2. Writing Prompt
Write one paragraph about the kind of
lifestyle you would like to have when you
retire. Include ideas on how much you
think it will cost to maintain this lifestyle.
(Do you want to live on the amount of money you have been
used to, more than they are used to, or less then they are used
to?)
Write a second paragraph on where their
income will come from after retirement.
3. How much money will you
need when you retire?
Many people stay healthy and
active for 20 years or more after
they retire.
If you start planning and investing
soon enough, you can spend those
years enjoying yourself instead of
worrying about paying the bills.
4. How much money will you
need when you retire?
One of the basic sources of
retirement income is Social Security.
Social Security Benefits Calculator
Could you live comfortably on Social
Security benefits only?
5. How much money will you
need when you retire?
How do you react to those you say,
“I’ll just live on Social Security.”
6. How much money will you
need when you retire?
What are the eligibility requirements
to receive Social Security?
What is the difference between a
traditional IRA and a Roth IRA?
What is the difference between a
401(k) and a 403(b).
7. Other sources of retirement
income:
Pension plans
401(k), 403(b)
Traditional IRA
Roth IRA
Keogh plan
Social Security
9. Planning for retirement is
your responsibility!
Traditional employer-funded
retirement plans are disappearing.
Social Security benefits may not
insure a comfortable lifestyle.
Without a retirement plan, you could
face a future of financial
uncertainties and hardships.
10. Compound Interest
Interest which is calculated not only on
the initial principal, but also the
accumulated interest of prior periods.
11. Would You Rather Have, A
Million Dollars Today, Or A
Penny That Doubles Every
Day For Thirty Days?
16. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 1
$300 $300
x. 04 + 12
$12 $312 End of Year 1
17. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 2
$312 $312.00
x. 04 + 12.48
$12.48 $324.48 End of Year 2
18. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Beginning of Year 3
$324.48 $324.48
x. 04 + 12.98
$12.98 $337.46 End of Year 3
19. Figure out Compound Interest
$300, 4% interest, 3 years
How much interest?
Total $337.46
-Principal -300.00
Total Interest
20. Figure out Compound Interest
$100, 2% interest, 3 years – How much interest?
Year 1: $100 at 2% = $2
$100 + $2 = $102
Year 2: $102 at 2% = $2.04
$102 + $2.04 = $104.04
Year 3: $104.04 at 2% = $2.08
$104.04 + $2.08 = $106.12
(Total) $106.12 – (Principal) $100 = (Interest)
$6.12
21. Rule of 72
Tells you how long it takes your
money to double in value.
Divide 72 by the interest rate to
determine number of years to
double.
Divide 72 by years to determine
rate needed to double your money
in a given time period.
22. Try It!
Apply the Rule of 72 to Find the Time or Rate
Assume you can earn 6% on your
money. How long will it take $100
to grow to $200?
72 ÷ 6% = 12 years
23. Try It!
Apply the Rule of 72 to Find the Time or Rate
If you have $200 today and need
$400 in eight years, what interest
rate do you need to earn?
72 ÷ 8 years = 9% interest
25. Assessment
Create a children’s story promoting
saving.
26. Assessment
Answer each question then share you answers
with the class in the form of a role play.
3. Norma is considering buying a certificate of
deposit with the $500 she has in a regular
savings account. Explain to her what factors
she could consider when choosing a certificate
of deposit.
27. Assessment
Answer each question then share you answers
with the class in the form of a role play.
2. You were visiting your Grandpa and you
happened to find $5000 stashed in an old shoe
box. He told you that he had been saving this
money for over 20 years.
a. Explain to him other options he has.
b.Explain and demonstrate the principles of
compounding interest.
28. Assessment
Answer each question then share you answers
with the class in the form of a role play.
3. Your friends, Jim and Joey (16) are twin
brothers and just received a $1000 inheritance
from a wealthy aunt. Jim wants the two of
them to put their money together and buy a 4-
wheeler. Joey says he wants to put his money
in a savings account. Jim comes to you to ask
you to help persuade Joey to buy the 4-
wheeler. What is your best financial advice?
29. Assessment
Answer each question then share their answers
with the class in the form of a role play.
4. You’ve been working for a while, but your
sister just got a job and is excited to have
some of her “own” spending money. Money
burns a hole in her pocket and you need to
give her some ideas on how to save some
money.
30. Let’s Wrap It All Up and Play
Savings & Investment
Fly Swatter Game
31. Future Compounding
Rule of 72
Value Interest
Certificate of Education
Quarterly
Deposit (college)
Interest True 9 years
False Principal Shorter
Savings
12 years Emergency
Account
Notas del editor
This can be used as a pre-assessment to see how realistic the students are about their retirement, or as an activity to expand on their prior knowledge.
