson 1 OnScreen Slides

1
(No Transcript)
2
Begin by Planning Today
1-2
3
Lesson Overview

• Decisions made today impact your future financial
  freedom
• Begin with basics
• Time and money
• Tax-advantaged investments
• Where will money come from?
• Resources

1-3
4
Will You Be Free?

• Some say freedom is having enough money to do
  what one wants.
• What do you want to do in retirement?
• Plan today to secure dreams!

1-4
5
Planning Pays Off

• Workers who plan for retirement
• Are more likely to save
• Save more or change their investment allocation
• Accumulate more total funds
• - 2002 Retirement Confidence Survey

1-5
6

• Your plan cannot be perfect,
• but
• an imperfect plan
• is much better than
• no plan at all!

1-6
7

• Estate plan
• Investment plan
• Home ownership
• Adequate insurance
• Emergency fund and credit
• Solvency

1-7
8
Sources of Retirement Income

• Employer
• Social Security
• Personal retirement investments
• Work in retirement

1-8
9
Time and Money

• Three 22 year-old investors
• A invested 2,000 per year for 5 years
• B waited 10 years, then invested 2,000 a year
  for 35 years
• C invested 2,000 per year each year

1-9
10
Time and Money

• Balances at age 66
• Investor A 607,887
• Investor B 596,254
• Investor C 1,581,591

1-10
11
Monthly Investment to Achieve 100,000
1-11
12
Monthly Investment to Achieve 100,000
1-12
13
Monthly Investment to Achieve 100,000
1-13
14
Factors That Affect How Your Nest Egg Will Grow

• Amount you invest
• How soon you get started
• Rate of return
• Whether taxable, tax-deferred, or tax-free

1-14
15
Tax-Advantaged Investments

• 401(k) and 403(b) retirement plans
• IRAs
• Roth IRAs
• Annuities

1-15
16
Net Worth

• Everything you own
• Everything you owe
• Net Worth

1-16
17
Where Will Your Nest Egg Come From?

• Do you spend less than you make?
• Does your employer offer a retirement plan?
• Do you take advantage of employer match?

1-17
18
Where Will Your Nest Egg Come From?

• Have you plugged spending leaks?
• Could you drive your car an extra year?
• Do you pay cash and save the interest cost?

1-18
19
Establish a Spending Plan

• Track your spending for a month.
• List occasional expenses.
• Add for goals. Include a retirement goal.

1-19
20
Learn More

• Additional publications in this series
• Extension publications
• Investing For Your Future web course
• http//www/investing.rutgers.edu
• Financial books from public library

1-20