CH-18 Starting Early: Retirement Planning – Personal Finance : Chapter Notes

18 STARTING EARLY: RETIREMENT PLANNING CHAPTER OVERVIEW As increasing numbers of Americans join the 65-and-over ranks, the United States faces a serious question—is this country prepared to meet the demands of a growing elderly population? The evidence that America is growing older is clear. In the last two decades, the 65-and-over population grew twice as fast as the rest of the population. Today, one of every nine Americans—a group of at least 25 million people—is 65 years of age or older. We begin this chapter by recognizing the importance of retirement planning. We show how individuals can analyze their current assets and liabilities to make sure they are suitable for retirement. Then, we suggest that individuals estimate their needs by considering changes in spending patterns and where and how they live. Next, we describe various types of housing suitable for retirees. In estimating retirement expenses, we emphasize that expenses should be adjusted for inflation. Once expenses are estimated, we then turn to the importance of evaluating planned retirement income. Income from Social Security, other public pension plans, employer pensions plans, personal retirement plans, and annuities are discussed in depth. Finally, we stress the need for living on retirement income and balancing the retirement budget. LEARNING OBJECTIVES CHAPTER SUMMARY After studying this chapter, students will be able to: My Life LO 18-1 Recognize the importance of retirement planning. Retirement planning is important because you will probably spend many years in retirement; Social Security and a private pension may be insufficient to cover the cost of living; and inflation may erode the purchasing power of your retirement savings. My Life LO 18-2 Analyze your current assets and liabilities for retirement. Analyze your current assets (everything you own) and your current liabilities (everything you owe). The difference between your assets and your liabilities is your net worth. Review your assets to make sure they are suitable for retirement. My Life LO 18-3 Estimate your retirement spending needs. The spending patterns of retirees change, so it is impossible to predict the exact amount of money you will need in retirement. However, you can estimate your expenses. Some of those expenses will increase; others will decrease. My Life L0 18-4 Identify your retirement housing needs. Where you live in retirement can influence your financial needs. You are the only one who can determine the location and housing that are best for you. The types of housing available to retirees include their present home. 18-1 LEARNING OBJECTIVES CHAPTER SUMMARY My Life LO 18-5 Determine your planned retirement income. Estimate your retirement expenses, and adjust those expenses for inflation, using the appropriate inflation factor. Your possible sources of income during retirement include Social Security, other public pension plans, employer pensions plans, personal retirement plans, and annuities. My Life LO 18-6 Develop a balanced budget based on your retirement income. Compare your total estimated retirement income with your total inflated retirement expenses. If your income approximates your expenses, you are in good shape; if not, determine additional income needs and sources. INTRODUCTORY ACTIVITIES 1. Point out the learning objectives and key terms for the chapter (p. 617). 2. Ask students to comment on the “My Life” scenario for the chapter (p. 617). 3. Ask students to share various attitudes toward retirement planning. 4. Discuss the methods that can be used to easily build a retirement fund. WHAT'S NEW TO THIS EDITION New content: Why retirement planning? Revised content: Starting early New content: The power of compounding Revised content: Financial Planning for Life's Situations feature Explains that as baby boomers near and enter their retirement years, they will encounter a unique set of challenges unlike those of any previous generation has faced. Provide most current information about the importance of starting early. Shows the power of compounding at different annual rates of return over different time periods. Defines a qualified domestic relations order (QDRO), and cautions that there is no single "best" way to divide retirement benefits in a QDRO. 18-2 Updated Exhibit 18-4: Older household expenditures Revised Did You Know feature Revised Did You Know feature Revised content: The future of Social Security Updated Exhibit 18-8: The future of Social Security Updated coverage: Defined-contribution plan Updated coverage: Regular and Roth IRAs New content: Keogh plans New content: Financial Planning for Life's Situation boxed feature New Dashboard feature Illustrates how an "average" older household spends its money (2011) Illustrates who receives Social Security benefits (2012). Provides updated information on monthly Social Security benefits in 2013. Cautions that according to the 2012 Trustees Report, Social Security is not sustainable over the long term at current benefit and tax rates. Shows that the number of workers per beneficiary has plummeted since 1945. Describes new contribution limits for 2013. Provides new contribution limits for regular and Roth IRAs for 2013. Provides an expanded discussion of Keogh plans and SEP-IRAs. Adds a timeline for retirement in the retirement checklist. Explains the importance of exploring your options in retirement savings opportunities now that traditional pensions and other employer-funded investment plans have become increasingly rare. 18-3 CHAPTER 18 OUTLINE I. Why Retirement Planning? A. Tackling the Trade-Offs B. The Importance of Starting Early C. The Power of Compounding D. The Basics of Retirement Planning II. Conducting a Financial Analysis A. Review Your Assets 1. Housing 2. Life Insurance 3. Other Investments B. Your Assets After Divorce III. Retirement Living Expenses A. Adjust Your Expenses for Inflation IV. Planning Your Retirement Housing A. Type of Housing B. Avoiding Retirement Housing Traps V. Planning Your Retirement Income A. Social Security 1. When and Where to Apply 2. What Information Will You Need? 3. What If You Retire at 62 Instead of 65? 4. Estimating Your Retirement Benefits 5. How To Become Eligible 6. Taxability of Social Security Benefits 7. If You Work After You Retire 8. Benefits Increase Automatically 9. Spouse's Benefits 10. Internet Access 11. The Future of Social Security B. Other Public Pension Plans C. Employer Pension Plans 1. Defined Contribution Plans 2. An Example: How Funds Accumulate 3. Tax Benefits of a TSA 4. Defined Benefit Plan 5. Plan Portability and Protection 18-4 D. Personal Retirement Plans 1. Individual Retirement Accounts (IRAs) 2. Regular (Traditional or Classic) IRA 3. Roth IRA 4. Spousal IRA 5. Rollover IRA 6. Education IRA 7. Simplified Employee Pension Plans IRA (SEP-IRA) 8. IRA Withdrawals 9. Keogh Plans E. Annuities 1. Types of Annuities F. Options in Annuities 1. Which Annuity Option Is the Best? 2. Will You Have Enough Money During Retirement? VI. Living on Your Retirement Income A. Tax Advantages B. Working During Retirement C. Investing for Retirement D. Dipping into Your Nest Egg CHAPTER 18 LECTURE OUTLINE Instructional Suggestions • Retirement can be a rewarding phase of your life, but you must plan ahead for it. I. WHY RETIREMENT PLANNING (p. 618) • While it is never too late to begin sound financial planning, you can avoid many unnecessary and • Use PPT slides 18-3 through 18- 6. • Discussion Question: What financial and personal difficulties are associated with inadequate retirement planning? 