TODAY   |  July 24, 2013

Investing 101: Preparing for retirement

Whether you’re investing in a 401(k), a Roth IRA, or any other retirement plan, there is always more to know about managing it. Brian Sullivan of CNBC’s “Street Signs” quizzes the TODAY anchors on their retirement investment smarts.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> this morning on investing 101, your retirement plan from roth iras to 401(k)s, it can be overwheling. he is going to test our smarts with a quiz. we'll be competing with the help of two interns. good morning everybody.

>> good to see you.

>> is that with a you call it? test the knowledge? i call it crushing the spirit.

>> wow.

>> who is ready.

>> first of all, it is very confusing when you sit down and say where do i put me money, how do i make sure my future is solid?

>> it s. there's a lot of options. we have options. i get confused. it's easy to be confused so hopefully we can cut through the confusion and go through basic terms but in a format that does include soul crushing. i'm pulling for clare.

>> okay.

>> let's get the gavel. we're ready.

>> okay. question. i give you multiple choice if you think you know the answer i want you to break the podium. here we go. question number one and i'm ready for press your luck part two when they return. invented in 1978 this plan is a staple for american retirement investing. pension, b, 503 b, c, 401(k).

>> c.

>> c is correct.

>> boom.

>> 1,000 points, or 1 point. whatever. 5.17 points. all right. question two. investing in a roth ira maybe a smart choice for, a retirees, b, lower to middle income families, c, wealthy families.

>> corbin.

>> b.

>> b is correct. lower to middle income families designed for people who will make more later in life. they can invest over a certain amount if you make over 180,000 as a family you are barred from the roth ira . 1,000 to 1,000 . question 3. life insurance that can be used as an investment and that has a cash value is known as a, whole life. b, term life, c, long-term.

>> a.

>> a is right. whole life.

>> you can take loans against it. you guys are getting a little ague aggressive on the gavel there.

>> you told us.

>> fair enough. fair enough.

>> i like this role. here we go. if you are under 50 years old, the maximum amount pretax you can contribute to a 401(k) plan this year is a, 5,000, b, 9,999, c, 17,500.

>> corbin and al.

>> c.

>> that is correct. 17,500. if you're over 50 1/2 you can invest more.

>> if you're my age, you can forget it.

>> you're half dead.

>> this is the tie breaker.

>> this is my favorite question. i'm skipping ahead. it's going to test your math skills brown university . let's see if you can get this right.

>> i'm a humidity major.

>> perfect. if at 30 years old, you have $5,000 invested in stocks and contribute nothing else ever again. so 5,000 at 30 years old and you get an average sock market return --

>> come on.

>> i like this.

>> come on vanderbilt. 5,000 at 30, you get an average return of just 8% but nothing else is put in. when you turn 65 you will have saved on that 5 grand, a 8,000, b 45,000, c 25,000?

>> 5,000 at 30. nothing else --

>> a?

>> a is right. the magic of compound interest. if you get 8% a year.