3.

9 The Importance of Investing for Retirement

Student Activity Packet
UNIT: INVESTING

Name:

Students will be able to:

●​ Explain what retirement means through a financial lens
●​ Investigate how investing can be a powerful tool to meet their retirement goals
●​ Understand what Social Security is and why most Americans cannot rely on Social Security alone for
retirement
●​ Explore factors that can impact how much they might need in retirement and their ability to meet their
retirement savings goal

NOTE: Vocabulary for this unit can be found in the NGPF Personal Finance Dictionary

INTRO

QUESTION OF THE DAY: For those who have one, what is the average amount of retirement
savings 20-29 year olds have in their 401(k)s?
Answer the question on the first slide in the space below. Then, compare your answer to the
answer on the second slide. Finally, follow your teacher’s directions on how to answer the
follow-up questions on the last slide.

1.​ For those who have one, what is the average amount of retirement savings 20-29 year
olds have in their 401(k)s?
48k

LEARN IT

ARTICLE: What is Retirement?

As you know, investing is a great way to build wealth for your future - especially retirement!
Retirement may seem a long way off, but it’s never too early to understand what it is and how you
can best prepare for it! Read this article to learn more about what retirement actually is and how
you can get there. Then, answer the questions.

What types of income can you use in retirement to support yourself? 401(k), pension or
457 plan, traditional IRA or Roth IRA, Annuities and 403(b) plans, SEP plans,
Non-retirement-specific investment vehicles

www.ngpf.org​ Last updated: 9/6/22

1
 Social Security defines the full retirement age as 67 for those born in 1960 or after.
Does this surprise you? Why or why not?
No. The reason why this doesn’t surprise me is because it was easier to save your money
back in the day

While most Americans want to retire, the unfortunate reality is that many don’t have
enough saved up to do so. Why do you think this is? ​
Its harder to save money in the times we live in now. Just for some eggs at walmart we’re
spending close to $9 so imagine us 20 years later the prices will be insanely high.

VIDEO: Will Social Security Be Around for Younger Generations?

As the previous article stated, many people rely on Social Security in retirement. However, you may
have repeatedly heard from the media that Social Security may not be around for much longer.
Watch this video to learn more about Social Security and what its future might look like in the U.S.
Then, answer the questions.

1.​ Which statement best describes what Social Security is and how it works?
a.​ Social Security is a mandatory payroll deduction for current workers who then
receive the retirement benefit on an annual basis.
b.​ Social Security is an optional program to allow retirees to continue contributing to
their individual retirement accounts.
c.​ Social Security is a government program that pools contributions from current
workers to then provide retirement support benefits to those who are eligible.
d.​ Social Security is a federal health insurance program for retired workers.

2.​ Why are people worried about the future of Social Security? ​
Because money is starting to run out

3.​ What solutions are presented to fix the Social Security shortfall? (hint: choose three
correct answers)
a.​ Stop distributing benefits to workers who do not pay into the system
b.​ Reduce benefits to match income from payroll taxes
c.​ Increase the Social Security tax rate
d.​ Raise the age of retirement for younger workers

4.​ While Social Security benefits millions of Americans, the system is not perfect. In what
ways is inequality built into the Social Security system?
Those benefits are calculated based on your earnings.

5.​ What points from this video can you use to explain why it’s important to invest for
retirement?​
It helps me to know why I must invest for my retirement

www.ngpf.org​ Last updated: 9/6/22

2
Video: How Much Savings Do You Need To Retire?​ ​
You’ve decided you want to start investing for retirement. Awesome! But, how much money do
you anticipate you’ll need in retirement? What’s your goal? The answers to those questions
depend on a variety of factors and personal preferences. Watch this video to understand how you
can determine how much you might need.

1.​ Why will you need slightly more income in each year of your retirement?
a.​ Your expenses increase the longer you are in retirement.
b.​ Your rate of return on investments is guaranteed to increase in retirement, so you
can spend more each year.
c.​ You are required to withdraw more money each year from your retirement account
d.​ You should take the increasing price of goods and services over time into
account.

2.​ How can the length of your retirement impact how much you might need to save for
retirement? (hint: choose two right answers)
a.​ The longer your retirement, the MORE money you'll receive in government stipends
and programs.
b.​ The longer your retirement, the LESS you need to have saved.
c.​ The longer your retirement, the MORE you need to have saved.
d.​ The longer your retirement, the LESS money you'll be able to withdraw each
year.

3.​ Which of the following should you do when taking your rate of return into account?
a.​ Assume an aggressive rate of return because that is what the market guarantees.
b.​ Assume an aggressive rate of return because it accounts for other income streams,
such as Social Security.
c.​ Assume a conservative rate of return so that you can plan the worst but hope for
the best.
d.​ Assume a conservative rate of return because that is how the market is going to
perform.

4.​ Why does the amount you need to save for retirement increase from 1.5M to over 2.1M
in this example?
a.​ You'll need more money each year in retirement.
b.​ The federal government contributes to your annual savings once you open a
retirement account
c.​ You're assuming you're going to earn more each year so you can contribute more.
d.​ The increased amount each year takes inflation into account.

DO IT

ACTIVITY: CALCULATE: Retirement Savings Goals

As you saw in the previous video, having a realistic goal for how much you might need in
retirement can help you better plan for your future. Let’s now take a look at how your savings rate,

www.ngpf.org​ Last updated: 9/6/22

3
the age you start investing, and other factors can impact your ability to meet your goal! Follow the
directions on the worksheet to complete this activity.

www.ngpf.org​ Last updated: 9/6/22

4