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by: Jennifer Cartwright
Jennifer Cartwright
Virginia Tech

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About this Document

all the notes about retirement
Personal Financial Planning
Dr. White
Class Notes
finance, retirement
25 ?




Popular in Personal Financial Planning

Popular in Agricultural & Resource Econ

This 3 page Class Notes was uploaded by Jennifer Cartwright on Monday April 25, 2016. The Class Notes belongs to AAEC 2104 at Virginia Polytechnic Institute and State University taught by Dr. White in Spring 2016. Since its upload, it has received 26 views. For similar materials see Personal Financial Planning in Agricultural & Resource Econ at Virginia Polytechnic Institute and State University.


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Date Created: 04/25/16
Retirement Planning  Retirement planning process o Determine your goals o What income will you have during retirement o Determine how much you need to invest o Determine where to invest for retirement  Retirement Income o Social security o Corporate retirement plans  Pensions  401 (k) o Personal retirement plans o Continued employment o Other income  Social Secuirty o Not meant to be a retirement plan o 3 main ss benefits:  Retirement income  Lt disability insurance o Full retirement = age 67  Early retirement (age 62) = reduce benefits  Delayed retirement (70) = increased benefits  Corporate Retirement Plans o Pensions  Funded by the employed  Becoming rare due to cost  2 types:  Defined benefit o Pays a guaranteed benefit for every year of retirement o Benefits based on average salary and years of service  Defined contribution o Employer makes a “defined” contribution each pay period to an account in your name o Builds pot of retirement funds o Types  Money purchase  Employer contributes a set percentage of employee’s salary  Profit- sharing  Annual contribution vary with company profits  Employer doesn’t have to make annual contributions  ESOP – employee stock ownership plan  Contributions used to purchase company stock o Vesting  Working long enough to qualify for pension income  Vesting periods  Immediate  Cliff  Graduated o 4-Oh-What accounts  These are employee- funded accounts  401(k)  403(b)  457 o Employee funded accounts  401(k), 403(b), 457  You elect to have funds taken out of paycheck and invested in a retirement account in your name  Money comes out of paycheck “pre-tax”  Employer may match your contributions  Early withdrawal penalty  10% penalty plus income tax o IRA: individual retirement Arr.  For US taxpayers  Long-term investments  2 types:  Traditional o Must have earned income during the year and under age 70.5 o Max contribution= 100% of income up to 5,500/year o Contributions may be tax deductible o Earnings are tax deferred o Early withdrawal penalty  Roth o Max contribution: 100% of income up to 5,500/year o Contributions are not tax deductible o Earnings are tax free o Easier access to your principal o Can continue to make contributions for life o No required distributions  Stuff  Can contribute to 401 (k) and an IRA  Can have traditional and roth IRA  Can have pension  Can convert from traditional to roth  Asset allocation o Self-Employed/Small business  Individual 401(k)  SEP-IRA  Defined contribution plan  Employer and eligible employees  Simple- IRA (employee funded)  Like 401k for small business


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