5. Funding the nest egg shortfall Aa Aa E Determining Retirement Shortfall Yuan and Alex are taking a personal finance course. They have calculated their projected retirement income and investment needs. Based on their calculations and taking into account their Social Security and pension incomes, they have a projected shortfall of $7,500.00 per year. They have 35 years to retirement. The impact of the inflation factor Continuing their worksheet, they consult a friend, economics professor Dr. Wu, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops. Calculate their inflation-adjusted annual shortfall at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Wu. Inflation-adjusted annual shortfall at 5%:$ Inflation-adjusted annual shortfall at 6%:$ You can use the following dropdown menu to identify the necessary future value interest factors. Future Value Interest Factors Future Value Future Value of an Annuity Funding the shortfall In addition to determining a realistic inflation rate, Yuan and Alex talked to their financial advisor to understand rates of return now and after they reach retirement. First, their advisor projects that in 35 years, they can realistically eam 5% on their nest egg. Second, he recommends an investment vehicle that is eaming 6% annually. Using the inflation-adjusted annual shortfall at 5% as previously calculated, determine the following: Amount of retirement funds required at 5%: 5 Annual savings required to fund nest egg at 6%: $ You can use the following dropdown menu to access a table of future value interest factors. Future Value Interest Factors 5. Funding the nest egg shortfall Aa Aa E Determining Retirement Shortfall Yuan and Alex are taking a personal finance course. They have calculated their projected retirement income and investment needs. Based on their calculations and taking into account their Social Security and pension incomes, they have a projected shortfall of $7,500.00 per year. They have 35 years to retirement. The impact of the inflation factor Continuing their worksheet, they consult a friend, economics professor Dr. Wu, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops. Calculate their inflation-adjusted annual shortfall at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Wu. Inflation-adjusted annual shortfall at 5%:$ Inflation-adjusted annual shortfall at 6%:$ You can use the following dropdown menu to identify the necessary future value interest factors. Future Value Interest Factors Future Value Future Value of an Annuity Funding the shortfall In addition to determining a realistic inflation rate, Yuan and Alex talked to their financial advisor to understand rates of return now and after they reach retirement. First, their advisor projects that in 35 years, they can realistically eam 5% on their nest egg. Second, he recommends an investment vehicle that is eaming 6% annually. Using the inflation-adjusted annual shortfall at 5% as previously calculated, determine the following: Amount of retirement funds required at 5%: 5 Annual savings required to fund nest egg at 6%: $ You can use the following dropdown menu to access a table of future value interest factors. Future Value Interest Factors