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Securing Your Financial Future

A comprehensive guide for American workers on how to secure their financial future through effective retirement savings. With 65% of workers confident they have enough saved for retirement, this resource highlights the importance of investment strategies like 401K, Roth IRA, and other plans. The guide emphasizes the significance of starting early, with a recommended savings rate of 10% from day one on the job. It also incorporates Christian perspectives on wealth and contentment, encouraging responsible financial stewardship. Equip yourself with the knowledge to grow your savings and achieve financial independence.

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Securing Your Financial Future

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  1. SecuringYour FinancialFuture

  2. Amount American Workers Have Saved for Retirement(65% are confident they will have enough money for retirement) SOURCE: Employee Benefit Research Institute

  3. Christian Perspective • Ecclesiastes 5:10 Whoever lovesmoney never has money enough; whoever loveswealth is never satisfied with his income. This too is meaningless. • Hebrews 13:5 Keep your lives free from the loveofmoney and be content with what you have… • I Timothy 6:10 For the loveofmoney is a root of all kinds of evil.

  4. Christian Perspective • I Corinthians 16:2 (Paul speaking) On the first day of each week, each one of you should setaside a sum of money in keeping with his income, savingitup, … • Proverbs 13:11 Dishonest money dwindles away, but he who gathersmoneylittlebylittle makes it grow. • Proverbs 13:22 A good man leavesaninheritance for his children's children, …

  5. 401K, 403B, 457, SEP Retirement Plans • Companysponsoredretirementsavingsplans (supported by multiple types of mutual funds) • 401K offered by “for profit” companies • 403B offered by “non profit” companies • 457 offered by governmentagencies • SEP available for self-employedindividuals • In many cases, these retirement savings plans are replacing company sponsored pensionplans

  6. 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 taxdeferred • 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)

  7. Individual Retirement Accounts • Traditional IRA(very similar to a 401K or 403B plans) • All contributions are made with “before-tax” dollars • All mutual fund gains are taxdiffered • All future withdrawals are fullytaxable • 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(introduced in 1997) • All contributions are made with “after-tax” dollars • All mutual fund gains are taxfree • All withdrawals are taxfree (after age 59 ½ ) • You do not have to begin withdrawing money at 70 ½

  8. Retirement Strategy • Begin investing 10%yourfirstdayatwork • 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 RothIRA 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)

  9. 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)

  10. 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 dayone 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

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