Foundations of Money Education Retirement Planning Notes How Much Do I Need to Retire Financial Planners often estimate that annually will need of their in retirement This income will not come from one place Pre Retirement Annual Income x Needed Annually in Retirement Annual Income Needed in Retirement There are only two things you can invest Of the two is more important Retirement has Older generations relied upon the 3 Legged Retirement Stool 1 2 3 Time in the Market The 3 Legged Retirement Stool Additional Notes Pensions through a pension Today pensions are but it is even more rare to have a retirement Pension Example Teacher Retirement System of Texas Contribute of pre tax earnings to receive this defined benefit Must be to receive full benefit can be prorated if you take it earlier TRS Pension Payment Formula Example x x x x Annual TRS Pension Payment How Much Do I STILL Need to Retire Pre Retirement Annual Income Needed Annually in Retirement Annual Income Needed in Retirement x Annual TRS Pension Payment Annual Amount Still Needed for Retirement Social Security of Americans qualify Earn 1 credit for each in earnings up to a max of credits per year per year With credits eligible for retirement and benefits Benefit Election Ages Max Monthly Pmt Max Annual Pmt Earliest age capable of receiving reduced benefits Earliest age capable of receiving full benefits Age that benefits stop growing x 12 x 12 x 12 How Much Do I STILL Need to Retire Pre Retirement Annual Income Needed Annually in Retirement Annual Income Needed in Retirement x Annual TRS Pension Payment Annual Social Security Payment Annual Amount Still Needed for Retirement Plan as if the Annual Amount Still Needed for Retirement will need to come from and accounts How Big of a Retirement Nest Egg Do I Need The Trinity Study used simulation to identify a The Rule This is the which can be from your retirement nest egg each year for of retirement without Pre Retirement Annual Income Needed Annually in Retirement Annual Income Needed in Retirement x Annual TRS Pension Payment Annual Social Security Payment Annual Amount Still Needed for Retirement 4 Rule Retirement Nest Egg Needed Additional Notes 401ks 403bs IRAs Tax Designations Options Mark or input a dollar amount for each retirement account assume 2023 tax year and an age under 50 Traditional Roth IRA 401k 403b IRA 401k 403b Tax Designation Account Type Pay taxes now year of contribution Pay taxes later year of withdrawal Max Annual Investor Contribution Employer Matching Investments managed by employer Investments managed by you Matching Age 50 Catchup Contributions 401k 403b IRA an employer makes to an employee s retirement plan based upon the the employee makes to their own plan Average Matching is It s important to know the which determines how long an employee must remain employed in order to keep the Timeline The earliest age capable of withdrawing from 401ks 403bs and IRAs without 10 penalty The age when Required Minimum Distributions must be made from 401ks 403bs and IRAs 401k 403b Rollovers Plans from former employers may be transferred to or Be careful when changing tax designations from to major tax implications Brokerage Accounts No tax deduction options low minimum investments and long term Benefits Gives you more than a retirement account Great way to invest if you are not a employee Another option if your employer has NO or bad options Maxed out all other accounts or you meet the restrictions for tax advantaged accounts cid 32