Taxes & Retirement

How Taxes ACTUALLY Work
Tell it straight:
The U.S. has a progressive tax system
You do NOT lose money by “moving into a higher tax bracket”
Taxes come out before you ever see your paycheck
Key Concepts (no filler):
Gross pay vs Net pay
Federal income tax
Payroll taxes (Social Security & Medicare)
Marginal tax brackets (only the top portion is taxed higher)
If students leave believing “higher income = worse taxes,” the system already beat them.
Video #1 (5 min)
PBS Two Cents – “Tax Brackets Explained”
Discussion (2 min):
Why don’t people understand this?
Who benefits from this confusion?
Retirement Is a Tax Strategy
No sugar-coating:
Social Security alone = bare survival
Retirement accounts exist because the government wants you to self-fund
The Big Three (Explain Simply)
401(k)
Employer-sponsored
Money goes in before taxes
Often includes employer match (free money)
457 (Public Employees)
Similar to 401(k)
HUGE advantage: can withdraw earlier after leaving job
Common for teachers, firefighters, government workers (Utah students: pay attention)
Roth IRA / Roth 401(k)
Taxes paid now
Withdrawals later = tax-free
Ideal when you’re young / lower income
Video #2 (5 min)
What is a 401k?
Why might a young worker prefer Roth?
When would pre-tax make more sense?
Activity: The $100 Decision (7 min)
Ask:
You’re 22. You invest $100/month starting now.Your friend waits until 32 and invests more per month.
Who ends up with more at 65?
Walk them through compound growth logic (no math heavy lifting).
Lesson:Time > effort > intelligence.
PART 3 — Real-World Tie-In (5 minutes)