18-5 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions serious difficulties by starting this planning early. Tackling the Trade-Offs (p. 618) • “You can’t have your cake and eat it too” is particularly true in planning for your retirement. • Only saving now and curtailing current spending can ensure comfortable retirement later. The Importance of Starting Early (p. 618) • Start early, but don’t let your 45th birthday roll by without a comprehensive retirement plan. • Financial planning for retirement is vitally important for several reasons:  You can expect to live in retirement for many years.  Social Security and a private pension may be insufficient to cover the cost of living.  Inflation may diminish the purchasing power of your retirement savings. The Power of Compounding (p. 619) • The key to saving for retirement is to make your money work for you through the power of compounding. • As the size of your savings grows, you can earn interest on a bigger and bigger pool of money. The Basics of Retirement Planning (p. 621) • The first step is to analyze your current assets and liabilities. Then estimate spending needs and adjust them for inflation. • Finally, evaluate your planned retirement income and increase it if necessary. • Supplementary Resource: Find the tools you need to see if you’re on track among Money’s collection of 30 retirement and savings calculators. Look on the Web at money.com/tools; click the RETIREMENT tab. • Use PPT slides 18-4 and 18-5. • Transparency Master 18-1 presents an overview of financial planning and the topics of this chapter. • Transparency Acetate 55 stresses the importance of starting retirement planning early in life. • Exercise: Have students suggest actions that can be taken at different stages of the adult life cycle to have a financially successful retirement. • Assignment: Have students talk to retired persons to obtain information on areas that are frequently overlooked when doing retirement planning. • Exercise: Create a list of nonfinancial actions that a person can take to plan for a fulfilling retirement. • Practice Quiz 18-1 (p. 621) 18-6 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions II. CONDUCTING A FINANCIAL ANALYSIS (p. 622) • Use Exhibit 18-3 to calculate your net worth now and at retirement. Review Your Assets (p. 623) • Housing: If you own your house, it is probably your biggest single asset. • Life Insurance: You may want to convert some of this asset into cash or income (an annuity). • U.S. Savings Bonds: These bonds are safe, and their interest is free from state and local income taxes. • Other Investments: Evaluate any other investments you may have. • Text Reference: Use Exhibit 18- 3 to calculate your net worth now and at retirement. • Use PPT slides 18-7 through 18- 9. • Practice Quiz18-2 (p. 624) III. RETIREMENT LIVING EXPENSES (p. 625) • Your spending patterns will probably change. The following expenses may be lowered or eliminated:  Work expenses  Clothing expenses  Housing expenses  Federal income taxes • Some of the following expense may increase:  Insurance  Medical expenses  Expenses for leisure activities  Gifts and contributions Adjust Your Expenses for Inflation (p. 627) • The possible loss of buying power due to inflation is what makes planning ahead so important. • Use PPT slides 18-10 and 18-11. • Exercise: Create a list of factors that influence the spending patterns of retired individuals. • Text Highlight: Use the worksheet in Exhibit 18-5 to list your present expenses and estimate what these expenses would be if you were retired. (p. 626) • Use PPT slide 18-11 • Supplementary Resource: Contact the Bureau of Labor Statistics, Department of Labor, Washington, DC 20212 to obtain information on spending patterns of nonretired and retired families. • Text Highlight: Use the inflation factor in the “Financial Planning Calculations” feature to estimate what your monthly and annual expenses will be when you retire. • Practice Quiz 18-3 (p. 627) IV. PLANNING YOUR RETIREMENT HOUSING (p. 628) • Where you live in retirement can influence your financial needs. Type of Housing (p. 629) • Many housing options exist. • Discussion Question: What factors influence the type of housing selected by individuals? • Use PPT slides 18-13 through 18-15 • Supplementary Resource: Contact the American Association of Homes, 1129 20th 18-7 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions staying in present home is the alternative preferred by most people approaching retirement. Avoiding Retirement Housing Traps (p. 630) • Write or call the local chamber of commerce to get an economic profile and details on area property taxes. • Contact the state’s tax department to find out state income, sales, and inheritance taxes and special exemptions for retirees. If your pension will be taxed by the state you’re leaving, check whether the new state will give you credit for those taxes. • Subscribe to the Sunday edition of a local newspaper. • Call a local CPA to find out which taxes are rising. • Check with local utilities to estimate your energy costs. • Rent for a while instead of buying immediately. St., NW, Suite 400, Washington, DC 20036 about obtaining a copy of The Continuing Care Retirement Community. • Exercise: Debate the issue of a retired person continuing to live in the same area as opposed to moving to a different geographic area. • Discussion Question: What actions should be taken by federal and state government agencies to protect people from deceptive land sales and fraudulent housing developments. • Use PPT slide 18-15. • Pracice Quiz 18-4 (p. 630) V. PLANNING YOUR RETIREMENT INCOME (p. 630) • Possible sources of income are Social Security, other public pension plans, employer pension plans, personal retirement plans, and annuities. Social Security (p. 630) • Social Security is the most widely used source of retirement income. However, it should not be the only source of your retirement income. • When and Where to Apply? Most people can qualify for reduced Social Security benefits at age 62. • Use PPT slides 18-16 and 18-29. • Discussion Question: What types of retirement income should be the main emphasis of a retirement program? • Assignment: Survey retired individuals or people close to retirement to obtain information on their main sources of retirement income. • Discussion Question: What actions might be appropriate by government and individuals to guarantee the continuing financial 18-8 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions • What Information Will You Need? Usually you will need:  Proof of your age  Your Social Security card  Your W-2 forms  Your marriage license  The birth certificates of your children • What if You Retire at 62 Instead of 65? Your benefits will be reduced if you retire before age 65. • Estimating