Financial Literacy
Savings Information
University of Wyoming – Delta Alpha Chapter
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.
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.
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?v=I-16u9x3tfE
Social Security
• Why won’t 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.html#wp108221
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
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
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/ballparkWorksheet-2005final.pdf
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
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.)
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
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
IRAs
• What are IRAs?
• A traditional IRA works like a 401K in that contributions are not taxed
until received at retirement. (There is a $4000/year limit on amount
you can contribute)
• A Roth IRA works in a reverse manner to traditional IRAs in that
contributions are taxed and cash receipts at retirement are tax-free.
(The advantage of this option is that earnings are never taxed)
Source: http://www.extension.iastate.edu/finances/personal/retirement/first_steps.htm
Savings
• Where can I find other helpful information about
retirement planning and savings?
• This website offers information about Mutual funds and other retirement
options from CNN Money
• http://money.cnn.com/pf/funds/
• This website offers information on CDs and investment rates
• http://www.bankrate.com/brm/rate/deposits_home.asp
• This website offers information to help you start saving
• FeedThePig.org
For additional financial literacy information please visit the
links below.
Credit Card Information
Student Loan Information
7/1/2016
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References
You Tube. (2008). Glenn Beck-The Real Story, Touching the Third Rail. Retrieved March 10, 2008.
http://youtube.com /watch ?v=I-16u9x3tfE
The Motley Fool. (2008). Is Your 401(k) Foolish. Retrieved March 10, 2008.
http://www.fool.com/money/401k/ 401k01.htm
Employee Research Benefit Institute (2008). Get a Ballpark E$timate of Your Retirement Needs.
Retrieved March 10, 2008. http://www.choosetosave.org/ballpark/ballparkWorksheet2005final.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/TR07/II_project.html#wp108221
Wollan, Bob. (2008). First Steps in Retirement Planning. Iowa State University: University Extension.
Retrieved March 10, 2008.
http://www.extension.iastate.edu/finances/personal/retirement/ first_steps.htm
7/1/2016