1. John is planning for his retirement. He is currently 33 and plans to retire in...

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1. John is planning for his retirement. He is currently 33 and plans to retire in 30 years, at age 63. He expects then to live an additional 34 years, until age 97. He currently earns $100,000 per year and anticipates needing 80% of his income during retirement. Based on his Social Security benefits statement, a pessimistic estimate of his Social Security pension when he retires is $15,000 per year in today's dollars. He expects inflation to average 3% per year. Assume withdrawals during retirement are at the beginning of each year. He believes he can earn a nominal return on his retirement investments of 8% per year before retirement, and 6% per year after retirement. Use the Annuity method with the Dalton approach. A. How much income per year does he need to get from his retirement investment in the first year of retirement? (3 points) B. How much in retirement investments in nominal terms does he need to accumulate by the day he retires? Show your work. (4 pts) C. How much does he need to contribute at the end of each year he works, for 30 years, in order to accumulate enough to meet his retirement income goal? Assume he has nothing accumulated today. Show your work. (4 pts) D. Is his plan feasible? Explain your answer. (2 pts) E. What changes should he consider in order to make his retirement more feasible? (2 pts) 1. John is planning for his retirement. He is currently 33 and plans to retire in 30 years, at age 63. He expects then to live an additional 34 years, until age 97. He currently earns $100,000 per year and anticipates needing 80% of his income during retirement. Based on his Social Security benefits statement, a pessimistic estimate of his Social Security pension when he retires is $15,000 per year in today's dollars. He expects inflation to average 3% per year. Assume withdrawals during retirement are at the beginning of each year. He believes he can earn a nominal return on his retirement investments of 8% per year before retirement, and 6% per year after retirement. Use the Annuity method with the Dalton approach. A. How much income per year does he need to get from his retirement investment in the first year of retirement? (3 points) B. How much in retirement investments in nominal terms does he need to accumulate by the day he retires? Show your work. (4 pts) C. How much does he need to contribute at the end of each year he works, for 30 years, in order to accumulate enough to meet his retirement income goal? Assume he has nothing accumulated today. Show your work. (4 pts) D. Is his plan feasible? Explain your answer. (2 pts) E. What changes should he consider in order to make his retirement more feasible? (2 pts)

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A To determine how much income John needs to get from his retirement investment in the first year of retirement we need to calculate his retirement income goal Since he anticipates needing 80 of his i... View the full answer