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Lifetime Money ManagementUniversity of California, DavisUniversity of California, DavisSchool of Veterinary MedicineSchool of Veterinary MedicineThursday, November 20, 2003Thursday, November 20, 2003

Donald Klingborg, DVM

Christine Milligan, SVM

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The value of your UCD DVM degreeThe value of your UCD DVM degree The cost of a UCD veterinary med The cost of a UCD veterinary med

educationeducation Financial aid & student loan informationFinancial aid & student loan information Personal finance tipsPersonal finance tips

Agenda

5

Average Starting Compensation for Entering Class of 2003

Graduates in 2007(UC Davis SVM ’03)

$70,547

$48,108

$77,895

$98,861

$66,842

$-

$20,000

$40,000

$60,000

$80,000

$100,000

Small AnimalPractice

Large AnimalPractice

Mixed AnimalPractice

Equine Practice

Weightedaverage practice

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Who do You Believe?’99 AVMA vs. Vet Econ

$-

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

SA EQ

Vet EconAVMA

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’99 & ’01 SA, LA, EQ DVM Median Income (AVMA ’01, ’03)

0

20000

40000

60000

80000

100000

120000

140000

DVM BOARDED

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$20,00

0

$40,00

0

$80,00

0

$175

,000

Mor

e

SAEqDairy

Point-in-Time Earnings’96 Vet Economics data

45% > $100,000

1/3 > $180,000

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Income-- DVM vs. Board Certified Specialist

Median Income (AVMA ’01, ’03)

0

20000

40000

60000

80000

100000

120000

140000

DVM BOARDED

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’01 Median Income by Years in Profession (AVMA ’03)

$-$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000

$100,000

SA LA Mixed EQ

'1 - 2 years'5-9 years'high

11

Veterinarian Salaries (’98 Practice Audit)

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

0 5 10 15 20 25 30

Years in Practice

$ V

alu

e

Salary

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The Cost of Your Education Estimate your total expensesEstimate your total expenses

tuition & feestuition & fees books & suppliesbooks & supplies rentrent foodfood clothingclothing transportationtransportation personal expensespersonal expenses ““other” expensesother” expenses

13

Cost of a UCD DVM Degree (Class of 2007)

Year 1Year 1$ 30,371$ 30,371

Year 2Year 2$ 32,608$ 32,608

Year 3Year 3$ 33,700$ 33,700

Year 4Year 4$ 38,690$ 38,690

TotalTotal $135,369$135,369Assumes annual increases of 5% for current financial aid expense budgets

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Projected Average Loan Indebtedness

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Class of 2007

Assumes $18,500

borrowed per year

at UCD SVM

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Two words of comfort when going to college . . .

Financial AidFinancial Aid

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3 x Two words of danger when going to college . . .

Credit CardsCredit CardsPizza & BeerPizza & BeerFinancial AidFinancial Aid

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The Financial Aid Equation

Budget or estimated cost of attendance

- Expected student contribution

= Estimated Financial Need &

eligibility for financial aid

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How to Re-Apply for Financial AidHow to Re-Apply for Financial Aid MustMust re-apply every yearre-apply every year using the Free using the Free

Application for Federal Student Aid (FAFSA) Application for Federal Student Aid (FAFSA) Renewal applicants’ PINs are mailed in Renewal applicants’ PINs are mailed in

DecemberDecember (if applied for 03-04 aid) (if applied for 03-04 aid) New applicants apply on-line at: New applicants apply on-line at:

http://www.fafsa.ed.govhttp://www.fafsa.ed.gov//

Gift aid and subsidized loans are limited . . . Gift aid and subsidized loans are limited . . . apply in January 2004apply in January 2004

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How to Re-Apply for Financial AidHow to Re-Apply for Financial Aid Student Aid Report (SAR) Student Aid Report (SAR) sentsent to student & to student &

school school approximately 1 monthapproximately 1 month after submitting after submitting FAFSAFAFSA

Vet Med and other grads are considered Vet Med and other grads are considered “independent”“independent” HoweverHowever, parental financial information must , parental financial information must

be reported on FAFSA to be considered for be reported on FAFSA to be considered for Federal Health Profession LoanFederal Health Profession Loan

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Three Types of Financial AidThree Types of Financial Aid GrantsGrants (gift aid) - based on need(gift aid) - based on need

UCD SVM Fee Grants & UCD GrantsUCD SVM Fee Grants & UCD Grants ScholarshipsScholarships (gift aid) - merit-based, etc.(gift aid) - merit-based, etc.