Eligibility requirements to receive Social Security: Citizenship You must be a United States citizen or a legal alien to be eligible for Social Security benefits. Social Security Contributions You must work and put money towards Social Security benefits for a period of 10 years before you can collect Social Security benefits upon retirement . Surviving Dependent A surviving dependent (spouse or child) may be eligible to collect the Social Security benefits of a deceased spouse or parent if the deceased spouse or parent was due any Social Security benefits. Dependent Grandchild or Child A dependent grandchild or child (biological, adopted or stepchild) may qualify for a parent's Social Security benefits if that grandchild or child is single and under 18 years of age, is between the ages of 18 and 19 and attending school full time (below grade 12), or was disabled before the age of 22 and is 18 years of age and up. Child Supporting a Senior Parent If a child supports a senior parent and contributes 50 percent to that support, the senior parent may be eligible for the Social Security benefits of that child if that child dies. Ex-Spouse Anyone divorced from someone 62 years of age or older may be eligible for their ex-spouses' benefits. Read more: Social Security Eligibility Requirements | eHow.com http://www.ehow.com/facts_4963569_social-security-eligibility-requirements.html#ixzz1EFuSnmBX Difference between traditional and Roth IRA? Traditional IRA Profile Tax deductible contributions (depending on income level) Withdraws begin at age 59 1/2 and are mandatory by 70 1/2. Taxes are paid on earnings when withdrawn from the IRA Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.) Available to everyone; no income restrictions All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception). Roth IRA Profile Contributions are not tax deductible No Mandatory Distribution Age All earnings and principal are 100% tax free if rules and regulations are followed Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.) Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions). 401(k) vs 403(b) 401k and 403b plans are actually the same thing - 401k plans are for for-profit companies, and 403b plans are for non-profit companies, schools, government agencies, etc.
Keogh Plan- A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined contribution. Contributions are generally tax deductible up to 25% of annual income with a limit of $47,000 (as of 2007). Keogh plan types include money-purchase plans (used by high-income earners), defined-benefit plans (which have high annual minimums) and profit-sharing plans (which offer annual flexibility based on profits).
Albert Einstein, arguably one of the most intelligent people who ever lived, was asked what he thought was the greatest of mankind’s discoveries. His answer: “compound interest.” He went so far as to call it the eighth wonder of the world. As an example of just how powerful this can be, consider the following scenario. Let’s say Christopher Columbus made an investment in the new world’s future in 1492. If Chris had places a single penny in a 6% interest-bearing account and instructed someone to remove the interest every year, the value of the interest earned by 2005 would be almost 31 cents. Not too much to write home about, is it? But if the young explorer had placed the same paltry investment of one cent into the same interest-bearing account but LEFT the earned interest to compound – earning interest upon interest – the results would be drastically different. What would you guess the account would be worth now? $10,000? $100,000? A million? 10 million? 100 million? In actuality, the resulting balance of a penny invested at 6% COMPOUND interest for 513 years would be $95,919,936,112. That’s 95 BILLION! Not bad for a single penny. Do you se what Al Einstein was so worked up about? It’s powerful. We may not have 513 years to make compound interest work for us, but we can employ it nonetheless. Comparable article http://investingcaffeine.com/2009/10/16/compounding-a-penny-saved-is-billions-earned/
Principal times interest rate = interest earned Add interest earned to principal = ending balance at the end of the year.
Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
Principal times interest rate = interest earned Add interest earned to beginning principal for that year = ending balance at the end of the year.
Year 1: $100 x .02 = 2 Add the $2 of interest to the principal of $100, which equals $102 Year 2: $102 x .02 = $2.04 Add the $2.04 to the beginning principal from the beginning of year 2 = $104.04 Year 3: $104.04 x .02 = $2.08 Add the $2.08 to the beginning principal from the beginning of year 3 = $106.12
This page is from the NEFE (National Endowment for Financial Education Order Free student and teacher manuals http://hsfpp.nefe.org/loadFile.cfm?contentid=321
See instructions on the last slide.
To play the Fly Swatter Game, project this page of the PPT on a wall (not recommended to be projected on a screen). Divide students into two teams. The first person in each team holds a fly swatter while facing the screen. When the teacher reads the definition or a question to which the students can identify the answer on the screen, they swat the answer with the fly swatter. Keep track of points, Rotate through the team. Change the PPT terms/answers as needed for items you need to review with your students.