MR ZIRKLE VIDEOS

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For saving for retirement, there are three things you should know about:
- Your savings goal
- What type of account you’d like to open
- How to manage money in your goal

Some people over save for retirement.

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BOOK
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For many senior citizens, Social Security is their primary source of income.
Social Security - NOT a form of investment, purchasing mandatory insurance that
provides for you and family in the case of death, disability, health problems or retirement.
They are a base level of protection, and aren't intended to let you live in comfort.

7.65% is FICA taxes, and how it works is money gets pooled and invested in Treasury
bills and is used to pay benefit checks to geysers.
Roughly 95% of Americans are covered by Social Security, unless the government
employs people who have different retirement systems.

Size of Social Security benefits depend on your number of years for earning, your
average level of earning in the highest 35 years of earning, and an adjustment for
inflation. Plus, how much credits you earn and how much you pay for.
- If you delay retirement, you get higher social security benefits
- At 62, you permanently earn less if you retire for benefits

Social security also provides for disability, health, and survivor. Survivor benefits are
initially one lump-sum payment to the family and regular payments to spouses
depending on certain conditions. Disability protection provides for people who can’t
perform substantial work or are expected for death.

25 years ago, employer-funded pensions were given for working so hard in a company.
Now it is quite rare, but some give in the form of defined-benefit plans.
Defined-benefit plans - You receive a defined or payout at retirement. They are generally
all noncontributory, which means you don’t have to pay for them. Some are contributory,
which means employees also pay.

Payout is based on a formula that can take into account a wide range of factors,
including age, salary, and years of service.
Downsides:
- No portability, if you leave company you can’t take pension with you
- Vested - To gain the right to the retirement contributions made by your employer
in your name
 - Few of them adjust for inflation
- Not all are funded pension plans-employer makes contributions to trustee who
invests the money for you

Cash-balance plans - Workers are credited with a percentage of their pay as well as a
predetermined rate of interest

You should have a modest retirement plan that can be easily incorporated into financial
life.

Steps:
- Step 1: Start planning for goals, figure out what you want to do when you retire
(Where will you live, how costly will life be?) Decide on time frame for objectives
- Step 2: Estimate how much money you will need, take your current living
expenses and use that as projection to how much it will cost to support yourself
in retirement, financial advisors recommend it will cost 70-80% of your current
expenses to live in retirement. Don’t forget taxes and goals!
- Step 3: Estimate income at retirement. First, estimate Social Security benefits.
Then, estimate your pension and any other retirement income.
- Step 4: Calculate the annual inflation-adjusted shortfall, there tends to be a big
difference between how much money you need and how much you’ll get
- Step 5: Calculate how much you will need to cover this shortfall
- Step 6: Determine How Much You Must Save Annually Between Now and
Retirement, just use a finance calculator
- Step 7: Put the Plan In Play and Save, one of the hardest steps, real key to being
successful is understanding compounding,

What Plan is Best? Try for a tax-favored retirement plan. You can contribute funds that
won’t go to the IRS, and even earn compounding on it. Taxes do pay at the end though.

Under a defined-contribution plan, your employer (and you) directly contribute to an

individual account that is set aside specifically for you. You receive on how well your
retirement payments performed. They remove the financial risk for future pension costs
away from the company and pass it on to the employee.

Profit-sharing plan - A pension plan in which the company’s contributions vary from year
to year depending on how well they perform
- Money purchase plan - Pension plan in which employer contributes set
percentage of their employees’ salaries to their retirement plan annually
- Thrifts and savings plan - Pension plan in which employer matches a percentage
of the employees’ contributions to their savings account
- Employee stock ownership plan - A retirement plan in which funds are invested in
the companies’ stocks
401k plan - Tax-deferred retirement plan in which employee contributions and earnings
on them are tax deductible. Employees may contribute to a maximum set by law (19.5k)
- Can be set up as part of employee sponsored defined-contribution plan

There are retirement plans for self-employed and small-business employees.

- Keogh or self-employed retirement plan - A tax-sheltered retirement plan for the
self-employed
- Simplified employee pension plan - A tax-sheltered retirement plan for small
business employees or self-employed
- Savings Incentive Match Plan for Employees - Tax-sheltered retirement plan aimed
at small business employees or self-employed that provides for some matching
funds by the employer to be deposited into employee retirement accounts

IRAs - Personal savings account that give you tax advantages for saving for retirement
- Traditional IRA contributions may be tax deductible based on your income and
whether your spouse has a retirement account
- After you turn 72 (or 70 ½) you must start paying annual distributions
- Restrictions on timing and amount of withdrawals exist, but you can roll over a
distribution (penalty free when becoming disabled, purchasing first house, need
money to pay medical expenses)
- Low and moderate income workers also have saver’s tax credit to help pay off
taxes
- Maximum is 1000$ for individuals and 2000$ for couple jointly

- Roth IRA, contributions are not tax deductible, but grows and withdraws tax-free,
has income limits but can easily be worked around by transferring money from
other IRA
- YOU ARE ALLOWED TO HAVE MULTIPLE FINANCIAL PLANS
- You can pull out your distributions at any time without penalty and aren’t forced to
withdraw at (72 or 70 ½)
- You can roll money from traditional IRA to Roth IRA without 10% penalty

- Go for Roth IRA if you can afford it

Go save for kid’s college to not dip into a savings account.

- Coverdell Education Savings Account - Also called Education IRA and works like
Roth IRA except there is 2000 limit
- Other way is 529 Plan - Tax-advantaged savings plan that used to only cover
college and graduate school, but expanded to cover K-12 education and further
apprenticeship programs (Maximum of 235k - 529k)