NGPF Activity Bank - Ms. Staring's Class



NGPF Activity BankInvesting #10 HYPERLINK "" \h Spanish versionCOMPARE: Types of Retirement AccountsAfter you’ve set your retirement goal, the second step in planning for retirement is to open a retirement account, of which there are a few types. As with any financial decision, before you sign up, you’d want to read the specific fine print for your account, as the resources below give general information, just to get you started.Part I - Distinguishing features of retirement accountsIn the chart below, the first column contains a statement. Mark an X in each type of retirement account for which the statement is true. If the statement doesn't apply to that type of retirement account, leave the box empty. To help you complete the chart, read and watch these videos on types of retirement accounts:PENSIONS: If you haven’t already, read this article, What is a Pension? Is It All You’ll Need to Retire?CHOOSING AN ACCOUNT TYPE OVERVIEW: Watch this from 1:04 to 3:24, Investing Basics: Planning for Retirement401(k): Watch this video, What is a 401(k)?IRA: Watch this video, What is an IRA?Name:Retirement Savings NotesPart I – NotesSavings: Most planners will tell you that you ought to keep at least _____________________________________ in an insured savings account or money market account. If you are a contract employee or a seasonal worker, they will probably say 6 months. Retirement savings plans401k – IRA – Roth – Traditional – Pension – Social Security – Website for calculating retirement savings: FactorPensionTraditional 401(k)Traditional IRARoth IRANothing about the account changes, even if you switch jobsEligibility may be affected by how long you work with a given companyAll employers offer this type of accountThe money you put into this retirement account has already had taxes taken out of itYou pay taxes when you eventually take the money outYour company may contribute funds toward your retirementAny contributions you make come directly from your paycheckYou make contributions from your bank accountYour employer has some say in how the money is investedYou have some choice in how your contributions are investedYour total retirement benefit will depend on the risk level of the investments you choseYou’re promised a fixed benefit each month, which may increase with inflationPart II - A few more questionsAnswer the following questions, based on what you have learned.Your friend Ricky says a Roth IRA has the best tax advantages, because you pay taxes now and won’t have to pay them when you take the money out in retirement. Why might he be right?Your friend Jasmine says a Traditional IRA or 401(k) has the best tax advantages because you don’t pay any taxes now, and you can wait until you retire to pay taxes. Why might he be right? Your friend Lucien says pensions and 401(k)s are the best retirement options because they offer you “free money.” What does he mean by this? Does he have a good point? Why or why not?If your friend Raheem asks you, “What type of account should I use to save for retirement,” what would you tell him? ................
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