finance homework

NAMES(S) ___________________________________ DATE ______________

RETIREMENT NEEDS ITEM RETIREMENT GOAL

1. Annual income needed at retirement in today’s dollars. 2. Estimated Social Security retirement benefit in today’s dollars.

Use the amount that is closest to the age at which you plan to retire (example: 1022 a month x 12 mo. = $12,264). If you need to request a statement, call SSA at (800)772-1213.

3. Defined benefit plan from an employer (ask your retirement benefit advisor how much you will receive annually in today’s dollars). This is not a 401(k)-type plan. Those plans go on line 7.

4. Additional annual income needed at retirement in today’s dollars. Subtract lines 2 and 3 from line 1.

5. Choose the number closet to the age you plan to retire. Enter the factor on line 5.

Age of retirement 55 60 65 70

Factor 21.0 18.9 16.4 13.6 6. Multiply line 4 by line 5. This is your retirement goal.

AMOUNT ALREADY AVAILABLE AS SAVINGS/INVESTMENTS 7. Employer savings plans, such as a 401(k). 8. IRAs and Keoghs. 9. Other investments, such as mutual funds, stocks, bonds, real

estate and other assets available for retirement. 10. Total retirement savings (add lines 7, 8, and 9).

FUTURE VALUE OF CURRENT SAVINGS/INVESTMENTS 11. Choose the number in the table that is the closest to the

number of years until you retire. Enter the factor on line 11.

Years to retirement 5 10 15 20 25 30 40

Factor 1.28 1.63 2.08 2.65 3.39 4.32 7.04 12. Multiply line 10 by line 11. 13. Additional retirement savings and investments needed at time

of retirement. Subtract line 12 from line 6.

ANNUAL SAVINGS NEEDED TO REACH RETIREMENT GOAL 14. Choose the number in the table that is the closest to the

number of years until you retire. Enter the factor on line 14.

Years 5 10 15 20 25 30 40

Factor 5.53 12.58 21.58 33.07 47.73 66.44 120.80 15. Divide line 13 by line 14. This is the amount you need to save

each year in order to reach your retirement goal.

EXAMPLE YOURS 1. $45,000 ___________

2. - $12,264 -___________

3. - $0 -___________

4. = $32,736 =__________

5. x 16.4 x __________

6. =$536,870 =__________

7. $64,037 ___________ 8. +$16,000 +__________ 9. +$0 +__________

10. =$80,037 =__________

11. x 4.32 x__________

12. =$345,760 =__________

13. =$191,110 =__________

14. ÷ 66.44 ÷__________

15. = $2,876 =__________