QS Ch 14: Assignment - Planning for Retirement Attempts: 0 0 K eep the Highest: 0/4 5. Funding the nest egg shortfall Determining Retirement Shortfall Rodrigo and Jesse have 25 years to retirement. They are taking a personal finance course and 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 $5,500.00 per year. Use the following tables to answer the questions about future value interest Interest Factors Future Value Interest Factors Future Value of an Annuity Periods 3.00% 1.810 2.090 2.420 2.810 3.260 5.00% 6.00% 2.653 3.210 3.386 4.290 4.3225.740 5.516 7.690 7.040 10.280 8.00% 4.661 6.848 10.062 14.785 21.724 9.00% 5.600 8.620 13.260 20.410 31.410 Ch 14: Assignment - Planning for Retirement Interest Factors--Future Value Interest Factors -Future Value of an Annuity Periods 9.00% 5.00% 33.066 47.726 6.00% 36.780 8.00% 45.762 25 84.700 3.00% 26.870 36.460 47.570 60.460 75.400 66.438 54.860 79.060 111.430 154.760 73.105 113.282 172.314 259.052 90.318 120.797 215.700 337.870 The impact of the inflation factor Continuing their worksheet, they consult a friend, economics professor Dr. Blakely, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops. Complete the following table by calculating inflation-adjusted annual shortfall for Rodrigo and Jesse at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Blakely Interest rate (Percent) Inflation-adjusted annual shortfall (Dollars) Complete the following table by calculating inflation-adjusted annual shortfall for Rodrigo and Jesse at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Blakely. Interest rate (Percent) Inflation-adjusted annual shortfall (Dollars) Funding the shortfall In addition to determining a realistic inflation rate, Rodrigo and Jesse talked to their financial advisor to understand rates of return now and after they reach retirement. First, their advisor projects that in 25 years, they can realistically earn 5% on their nest egg. Second, he recommends an Investment vehicle that is earning 6% annually. Complete the following table using the inflation-adjusted annual shortfall at 5% as previously calculated. Interest rate (Percent) Amount of retirement funds required (Dollars) QS Ch 14: Assignment - Planning for Retirement Attempts: 0 0 K eep the Highest: 0/4 5. Funding the nest egg shortfall Determining Retirement Shortfall Rodrigo and Jesse have 25 years to retirement. They are taking a personal finance course and 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 $5,500.00 per year. Use the following tables to answer the questions about future value interest Interest Factors Future Value Interest Factors Future Value of an Annuity Periods 3.00% 1.810 2.090 2.420 2.810 3.260 5.00% 6.00% 2.653 3.210 3.386 4.290 4.3225.740 5.516 7.690 7.040 10.280 8.00% 4.661 6.848 10.062 14.785 21.724 9.00% 5.600 8.620 13.260 20.410 31.410 Ch 14: Assignment - Planning for Retirement Interest Factors--Future Value Interest Factors -Future Value of an Annuity Periods 9.00% 5.00% 33.066 47.726 6.00% 36.780 8.00% 45.762 25 84.700 3.00% 26.870 36.460 47.570 60.460 75.400 66.438 54.860 79.060 111.430 154.760 73.105 113.282 172.314 259.052 90.318 120.797 215.700 337.870 The impact of the inflation factor Continuing their worksheet, they consult a friend, economics professor Dr. Blakely, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops. Complete the following table by calculating inflation-adjusted annual shortfall for Rodrigo and Jesse at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Blakely Interest rate (Percent) Inflation-adjusted annual shortfall (Dollars) Complete the following table by calculating inflation-adjusted annual shortfall for Rodrigo and Jesse at 5%. Then recalculate the shortfall based on the top rate provided by Dr. Blakely. Interest rate (Percent) Inflation-adjusted annual shortfall (Dollars) Funding the shortfall In addition to determining a realistic inflation rate, Rodrigo and Jesse talked to their financial advisor to understand rates of return now and after they reach retirement. First, their advisor projects that in 25 years, they can realistically earn 5% on their nest egg. Second, he recommends an Investment vehicle that is earning 6% annually. Complete the following table using the inflation-adjusted annual shortfall at 5% as previously calculated. Interest rate (Percent) Amount of retirement funds required (Dollars)