UCD SVM ScholarshipsUCD SVM Scholarships LoansLoans

1.1. Perkins LoanPerkins Loan2.2. Direct Loan (subsidized & unsubsidized)Direct Loan (subsidized & unsubsidized)3.3. Health Professions Student LoanHealth Professions Student Loan4.4. Private (alternative) LoanPrivate (alternative) Loan5.5. UCD SVM Student Loan ProgramUCD SVM Student Loan Program

Depending on financial need, students may receive Depending on financial need, students may receive more than one type of aidmore than one type of aid

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Loan DefermentsLoan Deferments No principal and/or interest payment requiredNo principal and/or interest payment required

Deferment forms available from loan Deferment forms available from loan servicerservicer

Loans from previous schools? Request Loans from previous schools? Request in-school deferment formsin-school deferment forms

In-school full-time In-school full-time (while in school)(while in school) In-school half-timeIn-school half-time (no limit) (no limit) UnemployedUnemployed (3 year limit) (3 year limit) Economic hardshipEconomic hardship (3 year limit) (3 year limit)

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Loan ForbearanceLoan ForbearanceLoan forbearance is a temporary Loan forbearance is a temporary

postponement or reduction in paymentspostponement or reduction in payments YOUYOU must request & complete form must request & complete form

available from lender or serviceravailable from lender or servicer Forbearance is a means to avoid Forbearance is a means to avoid

delinquency, default, or a bad credit delinquency, default, or a bad credit ratingrating

But . . . But . . . interest accruesinterest accrues during during forbearance and the forbearance and the original repayment original repayment period is not extendedperiod is not extended

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Cancellation of Your LoanCancellation of Your Loan

If you become If you become totallytotally andand permanentlypermanently disabled after loans are taken… or disabled after loans are taken… or

Upon your deathUpon your death

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Before you borrow . . .Before you borrow . . . There may be ways to reduce your costs There may be ways to reduce your costs

so you don’t have to borrow as muchso you don’t have to borrow as much

You can apply for a loan anytime You can apply for a loan anytime throughout the school year (but within 8 throughout the school year (but within 8 weeks before the end of the year)weeks before the end of the year)

Here are some tips that may help you Here are some tips that may help you reduce the amount you have to borrow...reduce the amount you have to borrow...

25

Saving TipsSaving Tips Buy used booksBuy used books Use only one credit cardUse only one credit card Pay off credit card balance every Pay off credit card balance every

monthmonth Take advantage of free activities Take advantage of free activities

(biking, lectures, tennis, reading, (biking, lectures, tennis, reading, hiking, etc.)hiking, etc.)

Get a roommateGet a roommate Cook your mealsCook your meals

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Saving TipsSaving Tips Clean your apartment to get your Clean your apartment to get your

deposit backdeposit back Use email instead of long distance callsUse email instead of long distance calls No cell phone, call waiting, cable TV, No cell phone, call waiting, cable TV,

DS/T1 line, pagerDS/T1 line, pager Use the library Use the library Sign up for utility’s balanced payment Sign up for utility’s balanced payment

planplan Negotiate your rentNegotiate your rent Keep your pets to a minimumKeep your pets to a minimum

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Credit Cards . . . Credit Cards . . . There are 1 billion cards in circulation; nearly There are 1 billion cards in circulation; nearly 4 cards for 4 cards for

every US citizenevery US citizen 70%70% of all card holders of all card holders carry a revolving balancecarry a revolving balance every every

month, paying min. amt. duemonth, paying min. amt. due Example: Example:

$1,000 debt $1,000 debt pay minimum amount due every month (2% or $10pay minimum amount due every month (2% or $10will take 19 years to pay off $1,000 and cost $1,900 in will take 19 years to pay off $1,000 and cost $1,900 in

interest ($2,900 total cost of $1,000 purchase)interest ($2,900 total cost of $1,000 purchase) Pay off credit card debt, then pay off balance each monthPay off credit card debt, then pay off balance each month

28

Increase IncomeGet a Job!Get a Job!

