How to be a millionaire

Question 1

how much more will my money grow in stocks compared to bonds or a savings account

Answer 1

Having your money in retirement funds for decades reduces risk because there is time to recover from any stock market crashes

Question 2

Funds have fund managers who buy and sell for the thousands of ppl who put funds in

Answer 2

mutual funds

Question 3

Stocks receive ____ which are reinvested into the fund, more growth

Answer 3

Dividends

Question 4

Each of the FUNDS in this lesson works like a ___ ____, but has ____ ____ ______ because it’s a ______ _______

Answer 4

mutual fund
special tax privileges
retirement fund

Question 5

Government

Answer 5

social security

Question 6

Your employer

Answer 6

pensions

Question 7

All you:

Answer 7

IRAs, 401Ks, 403Bs, annuities, real estate

Question 8

is required retirement planning from the federal government

Answer 8

Social security

Question 9

Who can opt out of social security

Answer 9

Religious clergy or self employed

Question 10

How do you pay into Social Security

Answer 10

This tax is automatically deducted from American paychecks and you are automatically set up

Question 11

If I earn $1 million, am I taxed $62k a year?

Answer 11

No. you only pay S tax on ~$147k (CAP) is $8240/year

Question 12

How do I collect my SS

Answer 12

When you retire or become permanently disabled, minimum age (67+)

Question 13

Average SS check

Answer 13

$1,500/month, and it depends

Question 14

What happens if I die and never collect my money? (SS)

Answer 14

Your family gets a modified amount (more if your children are under 18)

Question 15

Tells you how much you contributed to SS each paycheck

Answer 15

Pay stub

Question 16

Which employers offer pensions?

Answer 16

Government employees (military, police, firefighters, teachers, police, city hall, Congress)

Question 17

Minimum age (pensions)

Answer 17

59 1/2

Question 18

Military, police, and firefighters are offered full pensions after ___ years

Answer 18

20

Question 19

Other government jobs get their full pension after ____ years

Answer 19

30

Question 20

5 years before you qualify to receive any pension

Answer 20

Vesting period

Question 21

What happens if I die and never collect my pension check

Answer 21

Your family get a modified amount

Question 22

What if my employer goes bankrupt or underfunds it (pension)

Answer 22

You may not receive your pension

Question 23

What if I quit my job (pension)

Answer 23

You still get the amount you qualified for, but not until retirement age

Question 24

An Individual Retirement Account is a fund that you set up and contribute to during your working years.

Answer 24

IRA

Question 25

What age can you disburse your IRA funds

Answer 25

59 1/2

Question 26

What if I start an IRA, then I really need the money for something else?

Answer 26

You can withdraw funds early, but pay 10% penalty and pay taxes

Question 27

If we have SS and pensions, why do we need IRAs

Answer 27

SS will not be enough to live on, Few employers offer pensions

Question 28

Is an IRA, but you pay taxes when you put the money IN. You can borrow from this for education expenses or buying 1st home

Answer 28

Roth IRA

Question 29

Why is an IRA better than putting it in a savings account

Answer 29

It is not a savings account; the money is invested in stocks, bonds, and financial investments

Question 30

2 types of college savings plan

Answer 30

1. Prepaid
2. Savings Advantage

Question 31

buy a child’s college tuition at today’s price. This ONLY applies to tuition and can’t be used for other educational expenses

Answer 31

prepaid

Question 32

works like a Roth IRA but can also be used for K-12 private tuition up to $10k per year per student

Answer 32

Savings advantage

Question 33

When you invest a retirement mutual fund with other employees at your job

Answer 33

401K

Question 34

403Bs also known as

Answer 34

Tax sheltered plans

Question 35

This is basically 401Ks for nonprofit employers such as schools, and universities, charities, religious groups

Answer 35

403Bs/TSP

Question 36

When you sign over an asset or a lump sum to an insurance company, school, or charity… they write you a guaranteed fixed monthly check

Answer 36

Annuities

Question 37

Which assets can’t be affected by your employment status or former employer

Answer 37

IRAs, 401Ks, 403Bs, annuities, real estate