MA.912.F.4.9Archived Standard

Calculate, compare, and contrast different types of retirement plans, including IRAs, ROTH accounts, and annuities.

Remarks

Example: Suppose you put \$5000 per year into an IRA for 40 years. If the account pays 6% per year interest, how much would you have at the end of the 40 years? If, at that time, you are in the 15% income tax bracket, how much would this be after taxes?

Suppose that, instead, you paid the tax each year on the \$5000 at your current rate of 28% and put the remaining funds in a ROTH account paying 6% interest. How much would you then have after 40 years?

Which appears to be the better option? What are some of the risks of deferring tax payments until retirement?

Example: Explain the difference between an Individual Retirement Account (IRA) and a ROTH account.

Why might somebody choose to put retirement funds in a ROTH account rather than an IRA?
General Information
Subject Area: X-Mathematics (former standards - 2008)
Body of Knowledge: Financial Literacy
Idea: Level 3: Strategic Thinking & Complex Reasoning
Standard: Individual Financial Planning - Individual Financial and Investment Planning
Date of Last Rating: 06/07
Status: State Board Approved - Archived

Related Courses

This benchmark is part of these courses.
1200500: Advanced Algebra with Financial Applications (Specifically in versions: 2014 - 2015 (course terminated))
7921022: Access Economics with Financial Literacy (Specifically in versions: 2014 - 2015, 2015 - 2018, 2018 - 2023, 2023 and beyond (current))

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