SummerSummerSWEPSWEP: : www.cvma.netwww.cvma.net

School YearSchool YearUCD Student Employment UCD Student Employment Center:Center:

http://jobs.ucdavis.eduhttp://jobs.ucdavis.edu

UCD Human Resources: UCD Human Resources: http://www.hr.ucdavis.eduhttp://www.hr.ucdavis.edu

OtherOther

29

Let’s look at a real life case . . .Let’s look at a real life case . . . Student just graduated from UCD’s School of Student just graduated from UCD’s School of

Veterinary Medicine and borrowed Veterinary Medicine and borrowed $74,000$74,000 in subsidized and unsubsidized Direct Loans in subsidized and unsubsidized Direct Loans (maximum for all 4 years)(maximum for all 4 years)

What are his/her options? First job pays What are his/her options? First job pays $60,000 and making payments under the $60,000 and making payments under the Standard payment plan*?Standard payment plan*?

*Standard payment plan: fixed monthly amount, 10 years *Standard payment plan: fixed monthly amount, 10 years maximummaximum

Worse CaseGross income $60,000 $5,000

Annual Monthly

- LessTaxes & soc. sec (33%) $19,800 - $ 1,650Rent -$ 1,000Food (in & restaurant) (~$20/day) -$ 600Utilities -$ 150Telephone -$ 75

Student loan repayment (under standard plan) -$ 908 Car (payment, insurance, gas, maintenance) -$ 250

Clothes, personal, gifts, etc. -$ 100

Recreation, bad habits, etc. -$ 50

Total expensesTotal expenses - $ 4,783 - $ 4,783

Difference (discretionary income) $ 217Student borrowed $74,000 for a DVM degree at UC Davis.

Worse caseGross income $60,000 $5,000

Annual Monthly

- LessTaxes & soc. sec (33%) $14,850 $ 1,238Rent $ 1,000Food (in & restaurant (~$20/day) -$ 600Utilities $ 150Telephone $ 75

Student loan repayment (under standard plan)Student loan repayment (under standard plan) $ 908$ 908

Car (payment, insurance, gas, maint.) $ 250Clothes, personal, gifts, etc. $ 100

Recreation, bad habits, etc. $ 50 Total expenses $ 4,783

Difference (discretionary income) $ 217 (<5%)

Student borrowed $74,000 for a DVM degree at UC Davis.


Annual Monthly

- LessTaxes & soc. sec (33%) $19,800 - $ 1,650RentRent $ 1,000$ 1,000Food (in & restaurant) (~$20/day) -$ 600Utilities $ 150Telephone $ 75

Student loan repayment (under standard plan) $ 908 Car (payment, insurance, gas, maint.) $ 250

Clothes, personal, gifts, etc. $ 100

Recreation, bad habits, etc. $ 50

Total expenses $ 4,783



Annual Monthly

- LessTaxes & soc. sec (33%) $19,800 - $ 1,650Rent $ 1,000Food (in & restaurant) (~$20/day) -$ 600



Annual Monthly

- LessTaxes & soc. sec (33%) $19,800 - $ 1,650Rent $ 1,000Food (in & restaurant) (~$20/day) -$ 600

Equals One Steve’s Medium Pizza daily for 30 Equals One Steve’s Medium Pizza daily for 30 days, no beverages, no other fooddays, no beverages, no other food

= Food available for 33% of your breakfast, lunch, = Food available for 33% of your breakfast, lunch, and dinner mealsand dinner meals


35

Cost of BorrowingDirect Loan Monthly Repayment Schedule

Loan Amount # Payments Payment Total Loan Amount # Payments Payment Total $10,000$10,000 120120 $122 $122 $14,640$14,640$20,000$20,000 120120 $245 $245 $29,400$29,400$30,000$30,000 120120 $368 $368 $44,160$44,160$40,000$40,000 120120 $491 $491 $58,920$58,920$50,000$50,000 120120 $613 $613 $73,560$73,560$60,000$60,000 120120 $736 $736 $88,320$88,320$70,000$70,000 120120 $859 $859 $103,080 $103,080Assumes Standard 10 year repayment schedule at capped rate of 8.25% ($122.43 per month Assumes Standard 10 year repayment schedule at capped rate of 8.25% ($122.43 per month

per $1,000 @ 8.25%)per $1,000 @ 8.25%)

25-30 year repayment schedules lower monthly payments and 25-30 year repayment schedules lower monthly payments and increase interest costsincrease interest costs

36

Disposable Income vs. DebtDisposable Income vs. Debt((33% to taxes/withholding)33% to taxes/withholding)

Monthly Mo Pretax $60,000Debt Payments Earnings Salary

$30,000 $368 $549 $53,412

$50,000 $613 $915 $49,021

$74,000 $908 $1,355 $43,740

$90,000 $1,004 $1,499 $42,018

37

Instead of the Direct Loan standard loan Instead of the Direct Loan standard loan payment, you can request:payment, you can request:

•Income Sensitive RepaymentIncome Sensitive Repayment •pay interest only for 1 year (may pay interest only for 1 year (may reapply for up to 5 years)reapply for up to 5 years)

•Graduated RepaymentGraduated Repayment•payments increase every 2 years up to payments increase every 2 years up to 30 years30 years

38

Instead of the Direct Loan standard loan Instead of the Direct Loan standard loan payment, you can request:payment, you can request:

•Extended Repayment**Extended Repayment**•12 - 30 years pay plan, based on amount 12 - 30 years pay plan, based on amount borrowedborrowed

•Income Contingent**Income Contingent**•pay 4% of income first 5 years, up to 25 yearspay 4% of income first 5 years, up to 25 years

** Extended and Income Contingent repayment options are ** Extended and Income Contingent repayment options are currently available for Direct Loans onlycurrently available for Direct Loans only

39

Monthly Payments go Down With Monthly Payments go Down With Longer Repayment Periods & Longer Repayment Periods &

Lower Interest RatesLower Interest Rates

$-$20$40$60$80

$100$120$140

10 yrs 15yrs 25 yrs 30 yrs

5%8%

Loan Term

5%8%

Monthly Payments per $10,000Monthly Payments per $10,000

40

Interest Paid Increases with Interest Paid Increases with Longer TermsLonger Terms

$-$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000


Loan Term

Annual PayBorrowedInterest

Summary per $10,000 @ 8%Summary per $10,000 @ 8%

41

Interest Paid Increases with Interest Paid Increases with Longer Terms & Higher RatesLonger Terms & Higher Rates

$-

$5,000

$10,000

$15,000

$20,000


5%

8%

Loan Term

Total Interest per $10,000Total Interest per $10,000

42

If you don’t repay your loan . . If you don’t repay your loan . . Lose your deferment and forbearance optionsLose your deferment and forbearance options May not be eligible for further financial aidMay not be eligible for further financial aid Academic transcripts may be withheldAcademic transcripts may be withheld You will be reported to credit bureau, You will be reported to credit bureau,

damaging your credit recorddamaging your credit record Your federal and state tax refunds may be Your federal and state tax refunds may be

garnisheedgarnisheed Your employer may withhold part of wagesYour employer may withhold part of wages Your car and other possessions may be Your car and other possessions may be

repossessed and sold to pay your loansrepossessed and sold to pay your loans

43

Borrowing is scary business, but . . .Borrowing is scary business, but . . . A loan is an investment in you and your futureA loan is an investment in you and your future The terms and repayment options are very The terms and repayment options are very

attractive and sensitive to the needs of studentsattractive and sensitive to the needs of students

WWith deferments, ith deferments, forbearance, forbearance, consolidation, and up consolidation, and up to 5 repayment to 5 repayment options, there is options, there is no no reason for any reason for any student to become student to become delinquent or go into delinquent or go into default on her/his default on her/his student loan.student loan.

44

Federal Loan Consolidation ConsolidateConsolidate all federal educational loansall federal educational loans into one new into one new

loan and lower monthly paymentsloan and lower monthly payments Only one payment each monthOnly one payment each month Up to Up to 30 years to repay30 years to repay InterestInterest either: either:

a) weighted average of all loans or a) weighted average of all loans or b) variable rate with a cap of 8.25% b) variable rate with a cap of 8.25% (contact lender)(contact lender)

No feesNo fees to consolidate to consolidate No penaltyNo penalty for early payment for any loans for early payment for any loans Website: Website: http://loanconsolidation.ed.govhttp://loanconsolidation.ed.gov

45

Helpful Web Sites FAFSA on the Web: FAFSA on the Web: http://www.fafsa.ed.gov/ http://www.fafsa.ed.gov/ Your PIN #: Your PIN #: www.pin.ed.govwww.pin.ed.gov

