Financial Club Minutes: May 23 2007

RETIREMENT

Roth 401K

-after-tax limit of $15,500, increases 500/yr with inflation
-minimum of 5 years
-can start taking money from it at 59.5
-no income stipulation

CONS: taxes increase now, smaller take home pay, not available through all employers, can only roll over to Roth IRA and not a traditional IRA


Roth IRA

-individual IRA with strict limits you obtain through a brokerage
-after-tax
-under 49 the limit is 4,000/yr
-if you are single, you must make less than 99,000/yr
-if you are married, you must make less than 156,000/yr
-10% penalty for early withdrawal
-can take up to $10,000 for primary residence



FINANCIAL CALCULATORS

-target needed for retirement is 40% of your current salary
-try Principle Company Calculator http://www.principal.com/calculators/retire.htm
-Merck has a great resource called Financial Engines
-a conservative inflation rate is 3%, salary inflation is about 2% and an average gain of investment is 4%
-assume you will live to the age of 92

Housing For Retirement
-current mortgage rate is 6-7%
-reverse mortgages are available to people 62 or older and are a tax free loan with interest
-generally believed to be a "last ditch effort"
-you may get a lump sum or monthly payment
-one should weigh the option of reverse mortgage vs a home equity loan

Possible additional topics for retirement: medicare and medicaid

Financial Club Minutes-APRIL 2007

Meeting Format
-one topic per meeting
-monthly
-new members must be approved by all current members
-begin with retirement because must save for that first, then allocate funds for other things
-meeting minutes, as well as research, will be posted on blogger.com-Jen will capture minutes and set up/maintain blog
-next meeting is May 23, 7pm, at Gary's house

Group Assignment
Determine what items/topics are important to you in the follow bins:
1. Emergency Fund
2. Short Term
i.e. money market accounts, savings accounts
3. Mid Term
i.e. college funds, major purchases, home improvement
4. Long Term
i.e. second home, major purchases, home improvement
5. Retirement
i.e. wills, real estate, roth, IRA, annuities, roth 401K, reverse mortgage, bonds

FIRST TOPIC: RETIREMENT
INDIVIDUAL ASSIGNMENTS
Wills-Damon
Bonds
Real Estate-Jason
Roth IRA-Vere
Trad IRA-Damon
Annuities-Jen
Roth 401K-Gary
401K-Vere
How much to save-Mike
Health care costs-Chris