University of Wyoming – Delta Alpha Chapter

1. Financial LiteracySavings Information University of Wyoming – Delta Alpha Chapter

2. Savings • Why is saving important? • It is important to start saving now because the U.S. Government is in a financial crisis, and it is very likely that social security will not be available by the time you reach retirement. There is a downward trend of personal savings, and the sooner you start saving the sooner you will be able to retire.

3. U.S. Debt • How much is the U.S. government in debt? • The U.S government is in debt 56 trillion dollars (56,000,000,000,000), and each year the debt grows one to two trillion dollars. • How does the government pay back the debt? • The only way the government can pay back its debt is to cut governmental spending, or to raise taxes.

4. U.S. Debt If you want to learn more about the upcoming U.S. financial crisis follow the link below to watch a Glenn Beck Interview with the Head U.S. Government Accountant, David Walker What does the U.S. debt have to do with me? Taxes will need to increase in near future in order to pay off debt The Government cannot afford programs like Social Security and Medicare Source: http://youtube.com/watch?v=I-16u9x3tfE

5. Social Security Social Security Long-Term Projections Why won’t Social Security be available? Social Security expenses will exceed costs by 2015 Social Security will be unfunded by 2041 Source: 2007 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Figure II.D4 www.ssa.gov/OACT/TR/TR07/II_project.html#wp108221

6. Social Security Why is not having Social Security a concern? This chart shows a downward trend of Personal Savings It means that Americans need to change this trend if they ever want to retire Saving now is better than saving later Source: http://www.bea.gov

7. Saving Early • Why is saving early beneficial? • Albert Einstein: “The most powerful force in the universe is compounding interest.” • The chart to the right is an illustration of the difference between early versus late investing. Source: http://www.fool.com/money/401k/401k01.htm

8. Retirement • How much money will I need if I want to retire when I am 65? • If you are 30 and have NO savings and want to live on $80,000 per year when you retire, then you will need $1,388,000 when you are 65. • Being able to save $1,388,000* means that you need to save $22,208 each year. *Assuming you will live to age 89 and have no Social Security Source: http://www.choosetosave.org/ballpark/ballparkWorksheet-2005final.pdf

9. Employer Saving Options • What are employer saving options? • There are three types of employer saving options: 401K, 457, or 403(b) • What is the difference between a 401K, 457, and 403 (b)? • A 401k is an employer sponsored retirement plan that is generally a part of an employee benefit package • A 457 Plan was created for state and local government employees • A 403 (b) was created for non-profit employees

10. Employer Saving Options • What are the advantages of a 401K, 457, or 403(b) Plan? • Employers will match contributions up to a certain % of income. That means FREE MONEY! (There are limitations on the amount you can contribute based on income.) • Money you put into a plan is not TAXED until you take it out. (Generally taxed when you retire, and have lower tax rate.)

11. Plans invest contributions in stocks, bonds, money markets or a mix of the three. • Equity index funds are usually safer funds. • Be aware of the costs that the plan itself charges. Make sure that the costs of running the plan are not unnecessarily eating into your retirement savings. 401K, 457, or 403(b)-Additional Information Source: http://www.fool.com/money/401k/401k08.htm

12. Non-Employer Saving Options • What if my employer does not offer a retirement savings plan? • Traditional IRAs and Roth IRAs are non-employer saving options

13. IRAs • What are IRAs? • A traditional IRA works like a 401K in that contributions are not taxed until received at retirement. (There is a $4000/year limit on amount you can contribute) • A Roth IRA works in a reverse manner to traditional IRAs in that contributions are taxed and cash receipts at retirement are tax-free. (The advantage of this option is that earnings are never taxed) Source: http://www.extension.iastate.edu/finances/personal/retirement/first_steps.htm

14. Savings • Where can I find other helpful information about retirement planning and savings? • This website offers information about Mutual funds and other retirement options from CNN Money • http://money.cnn.com/pf/funds/ • This website offers information on CDs and investment rates • http://www.bankrate.com/brm/rate/deposits_home.asp • This website offers information to help you start saving • FeedThePig.org

15. For additional financial literacy information please visit the links below. Credit Card Information Student Loan Information Your opinion is important to us. Please use the link below and to fill out a short survey for a chance to win a $50 Savings Bond. Survey

16. References You Tube. (2008). Glenn Beck-The Real Story, Touching the Third Rail. Retrieved March 10, 2008. http://youtube.com /watch ?v=I-16u9x3tfE The Motley Fool. (2008). Is Your 401(k) Foolish. Retrieved March 10, 2008. http://www.fool.com/money/401k/ 401k01.htm Employee Research Benefit Institute (2008). Get a Ballpark E$timate of Your Retirement Needs. Retrieved March 10, 2008. http://www.choosetosave.org/ballpark/ballparkWorksheet- 2005final.pdf United State Bureau of Economic Analysis (BEA). (2007). Retrieved March 10, 2008. http://www.bea.gov United States Social Security Administration (SSA). (2007). 2007 OASDI Trustees Report. Retrieved March 10, 2008. www.ssa.gov/OACT/TR/TR07/II_project.html#wp108221 Wollan, Bob. (2008). First Steps in Retirement Planning. Iowa State University: University Extension. Retrieved March 10, 2008. http://www.extension.iastate.edu/finances/personal/retirement/ first_steps.htm