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Retirement Planning

You can calculate your own retirement needs using the formula in your handout, in lecture or the user-friendly web sites can guide you through the process of collecting the data you need for calculating your retirement needs. 

These sources perform the calculations and tell you how much money you may need to accumulate to meet your financial goals. No matter what your age it is never too early or too late to think about these steps. If you are young or old, compounding can work in your favor.  

First Read What it Takes to Retire: http://www.pbs.org/wgbh/pages/frontline/retirement/world/need.html

Now, Check out the powerful affects of compounding interest:   http://www.eduworks.com/Documents/Workshops/EdMedia1998/class/compound.htm

Now see what taxes and inflation and time can do to your investments interest. This helps you understand why it's important to save your money in accounts that accumulate tax-free dollars such as IRA's or 401K or 403B accounts.  http://www.bygpub.com/finance/TaxFixedAmtCalc.htm

ASSIGNMENT

Calculate your retirement needs (if you are uncomfortable using your own income figures make one up- I want to see that you know how to follow the process). You can either follow the procedure located in the lecture or use a retirement calculator (if you did not use AARP's calculator above, there are more links provided below) . Cut and past the following questions and answer each at the discussion board. As usual, leaving items out results in a lower grade.  If you need help, email me or a colleague, or put a note with the subject "HELP" at the discussion board. 

1. How much monthly income do you want in retirement?
2. How did you arrive at that amount?
3. How much money will you need to save each month or year to obtain the income level you desire in retirement (give us an actual figure) and what total amount will you need?
4. What rate of interest did you calculate on that savings to meet your goals? Is it realistic?
5. Share your insights about retirement savings, your findings, and what you might change, if anything, to ready yourself for retirement. 

Procedure

Worksheets may ask for figures you do not have. Many of you will have to estimate numbers for this assignment (use a SWAG- for example consider minimum and maximum Social Security payments  per month and calculate accordingly per the Social Security web site).  Be creative. When deciding on income needs, consider the career you are likely to develop after graduation, the wages you’ll want to be paid, and then calculate your retirement based on those estimated numbers.  You can us this site to estimate Social Security Benefits: http://www.ssa.gov/OACT/anypia/index.html

 Remember to consider all streams of income including retirement plans or pensions, Social Security, savings, etc.

Resources-  The most accurate method is to plug in your numbers where I have calculated a hypothetical retirement in the lecture materials. 

You can search for other retirement calculators using a search engine. Use key words like "retirement planning", or "retirement calculators". Here are some resources I found:

                http://retireplan.about.com/cs/calculators/a/calculators.htm

 

AARP Calculator    

http://sites.stockpoint.com/aarp_rc/wm/Retirement/Retirement.asp?act=LOGIN

http://www.aarp.org/money

U.S. Department of Labor: http://www.dol.gov/dol/topic/retirement/index.htm

The U.S. Department of Labor has created a web page designed as a primer for retirement. The guide stresses financial preparation, including knowing about benefits, employer plans such as the 401(k), and Social Security. Phone numbers for retirement issues-oriented organizations are also provided.