Emergency Fund
What is a dedicated cash reserve set aside strictly for unexpected life events like job loss, medical bills, or car repairs?
Emergency Fund
According to financial advisors, what percentage of pre-retirement annual income do retirees need to maintain their lifestyle?
70%
Marcus earns $43,000 per year before retiring. Based on the 70 Percent Rule, how much income will he need each year in retirement?
$30,100 (43,000 x 0.70)
Financial experts recommend storing how many months of basic living expenses in an emergency fund?
3-6 months
What is the major perk of a Roth IRA regarding investment growth and withdrawals in retirement?
Tax-free growth and tax-free withdrawals
What is the earliest age at which you can claim Social Security retirement benefits?
Age 62
If your basic living expenses are $3,000 per month, what are your 3-month minimum target and 6-month full target amounts?
3 month: $9,000
6 month: $18,000
Adam just started his first job. Why might contributing to his employer's 401(k) be a better choice than placing that money into a basic savings account?
-Adam does not have to pay taxes on his contributions right now (he can invest that money now elsewhere)
-Often includes an employer match ("free money" your company deposits into your retirement account based on how much you save from your own paycheck)
What is Mrs. Ortell's latest grandma hobby?
Crocheting (making pumpkins)
What type of liquid, low-risk, FDIC-insured account should emergency funds be kept in?
Basic Savings Account or High-Yield Savings Account (HYSA)
Are contributions to a Traditional IRA made pre-tax or after-tax, and when do you pay taxes on that money?
Pre-tax; you pay taxes later when you withdraw the money in retirement.
What happens to your payout if you choose to claim Social Security benefits at age 62 instead of waiting?
It is permanently reduced.
If your living expenses are about $4,000 a month, how much should you have in an emergency fund?
$12,000-$24,000 (3-6 months worth of expenses)
3x4,000=12,000
6x4,000=24,000
Why is a Roth IRA especially popular with young adults early in their careers?
Because they are currently in a lower tax bracket, allowing them to pay lower taxes now and enjoy tax-free growth and withdrawals later.
At what age do retirees become eligible to receive 100% of their full Social Security retirement benefits?
Age 67