Planning for Retirement. #14. Learning Goals. Role of Retirement Planning. Set Your Goals At what age do you want to retire? How much money will you need?. Three Biggest Pitfalls in Retirement Planning. Compounding magnifies these pitfalls. Estimating Income Needs. Sources of Income .
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Planning for Retirement
Set Your Goals
At what age do you want to retire?
How much money will you need?
Compounding magnifies these pitfalls
See it as an insurance system not a retirement plan
Benefits provided by payroll taxes employee and employer pay
Amount of benefits may not be sufficient at retirement
Basic Social Security benefits include:
Employer-sponsored retirement programs
Self-directed retirement program
company guarantees contribution, but not a return on it or a retirement benefit
company guarantees retirement benefit regardless of pension fund performance
Evaluating Employer-Sponsored Pension Plans
annuitant purchases annuity by paying premiums into the account
insurance company makes payments to annuitant. Portion not returned to annuitant prior to death goes to beneficiaries
Single Premium vs. Installments
one lump-sum payment or a series of payments to purchase annuity
Fixed vs. Variable
investment grows at low guaranteed fixed rate or possibly a higher variable rate with no guarantee of return
Classification of Annuities
insurance company agrees to pay guaranteed rate of interest
monthly income from policy varies based on insurer’s actual investment experience