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| Name: | Sample Student | | | | | Date: | June 3, 2019 | | | | | | | | 43 |
| Forecasting Retirement Income |
| Purpose: To determine the amount needed to save each year to have the necessary funds to cover retirement living costs. |
| Financial Planning Activities: Estimate the information requested below. |
| Suggested Websites: | | www.ssa.gov | | | | www.pensionplanners.com | | | | www.choosetosave.org |
| Suggested App: | | RetirePlan |
| Estimated annual retirement living expenses | | | | | | | | | | | | | | | Your Personal Financial Plan |
| Estimated annual living expenses if you retired today >>>>>>>>>>>>>>>>>> | | | | | | | $48,000 |
| Future value of living expenses assuming you will retire in | | | | | 40.00 | years | | | | **This "future value factor" can be estimated using the tables in Exhibit 1-A of the Chapter 1 Appendix. |
| and your living expenses will rise at an annual rate of | | | | | 3.00% | X | 3.262038 |
| Projected annual retirement living |
| expenses adjusted for inflation -------------------------------------------------------------------------- | | | | | | | | | | | (A) | $156,577.81 |
| Estimated annual income at retirement |
| Social Security income: | | http://www.ssa.gov/estimator/ | | | >>>>>>>>>>>>> | | $18,000.00 |
| Company pension and personal retirement account income >>>>>>>>>>>>> | | | | | | | $16,500.00 |
| Investment and other income >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> | | | | | | | $7,800.00 |
| Total retirement income -------------------------------------------------------------------------------------- | | | | | | | | | | | (B) | $42,300.00 |
| Annual shortfall of income after retirement (subtract B from A) --------------------------------- | | | | | | | | | | | (C) | $114,277.81 |
| Additional amount required to fund the income shortfall at retirement |
| Expected annual rate of return on invested funds before retirement >>>>>>>> | | | | | | | 8.00% | | < | This rate |
| Expected years in retirement >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> | | | | | | | 35 | | | must be greater than |
| Expected annual rate of return on invested funds after retirement >>>>>>>>> | | | | | | | 5.00% | | < | this rate. |
| Additional amount needed at retirement to fund the shortfall ------------------------------------ | | | | | | | | | | | (D) | $2,507,533.94 |
| Annual deposit required to achieve needed investment fund |
| The future annuity factor for a series of deposits for | | | | | 40.00 | years |
| *This "future value annuity factor" can be estimated using the tables in Exhibit 1-B of the Chapter 1 Appendix. | | | | at | 8.00% | interest equals | | ------------------------- | | | (E) | 259.056519 |
| Annual deposit required to accumulate the amount needed ( D ÷ E ) -------------------------------------- | | | | | | | | | | | | $9,679.49 |
| What's Next for Your Personal Financial Plan? |
| * Survey retired individuals or people close to retirement to obtain information on their main sources of retirement income. |
| * Make a list that suggests the best investment options for an individual retirement account. |
BAEK
KDH_FPF5e_PFP_Ch_14.xls
