(1)If Michael and Michelle include the receipt of Social Security benefits in their retirement planning, could they retire at age 67 without increasing their annual savings? Assume that at age 67 (in todays dollars) Michaels Social Security would be $29,820 and Michelles would be $14,910. Use Michaels salary only.

(2)If the Williamses choose to rely on Social Security benefits in their retirement planning, how much earlier than age 67 can they retire? (Assume all other facts as given in first question).

Michael and Michelle VVJIHamS January 1, 2011 Liabilities and Net Worth? Assets Current liabilities Cash/cash equivalents Credit card balances 550 Checking account $2,500 25,000 Auto loan (Audi) Money market accounts 5,000 Auto loan NToyota) 18,000 (1.75% interest rate) $7,500 Total current liabilities $43,550 Total cash/cash equivalents Invested assets Long-term liabilities $225,000 $15,000 Home mortgage CD Section 401(k) plan 50,500 Student loans 10,000 Cash value of Fife insurance W 6,000 10,000 Total long-term liabilities $275,500 Coin collection Total investments $41,000 $73,950 Net worth Personal use assets House (appraised 7/01/10) JT $275,000 Auto (Toyota) JT 22,500 Auto (Audi) JT 47,000 Total personal use $344,500 Total liabilities and net worth $393,000 Total assets $393,000 Note to financial statements Assets are stated at fair market value. oint obligations except the student loans which belong to Michael es are stated at principal ondy and are al Liab The money market account is currently serving as their emergency fund Land value was determined to be S50,000 and the home value S225,000. Replacement value of the home is adso 5225,000 tle designations oint tenancy with right of survivorship JT H Husband's separate property Wife's separate property The Williamses primarily use cash, check, and debit cards for personal expenditures. Michael and Michelle VVJIHamS January 1, 2011 Liabilities and Net Worth? Assets Current liabilities Cash/cash equivalents Credit card balances 550 Checking account $2,500 25,000 Auto loan (Audi) Money market accounts 5,000 Auto loan NToyota) 18,000 (1.75% interest rate) $7,500 Total current liabilities $43,550 Total cash/cash equivalents Invested assets Long-term liabilities $225,000 $15,000 Home mortgage CD Section 401(k) plan 50,500 Student loans 10,000 Cash value of Fife insurance W 6,000 10,000 Total long-term liabilities $275,500 Coin collection Total investments $41,000 $73,950 Net worth Personal use assets House (appraised 7/01/10) JT $275,000 Auto (Toyota) JT 22,500 Auto (Audi) JT 47,000 Total personal use $344,500 Total liabilities and net worth $393,000 Total assets $393,000 Note to financial statements Assets are stated at fair market value. oint obligations except the student loans which belong to Michael es are stated at principal ondy and are al Liab The money market account is currently serving as their emergency fund Land value was determined to be S50,000 and the home value S225,000. Replacement value of the home is adso 5225,000 tle designations oint tenancy with right of survivorship JT H Husband's separate property Wife's separate property The Williamses primarily use cash, check, and debit cards for personal expenditures