A. Using Excel, calculate how much you will need to live on each year during your retirement years based on an assumed inflation rate of 2%, your desired annual income in todays dollars, desired years until retirement, and years expected to live during retirement until death (research the web to help determine your life expectancy). For each year during retirement, take the prior year income times 1.02.

Example: desired annual income in todays dollars of $60,000 (PV), inflation rate of 2% (rate), years until retirement 40 years (nper), 0 payments (pmt), type = 0 end of period vs. type = 1 beginning of period)

= FV(rate,nper,pmt,pv,type)

=FV(0.02,40,0,-60000) This is the first year, then take times 1.02 for each year of retirement

Take the present value of each retirement year, at an assumed return rate during your retirement years/distribution phase (i.e. .05), and add these present values together to determine how much you will need to have saved upon retirement.

= PV(rate,nper,pmt,-FV,type)

=PV(rate in decimals, year of retirement,0,living expense that year)

Sum these present values to determine retirement savings goal.

Calculate how much you will need to contribute each year into your 401K to achieve your goals, at an assumed rate of return (i.e. .07), during your accumulation/savings years

= PMT(rate,nper,PV,FV,type)

=PMT(rate in decimals, years until retirement used above,0,total need to save from #2)

Determine whether you should use a Traditional 401k or Roth 401k using the below calculator, assumptions used in #1-3, & following assumptions:

Assumptions:

Before tax return on savings (accumulation phase) = 7%

Before tax return on savings (distribution phase) = 5%

Income tax bracket (accumulation phase) = 25%

Income tax bracket (distribution phase) = 15%

https://www.calcxml.com/do/ret10

Determine a broad asset allocation for your 401k using the below calculator:

http://money.cnn.com/tools/assetallocwizard/assetallocwizard.html

Conduct research regarding annuities at the link below (watch at least the first video under annuity videos tab). Then discuss whether you would choose to invest your own funds to live on in retirement or would choose an annuity product and why (read links under annuity basics in right column). Describe the type of annuity you would select (fixed, indexed, or variable) (read links under annuity investment type).

http://www.findyourannuity.com/Annuities/What-are-Annuities