Securing Your
Financial Future
Amount American Workers Have Saved for Retirement
(65% are confident they will have enough money for retirement)
$250,000 or more
11%
$100,000 -249,999
12%
$50,000 - $99,999
Less than $25,000
12%
52%
$25,000 - $49,999
13%
SOURCE: Employee Benefit
Research Institute
Christian Perspective
Ecclesiastes 5:10
Whoever loves money never has money enough;
whoever loves wealth is never satisfied with his
income. This too is meaningless.
 Hebrews 13:5
Keep your lives free from the love of money and
be content with what you have…
 I Timothy 6:10
For the love of money is a root of all kinds of evil.
Christian Perspective
I Corinthians 16:2 (Paul speaking)
On the first day of each week, each one of you
should set aside a sum of money in keeping with his
income, saving it up, …
Proverbs 13:11
Dishonest money dwindles away, but he who gathers
money little by little makes it grow.
Proverbs 13:22
A good man leaves an inheritance for his children's
children, …
401K, 403B, 457, SEP
Retirement Plans
 Company sponsored retirement savings plans
(supported by multiple types of mutual funds)
– 401K offered by “for profit” companies
– 403B offered by “non profit” companies
– 457
offered by government agencies
– SEP available for self-employed individuals
 In many cases, these retirement savings plans are
replacing company sponsored pension plans
401K, 403B, 457, SEP
Retirement Plans (cont’d)
 Maximum contribution is 15% of earned income
 Tax favored (tax advantaged)
– Additions are made with “before- tax” dollars
– All interest/dividends are tax deferred
 Most companies will match the first 1-5% of
each employee’s contribution
 All balances must be rolled over to an IRA
when you leave a job (to avoid taxes and 10%
tax penalties)
Individual Retirement Accounts
 Traditional IRA
–
–
–
–
–
All contributions are made with “before-tax” dollars
All mutual fund gains are tax differed
All future withdrawals are fully taxable
You must begin withdrawing money at age 70 ½
Main use: Store (roll over) 401K/403B funds from
previous jobs (and thus defer taxes)
 Roth IRA
–
–
–
–
(very similar to a 401K or 403B plans)
(introduced in 1997)
All contributions are made with “after-tax” dollars
All mutual fund gains are tax free
All withdrawals are tax free (after age 59 ½ )
You do not have to begin withdrawing money at 70 ½
Retirement Strategy
 Begin investing 10% your first day at work
– You will never miss what you never had
– You will not have to make tough decisions later
 Recommended Investment Strategy
– First, invest in a 401K up to the matching percent
– Second, invest in a Roth IRA up to the maximum
amount allowed per year ($4,000 in 2005).
– Third, go back and invest in your 401K up to the
maximum allowed per year ($14,000 in 2005)
Retirement Savings Example
 Your first job pays $30,000 per year and you get a raise
of $3,000 per year thereafter.
 You contribute 10% each month (payroll deduction)
 Your employer matches the first 3% contribution
 You contribute 10% for 45 years (ages 22–67)
 Your final retirement “nest egg” will be:
401K
+
Roth IRA
=
Total
$ 700,000 + $ 800,000 = $1,500,000 ( 5% - pessimistic)
$ 900,000 + $1,100,000 = $2,000,000 ( 6% - conservative)
$1,500,000 + $1,800,000 = $3,300,000 ( 8% - avg. last 30 yrs)
$2,600,000 + $3,100,000 = $5,700,000 (10% - optimistic)
Summary
 Every person is eligible to invest in their future
 You will secure your financial future if you
follow one simple rule…. Invest 10% beginning
day one of your career
 Don’t borrow from your 401K or 403B plan!
 College is still the best option if you want:
– More initial career options
– Higher starting salary
– More career advancement opportunities