Your Retirement Benefits. The Social Security Administration will, upon request, provide a history of your earnings and an estimate of your future monthly benefits. • How to Become Eligible? To qualify for Social Security retirement benefits, you must have the required number of quarters of coverage. • Minimum and Maximum Benefits. Social Security retirement benefits are based on earnings over the years. • Social Security Benefits May Be Taxable. Up to one half of your Social Security may be subject to federal income tax. • If You Work After You Retire. Your Social Security benefits may be reduced if you earn above a certain amount a year. • Benefits Increase Automatically. Social Security benefits increase automatically each January if the cost of living has increased during the preceding year. • The Future of Social Security. The Social Security program is on a sound financial footing. stability of the Social Security program? • Supplementary Resource: Obtain a copy of Your Social Security and other booklets from the Social Security Administration, 6401 Security Blvd., Baltimore, MD 21235. • Text Highlight: Point out Did You Know feature to show approximate monthly Social Security benefits for workers at age 65 (p. 633) • Transparency Acetate 57 shows anticipated source of retirement income. • Use PPT slides 18-16 through 18-18. Other Public Pension Plans (p. 634) • Besides Social Security, the federal government administers several other retirement plans. Many state, county, and city governments operate retirement plans for their employees. Employer Pension Plans (p. 634) • Most employer plans are defined-benefit or defined- contribution plans.  A defined-contribution plan has an individual account for each employee; therefore, these plans are sometimes called individual account plans.  Defined-contribution plans include money- purchase pension plans, stock bonus plans, profit sharing plans, and 401(k) plans. • In a defined-benefit plan, the plan document specifies the benefits promised to the employee at the normal • Text Reference: Contrast the difference between a defined contribution plan and a defined benefit plan (p. 634). • Use PPT slide 18-19. • Text Highlight: Point out Exhibit 18-9: An early start + tax deferred growth = greater savings (p. 635). • Use PPT slides 18-20 through 18-22 • Assignment: Survey local businesses to determine the types of retirement plans available to employees. • Discussion Question: Why is an IRA still beneficial for retirement planning even for individuals who may not qualify for the contribution deduction? 18-9 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions retirement age. Personal Retirement Plans (p. 638) • The two most popular personal retirement plans are individual retirement accounts (IRAs) and Keogh accounts. • Individual Retirement Accounts (IRAs) entail the establishment of a trust or a custodial account. The IRA earnings are not taxed until they are withdrawn.  The new tax act makes several important changes in the IRA rules. • A Comparison: 401(k) contributions versus IRAs • Simplified Employee Pension Plans-IRA (SEP-IRA). SEP plans are nothing more than individual retirement accounts funded by an employer. • The SEP-IRA is the simplest type of retirement plan if you are fully or partially self-employed. • IRA Withdrawals: If you take the lump sum, the entire amount will be taxable as ordinary income. IRA withdrawals made before age 59 1/2 are subject to a 10 percent tax in addition to ordinary income tax. • The Rollover IRA Strategy: IRA rollover enables you to avoid the early distribution penalty on pre-59 1/2 distributions. • Keogh Plans: A Keogh plan is a qualified pension plan that has been developed for self-employed individuals and their employees. • Use PPT slides 18-24 through 18-29 • Text Highlight: Point out Exhibit 18-12 that summarizes IRA options. (p. 641) • Supplementary Resource: Required IRA withdrawals must begin by April 1 of the year after you turn 70½. Call 1-800-829- 3676 and ask for IRA Publication 590. • Use PPT slides 18-25 through 18-27. • Annuities (p. 643) • An annuity provides guaranteed income for life. Annuities may be fixed or variable. • Types of annuities: Immediate annuities are generally purchased by people of retirement age.  A deferred annuity purchased with a lump sum is known as a single-premium deferred annuity. Options in Annuities (p. 643) • There are three major options for an annuity payoff:  Straight life annuity: You receive an income for the rest of your life.  Life annuity with installments certain: You receive an income for the rest of your life. If you die within a certain period after you start receiving income, usually 10 or 20 years, your beneficiary receives regular payments for the balance of that period.  Installment refund annuity. You receive an income for the rest of your life. However, if you die before receiving as much money as you paid • Use PPT slides 18-27 through 18-29 • Assignment: Have students suggest the best investment vehicles for an individual retirement account. • Assignment: Have students talk to representatives of various financial institutions to determine their suggestions for IRA investments. • Text Highlight: Use pages 643- 644) to review the uses and types of annuities. • Assignment: Have students contact several insurance companies to learn what types of annuities are available from them. • Discussion Question: Ask students what type of annuity would best fit their financial situation and what payout option would they choose. 18-10 CHAPTER 18 LECTURE OUTLINE Instructional Suggestions in, your beneficiary receives regular income until the total payments equal that amount. Which Annuity Option Is the Best? (p. 644) • An annuity guarantees lifetime income, but you have a choice about the form it will take. Discuss all of the possible options with your insurance agent. Will You Have Enough Money During Retirement? (p. 645) • Estimate what your annual retirement income will be. Now compare your income with your total inflated retirement expenses. VI. LIVING ON YOUR RETIREMENT INCOME (p. 646) • First make sure you are receiving all of the income to which you are entitled. • Be sure to take advantage of all the tax savings retirees receive. • You may want to work part-time during your retirement. • To offset inflation, your retirement assets must earn enough to keep up with, and even exceed, the rate of inflation. • Dipping into your nest egg is not wrong, but you must do so with caution. • Software: The software that accompanies Personal Finance may be used to forecast retirement income needs. • Use PPT slide 18-29. • Practice Quiz 18-5 (p. 646) • Use PPT Slide 18-31 • Practice Quiz 18-6 (p. 649) 18-11 CONCLUDING ACTIVITIES • Use the "My Life Stage" feature (p. 651 ) to highlight the main financial planning activities from the chapter for various ages and life situations. • Point out the chapter summary of objectives (p. 652) and key terms in text margin (p. 653). • Discuss selected end-of-chapter Financial Planning Problems, Financial Planning Activities, Financial Planning Case, and Continuing Case. • Use the Chapter Quiz in the Instructor’s Manual. • Refer students to Chapter 18 of Personal Finance Software for calculating retirement fund deposits. WORKSHEETS FROM PERSONAL FINANCIAL PLANNER FOR USE WITH CHAPTER 18 Use the "Your Personal Financial Planner in Action" activities to encourage students to plan and implement various personal financial decisions. Sheet 62 Retirement Housing and Lifestyle Planning Sheet 63 IRA Comparison Sheet 64 Forecasting Retirement Income CHAPTER 18 QUIZ ANSWERS True-False Multiple Choice 1. T (p. 618) 6. C (p. 619) 2. F (p. 623) 7. C (p. 619) 3. T (p. 630) 8. D (p. 621) 4. F (p. 631) 9. A (p. 635) 5. T (p. 638) 10. B (p. 645) 18-12 Name ________________________________________ Date____________________________ CHAPTER 18 QUIZ TRUE-FALSE _____1. The ground rules for retirement planning are rapidly changing. _____2. Reverse annuity mortgages are not yet available in the United States. _____3. Social Security is the most widely used source of retirement income. 