1. Assume you are 20 years old and you begin putting $50 per month into an accou

Question

1. Assume you are 20 years old and you begin putting $50 per month into an account for retirement. If you keep to your plan, how much do you think you will have at age 65?


2. Social Security laws allow you can collect full social security benefits at age 67 however; the law allows you to retired early at age 62 with a 30% reduced rate of benefits. If your full benefits were $1,000 a month, what would your reduced amount be at 62?



3. Social Security laws might change soon and the retirement age may go from 67 to 69. How would this change affect you?



4. If your company offers a 401k plan and you put $50 a month into it. Your company matches your amount with 50%. How much money will you have saved in a year?



5. Why should you not rely on social security as your sole income during retirement?

Explanation / Answer

1. About $100,000. However this does not account for inflation, nor the income taxes that you will have to pay on the interest. 2. If the full retirement age changes, then the early retirement payout will be reduced or I will have to wait longer to draw social security. It won't affect my retirement date, just the date that I receive social security benefits. 3. For every 2 dollars you put into your 401k your company will put 1 dollar into your 401k up to the company cap. 4. You have equity that you can draw on in your retirement. If your mortgage is paid off, then your living expenses are lower. 5. Learn to live well below your means.

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