You May Have Seen Ads Promoting FeedThePig.org

1
Financial LiteracySavings Information
University of Wyoming Delta Alpha Chapter
2
Savings

• Why is saving important?
• It is important to start saving now because the
  U.S. Government is in a financial crisis, and it
  is very likely that social security will not be
  available by the time you reach retirement.
  There is a downward trend of personal savings,
  and the sooner you start saving the sooner you
  will be able to retire.

3
U.S. Debt

• How much is the U.S. government in debt?
• The U.S government is in debt 56 trillion dollars
  (56,000,000,000,000), and each year the debt
  grows one to two trillion dollars.
• How does the government pay back the debt?
• The only way the government can pay back its debt
  is to cut governmental spending, or to raise
  taxes.

4
U.S. Debt

• What does the U.S. debt have to do with me?
• Taxes will need to increase in near future in
  order to pay off debt
• The Government cannot afford programs like Social
  Security and Medicare

• If you want to learn more about the upcoming U.S.
  financial crisis follow the link below to watch a
  Glenn Beck Interview with the Head U.S.
  Government Accountant, David Walker

Source http//youtube.com/watch?vI-16u9x3tfE
5
Social Security

• Why wont Social Security be available?
• Social Security expenses will exceed costs by
  2015
• Social Security will be unfunded by 2041

• Social Security Long-Term Projections

Source 2007 Annual Report of the Board of
Trustees of the Federal Old-Age and Survivors
Insurance and Disability Insurance Trust Funds,
Figure II.D4 www.ssa.gov/OACT/TR/TR07/II_project.h
tmlwp108221
6
Social Security

• Why is not having Social Security a concern?
• This chart shows a downward trend of Personal
  Savings
• It means that Americans need to change this trend
  if they ever want to retire
• Saving now is better than saving later

Source http//www.bea.gov
7
Saving Early

• Why is saving early beneficial?
• Albert Einstein The most powerful force in the
  universe is compounding interest.
• The chart to the right is an illustration of the
  difference between early versus late investing.

Source http//www.fool.com/money/401k/401k01.htm
8
Retirement

• How much money will I need if I want to retire
  when I am 65?
• If you are 30 and have NO savings and want to
  live on 80,000 per year when you retire, then
  you will need 1,388,000 when you are 65.
• Being able to save 1,388,000 means that you
  need to save 22,208 each year.
• Assuming you will live to age 89 and
  have no Social Security

Source http//www.choosetosave.org/ballpark/ballp
arkWorksheet-2005final.pdf
9

Employer Saving Options

• What are employer saving options?
• There are three types of employer saving options
  401K, 457, or 403(b)
• What is the difference between a 401K, 457, and
  403 (b)?
• A 401k is an employer sponsored retirement plan
  that is generally a part of an employee benefit
  package
• A 457 Plan was created for state and local
  government employees
• A 403 (b) was created for non-profit employees

10
Employer Saving Options

• What are the advantages of a 401K, 457, or 403(b)
  Plan?
• Employers will match contributions up to a
  certain of income. That means FREE MONEY!
  (There are limitations on the amount you can
  contribute based on income.)
• Money you put into a plan is not TAXED until you
  take it out. (Generally taxed when you retire,
  and have lower tax rate.)

11
401K, 457, or 403(b)-Additional Information

• Plans invest contributions in stocks, bonds,
  money markets or a mix of the three.
• Equity index funds are usually safer funds.
• Be aware of the costs that the plan itself
  charges. Make sure that the costs of running the
  plan are not unnecessarily eating into your
  retirement savings.

Source http//www.fool.com/money/401k/401k08.htm
12
Non-Employer Saving Options

• What if my employer does not offer a retirement
  savings plan?
• Traditional IRAs and Roth IRAs are non-employer
  saving options

13
IRAs

• What are IRAs?
• A traditional IRA works like a 401K in that
  contributions are not taxed until received at
  retirement. (There is a 4000/year limit on
  amount you can contribute)
• A Roth IRA works in a reverse manner to
  traditional IRAs in that contributions are taxed
  and cash receipts at retirement are tax-free.
  (The advantage of this option is that earnings
  are never taxed)

Source http//www.extension.iastate.edu/finances/
personal/retirement/first_steps.htm
14
Savings

• Where can I find other helpful information about
  retirement planning and savings?
• This website offers information about Mutual
  funds and other retirement options from CNN Money
• http//money.cnn.com/pf/funds/
• This website offers information on CDs and
  investment rates
• http//www.bankrate.com/brm/rate/deposits_home.asp
  
• This website offers information to help you start
  saving
• FeedThePig.org

15
For additional financial literacy information
please visit the links below. Credit Card
Information Student Loan Information
Your opinion is important to us. Please use the
link below and to fill out a short survey for a
chance to win a 50 Savings Bond. Survey
16
References

• You Tube. (2008). Glenn Beck-The Real Story,
  Touching the Third Rail. Retrieved March 10,
  2008. http//youtube.com /watch ?vI-16u9x3tfE
• The Motley Fool. (2008). Is Your 401(k) Foolish.
  Retrieved March 10, 2008. http//www.fool.com/mon
  ey/401k/ 401k01.htm
• Employee Research Benefit Institute (2008). Get a
  Ballpark Etimate of Your Retirement Needs.
  Retrieved March 10, 2008. http//www.choosetosave
  .org/ballpark/ballparkWorksheet- 2005final.pdf
• United State Bureau of Economic Analysis (BEA).
  (2007). Retrieved March 10, 2008.
  http//www.bea.gov
• United States Social Security Administration
  (SSA). (2007). 2007 OASDI Trustees Report.
  Retrieved March 10, 2008. www.ssa.gov/OACT/TR/TR0
  7/II_project.htmlwp108221
• Wollan, Bob. (2008). First Steps in Retirement
  Planning. Iowa State University University
  Extension. Retrieved March 10, 2008.
  http//www.extension.iastate.edu/finances/persona
  l/retirement/ first_steps.htm