4. At age 65, Social Security benefits are paid automatically. 5. ERISA sets minimum standards for pension plans in private industry. MULTIPLE CHOICE _____6. At age 65, what is an average life expectancy of a woman? a. 9 years b. 14 years c. 20 years d. 25 years _____7. What is considered the critical age to begin financial planning for retirement? a. 25 b. 35 c. 45 d. 55 8. The first step in retirement planning is to a. estimate your spending needs. b. estimate the inflation rate. c. evaluate your planned retirement income. d. analyze your current assets and liabilities. 9 Under what retirement plan does your employer make nontaxable contributions to the plan for your benefit and reduce your salary by the same amount? a. 401(k) b. Keogh c. Gramm-Rudman d. Defined Benefit 10. In what type of annuity is the money you pay invested in common stocks or other equities, and the income you receive dependent on the investment results? a. Fixed dollar annuity b. Variable annuity c. Life annuity with installments certain d. Installment refund annuity 18-13 SUPPLEMENTARY LECTURE: 18-1 Safeguard Your Retirement in Hard Times; Take These steps to protect your golden years: Cut expenses, consider refinancing, and make yourself indispensable at work. (Your Retirement) Ellen Hoffman. Safeguard Your Retirement in Hard Times; Take these steps to protect your golden years: Cut expenses, consider refinancing, and make yourself indispensable at work. (YOUR RETIREMENT) Ellen Hoffman. Full Text: COPYRIGHT 2008 The McGraw-Hill Companies, Inc. Byline: Ellen Hoffman Investment losses, job loss or downsizing, an upward adjustment on your adjustable rate mortgage, and higher prices on everything from gas for your car to rice for the table are only some of the current factors that could derail your financial planning for your golden years. When your income is not covering all your expenses, it can be tempting to simply cut out the expense of saving for retirement -- or tap the savings in your 401[k] or IRA to pay the bills. But there will always be negative consequences to those actions. If you simply stop saving, you’ll almost certainly reduce the amount of money available to you when you decide to retire, and you may even have to postpone your retirement. Uncle Sam allows you to take out a loan from your 401[k] or to withdraw money for certain financial “hardships,” including preventing foreclosure on your home. But the criteria are stiff, and you’ll incur financial penalties that could take you years to overcome. And if you’re younger than 59-and-a-half and simply withdraw money from your 401[k] or IRA, in almost every case you’ll also incur a 10% penalty and have to pay income tax. Control Your Spending “Anytime a dollar can stay in the 401[k] or retirement plan, that’s a dollar not yet taxed and a dollar that is there for tomorrow,” says Jamie Milne, a financial planner in Barre, Vt. “The fundamentals of retirement do not really change in a recession, but the attention to detail [such as controlling spending] is just that much more important.” Controlling spending starts with understanding how you spend. If the numbers are not in your head, take time to review your spending for the last few months, or even for the last year. Also consider the suggestion from Chicago financial planner Malay Vasavda that you invest in money management software to help you monitor expenses on a regular basis. 18-14 Once you have the list of expenses, comb through for savings. Michael Foltz, a financial planner in Itasca, Ill., suggests some relatively painless cuts: Reduce the number of restaurant meals or frequent less expensive restaurants, trim auto expenses by finding someone to share your commute, increase the deductibles on homeowner’s and auto insurance, and delay major discretionary spending such as an expensive vacation or new vehicle. Consider Refinancing Your Home In other cases, downsizing your home -- reducing both mortgage and maintenance expenses -- may be the solution. Loretta Nolan, a financial planner in Old Greenwich, Conn., has a 57-year-old client, a corporate executive, whose home has lost about $200,000 in value recently. The executive had planned to sell the home in a few years and put that extra $200,000 toward an enhanced retirement lifestyle. Instead, she’s considering selling now and moving to a home that’s less expensive. By doing so, she will both reduce her current costs and free up more of her income for retirement. If you haven’t done so recently, refinancing your home may also help you avoid compromising your retirement savings. Interest rates are relatively low, and if you plan to stay in the home for several years or more, a lower-rate fixed mortgage could be a boon to your budget. Just don’t fall for any of the tricky deals -- such as an interest-free mortgage or an ARM with a huge balloon payment -- that have plunged so many homeowners into financial disaster in recent months. Create an Emergency Fund Perhaps the biggest key to financial stability in a bad economy is your job. If you lose the job or are asked to take a lesser position, you could lose income, health insurance, and retirement benefits all at once. Protect your income by making yourself indispensable at work, keeping your skills up to date, and staying attuned to external and internal trends that could affect your employer’s balance sheet. If your company is publicly traded, pay attention to the stock price, read reports to the shareholders, and keep up with the news. Even if you don’t feel personally threatened by the current scary economic news, consider some preventive measures. Inoculate your retirement savings against future incursions by creating an emergency fund that, in a crunch, could pay up to six months of your expenses; and apply for a home equity line of credit -- easier to get when you are not in dire financial straits -- to use if the unexpected should occur. Source: http://www.businessweek.com/investor/content/may2008/pi2008051_283088.htm 18-15 SUPPLEMENTARY CASE 18-1 Jim Monitz, 52, plans to retire at age 65. To supplement his income at retirement, he starts to save $100 at the beginning of each month. Assuming that his annual return on savings is eight percent, what amount will Jim have accumulated at age 65? How big will the nest egg be if Jim could earn