Professor educates class
about benefits of financial, retirement planning
By Jamie Teibel
Summer
Editor
Sharon DeVaney, a professor of consumer sciences
and retailing, teaches retirement planning to her students. She is
trying to educate young people about early retirement planning so
that they will be able to enjoy the lives they create for themselves.
By doing interviews, her students discover that
although people have the chance to plan for retirement, they don’t.
"People aren’t very conscientious of planning for retirement,"
she said. "They have other, more important needs to accomplish."
DeVaney said the main reason people should save
for retirement is tax deferral. This means that the income tax from
the money set aside is deferred until withdrawal at retirement. If
invested, the growth is also tax deferred.
DeVaney and research assistant Yi-Wen Chien used
data from the 1998 Survey of Consumer Finances to find the causes
that influence the amount of money people put into these tax deferred
plans, through their employer or individual retirement account.
According to a compilation by J. Michael Lillich,
business writer for the Purdue News Service, DeVaney’s research
indicated a relationship between the amount being saved, taking more
financial risk, being married, having more education, being a professional,
owning a home, the amount of non-financial assets and spending less
than last year’s income.
One plan, called an individual retirement account,
or IRA, is beneficial to middle and low income wage earners. Another,
called Keogh, is more beneficial to those who are self-employed.
401K plans, offered by some employers, are plans
DeVaney says people should try to participate in because employers
will probably match some part of the wages an employee sets aside.
DeVaney said people have to be "willing
to set aside money" in order to be financially stable when it
is time for them to retire. She also said that this issue mainly applies
to young people who are getting a salary and have the chance to invest.
She encourages those who are not covered by their employer to get
an IRA as soon as possible, "When you get a job and have a full
time salary, you can get an IRA at anytime."
DeVaney suggests those without retirement plans
should ask what kinds of benefits their employer has and read the
booklets or statements provided to find as much information as possible.
If ignored, employees could be missing out on healthcare plans, retirement
plans and even education financing.
She also suggests that students take CSR 342
because "It gets you started on money management, investing and
retirement planning."
