Use Worksheet 14.1 to assist Stacy Eustus with her retirement planning needs. She plans to retire in 15 years, and her current household expenditures run about $50,000 per year. Stacy estimates that she’ll spend 80 percent of that amount in retirement. Her Social Security benefit is estimated at $15,000 per year, and she’ll receive $12,000 per year from her employer’s pension plan (both in today’s dollars). Additional assumptions include an inflation rate of 4 percent and a rate of return on retirement assets of 8 percent a year before retirement and 5 percent afterward. Use Worksheet 14.1 to calculate the required size of Stacy’s retirement nest egg and the amount that she must save annually over the next 15 years to reach that goal.
Answer to relevant QuestionsWhat are the main differences between fixed and variable annuities? Which type is more appropriate for someone who is 60 years old and close to retirement?Briefly describe the steps involved in the estate planning process.Define and differentiate between joint tenancy and tenancy by the entirety. Discuss the advantages and disadvantages of joint ownership. How does tenancy in common differ from joint tenancy?The two basic techniques of estate planning are(1) Dividing your estate and (2) Deferring income to minimize taxes.Describe and discuss each of these techniques.1. Does Latafat really need a will? Explain why or why not. What would happen to his estate if he were to die without a will?2. Explain to Latafat the common features that need to be incorporated into a will.3. Might the ...
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