an annual return of 10 percent? Use the table here to find the amounts. Building Your Nest Egg This table shows how much you’ll have at the end of a period of years if you save or invest $100 a month, assuming various annual returns. Other amounts can be calculated as fractions or multiples of $100. (Table assumes $100 is saved at the beginning of each month.) Year 5.5% 7% 8% 9% 10% 12% 1 1,236 1,246 1,253 1,260 1,267 1,281 2 2,542 2,583 2,611 2,638 2,667 2,724 3 3,922 4,016 4,018 4,146 4,213 4,351 4 5,380 5,553 5,673 5,795 5,921 6,183 5 6,920 7,201 7,397 7,599 7,808 8,249 6 8,546 8,968 9,264 9,572 9,893 10,576 7 10,265 10,863 11,286 11,730 12,196 13,198 8 12,080 12,895 13,476 14,091 14,740 16,153 9 13,998 15,073 15,848 16,672 17,550 19,482 10 16,024 17,409 18,417 19,497 20,655 23,234 11 18,164 19,914 21,198 22,586 24,085 27,461 12 20,425 22,601 24,211 25,964 27,874 32,225 13 22,814 25,481 27,474 29,660 32,060 37,593 14 25,337 28,569 31,008 33,703 36,684 43,642 15 28,002 31,881 34,835 38,124 41,792 50,458 16 30,818 35,432 38,979 42,961 47,436 58,138 17 33,793 39,240 43,468 48,251 53,670 66,792 18 36,936 43,323 48,329 54,037 60,557 76,544 19 40,255 47,702 53,593 60,367 68,165 87,533 20 43,762 52,397 59,295 67,290 76,570 99,915 21 47,467 57,431 65,469 74,862 85,855 113,867 22 51,381 62,829 72,157 83,145 96,122 129,590 23 55,516 68,617 79,399 92,204 107,443 147,306 24 59,884 74,824 87,242 102,114 199,961 167,269 25 64,498 81,480 95,737 112,953 133,789 189,764 26 69,373 88,616 104,936 124,809 149,066 215,111 27 74,522 96,269 114,899 137,777 165,942 243,674 28 79,962 104,475 125,689 151,962 184,585 275,858 29 85,709 113,274 137,374 167,477 205,180 312,125 30 91,780 122,709 150,030 184,447 227,933 352,991 Answers: Jim has 13 years to retirement. At eight percent, the nest egg will be $27,474 in 13 years. At 10 percent, the amount will be $32,060. 18-16 SUPPLEMENTARY CASE: 18-2 The Rollover Riddle; What to do with that 401(k). As Bob Belvry and his wife, Marilyn Berner, prepared for retirement over the past year, they needed advice about how best to invest some $400,000 they had accumulated in a hodgepodge of deferred compensation, 401(k), and individual retirement accounts. After fruitless attempts to get personal attention from Fidelity Investments, which held much of the money, the Key West (Fla.) couple took a friend's advice and turned to a broker from Raymond James Financial. Fidelity will not comment on specific customers. The broker won the account by driving 15 miles to their home after work for a two-hour meeting. "We wanted to work with a human being we could actually talk to," says Berner, a psychotherapist and former chief of staff in Massachusetts' Mental Health Dept. "We wanted someone we could get quickly if we needed to," adds Belvry, a technology training specialist. The couple, who moved to Florida, consolidated their accounts in a rollover IRA and left it to the broker to suggest investments for it. More and more people will be looking for the same sort of counsel as the leading edge of the Baby Boom generation reaches 59 1/2 this year, generally the age when retirement savings can be withdrawn without penalty. Not only does investment advice become more important -- you're no longer working, so there's less opportunity to recoup your losses -- but you face significant tax and estate planning implications related to what you do with your assets. The big issue is whether to move the assets into a rollover IRA or keep it in the corporate 401(k) plan. Financial planners say rollovers make sense for most people. Almost $2 trillion will be rolled over from workplace plans to IRAs over the next five years, according to Financial Research, a Boston firm. The investment companies that run corporate 401(k) plans are often ill-equipped to provide the hands-on advice that many seek, so the decision to roll over is often made as part of a strategy developed with a financial planner or broker. Perhaps the best reason to move the 401(k) to an IRA: A wider range of investment choices. Workplace plans typically offer only a dozen or so investment funds, but with an IRA at a bank or brokerage firm, you can invest in almost any kind of security. Even more options are available in self-directed IRAs, which can invest in commercial, multi-family, and vacation real estate, business start-ups, franchise opportunities, and limited partnerships. Finding a firm to administer a self-directed account can take some doing, since most banks and brokerages don't handle them and annual fees can exceed $1,000, compared with less than $100 on a traditional IRA. Leaving money to heirs is usually easier with an IRA. If the owner of a 401(k) dies and the beneficiary is anyone other than a spouse, what happens next is largely up to employers. They decide how long beneficiaries can keep funds in the plan, and most require that the heirs liquidate the account -- generating a large tax bill. "With the income tax and the possibility of the estate tax for large accounts, you could see 70% disappear," says Annette Simon, a financial planner at Mosaic Wealth Management in Bethesda, Md. In contrast, when the owner of an IRA dies, beneficiaries can stretch out the distributions over their lifetimes, greatly reducing the tax hit. Still, there are a few reasons to stick with the 401(k). If you take early retirement, you can tap the money without penalty starting at age 55 -- even if you continue to work at another company. IRA assets 18-17 typically can't be withdrawn before age 591/2 without penalty. Another benefit: Employer-sponsored plans often have access to low-cost mutual-fund shares that aren't available to the public. If you have appreciated company stock in a 401(k), the best bet may be to withdraw it entirely. That means you will owe income tax, but only on the amount you paid for the shares. When you eventually sell the stock, you'll owe tax on the difference between your cost and your sales price, but that profit will be at the lower capital-gains tax rate. If instead you move the stock to an IRA, you'll owe regular income tax on the entire amount. It's complicated stuff, for sure. No wonder Belvry and Berner and millions of others are seeking some good advice. When you retire, you usually have the option of keeping your employer’s 401(k) plan or rolling it over into an individual 401(k). 401(k) ACCESS: Those who leave their jobs at age 55 can start taking regular withdrawals without penalty. ESTATE PLANNING: Other than a spouse, anyone inheriting the plan will usually face income taxes on the entire balance. FEES: Employers may absorb administrative costs for the plan. INVESTMSENTS: Choices may be limited, but often include funds with lower expenses than you can get on your own. IRA ACCESS: Penalty-free withdrawals start at age 59½ . ESTATE PLANNING: Heirs can lower tax bite by stretching out account withdrawals over their lifetime. FEES: Financial service companies can hit you for account maintenance fees. INVESTMENTS: Almost unlimited choices, and with self-directed IRAs, you can even do direct investment in real estate. Questions: 1. Why did Bob and Marilyn Berner choose a broker from Raymond James Financial? 2. Why do financial planners say that rollovers make sense for most people? 