Goodbye Tensions,

Hello Pensions!
An overview of retirement
By: Neha Satapathy

Overview
Internship: Pinnacle Advisory Group
Mentor: Barbara Ristow
Teacher: Mary Jane Sasser
Topic studied: The Relationship between financial literacy and
retirement security
What are the effects of a delayed establishment of independence from parents?
How does this relate to having a proper financial education?

Interesting Facts
Americans largest financial concern is the topic of retirement
Most adults do not begin planning for their retirement until they are
in their late thirties
As of 2015, nearly a fourth of the federal budget is allocated for
funding social security

Retirement: Definitions
Retirement: The period of ones life after leaving ones job and
ceasing to work.
Retirement Security: The level of comfort one has with the resources
that are intended to support them through retirement and provide
a standard of living similar to that prior retiring.
Can also be used as a measure of success regarding ones financial saving and
planning history

Retirement: Social Security

Many people base retirement age on benefit eligibility
Life expectancy in 1965: 60.9 years
Life expectancy in 2015: 78.2
Longer life expectancy Phasing out pension plans
Allows adults to retain health care and retirement benefits while being able to
pursue their interests

Retirement: Negative Impacts of Phasing

Retirement security
Inflow of money to retirement savings will gradually decrease requiring a longer
than expected amount of work life in order to raise enough money to retire
successfully

Social Security
Final average salary calculation Reduces long term benefits
Alternative: Quit full time job, take pension earnings, begin part time job
SS Benefits based off of 35 highest paid years
Sacrificing high salary reduces benefits

Financial Dependence
Definitions
An individuals dependence on someone (usually parents) for basic financial
coverage such as taxes, insurance, shelter, etc
The dependence (on parents or educational system) to provide an introduction to
financial education

Both are equally important factors in determining ones retirement

security

Financial Dependence: Coverage

Over the period of 1996 - 2013, the number of young adults sharing
a home with their parents rose by 25%
Affordable Care Act children are allowed to be under guardian care of an
extended amount of time than the act initially provided

Financial Dependence: Coverage

How children are affected
Able to save money by not having to pay for living expenses,
insurance, etc
Likely delays learning about managing finances until a later age

Financial Dependence: Coverage

How parents are affected
Retirement security
End up providing for extra family members for a longer period of time
Money is taken away from potential retirement savings
May need to delay retirement in order to compensate for lost years

Financial Dependence: Literacy

(Stop at

Financial Dependence: Literacy

Financial Crisis of 2008
Countless Americans lost their savings
U.S Government faced issue of ensuring retirement coverage for baby boomers

Mindsets
Gen X adopted money conscious mindset from watching parents in the baby
boomer generation have to work hard to achieve the American Dream
This more practical, realistic approach to finance has often brought members of
Gen X stable financial lives

Financial Dependence: Literacy

Mindsets continued
Many members of generation Y have set
their financial standards high based on
observations of their parents in
Generation Xs secure lifestyles.
Generation of dreamers and high
achievers

Financial Dependence: Literacy

Generations Y & Z and the YOLO Movement
Mindset that current actions do not have long term implications
Fine line between present and future
Caused after being coddled by parents

Financial Literacy Survey: Process

1.Studied various past surveys similar to mine and sourced
questions
2.Chose groups to survey
a. Generation X/Y in Pinnacle Advisory Group
b. Generation X/Y in UMD scholars program

3.Google Survey
4.Analyzed results

Financial Literacy Surveys

Financial Literacy Surveys

Financial Literacy Surveys: Data

Majority of surveyed people learned finance from parents or
individually
Nearly all became aware of need to be in charge of finances from
early teens to early adulthood (12-20)
50% responded to being somewhat sure of knowing how to manage
their personal finances

Analysis
The age range of 15-20 is a critical time in a persons life for
developing interest in personal finance
Parents currently play a large role in shaping childs exposure to
money and finance

Conclusion
Retirement security is an important factor in making sound financial
decisions
In order to retire at an ideal age, children need to be taught basic
financial concepts and be held financially responsible by their 20s
Will help them transition towards becoming more financially literate
Will increase their awareness of and action towards retirement savings

Conclusion
Longer life expectancy people need more money to retire
successfully
Working after a certain age is not the most efficient method of ensuring financial
security
Solution: Education that encourages new generations to take greater control of
financial lives at a younger age
Begin saving for retirement as early as ten years prior to the current norm (mid
30s)

The End!