Retirement Plan for high school graduate Running Head: Retirement Planning

John Doe

ABC University

(This is a three paged retirement plan written in MLA, relying on 5 sources. The paper is backed with excel spreadsheets that calculate the amount to be contributed, annually and the retirement needs of the client. In the drawing of this plan, all figures are initially expressed in today's dollars before factoring in the element of inflation.)

Retirement Plan for high school graduate Introduction Retirement is not an esoteric event and many of us will have to experience it, whether we like it or not. Therefore, realizing a suitable retirement is an elaborate process that requires sensible planning and a good number of years of persistence, discipline and consistency. The reason behind retirement planning is justified by the uncertainty of Social Security and Pension Benefits offered by the government. This has come as a result of a tight economy, government sponsored retirement plans have become even shakier. In addition, the population of the developed world is continuing to age, with fewer and fewer working populace remaining to contribute to the social security. Another reason is that, as a person continues to age, the bodys immunity becomes weaker and opportunistic ailments take hold of it. Thus, one has to prepare themselves in the event of unforeseen medical expenses. One needs a well-planned retirement nest egg to avoid liquidating assets in order to cover expenses during retirement years. In sum, retirement gives one the flexibility they need in dealing with changes (Lusardi 16). How much is needed? In as much as it is possible to determine a reasonable number for ones retirement needs, there is no magic number that applies in general. The process involves giving answers to a few questions and plunging into some number crunching. As a matter of fact, the plan is futuristic in nature and relies on estimates that are on the conservative side. It is believed that sticking to this plan will ensure that one is able to accumulate a nest egg enough to last through their golden years (Careonecredit para. 3).

Retirement Plan for high school graduate

Important Assumption In the drawing of this plan, all the figures are expressed in today's dollars, for purposes of simplicity. Then, after determining the retirement needs (as expressed in today's dollars), the task of converting the figures into "tomorrow's dollars," by factoring in inflation is undertaken (Nab 6). Calculation The following details are taken into consideration: Retirement age: 65 Current age: 18 Years to Retirement: 47 Annual income needed for the retirement years: $40,000 (This figure is estimated on the high end; in general, it's reasonable to assume you'll need about 80% of your current annual salary in order to maintain your standard of living (Investopedia para.6). The current market value of all your savings and investments is zero but a house and three cars will be purchased in the course of employment. Annualized real rate of return less inflation on investments: 8% (Inflation is assumed to be 4% annually, while a realistic rate of return is chosen to be 610%. Conservatively, returns are estimated on the low end). The value of a company pension plan :( 10% of annual salary, assuming that the high school graduate will secure employment after college-at age 22)

Retirement Plan for high school graduate

Roth and Taxable IRA Besides being eligible for a retirement fund at work that matches your funds, it is important to sign up for a Roth IRA. This is funded by with money that has already been taxed as part of your normal paycheck. The advantage of Roth is that, money that is withdrawn later is tax-free.

Conclusion It is important to get more enlightened on financial matters; the subject is not genetically encoded in peoples mind. In addition, it is important to stay away from unnecessary debt and to build a robust emergency stash (LaLanne 129).

Retirement Plan for high school graduate

Works Cited

Investopedia, Retirement Savings Tips for 18- To 24-Year-Olds, 2011. Web http://www.investopedia.com/articles/younginvestors/06/tips18to24.asp

Careonecredit, Starting to Plan for Retirement in Your 20's, 2011 http://www.careonecredit.com/knowledge/article.aspx?article=563

Nab, Understanding retirement planning, 2009. Web http://www.nab.com.au/wps/wcm/connect/99806c004d6ef27aa694bf3118eed1d1 /UnderstandingRetirementPlanning.pdf?MOD=AJPERES&CACHEID=99806c004 d6ef27aa694bf3118eed1d1

Lusardi, Annamaria and Mitchell, Olivia, Financial Literacy and Retirement Planning: New Evidence from the Rand American Life Panel, 2009. Web http://deepblue.lib.umich.edu/handle/2027.42/57569

LaLanne J, Rettick MJ, Linkletter, A. Fiscal Fitness: 8 Steps to Health and Wealth from Americas Leaders in Fitness and Finance. Franklin Lakes, NJ; 2008.