Retirement

Final 50 questions from 13-17 Ch.14 Do not be to conservative at our age, if you do not set enough a side then compounding will not work in your favor. 5000 dollars is the maximum amount in an IRA account per year. Most people are dependent on social security for retirement earnings. Three ways for retirement social security, retirement type plan, and personal savings, you can control personal savings and retirement plans to some extent, but you can not control Social Security 7.65% is subtracted from paycheck to pay for social security and medicare, 6.2%, 1.45%, the 12.4 percent of our payment is going to current retired people, when made people died sooner but now life expectency has increased and also benefits, which requires more support from taxes, you pay 6.2% up to 106,000, it rises with CPI change, collecting more taxes without change in income, we are paying out more benefits then collections, baby boom generation is the primary problem in this social security program, 67 is the retirement age, discussions of raising to 68, the system is a pay as you go system, we are paying more out, we must cut benefits which is prevented by the older voters, 35-40% of retirement expenses are dependent on social security, 1 credit for every 1020 dollars you earn and you can not recieve more than four credits for at least 10 years, you can retire as early as 62 then you get your benefits reduced permantely depending on how many months you retire early, permenant hair cut is cut 30% permanetly, you can delay retirement to 70, every year benefits increase 8%, computationanly most people apply for retirement at age 62, if you are more than 14160 for every dollar over you will lose two dollars from benefits, benefits can be reduced if subject to taxation, depending on your total income, 25000 for single, 32000 married, average benfit for a normal 1586, emplorer sponsered plan it will be predetermined on how long you work and how much your earnings were over a period of time, this is a defined benefit plan is known as pension plans which are not as common, because of the substansial cost, alternative plan is not known because it depends on how much you contribute to the plan and how much the emploer contributions, defined contribution plans are more common, participation requirements, vesting means you either do or do not own what the emploer puts into the account, you earn this by staying with the company, first year second year, then third year you have the right to all the money called cliff vesting, first year nothing, second year 20% percent

owned grated vesting, contributory plan you put in the money, noncontributory plan is paid by the employer, quilify plan immediate benefits which is most common, then non qualify no immediate benefits