The question has excel that asked before.

Tom Wright is an HR manager at a mid-sized manufacturing company and was shocked one morning to learn he was being laid-off; the company is going to a service center delivery for HR and his position is being eliminated. His employment / severance will be maintained for six months. Tom has been very diligent in saving for his retirement and, prior to this pending termination, felt he was in good shape to retire at any time of his choosing. Tom designed his own retirement plan analysis over the past ten years, and his plan shows he and his wife Janet are in good financial shape. Instead of relying totally on his own plan, Tom and Janet decided they should consult you, a professional retirement planner, to review his plan and counsel them on how they should live their golden years. They are looking to you to answer several important questions: Is Tom's retirement plan accurate, or do you need to modify it? If the plan requires modification, will the modified plan affect the Wright's retirement goals? Tom is not ready to retire and would like to do volunteer work at a local charitable organization. Tom also is a die-hard Chicago Cubs fan, and was recently given the news that the Cubs organization is willing to let him work as a volunteer for them. This is a dream come true for Tom. He also has been offered a position with a small company working 24 hours/week as an HR specialist. This part-time position will pay $40,000 annually and offers medical benefits and participation in a 401(k) plan after one year of service. Does Tom have to accept this part-time position, or can he pursue his dream with the Cubs and also do volunteer work for the local charitable organization? Can Tom and Janet retire with the same lifestyle they are now enjoying, or will they have to make adjustments? If adjustments are necessary, what do you recommend? Additional Information Janet is age 60 and Tom became age 64 this past July. Janet has been out of the workforce for nearly 30 years as she was diagnosed with multiple sclerosis at age 30. Janet stopped working at age 35 due to her disability and has been receiving Social Security disability benefits since age 35. Tom and Janet have been married 37 and have no children, but they do have a demanding cat named Clyde. Tom worked as a human resources manager for a mid- sized engineering firm and was with the company for ten years. With ten years of service, he can now retire with retiree medical benefits receiving a 50% contribution subsidy. Medical coverage through the company ends for Tom when he is 65 and will end for Janet when she is age 65. Tom has a small defined benefit plan with this employer that is estimated to produce lifetime income of $224.00 per month for him and Janet. Other than Janet's Social Security disability benefits, there are no other major sources of income for Tom and Janet after August.

Key questions that Tom and Janet want you to answer are:

Tom's preference is to pursue hobbies, volunteer with the Cubs and work at a local charitable organization, but he is also a realist. Is Tom able to retire now without making changes to his current budget? If not, how long should he work at the proposed part-time job (which pays $40,000 annually) to meet this retirement goal?

What changes would you ask Tom and Janet make to improve their current retirement plan?

Are you comfortable with the assumptions Tom has made in constructing his retirement plan? If not, what assumption changes would you make to more accurately represent Tom and Janet's retirement liabilities?

Additional information to add:

Should we use and document our own assumptions such as taxes, growth rates, inflation rates, life expectancy, etc..? I know one of the questions is to answer questions around assumptions Tom used, but I do not actually see any of these assumptions noted.

Yes, you should consider your own assumptions based on what you think is appropriate and reasonable. Under Tom's plan, he is assuming he will have enough money to last 58.9 years. Under his plan, he is not considering the affect of inflation or growth on investments. To be charitable, maybe he believes that the growth on his investments will exactly equal the inflation rate so these two will cancel each other. If this is the case, is this a reasonable assumption? Regarding taxes, Tom missed this one and they are not a part of his plan. Will adding taxes back into the equation adversely impact his plan to the point where he will be unable to meet his retirement goals?

- Is it safe to say they live in Chicago, Illinois given Tom is a Cubs fan?

Yep, Tom and Janet live in suburban Chicago, in fact they go to my church. Knowing the Cubs track record, I question his devotion to a team that has only won one World Series in 106 years. But to quote a famous Cub fan (Jack Brickhouse) "Hey, anyone can have a bad century"

- Is it safe to assume there is no expected income from the volunteer work Tom is interested in pursing?

Yes, that is a safe assumption. But the question to address, is does he need an additional source of income to meet his retirement goals. One last comment: if he does choose to take the part-time job, he will kiss the Cub position good-bye and lose his dream. He will be unable to do both, and the Cub position will not be available to him at a future date.

- With Janet having MS, should we adjust life expectancy?

That is a tricky question. Generally speaking MS will tend to lower a person's life expectancy, but there are situations where the person with MS lives a normal life expectancy, but their life has many restrictions on what they can do. Do you think Janet's MS might influence Tom's plan in other ways?

• The trust is not a giving trust, and I am pretty certain that it is a simple revocable trust. Tom set this up in the event something happened to him, since Janet is not very money savvy. His thought was to have a trustee manage the money on her behalf should in the event of his death or incapacity. As you can tell from this description, there is no annual payout.

Key questions that Tom and Janet that need to answer:

• Tom's preference is to pursue hobbies, volunteer with the Cubs and work at a local charitable organization, but he is also a realist. Is Tom able to retire now without making changes to his current budget? If not, how long should he work at the proposed part-time job (which pays $40,000 annually) to meet this retirement goal?
• What changes would you ask Tom and Janet make to improve their current retirement plan?
• Are you comfortable with the assumptions Tom has made in constructing his retirement plan? If not, what assumption changes would you make to more accurately represent Tom and Janet's retirement liabilities?