68 customizable lessons, aligned with National Standards, exams and more.
Read NGPF's school-by-school analysis of financial education in America today
Activities
Advocacy
Behavioral Economics
Best Of
Budgeting
Buying a Car
Career
Checking
Consumer Skills
Credit
Cryptocurrencies
Current Events
Curriculum Announcements
Economics
Entrepreneurship
Edpuzzle
ELL Resources
FinCap Friday
Gambling and Sports Betting
Insurance
Interactive
Investing
Math
Paying for College
Philanthropy
Podcasts
Press Releases
Professional Development
Question of the Day
Savings
So Expensive Series
Taxes
Teacher Talk
Ok, I have to admit that this headline caught my attention “Help! I have no ideas where my 401(k) is, or what to do with it.” The article goes on to describe an individual who has had several jobs and lost track of her 401(k)s along the way. I like the plain English language the writer uses to describe the elements of a 401(k).
Here are a few highlights:
The man responsible is Ted Benna, and he’s currently in his 70s and semi-retired on a horse farm in Pennsylvania. In 1978, he realized that a newly passed tax code — yes, section 401(k) — left a loophole for retirement savings that we’ve been exploiting ever since. Then, in 2011, he startedtelling reporters that he’d accidentally created “a monster”: a giant finance vehicle fueled by hidden fees that Americans are blithely packing their hard-earned money into, unaware that their savings are just spinning wheels in the mud. It’s all become too complicated and confusing, Benna said. People can’t understand their own retirement plans anymore.
The function of retirement plans is to dodge taxes in a way that makes you more money over time. Which taxes you dodge depends on the individual plans. For example, whatever you put into your 401(k) is “pre-tax” — i.e., the IRS hasn’t touched it yet. That means it has more oomph in the market, where more money has a snowball effect. Also, unlike a normal investment account, you don’t have to pay taxes on your 401(k)’s growth every year. Of course, you will get taxed on those dollars at some point — namely, when you take them out of your 401(k) after you retire.
Christine Benz, the director of personal finance at Morningstar, essentially studies this stuff for a living and makes investing very simple: “Either a pure index fund or a target date fund is a fine idea; you can’t go wrong with those,” she says. The beauty of both of these options is that they’re low-fee and low-maintenance — and you can pick them out on a confusing drop-down menu of investment, which is saying a lot.
A target date fund is particularly great for people who want to stay hands-off, because the account is managed based on your age and life stage, so the balance of investments shifts automatically as you get older. (When you get closer to retirement, your investments should be very low-risk, but when you’re younger, you can afford to try riskier stocks that’ll hopefully get bigger results — to return to the gym metaphor, you can try trapeze gymnastics when you’re 29, but at 58 you’re be better off with Pilates.) As Christine put it, “A target date fund is the ultimate in do-it-for-me investing. Once you’re participating, inertia is your friend.” Music to my ears.
________
Since most young people’s first experience with investing will come through a 401(k) plan, we created a case study, Compound My Interest in 401(k) Plans, to give them practice in making these important life decisions.
NGPF Podcast: Tim Talks To Kristin Wong, Prolific Financial Blogger
These 16 Pages Will Teach Your Students All They Need to Know About Investing...
Question of the Day: If you invested $1,000 in Netflix stock 10 years ago, what would it be worth now?
Question of the Day: What percent of teens have started investing?
Question of the Day: What is the median and average retirement savings for people under 35?
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
Join the more than 12,000 teachers who get the NGPF daily blog delivered to their inbox:
MOST POPULAR POSTS
1
Question of the Day: How much did Taylor Swift's Eras Tour gross during its two-year, 149 concert run?
2
Get Festive with NGPF Resources and Activities
3
Useful Personal Finance Movies and Documentaries with Worksheets
4
NEW Holiday Personal Finance Posters
5
NEW NGPF Review Materials Released
Before your subscription to our newsletter is active, you need to confirm your email address by clicking the link in the email we just sent you. It may take a couple minutes to arrive, and we suggest checking your spam folders just in case!
Great! Success message here
New to NGPF?
Save time, increase engagement, and teach life-changing financial skills with NGPF’s free curriculum
1.Register for a free TeacherAccount
2.ExploreSemester Course
3.Findstudent favorites
4.LeverageNGPF Academy
Your new account will provide you with access to NGPF Assessments and Answer Keys. It may take up to 1 business day for your Teacher Account to be activated; we will notify you once the process is complete.
Thanks for joining our community!
The NGPF Team
Complete the form below to access exclusive resources for teachers. Our team will review your account and send you a follow up email within 24 hours.
To speed up your verification process, please submit proof of status to gain access to answer keys & assessments.
Acceptable information includes:
Acceptable file types: .png, .jpg, .pdf.
Once you submit this form, our team will review your account and send you a follow up email within 24 hours. We may need additional information to verify your teacher status before you have full access to NGPF.
Take the quiz to quickly find the best resources for you!