3. What are a few reasons to stick with the 401(k)? 18-18 ANSWERS TO PRACTICE QUIZZES, FINANCIAL PLANNING PROBLEMS, FINANCIAL PLANNING ACTIVITIES, FINANCIAL PLANNING CASE, AND CONTINUING CASE PRACTICE QUIZZES Practice Quiz 18-1 (p. 621) 1. How can the Internet assist you in retirement planning? Internet is a useful tool in planning retirement. For example, the International Society for Retirement and Life Planning (www.isrplan.org) promotes a holistic approach to retirement and life planning. This is just one of thousands of websites on the Internet. Exhibit 18-2 shows a few popular websites that can be used for retirement planning. 2. Why is retirement planning important? Financial planning for retirement is vitally important for several reasons. You can expect to live in retirement for many years. Social Security and a private pension may be insufficient to cover the cost of living, and inflation may erode the purchasing power of your retirement savings. 3. What are the four basic steps of retirement planning? The first step is to analyze your current assets and liabilities. Then estimate your spending needs and adjust them for inflation. Next, evaluate your planned retirement income. Finally, increase your income if necessary. Practice Quiz 18-2 (p. 624) 1. How can you calculate your net worth today and at retirement? As you learned in Chapter 3, your current assets include everything you own that has value: cash on hand and in checking and savings accounts; the current value of your stocks, bonds, and other investments; the current value of your house, car, jewelry, and furnishings; and the current value of your life insurance and pensions. Your current liabilities are everything you owe: your mortgage, car payments, credit-card balances, taxes due, and so forth. The difference between the two totals is your net worth, a figure that you should increase each year as you move toward retirement. Use Exhibit 18-3 to calculate your net worth now and at retirement. 2. What assets are considered marital assets? Any divorce is difficult, but when it comes to a division of marital assets, many couples get nasty. Your pension benefits are considered marital property which must be divided in a divorce. “Even if a person is not ready to retire, pension benefits are considered a marital asset subject to the division of property,” says Howard Sharfstein, partner in charge of the Domestic Relations section of the Individual Client Services division of Schulte Roth & Zabel of New York. Any retirement fund money, including a 401(k) plan or a profit-sharing plan, set aside during a marriage and the dollar growth of a pension plan during a marriage are considered marital property. 18-19 Practice Quiz 18-3 (p. 627) 1. How can you estimate the amount of money you’ll need during retirement? The exact amount of money you will need in retirement is impossible to predict. However, you can estimate the amount you will need by considering the changes you plan to make in your spending patterns and in where and how you live. Exhibit 18-4 can help you in anticipating your own future spending patterns. 2. What expenses are likely to increase or decrease during retirement? The expenses that are likely to be lower or eliminated are work related expenses, clothing expenses, housing expenses, federal income taxes, and commuting expenses. Insurance, medical expenses, expenses for leisure activities, and gifts and contributions are likely to increase. The spending pattern changes because your mode of living during retirement changes. 3. How might you adjust your expenses for inflation? By using the inflation factor in the Financial Planning Calculations feature, you can estimate what your monthly and annual expenses will be when you retire. Practice Quiz 18-4 (p. 630) 1. What are some housing options for retirees? Everyone has particular needs and preferences; you are the only one who can determine what location and housing are best for you. 2. How can retirees avoid retirement housing traps? Caveat Emptor: Be sure you know what you are doing. Practice Quiz 18-5 (p. 646) 1. What are possible sources of income for retirees? Various sources of retirement income are Social Security, employer pension plans, personal retirement plans, and annuities. Social Security is the most widely used source of retirement income for most Americans. 2. What are examples of defined-contribution plans? How do they differ from defined-benefit plans? Defined-contribution plans include money-purchase pension plans, stock bonus plans, profit-sharing plans, and salary reduction or 401(k) plans. In a defined-benefit plan, the plan document specifies the benefit promised to the employee at the normal retirement age. A defined-contribution plan has an individual account for each employee; therefore, these plans are sometimes called individual account plans. 3. What are the two most popular personal retirement plans? The two most popular personal retirement plans are individual retirement accounts (IRAs) and Keogh accounts. 4. What are annuities? What options are available in annuities? Which option is the best? 18-20 Annuities are contracts that provide life long income. This income is guaranteed for life. Major options in annuities are: lifetime income, lifetime income with a minimum number of payments guaranteed, and life income for two people. The major options, their descriptions, and uses are summarized in Exhibit 18-13 on page 644. Each option has its advantages and disadvantages. Let students consider the pros and cons of each. Practice Quiz 18-6 (p. 646) 1. What is the first step in stretching your retirement income? The first step in stretching your retirement income is to make sure you are receiving all of the income to which you are entitled. Examine the possible sources of retirement income mentioned earlier to see whether there are more programs or additional benefits that you could qualify for. What assets or valuables could you use as a cash or income source? 2. How should you invest to obtain retirement income? To offset inflation, your retirement assets must earn enough to keep up with, and exceed, the rate of inflation. FINANCIAL PLANNING PROBLEMS (p. 653) 1. Calculating Net Worth. Shelly’s assets include money in the checking and savings accounts, investments in stocks and mutual funds, and personal property, including furniture, appliances, an automobile, a coin collection, and jewelry. Shelly calculates that her total assets are $108,800. Her current unpaid bills, including an auto loan, credit card balances, and taxes total $16,300. Calculate Shelly’s net worth. Net Worth = Assets – Liabilities Shelly’s Net Worth is $108,800 - $16,300 = $92,500 2. Preparing a Net Worth Statement. Prepare your net worth statement using the guidelines presented in Exhibit 18-3 (p. 622). The purpose of this activity is to review one’s assets to make sure they are suitable for retirement. After thoroughly reviewing assets, one can estimate spending needs during the retirement years. 