To electronically sign your FAFSA To electronically sign your FAFSA To access your student loansTo access your student loans

Direct Loans: Direct Loans: http://www.ed.gov/DirectLoan/http://www.ed.gov/DirectLoan/ UCD Graduate Financial Aid OfficeUCD Graduate Financial Aid Office

http://faoman.ucdavis.edu/gradfao.htmhttp://faoman.ucdavis.edu/gradfao.htm National Student Loan Data System (NSLDS)National Student Loan Data System (NSLDS)

www.nslds.ed.govwww.nslds.ed.gov Loan Consolidation: Loan Consolidation: http://loanconsolidation.ed.govhttp://loanconsolidation.ed.gov Alternative Loans: Alternative Loans: http://www.estudentloan.comhttp://www.estudentloan.com

46

10 Tips After You GraduateContinue to live like a studentContinue to live like a studentTransfer at least 10% of your gross salary Transfer at least 10% of your gross salary

from paycheck to savingsfrom paycheck to savingsContribute to a 401(k) or IRA - to the Contribute to a 401(k) or IRA - to the

max.max.Buy used carsBuy used carsBuy no-load mutual fundsBuy no-load mutual funds

47

10 Tips After You Graduate

Pay off loans as soon as possiblePay off loans as soon as possible If you have children, give them the best If you have children, give them the best

education education Live minimally but take care of your stuffLive minimally but take care of your stuff Pay off your mortgage by the time you Pay off your mortgage by the time you

retireretire Invest through a discount brokerInvest through a discount broker

48

Establish an A-1 Credit RatingEstablish an A-1 Credit Rating Pay your bills on time to maintain a good credit Pay your bills on time to maintain a good credit

recordrecord If you get in trouble, contact your creditors and If you get in trouble, contact your creditors and

make arrangements to pay something to show make arrangements to pay something to show good faithgood faith

Avoid using credit cards unless you pay them off Avoid using credit cards unless you pay them off every monthevery month

Reserve consumer credit for major purchases Reserve consumer credit for major purchases (car or house)(car or house)

49

Managing Your CreditManaging Your Credit Check your credit rating annually… adjust any errors Check your credit rating annually… adjust any errors

immediatelyimmediately Avoid total debt payments exceeding Avoid total debt payments exceeding 35%35% of income of income National Credit Bureaus National Credit Bureaus

800-685-1111 Equifax – 800-685-1111 Equifax – www.equifax.com www.equifax.com 888-397-3742 Experian 888-397-3742 Experian -- -- www.experian.com www.experian.com 800-888-4213 TransUnion (PA) – 800-888-4213 TransUnion (PA) –

www.transunion.comwww.transunion.com Complaints or help to resolve problem?Complaints or help to resolve problem?

202-326-2222 Federal Trade Commission202-326-2222 Federal Trade Commission

50

InsuranceInsurance

Insure your possessions, car, and your healthInsure your possessions, car, and your health Complete a detailed inventory of what you ownComplete a detailed inventory of what you own Take photos of your possessionsTake photos of your possessions Keep the list and photos in a safe deposit box Keep the list and photos in a safe deposit box

or fire-proof safeor fire-proof safe Term-life insurance is cheaper than whole lifeTerm-life insurance is cheaper than whole life Regularly review your beneficiariesRegularly review your beneficiaries

51

TaxesTaxes

Get organizedGet organized (folder, file drawer or paper (folder, file drawer or paper bag) If eligible, open a 401(k) or IRA and bag) If eligible, open a 401(k) or IRA and fund itfund it

Order IRS Publication 17 (800-TAX-FORM)Order IRS Publication 17 (800-TAX-FORM) Get forms and help on the web:Get forms and help on the web:

www.irs.govwww.irs.gov Automatic filing extension to August 15thAutomatic filing extension to August 15th Keep your records for 5 yearsKeep your records for 5 years

April 15th

52

Your Biggest Tax BreaksYour Biggest Tax Breaks

Exclusion of income of retirement plan Exclusion of income of retirement plan contributions & earnings (IRA, 401k, etc.)contributions & earnings (IRA, 401k, etc.)

