Personal Finance Homework 14

1. Retirement Planning Pitfalls

a. Starting too late
i. When people my age are looking to start putting away money for
retirement, we tend to find it hard to find money to save, because we have
other payments and big purchases to save up for. This leaves us in the
decision to “put off retirement planning until later in life”. This usually
results in starting around our 30s which is 10 years too late.
b. Putting away too little
i. Maybe with other payments and expenses taking center stage, this leaves
little wiggle room to put away money for retirement. Another reason may
be due to lifestyle choices. I can understand this one, because being in our
20s is a time that we are wanting to take on the world, not saving for
retirement. Unless, we adapt to that mindset to realize the importance of it.
c. Investing too conservatively
i. While investments can be a risky move in some areas, it is better to
consider all options before sinking retirement funds into “low-yielding,
fixed-income securities”. Although risks can have their consequences, so
can low to no risk investments.
2. Calculating Amount Available at Retirement
a. The factor that meets at the intersection of 40 years and 8% is 259.057259.057 x
$3,000 = $777,171
b. Tyler would have accumulated as much money in retirement as Jocelyn
because he is working 10 years later than Jocelyn did. Tyler would have to
save around $4,000 in order to be anywhere near Jocelyn’s retirement fund
at age 65.