Finance 260: Retirement Savings and Ratios

These flashcards cover key vocabulary and concepts related to retirement savings, ratios, and financial planning as presented in the lecture notes.

Retirement Savings Ratio

A measure of how much of an individual's income is saved for retirement, expressed as a percentage of gross pay.

Emergency Fund

Savings set aside to cover 3-6 months of non-discretionary expenses in case of unexpected situations.

Non-Discretionary Spending

Expenses that must be paid regardless of personal financial circumstances, such as debt payments and utilities.

Investment Assets to Gross Pay Ratio

A ratio that compares an individual's total investment assets to their gross pay, indicating how well they are doing in terms of retirement savings.

Housing Ratio 1

A measure that calculates housing costs as a percentage of gross pay, ideally less than 28%.

Housing Ratio 2

A measure that includes housing costs plus other debt payments as a percentage of gross pay, ideally less than 36%.

Savings Ratio

The ratio of total savings, including employer contributions, relative to gross income.

PITI

An acronym referring to the components of housing costs: Principal, Interest, Taxes, and Insurance.

Savings Goal

A specific amount of money that a person aims to save over a certain period, often for retirement or emergency funding.

Stock Market Return

The average annual return on investment in the stock market, historically around 10% over the long term.