7. Robin is planning for her retirement. She is currently 37 years old and plans to...
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7. Robin is planning for her retirement. She is currently 37 years old and plans to retire at age 62 and live until age 97. Robin currently earns $120,000 per year and anticipates needing 80% of her income during retirement. She anticipates Social Security will provide her with $15,000 per year at age 62, leaving her with required savings to provide $81,000 ($120,000 x 0.80 - $15,000) annually during retirement. She is willing to take some investment risk. Her pre-retirement portfolio will be 80% stocks and 20% bonds and their post retirement portfolio will be 60% stocks and 40% bonds. Large company stocks have averaged 9% annually, and intermediate term government bonds have averaged 5% (please calculate the weighted average expected return of your portfolios). She believes inflation will be 3% per year. How much must Robin save at the end of each year if she wants to make her last savings payment at age 62 to meet her retirement goal? (2.5 points) 9. Assume the same facts as in question 7 except that Robin would like to have the same purchasing power in retirement savings at age 97 as she does at age 62 when she retires. How much must Robin save at the end of each year if she wants to make her last savings payment at age 62 to meet her retirement goal, assuming she wants to maintain the original purchasing power of her capital balance? (2.5 points) 7. Robin is planning for her retirement. She is currently 37 years old and plans to retire at age 62 and live until age 97. Robin currently earns $120,000 per year and anticipates needing 80% of her income during retirement. She anticipates Social Security will provide her with $15,000 per year at age 62, leaving her with required savings to provide $81,000 ($120,000 x 0.80 - $15,000) annually during retirement. She is willing to take some investment risk. Her pre-retirement portfolio will be 80% stocks and 20% bonds and their post retirement portfolio will be 60% stocks and 40% bonds. Large company stocks have averaged 9% annually, and intermediate term government bonds have averaged 5% (please calculate the weighted average expected return of your portfolios). She believes inflation will be 3% per year. How much must Robin save at the end of each year if she wants to make her last savings payment at age 62 to meet her retirement goal? (2.5 points) 9. Assume the same facts as in question 7 except that Robin would like to have the same purchasing power in retirement savings at age 97 as she does at age 62 when she retires. How much must Robin save at the end of each year if she wants to make her last savings payment at age 62 to meet her retirement goal, assuming she wants to maintain the original purchasing power of her capital balance? (2.5 points)
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Answer rating: 100% (QA)
Weighted Average Expected Return Weight of Asset 1 Expected Return of Asset 1 Weight of Asset 2 Expected Return of Asset 2 For Robins preretirement portfolio Expected Return of Stocks 9 Expected Retur... View the full answer
Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
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