3. Calculating Living Expenses. Calculate how much money an older household with an annual income of $40,000 spends on transportation each year. (Hint: Use Exhibit 18-4) $40,000 × 14.7% (0.147) = $5,880 4. Calculating Living Expenses. Using Exhibit 18-4, calculate how much money the household from Problem 3 spends on housing. $40,000 × 35.0% (0.35) = $14,000 18-21 5. Calculating an IRA Accumulation. When Jamal graduated from college recently, his parents gave him $1,000 and told him to use it wisely. Jamal decided to use the money to start a retirement account. After doing some research about different options, he put the entire amount into a tax- deferred IRA that pays 11 percent interest, compounded annually. Calculate how much money will Jamal have in his IRA at the end of ten years, assuming that the interest rate remains the same and that he does not deposit any additional money. Show your calculations in the form of a chart. The answer is $2,839.44 as shown below: Year 1 $1,110.00 Year 6 $1,870.42 Year 2 $1,232.10 Year 7 $2,076.17 Year 3 $1,367.63 Year 8 $2,304.55 Year 4 $1,518.07 Year 9 $2,558.05 Year 5 $1,685.06 Year 10 $2,839.44 6. Calculating an IRA Accumulation. Janine is 25 and has a good job at a biotechnology company. She currently has $5,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Janine estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). How much will Janine’s IRA be worth when she needs to start withdrawing money from it when she retires? (Hint: Use Exhibit A-1 in the appendix to Chapter 1.) Years to retirement = 40 Her current IRA = $5,000 Annual growth rate = 8% Future Value (compounded sum) after 40 years @ 8% growth = $5,000 x 21.725 = $108,620 7. Calculating an IRA Accumulation. In the above problem, how much money will Janine have to accumulate in her company’s 401(k) plan over the next 40 years in order to reach her retirement income goal? $875,000 - $108,620 = $766,380 8. Calculating Retirement Amount. Calculate how much you would have in 10 years if you saved $2,000 a year at an annual rate of 10 percent with the company contributing $500 a year. 18-22 Contributions Interest Total Annual contribution of 10% of a $20,000 salary $2,000.00 10% Company annual contribution matching of 2.5% of the salary 500.00 1st Year $2,500.00 $250.00 $2,750.00 2nd Year 2,500.00 525.00 5,775.00 3rd Year 2,500.00 827.50 9,102.50 4th Year 2,500.00 1,160.25 12,762.75 5th Year 2,500.00 1,526.28 16,789.03 6th Year 2,500.00 1,928.90 21,217.93 7th Year 2,500.00 2,371.79 26,089.72 8th Year 2,500.00 2,858.97 31,448.69 9th Year 2,500.00 3,394.87 37,343.56 10th Year 2,500.00 3,984.36 43,827.92 TOTAL $25,000.00 $18,827.92 $43,827.92 9. Calculating an IRA Contribution. Gene and Dixie, husband and wife (ages 35 and 32), both work. They have an adjusted gross income of $50,000, and they are filing a joint income tax return. What is the maximum IRA contribution they can make? How much of that contribution is tax deductible? Gene and Dixie are eligible for a tax-deductible IRA contribution of $5,000 each (assuming that they each earn at least $5,000 per year). Since their adjusted gross income is $50,000, the entire $10,000 IRA contribution is tax deductible in 2008. If they choose a Roth IRA, they can’t deduct any amount. 10. Calculating Net Pay and Spendable Income. Assume your gross pay per pay period is $2,000 and you are in the 33 percent tax bracket. Calculate your net pay and spendable income if you save $200 per pay period after paying income tax on $2,000. $200 per pay period after paying income tax on $2,000. After-tax saving method: Gross Pay Tax Net Pay After-Tax Savings Spendable Income $2,000 $660 $1,340 $200 $1,140 11. Calculating Net Pay and Spendable Income. In the above example, calculate your net pay and spendable income if you save $200 per pay period in a tax-sheltered annuity. 18-23 Tax-sheltered method: Gross Pay TSA Net Pay Tax Spendable Income $2,000 $200 $1,800 $594 $1,206 12. Dipping into Your Nest Egg. You have $50,000 in your retirement fund that is earning 5.5 percent per year, compounded quarterly. How many dollars in withdrawals per month would reduce this nest egg to zero in 20 years? Referring to Exhibit 18-16 (p. 649), students will find that at a withdrawal rate of $340 a month, the nest egg of $50,000 will be reduced to zero in 20 years. 13. Dipping into Your Nest Egg. In the above example, how many dollars per month can you withdraw for as long as you live and still leave this nest egg intact? At 5.5 percent interest, compounded quarterly, one can take $230 a month indefinitely and still leave the $50,000 nest egg intact. FINANCIAL PLANNING ACTIVITIES (p. 654) 1. Conducting Interviews. Survey friends, relatives, and other people to get their views on retirement planning. Prepare a written report of your findings. Views on retirement planning will vary among the individuals surveyed. Many young professionals would rather spend money today than save for retirement. Prosperous and educated people want the good life now. Many interviewees probably have not yet begun to save seriously for retirement. 2. Obtaining Information about Reverse Mortgages. Obtain a consumer information kit from Wells Fargo Home Mortgage in Chicago (1-800-530-2424). Examine and evaluate the kit. How might a reverse mortgage help you or a family member? The free consumers’ information kit on reverse mortgages will show the money available at various ages. The money available will depend on a person’s age, the value of the person’s home, and prevailing interest rates. 3. Using the Internet to Obtain Reverse Mortgage Information. a. Visit the Website of the American Association of Retired Persons (AARP) at www.aarp.org. Locate the AARP Home Equity Information Center, which presents basic facts about reverse mortgages. Then prepare a report on how reverse mortgages work, who is eligible, what you get, what you pay, and what other choices are available to borrowers. b. Visit Fannie Mae’s Website at http://www.fanniemae.com/Homebuyer to find out about its reverse mortgage program. a. Students will find a wealth of information from AARP’s Web page. Their consumer information publications that may be of interest to students include Home Equity, 18-24 Consumers’ Guide to Home Equity Conversion, A Primer on Financial Management for Midlife and Older Women, etc. On the Web, students will find helpful facts about home equity conversion, reverse mortgages (RMS, federally-insured RMS, FHA-insured RMS fixed term uninsured RMS, sale leaseback’s, etc. Their Home Equity Information Center is located at 601 E Street, N. W., Washington DC 20049. b. Fannie Mae provides information on Home Equity Conversion Mortgages. The Website compares types of mortgages, how to apply for a loan, locate an lender and much more. Students will find its newest website at www.HomePath.com for additional helpful hints about Rms. 4. Determining Expenses during Retirement. Read newspaper or magazine articles to determine what expenses are likely to increase and decrease during retirement. How might this information affect your retirement planning decisions? The expenses that are likely to be lower or eliminated are work related expenses, clothing expenses, housing expenses, federal income taxes, and commuting expenses. Insurance, medical expenses, expenses for leisure activities, and gifts and contributions are likely to increase. The spending pattern changes because your mode of living during retirement changes. 