3. Estimating retirement savings goals in today's dollars Aa Aa E Saving Today for Retirement Tomorrow Jim Alden is a 33-year-old real estate agent eaming $40,000 per year. Jim wants to retire in 30 years when he is 63. Jim expects to live for 10 more years after he retires. Jim also expects his expenses to be lower than they are now after he retires. He estimates that, along with his other sources of income and assets, by then, 90% of his current income will be sufficient to support the lifestyle he desires. Jim saves and invests but is pretty sure he should be saving more now to meet tomorrow's retirement goals. Using this information and the information in the following tables, complete the worksheet to determine if Jim's current plan will enable him to reach his goals. Assume a 4% retum and growth rate adjusted for inflation) on all savings and investments. Round your answers to the nearest dollar. Enter zero (O) in any rows for which there is no figure. Any Social Security retirement benefits or pension payments are annual amounts. Savings & Investments - Current Balances Amounts that Jim already has available in today's dollars: . Employer savings plans: $20,000 IRAs and Keoghs: $0 Other investments: $5,000 Home equity (net of possible replacement with new home after retiring): $0 Savings & Investments - Current Contributions Jim saves or invests $600 per year. other Income According to Jim's most current Social Security statement, his estimated monthly Social Security retirement benefit in today's dollars is $1,300. Jim's employer does not offer a pension plan. Jim is enrolled in an employer-sponsored retirement plan. Click here for tables of interest factors Future Value of a single Amount Future Value of an Annuity Present Value of an Annuity Jim Alden's Numbers 1. 2. 3. 4. 5. 6. 7. Annual income needed at retirement in today's dollars. Estimated Social Security retirement benefit in today's dollars. Estimated employer pension benefit in today's dollars. Total estimated retirement income from Social Security and employer pension in today's dollars. Additional income needed at retirement in today's dollars. Amount Jim must have at retirement in today's dollars to receive additional annual income in retirement Amount already available as savings and investments in today's dollars. A. Employer savings plans (such as 401(k), SEP-IRA, profit-sharing) B. IRAS and Keoghs Other investments, such as mutual funds, stocks, bonds, real estate, and other assets available for retirement D. Portion of current home equity considered savings, net of cost to replace current home with another home after retirement (optional) E. Total: A through Future value of current savings/investments at time of retirement. Additional retirement savings and investments needed at time of retirement. Annual savings needed to reach amount in line 9) before retirement. Current annual contribution to savings and investment plans. Additional amount of annual savings that you need to set aside in today's dollars to achieve retirement goal in line 1). 8. 9. 10. 11. 12. 3. Estimating retirement savings goals in today's dollars Aa Aa E Saving Today for Retirement Tomorrow Jim Alden is a 33-year-old real estate agent eaming $40,000 per year. Jim wants to retire in 30 years when he is 63. Jim expects to live for 10 more years after he retires. Jim also expects his expenses to be lower than they are now after he retires. He estimates that, along with his other sources of income and assets, by then, 90% of his current income will be sufficient to support the lifestyle he desires. Jim saves and invests but is pretty sure he should be saving more now to meet tomorrow's retirement goals. Using this information and the information in the following tables, complete the worksheet to determine if Jim's current plan will enable him to reach his goals. Assume a 4% retum and growth rate adjusted for inflation) on all savings and investments. Round your answers to the nearest dollar. Enter zero (O) in any rows for which there is no figure. Any Social Security retirement benefits or pension payments are annual amounts. Savings & Investments - Current Balances Amounts that Jim already has available in today's dollars: . Employer savings plans: $20,000 IRAs and Keoghs: $0 Other investments: $5,000 Home equity (net of possible replacement with new home after retiring): $0 Savings & Investments - Current Contributions Jim saves or invests $600 per year. other Income According to Jim's most current Social Security statement, his estimated monthly Social Security retirement benefit in today's dollars is $1,300. Jim's employer does not offer a pension plan. Jim is enrolled in an employer-sponsored retirement plan. Click here for tables of interest factors Future Value of a single Amount Future Value of an Annuity Present Value of an Annuity Jim Alden's Numbers 1. 2. 3. 4. 5. 6. 7. Annual income needed at retirement in today's dollars. Estimated Social Security retirement benefit in today's dollars. Estimated employer pension benefit in today's dollars. Total estimated retirement income from Social Security and employer pension in today's dollars. Additional income needed at retirement in today's dollars. Amount Jim must have at retirement in today's dollars to receive additional annual income in retirement Amount already available as savings and investments in today's dollars. A. Employer savings plans (such as 401(k), SEP-IRA, profit-sharing) B. IRAS and Keoghs Other investments, such as mutual funds, stocks, bonds, real estate, and other assets available for retirement D. Portion of current home equity considered savings, net of cost to replace current home with another home after retirement (optional) E. Total: A through Future value of current savings/investments at time of retirement. Additional retirement savings and investments needed at time of retirement. Annual savings needed to reach amount in line 9) before retirement. Current annual contribution to savings and investment plans. Additional amount of annual savings that you need to set aside in today's dollars to achieve retirement goal in line 1). 8. 9. 10. 11. 12