Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a...
-
Upload
society-of-women-engineers -
Category
Engineering
-
view
253 -
download
2
description
Transcript of Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a...
![Page 1: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/1.jpg)
Working for Today, Saving for Tomorrow How to Take Control of Your Finances and Plan for a Profitable Retirement
November 2012 Marisa S. Ruhter
![Page 2: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/2.jpg)
2
Overview
Personal Finance
R
esources
Retirement Planning
Investing
![Page 3: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/3.jpg)
3
Budget List Fixed Expenses
Track Spending
Identify Needs vs Wants
10 Tools to Help: www.doughroller.net/tools-resources/10-online-budget-tools/
![Page 4: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/4.jpg)
4
Industry Debt Guidelines
Sum of Debt Payments Income (Pre Tax)
= Debt to Income Ratio
Debt to Income Ratio < 15 % Very Good
16% - 20% Good 21% - 35% Try to Reduce Debt 36% - 50% Too Much Debt
>50% Serious Trouble
![Page 5: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/5.jpg)
5
Emergency Fund
3 to 6 months worth of living expenses Exact amount depends on
personal comfort level
![Page 6: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/6.jpg)
6
Insurance
![Page 7: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/7.jpg)
7
How Much Money Will I Need?
Retirement Basics: http://money.cnn.com/retirement/guide/basics_basics.moneymag/
Medical Expenses Leisure Activities Health Care Costs
$$$
Savings Plan Contributions Work Related Expenses Taxes
$$$
![Page 8: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/8.jpg)
8
Other Things to Consider Retirement Age
Length in Retirement
Health Care
Inflation
Lifestyle
Retirement Calculator: http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
Image Source: Wikipedia
![Page 9: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/9.jpg)
9
401(k)
Pay Check Modified Income Taxes
401(k)
Employer Contribution
Taxes Income
Retirement
![Page 10: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/10.jpg)
10
401(k)
Contributions Managed Externally
Investment Choices
Employer Vesting
Source: www.irs.gov
More Info: www.401khelpcenter.com
![Page 11: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/11.jpg)
11
Traditional IRA
Pay Check Modified Income Taxes
Traditional IRA
Taxes Income
Retirement
Employer
![Page 12: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/12.jpg)
12
Roth IRA
Pay Check Take Home Pay Roth IRA
Taxes
Income
Retirement
Employer
![Page 13: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/13.jpg)
13
Contribution Limits
Traditional IRA Contribution Limits
Roth IRA Contribution Limits
Age 2012 Contribution Limits Up to age 50 $5,000 Age 50 – 70½ $6,000 Over age 70½ Not allowed
Age 2012 Contribution Limits Up to age 50 $5,000 Over age 50 $6,000
![Page 14: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/14.jpg)
14
Latest Age for Social Security Payments
70 67
Full Retirement Age
55
Retirement Age after which 401(k) distributions no longer incur 10% penalty
50
IRA Contribution Limits Increase
Retirement Timeline
Age 59½
IRA Withdrawals subject to 10% early distribution
penalty
62
Earliest Age for Social Security Payments
70½
Required Minimum Distributions from Traditional IRA’s
Social Security Benefits: www.socialsecurity.gov/estimator/
![Page 15: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/15.jpg)
15
Choosing a Brokerage Banks Mutual Fund Companies Brokerage Firms
Minimum Initial Investment Automatic Contributions
Available Minimum Contributions
Allowed Fees Investment Options
IRA Broker Quiz: https://www.mint.com/ira-center/?campaign=MMB_IRA_brokerage
![Page 16: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/16.jpg)
16
Diversification
![Page 17: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/17.jpg)
17
Diversification Merriam-Webster Definition: “composed of distinct or unlike elements or qualities”
Risk Management Technique
![Page 18: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/18.jpg)
18
Why Diversify?
S&P 500
Bonds
1.9%
![Page 19: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/19.jpg)
19
Yearly Asset Class Returns
![Page 20: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/20.jpg)
20
Diversification Individual Factors
– Risk Tolerance – Years Until Retirement – Confidence / Experience
Stocks
Bonds Stocks
Money Market Funds
Bonds
MM
Risk Tolerance Quiz: http://njaes.rutgers.edu/money/riskquiz/
– Future Expectations – Personality
![Page 21: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/21.jpg)
21
Moderate Allocation Example
Large-Cap Equity Small-Cap Equity International Equity Fixed Income Cash Investments
Indexed Funds – Bond Market Index Fund – Treasury Money Market Fund – S&P 500 Index Fund – International Index Fund – Russell 2000 Index Fund – Total Stock Market Index Fund
Actively Managed Funds – Domestic Large Co. Fund – Domestic Small/Mid Co. Fund – Emerging Markets Fund – Health Care Fund – Blue Chip Growth – Small Cap Value Fund
35% 35%
15%
5%
10%
![Page 22: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/22.jpg)
22
Target Date Funds
Retired Retire 2015
Retire 2020
Retire 2025
Retire 2030
Retire 2035
Retire 2040
Retire 2045
Retire 2050
Example Asset Allocation for Target Date Funds
Large / Mid-Cap Equities
Small-Cap Equities
International Equities
Real Estate
Commodities
US Bonds
Global Bonds
Inflation-Linked Bonds
![Page 23: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/23.jpg)
23
Buying Stock Where to start?
– Understand yourself – Understand an industry
Research
Create a Watch List
General Investment References: www.fool.com & www.investopedia.com
![Page 24: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/24.jpg)
24
Buying Stock How
Rule of 5
Reflect
Taxes
2012 Broker Rankings: www.smartmoney.com/invest/markets/smartmoneys-annual-broker-survey-23119/
![Page 25: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/25.jpg)
25
Annual Maintenance Review Allocations Annually
Consider Entire Portfolio
Professional Consultation
![Page 26: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/26.jpg)
26
Summary
Personal Finance
R
esources
Retirement Planning
Investing
![Page 27: Working for Today, Saving for Tomorrow: How to Take Control of Your Finances and Plan for a Profitable Retirement](https://reader036.fdocuments.in/reader036/viewer/2022081403/554a32fbb4c9051b578b533e/html5/thumbnails/27.jpg)
27
“Don't be too timid and squeamish about your actions. All life is an experiment.”
- Ralph Waldo Emerson