The Fosters definitely want to plan for retirement. They would love to retire at 63, with 80%
Fantastic news! We've Found the answer you've been seeking!
Question:
The Fosters definitely want to plan for retirement. They would love to retire at 63, with 80% replacement of preretirement income. But they understand that they may have to wait longer if that is not a possibility.
Assumptions:
In your conversations with the Fosters and from your research you have discovered:
- Inflation (CPI) is expected to be 3%
- The rate of return on their investments and any additional retirement savings is expected to be 8%
- Both have similar 401(k) plans at their respective employers. Both plans have an employer match of 100% for the first 3% of salary David contributes, and 50% for any contributions greater than 3% up to 5%. Briana would like to start contributing but hasn't gotten around to it. David contributes 10%.
- Based on their family history, they both expect to live to age 95
- Their combined Social Security Benefits are expected to be (in today's dollars):
- Age 63 - $36,450
- Age 65 - $42,120
- Age 67 - $48,600
- You should be able to perform all calculations using the methods found in your textbook.
- Calculate the amount they would have to invest today in a lump sum to fully fund retirement at Age 63. Show the steps performed to get your answer. In your paper, discuss with them whether they have assets to complete this.
- Calculate the annual savings amount required for the Fosters to retire at Ages 63, 65 and 67. Show the steps performed to get your answers.
- Provide a written explanation of the results, including your assumptions, explained as if you were explaining it to the client. Charts/Tables may help the Fosters understand better.
- Discuss in your paper a couple of options of what types of accounts they might use and how much they could save in each.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: