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How to Become a Millionaire. Retirement Accounts. To Retire. Save $20,000 for 47 years with 8% interest Worth $744,640 10% interest, Worth $1,763,949 Every Million saved = $50,000 in retirement With 8% annual interest rate Calculate what you want to make in retirement

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how to become a millionaire

How to Become a Millionaire

Retirement Accounts

to retire
To Retire
  • Save $20,000 for 47 years with 8% interest
    • Worth $744,640
  • 10% interest,
    • Worth $1,763,949
  • Every Million saved = $50,000 in retirement
    • With 8% annual interest rate
  • Calculate what you want to make in retirement
    • Consider Social Security payouts
    • Consider retirement account payouts
what you think and want to know
What you think and want to know
  • Answer I think and I want on page 32
  • Watch Dave Chapter 3, Part 1
  • Do you have all page 33 to 35 answers?
  • IRS (Internal Revenue Service) codes
  • Retirement account = tax savings
  • All names based on tax code
  • Just a name of account - have all types of investments in the account
    • Dressed up in a coat
slide4
Roth
  • Roth
    • Pay taxes now & Never again
    • Money grows tax free
  • Tax Deferred Accounts
    • Make more now than retirement
    • Pay taxes latter = pay less in taxes
  • If take $ early = penalty
pension plan
Pension Plan
  • SEPP
    • Self-employed person may deduct up to 15%
  • How a pension work now days
    • Tax, employer and (minimum) employee funded
    • Get to retire without saving much / any
  • Who gets them?
    • Politicians, Police, Fire, Teachers – Public Servants
401 k 403 b
401(k), 403(b)
  • Companies really do not have pensions
  • Most are now self-funded and matching plans
  • 401(k) = company 403(b) = non-profit organization
    • 2010 median match = 3% of pay
    • Meaning, earn $40,000 you put at least 3% or $1,200 in 401(k) and employer will put in 3% or
    • $1,200 free money into your account
    • Law forces you to enroll or opt out
    • Can usually put up to 15% into 401(k) up to $17,000
slide7
457
  • Deferred compensation
  • For government employees
  • Do not use a Guaranteed Investment Contract
  • Difference between 457 & 401/403
    • No 10% penalty for withdrawal before the age of 59½
    • Independent contractors can participate
more on retirement
More on Retirement
  • You should be funding your plan whether your company matches or not.
  • You should always rollover retirement plans to an IRA when you leave the company
    • Or, if allowed roll to your new 401(k)
    • Or, you will be charged more fees
    • Use a direct transfer or may get charged taxes and penalties
  • Answers:
    • Pay the taxes separately and you understand all taxes will become due
baby step 4
Baby Step 4
  • Never BORROW on your retirement plan
    • Will become a habit
  • Fund 401(k) or other plan up to the Match
  • Above the match, fund Roth IRAs
  • Complete 15% of income by going back to your 401(k) or other plans
social security
Social Security
  • Estimated monthly benefit
  • Start at age 62 and 1 month in 2050
  • $1,061.00
  • For your estimate, we assumed no future increases in prices or earnings
social security1
Social Security
  • Worksheet – Watch Dave and answer questions
  • Will go over