Exclusion of employer contribution for insuranceExclusion of employer contribution for insurance

Interest deductions for home mortgageInterest deductions for home mortgage

Exclusion of state & local income & property Exclusion of state & local income & property taxestaxes

Accelerated depreciation on machinery & Accelerated depreciation on machinery & equipmentequipment

53

Your Biggest Tax BreaksYour Biggest Tax Breaks

Partial exclusion of social security benefitsPartial exclusion of social security benefits

No income tax from appreciation on assets at No income tax from appreciation on assets at deathdeath

Tax exclusion on capital gains on home salesTax exclusion on capital gains on home sales

Charitable contribution deductionsCharitable contribution deductions

Deduction of interest on educational loansDeduction of interest on educational loans

Deductions for real estate taxesDeductions for real estate taxes

54

Savings Programs Risk-free savings (savings accounts, money Risk-free savings (savings accounts, money

market funds, certificates of depositmarket funds, certificates of deposit U.S. Savings Bonds (tax-free earnings)U.S. Savings Bonds (tax-free earnings) Mutual Funds (pooled investors’ funds)Mutual Funds (pooled investors’ funds) Stocks (potential for long-term growth)Stocks (potential for long-term growth) Zero Coupon Bonds (purchased at discount)Zero Coupon Bonds (purchased at discount) Insurance program (annuities, whole life)Insurance program (annuities, whole life) Company retirement plans (401k, etc.)Company retirement plans (401k, etc.)

55

The Secret of Compounding Interest

You earn interest income on your You earn interest income on your original investment and . . .original investment and . . .

also earnalso earn

interest on interestinterest on interest

56

The Power of CompoundingThe Power of Compounding72/Interest Rate = doubling period72/Interest Rate = doubling period

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40

@ 5% Your money doubles in 14.4 years@ 5% Your money doubles in 14.4 years

Assumes an 5% pretax return and reinvesting all earnings.

2X 2X2X

$2,000 becomes $14,080 in 40 years @ 5%

57

The Power of CompoundingThe Power of Compounding72/Interest Rate = doubling period72/Interest Rate = doubling period

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000$22,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40

+ 1% in interest+ 1% in interest

Higher interest shortens the doubling period 72/6=12 years

Assumes an 6% pretax return and reinvesting all earnings.

2X 2X 2X 2X

$2,000 = $20,571 in 40 years @ 6%

58

Tax-Deferred ProgramsTax-Deferred ProgramsPersonal Financial TreasuresPersonal Financial Treasures 401(k), 403(b), IRA, etc.401(k), 403(b), IRA, etc. Unequaled tax benefitsUnequaled tax benefits

contributions reduce taxable income dollar for contributions reduce taxable income dollar for dollardollar

profits earned on investments grow untaxed until profits earned on investments grow untaxed until withdrawalwithdrawal

start a 401(k), etc. as soon as you canstart a 401(k), etc. as soon as you can Many companies Many companies matchmatch employee contribution (.50 employee contribution (.50

for every dollar, up to 6% of salary)for every dollar, up to 6% of salary)

59

InvestingInvesting The only way to get money to invest is to The only way to get money to invest is to save save

regularlyregularly The only way to save regularly is to The only way to save regularly is to spend less spend less

than you earnthan you earn Establish an emergency fund firstEstablish an emergency fund first Don’t invest in something you don’t understandDon’t invest in something you don’t understand Be skeptical . . . if it sounds too good to be true, it Be skeptical . . . if it sounds too good to be true, it

probably isprobably is Don’t put all your eggs in one basketDon’t put all your eggs in one basket

60

Big Retirement IssuesBig Retirement Issues We’re living longerWe’re living longer We need to anticipate (and beat) inflationWe need to anticipate (and beat) inflation At what age do you want to retire?At what age do you want to retire? Don’t count on your employer or the Don’t count on your employer or the

government (social security or pensions) government (social security or pensions) for retirement benefits for retirement benefits

62

Cumulative Investment Returns & InflationCumulative Investment Returns & Inflation

0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

5 years 10 years 15 years 20 years

StocksBondsTreasury BillsInflation

Source: T. Rowe Price Associates. For period ending 9/93. Chart does not necessarily predict future results.

Stocks win!

63

Financial SecurityFinancial Security Paying off your student loansPaying off your student loans Buying a homeBuying a home Educating your childrenEducating your children Meeting adversaries of life (unemployment, Meeting adversaries of life (unemployment,

disability, emergencies)disability, emergencies) Retiring comfortably, not running out of Retiring comfortably, not running out of

moneymoney

Yes, you can!Yes, you can!

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