“Taxes & Retirement: How the System Actually Works”
Audience: High school (Money Club)
Time: 35–45 minutes
Why this matters:
Most adults don’t understand taxes or retirement until they’re already losing money. This lesson fixes that early.
Utah State Standards Alignment (Explicit)
This lesson hits these Utah GFL strands:
- Income & Taxes – understanding payroll taxes, marginal tax rates
- Saving & Investing – retirement accounts, compound growth
- Financial Decision-Making – tax strategy, long-term planning
(These are required competencies for Utah graduation — this is not enrichment fluff.)
PART 1 — Taxes (15 minutes)
🔍 Mini-Lesson: 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?
Activity: Paycheck Reality Check (5 min)
Give students a hypothetical job:
$18/hour, 30 hours/week
Have them estimate:
- Gross monthly income
- What actually hits their bank account
- Where the rest goes
Point: Taxes are not optional, but strategy matters.
PART 2 — Retirement Accounts (20 minutes)
Mini-Lesson: 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)
Reality Check Questions
- Why doesn’t school usually teach this?
- Who benefits from people not understanding taxes?
- How does this connect to wealth inequality?
This is where Money Club becomes civic education, not just finance.
🧾 Exit Ticket (2 minutes)
Students answer ONE:
- Should young workers prioritize Roth or pre-tax — and why?
- What is one tax myth you believed before today?
- Why is a 457 better than people realize?