Kwame has $5,000 in his checking and $67,200 in a money market account yielding 0.1% per year.

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Question:

Kwame has $5,000 in his checking and $67,200 in a money market account yielding 0.1% per year. Laticia has $4,300 in her checking account.

Home and Mortgage

Laticia came into the relationship owning her own apartment, where they both currently live. They love it. There’s enough space, even after the baby arrives, and so they have no plans to move. The market price of the apartments is estimated at $882,000. Laticia initially borrowed $650,000 to buy it; she currently owes $393,000 on the mortgage. It’s a 30-year fixed-rate mortgage; the monthly payment (principal and interest) is $2,973. Laticia does not remember what the interest rate is, but both agree they want to pay off that mortgage as soon as they can, feeling that owning real estate outright is the surest way to financial security. There are~14years left to pay on the mortgage, but they have been diligent in trying to pay more than they have to, and they plan to keep doing that. All rights reserved. Real estate taxes and homeowner’s insurance premiums are $800 a month. The windows are pretty drafty, so the utility bills are very high at $360 a month on average. The cost to replace the windows is estimated at $11,000, and if done, the utility bills are expected to drop to $200 a month on average.

Income tax information

Being high earners, their taxes are also high. Their federal income taxes are estimated at $130, this year, and 43the New York tax bill is expected to be $46,000.

Other expenses

Laticia and Kwame barely buy any groceries, maybe $200 worth a month. They mostly eat out and typically spend anywhere from $650 to $1,000 a month. Their clothing expenses are $250, transportation is $480, entertainment is $500, and other miscellaneous expenses are $100 a month. Despite their busy schedules, they try to go on one annual vacation together, typically spending $3,000 in total.

Student Loans

Kwame just consolidated his student loans at a 25%interest rate for 10 years. His monthly payment is $3,009. Laticia’s current student loan balances $63,000. Her monthly paymentis$1,008 and the interest is 3.9%.

Employee Benefits

As an employee of the Coney Island Hospital, Kwame has access to a pretty good benefits package. His family’s health insurance premiums are only $400 a month; he has both a short-term and a long-term disability policy heavily subsidized by the employer (his contribution being only $294 per weekly paycheck). His employer also provides free life insurance. The death benefit is three times the employee’s annual compensation. If Kwame wanted, he could buy more coverage through work, but he’d have to pay for it.

Investment and Retirement Information

Coney Island Hospital employees can participate in the Newyork City Deferred Compensation Plan (NYCDCP). The plan has both 401(k) and 457 components, both of which he could max out every year if he wanted to. Kwame heard from colleagues that the 457 plan is better (he does not know why), so he set up his contributions recently to max it out every year. His current balance is $4,200, and he has been contributing to the Traditional option only. He also has a Roth IRA with a $37,000 balance. Laticia has been contributing $4,000 a year to Pfizer’s Roth 401(k) plan lately and has accumulated $52,000 in it. Pfizer provides a generous dollar-for-dollar match of employee contributions up to 4.5% of their compensation. This matching contribution goes into the Traditional type of account; her current balance there is 24,400.67 Kwame and Laticia are somewhat more conservative investors than most others their age. They understand they need some stock exposure in order to achieve a better long-term return, but they get nervous when their investments go down. They are hoping for a long-term return of 6% while they are contributing to the accounts, and 5% while in retirement. The Adeyemi plan to retreat at the same time when Kwame is 70 and Laticia is 65 years old. Their expected monthly Social Security retirement benefits are $3,200 for Kwame and $2,600 for Laticia.

Required

Prepare a plan for a 7323-yearlong retirement period. And make a Cash flow statement and balance sheet.