Financial Planning Essay

To inform the audience about how small sacrifices today can result in huge dividends in retirement. Thesis: Today I will inform the audience of the power of saving small amounts of money for the future and how compound interest works in their favor when they start saving as soon as possible. Organizational Pattern: Topical Introduction A. Attention Getter Who wants to be a millionaire? You can be!!! Social Security will very likely NOT be available to people currently younger than 40 and if it does survive will not be a significant amount to live on. How we prepare NOW can determine whether we are world travelers or Walmart greeters. C. Credibility My father impressed upon me the need for financial planning. I began saving when I first started working at 17 and have benefitted greatly. D. Thesis Today I will show how anyone can have a rewarding future by making small and often unnoticed sacrifices currently. E. Preview Specifically, I will discuss retirement saving strategies including 401K matching programs from employees and IRA’s. Transition First I will discuss the expediency of saving at an early age. I. Body A. When to start saving for retirement? 1. The earlier the better. Due to the exponential nature of compound interest the longer the money remains the more significant the growth 2. It’s never too late to start saving for retirement. The problem is the longer you wait the more impact on your budget due to having to save a higher percentage of your current income. If you start saving early your impact is minimized greatly. Transition Next, I will discuss the various ways to save for retirement. 1. 401K plans offer you the chance to deduct monies from your paycheck either before taxes are deducted or afterward. Each option has tax 2. advantages but their impact is geared toward current tax savings or tax savings during retirement. The real opportunity in 401K is the employee match program where your employer invests the same amount into your account, usually up to a certain percentage. . Individual Retirement Accounts (IRAs) are another way to save for retirement. They can be used independently or in conjunction with a 401K plan. Funds are deposited after taxes have been withheld so there is no tax due upon withdrawal in retirement. IRA contributions can be withdrawn without penalty if you face a financial hardship such as losing your home or significant medical bills. Transition My final point is a strategy that can meet your goal while minimizing impact on your current lifestyle. 1. Many of you are working toward new careers and excited about that first REAL paycheck. 2. If you â€Å"forget† about the percentage of your check that is going into the 401K and structure your budget on the remaining amount you will find saving easy and rewarding. 3. Begin with 3% of your pay going into retirement savings. Each raise/promotion you get increase it by 1% until you have reached your employer’s maximum match rate. Then add the 1% into an IRA until you have reached the percentage that results in your desired retirement account. I have discussed when to start saving for retirement, various ways to save as well as methods for minimizing the impact on your current budget. B. I trust that now you are more informed about the rewards available in the future when you start saving now and have obtained information about ways to achieve your goals. References Ira online resource guide.