Retirement Accounts

The account matters as much as the investment.

12 problems · about 21 minutes · TEKS M.M.8.B

What this lesson teaches

The student explains retirement account types and computes the value of an employer match.

Straightforward practice. Get the method working first.

5 problems

A 5% match on a $40000 salary. Match in dollars?
Answer 2000
Why $2000.
Why is an employer match described as free money?
Answer It doubles the matched contribution immediately.
Why An instant 100% return on the matched amount.
A 4% match on a $60000 salary. Match in dollars?
Answer 2400
Why 0.04 × 60000.
A 6% match on a $45000 salary. Match in dollars?
Answer 2700
Why 0.06 × 45000.
Contributing $2000 with a full match. Total added in dollars?
Answer 4000
Why Double it.

The same ideas with more to keep track of.

3 problems

Match threshold $2500, you contribute $1000. Match left unclaimed, in dollars?
Answer 1500
Why 2500 − 1000.
What return does a full match give on the matched portion, in percent?
Answer 100
Why The money doubles.
Does early withdrawal usually carry a penalty? 1 yes, 0 no.
Answer 1
Why Tax plus a penalty.

Mixed problems. Work out what kind of question it is before you start.

4 problems

Put the retirement saving priorities in order, best first.
Answer 1. Contribute enough to claim the full employer match. 2. Clear high interest debt. 3. Build the emergency fund. 4. Invest anything beyond that for the long term.
Why Nothing else returns 100% immediately.
A 3% match on a $70000 salary. Match in dollars?
Answer 2100
Why 0.03 × 70000.
The Match: A 5% match on a $50000 salary. Match amount in dollars?
Answer 2500 dollars
Why $2500.
The Total: You contribute $2500 and the employer matches it fully. Total added, in dollars?
Answer 5000 dollars
Why $5000.