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3.09 The Importance of Investing for Retirement

Last updated 2 months ago
19 questions
Note from the author:

QUESTION OF THE DAY: What are the median and average retirement savings for people under 35? 📷5 min

Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions on the last slide.
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Your guess: What are the median _______ and average retirement savings_______ for people under 35?

Answer: What are the median_______ and average retirement savings_______ for people under 35?

ARTICLE: What is Retirement? 📷9 min

As you know, investing is a great way to build wealth for your future - especially retirement! Retirement may seem a long way off, but it’s never too early to understand what it is and how you can best prepare for it! Read this article to learn more about what retirement actually is and how you can get there. Then, answer the questions
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What types of income can you use in retirement to support yourself?_______ _______ _______ _______
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Social security defines the full retirement age as 67 for those born in 1960 or after. Does this surprise you? _______ Why or why not?_______
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While most Americans want to retire, the unfortunate reality is that many don’t have enough saved up to do so. Why do you think this is?

VIDEO: Will Social Security Be Around for Younger Generations? 📷13 min

As the previous article stated, many people rely on Social Security in retirement. However, you may have repeatedly heard from the media that Social Security may not be around for much longer. Watch this video to learn more about Social Security and what its future might look like in the U.S. Then, answer the questions.

*https://www.investopedia.com/articles/retirement/111816/will-social-security-cap-increase-help-it-last-longer.asp
1

Which statement best describes what Social Security is and how it works?

1

Why are people worried about the future of Social Security?

3

What solutions are presented to fix the Social Security shortfall? (hint: choose three correct answers)

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While Social Security benefits millions of Americans, the system is not perfect. In what ways is inequality built into the Social Security system?

1

What points from this video can you use to explain why it’s important to invest for retirement?

EDPUZZLE: How Much Savings Do You Need To Retire? 📷10 min

You’ve decided you want to start investing for retirement. Awesome! But, how much money do you anticipate you’ll need in retirement? What’s your goal? The answers to those questions depend on a variety of factors and personal preferences. Watch this video to understand how you can determine how much you might need. Follow your teacher's directions to answer the questions either in your student activity packet or within the EdPuzzle itself.
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Why will you need slightly more income in each year of your retirement?

2

How can the length of your retirement impact how much you might need to save for retirement? (hint: choose two right answers)

1

Which of the following should you do when taking your rate of return into account?

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Why does the amount you need to save for retirement increase from 1.5M to over 2.1M in this example?

The first step in planning for your retirement is determining a retirement savings goal. Use Nerdwallet’s Retirement Calculator to explore the following scenarios.
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Scenario 1: Lucía
  • Salary: $60,000 (the median salary for a museum curator)
  • Age: 40 years old and hasn't started saving for retirement yet.
  • Retirement Goal: Retire at 67 to receive full Social Security benefits
  • Retirement Budget: $2,225 per month
To meet her retirement budget, how much will Lucía need to save total?_______
If Lucía decides she can set aside $500 of her salary per month for retirement…
How much will she have at age 67?_______
How short is she in her savings?_______

If Lucía increases her saving rate to:
  1. $750 per month, how short will she be?_______
b. $1,000 per month, how short will she be?_______
c. How much does she need to save per month to reach her retirement goal?_______
d. What challenges might Lucía face when trying to save this percentage of her income?_______

Let’s see what happens if Lucía delays retirement until age 70:
Hint: Click on “Advanced Details” on the left-hand side.
  1. How short would she be if she saves $500 per month?_______
  2. How much money must she save monthly to meet her retirement goal?_______
  3. Do you think Lucía should delay her retirement by 3 years? _______ Explain your reasoning._______
  4. Why is it so difficult for Lucía to meet her retirement savings goal?_______
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Scenario 2: Angélica
  • Salary: $75,000 (average for a clinical psychologist with 5–10 years of experience)
  • Age: 28 years old and hasn't started saving for retirement yet
  • Retirement Goals: Retire at 67 to receive full Social Security benefits
  • Retirement Budget: $3,000 per month
Reminder: Set the retirement age to 67 in "Advanced Details" on the left-hand side.
  1. To meet her retirement budget, how much will Angélica need to save total?_______
  2. If Angélica saves $950 of her salary per month for retirement:
  3. How much will she have at age 67?_______
b. How short is she in her savings?_______
c. How much must she save monthly to reach her goal by 67?_______
If Angélica can’t save afford to save $950 per month:
  1. How else could Angélica meet her retirement goal? *Remember, she can’t change the past._______
b. What might be challenging about your recommendation in Part A_______
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Scenario 3: Daniel 📷
  • Salary: $85,000 (an average starting salary for an engineer)
  • Age: 22 and just graduated college
  • Retirement goal: Retire at 67 to receive full Social Security benefits
  • Retirement budget: $4,000 per month
Reminder: Set the retirement age to 67 in "Advanced Details" on the left-hand side.
  1. To meet his retirement budget, how much will Daniel need to save total?_______
  2. If Daniel sets aside $1,200 of his salary per month for retirement:
  3. How much will he have at age 67?_______
b. Should he save less than $1,200 each month?_______ Why or why not?_______

Angélica and Daniel are cousins and are discussing their retirement goals. Here are some things they’re wondering:
Hint: For part b, it will be helpful to read the text below the calculator.
  1. Daniel was able to save nearly DOUBLE the amount that Angélica did. What factors led to his increased savings total?_______
  2. What assumptions does this retirement calculator make?_______ Do they seem reasonable?_______ Why or why not?_______
1

In retirement, it’s common to rely on income from all of the following sources EXCEPT...

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Which of the following statements is TRUE about the state of retirement in the U.S.?

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Eli is planning ahead for retirement. They should consider all of the following factors when determining how much they’ll need in retirement EXCEPT…