5. Evaluating Retirement Housing Options. Which type of housing will best meet your retirement needs? Is such housing available in your community? Make a checklist of the advantages and disadvantages of your housing choice. Students’ responses will vary, according to their taste. They may select to live in their present home, but can also choose other options such as house sharing, accessory apartment, ECHO unit, boardinghouse/rooming house, single-room occupancy, professional companionship agreement, caretaker arrangement, commercial rental, board and care home, congregate housing, continuing care retirement community, and nursing home. 6. Writing Letters to Representatives in Congress. Write a letter urging your representative in Congress to introduce or support legislation repealing the provisions of the present Social Security law that limit the earnings Americans ages 65 to 69 who must work to provide for their needs. Responses will vary. 7. Requesting Personal Earnings and Benefits Statement. Obtain Form SSA-7704 from your local Social Security office. Complete and mail the form to receive a personal earnings and benefits statement. Use the information in this statement to plan your retirement. Responses will vary. FINANCIAL PLANNING CASE (p.655) Planning for Retirement 1. In the past, many workers chose to stay with their employer until retirement. What was the major reason for employees’ loyalty? Employers were paternalistic and offered pensions for their employees. Most workers retired with a good company pension at 65. With Social Security payments, retirees had enough income during retirement years. 2. How did Maureen amass $1.4 million for retirement, while Therese could only accumulate $553,000? 18-25 Maureen started 10 years earlier—at age 25—instead of at age 35. The time value of money and compounding of earnings worked the magic for Maureen. 3. Why do women need to start early saving for retirement? Because women typically enter the work force later than men, have lower salaries and ultimately, lower pensions. 4. How is net worth determined? You add up all you assets (everything of value you own), and deduct all the liabilities (everything you owe) to figure out your net worth. 5. What expenses may increase or decrease during retirement? Health insurance, prescriptions, travel and recreation expenses will most likely increase, while clothing for work, dry cleaning, and commuting costs will most likely decrease. CONTINUING CASE (p. 656) Retirement Planning 1. How would you assess the strengths and weaknesses of the Lawrences financial condition at this stage in their lives? The Lawrences realized a number of years ago that they must begin planning for retirement. As a result, they began investing in conservative stocks and mutual funds. The current value of these investments is about $35,000. As mentioned in this case, Mark's retirement fund is smaller than he might like. Its current value is just over $102,000. Since this couple is approximately 20 years away from retirement, they still have time for conservative investments to grow and provide the financial foundation they need for retirement. 2. At their current ages, what should their major priorities be as they continue to plan for retirement? The number one priority for the Lawrences should be preparation for retirement. Given the current financial status of the Lawrences, they should continue to do what they have done for the past 8 years. Since Shelby is 45 and Mark is 46, they will have approximately 20 years until Mark retires. This 20-year window allows the Lawrences to continue to choose conservative investments. They should also increase their contributions to Mark’s retirement fund (if possible). They should avoid the temptation to try and get-rich quick with speculative investments. For the Lawrences, patience should pay excellent dividends. 3. Explain how Shelby and Mark might use the Personal Financial Planner sheets on Retirement Housing and Lifestyle Planning and Forcasting Retirement Income. Student answers will vary. Encourage them to start thinking about their own retirement before they are 50. DAILY SPENDING DIARY (p. 657) Analysis Questions 1. What portion of your net income is set aside for saving or investing for long-term financial security? 18-26 Student answers will vary. 2. What types of retirement planning activities might you start to consider at this point of your life? Student answers will vary. 18-27 TM 18-1 Components of Retirement Planning Analyze current financial situation Estimate retirement living expenses and other financial needs Evaluate current level of expected retirement income Revise retirement planning investments and funds 18-28 McGraw-Hill/Irwin TM 18-2 Suggested Investment Strategies for Life’s Situations Bramwell Growth 17% Tweedy Browne Amer. Value 17% GAM Int'l 17% Yacktman 16% Benham Target Mat. Tr.- 2010 Port 17% GAM Japan Capital 16% Lexington Worldwide Emerging Markets 17% T. Rowe Price New Asia 17% Longlea f Partner s 17% Mutual Beacon 16% T. Rowe Price Science & Tech. 17% Warburg Pincus Int'l Equity 16% Loomis Sayles Bond Vanguard/ 15% Wellington 25% Strong Opportunity 15% Vanguard Inter.-Term U.S. Treas. 15% Nicholas 15% Templeton Foreign 15% 35-year-old 50-year-old 65-year-old Source: Cain Management Corp. Source. Mutual Fund Monthly Source: Morningstar Inc. Source: Cain Asset Management Corp., Mutual Fund Monthly, Morningstar Inc., and Jonathan Clements, "Go Global, but Use Your Age as a Travel Guide," The Wall Street Journal, January 6, 1995, p. R5. Reprinted with permission. 18-29 Name ______________________________________ Cha pt er 18: S t a r t i n g E a r l y : R e t i r e m e n t P l a n n i n g 2. A plan in which tax-deductible contributions fund the retirement of self-employed people and their employees; also called a "self-employed retirement plan." 3. A plan that specifies the benefits the employee will receive at the normal retirement age. 5. A special account in which the employee sets aside a portion of his or her income; taxes are not paid on the principal or interest until money is withdrawn from the account. abbreviation 7. A mortgage in which the lender uses the borrower's house as collateral to buy an annuity for the borrower from a life insurance company; also called an "equity conversion." 8. A plan under which employees can defer current taxation on a portion of their salary. Also called a "401(k) plan." abbreviation 1. A plan--profit sharing, money purchase, Keogh, or 401(k)--that provides an individual account for each participant; also called an "individual account plan." 4. A contract that provides an income for life. 6. An employee's right to at least a portion of the benefits accrued under an employer pension plan, even if the employee leaves the company before retiring. Across Down D E F I N E D C O N T R I B U T I O N P L A N R E V E R S E A N N U I T Y M O R T G A G E D E F I N E D B E N E F I T P L A N V E S T I N G A N N U I T Y K E O G H T S A I R A 1 2 3 4 5 6 7 8 Instructor Manual for Personal Finance Jack R. Kapoor, Les R. Dlabay , Robert J. Hughes, Melissa M. Hart 9780077861643, 9781260013993