Financial Planning

How old are you now? What age will you be when you retire? How much money will you need every month when you retire? Will you need an ever increasing amount or the same amount every month? How long will you live? Do you want to spend all of your money or do you want to leave something to your heirs?

Based on the answers to your questions above, calculate monthly balances for the life of your plan and show in graphical form. Show best case and worst case scenarios based on the margin of error in your calculations. For example, maybe you will earn 8%, maybe you will earn 12%, but you expect 10%. Growth rates and cash flows may vary.

Advanced questions (4 points):

(1 point) What if you receive Social Security benefits? How does this affect your calculations? (1 point) What if your employer matches your contributions dollar for dollar up to 100% of your salary? How does that affect your calculations? (1 point) How will taxes affect your calculations? (1 point) If you max out your Roth IRA every year and maximize your employee matching contribution in your 401(k), how does that affect your calculations?

Deliverable: A comprehensive retirement plan for your client in graphical and written form.

Show monthly balances graphically in pre and post retirement. Explain the plan to your client in words.

Show best case and worst case scenarios. Estimates of interest rates, growth rates, tax rules, social security payments, etc. are subject to error. Show the range of possible outcomes. You can create a graph with margin of error like the one below, or you can create multiple graphs.

There are sample calculations on T-square under resources/class notes/1. Topics/06. DCF analysis/Typical Retirement Problem. All calculations are from chapters 4 & 5 in your textbook.

You have to make some assumptions. Please be prepared to discuss your work.

The graph below is from a standard excel template that you see when you click “file” then “new.” This illustrates the kind of graph that I am looking for.