5. Funding the nest egg shortfall Determining Retirement Shortfall Ryan and Rebecca have 35 years to retirement. They are taking a personal finance course and have calculated their projected retirement income and investment needs. Based on their calculations and taking into account their Social Security and pension incomes, they have a projected shortfall of $5,000.00 per year Use the following tables to answer the questions about future Value Interest factors. Interest Factors Future Valut Interest FactorFour Vive of an Annuity Periods 3.00% 5.00% 8.00% 6.00% 3.210 20 4.661 1.010 2.090 2.420 2.653 3.386 9.00% 5.600 8,620 13.260 25 4.290 5.740 6.848 10.062 30 4322 35 2.810 5.516 7.690 10.280 14.785 21.724 20.410 31.410 40 3.260 7.040 The impact of the Inflation factor Continuing their worksheet, they consult a felend, economics professor Dr. Garcia, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops Complete the following table by calculating inflation adjusted annual shortfall for Ryan and Rebecca at 596 Then recalculate the shortfall based on the top rate provided by Dr. Ganca Use the following tables to answer the questions about future value interest factors. Interest Factors --Future Value Interest Factors-Future Value of an Annuity Periods 3.00% 5.00% 6.00% 8.00% 9.00% 20 26.870 33.066 36.780 45.762 51.160 25 36.460 47.726 54.860 73.105 184.700 30 47.570 66.438 79.060 113.282 136.300 35 60.460 90.318 111.430 172.314 215.700 40 75.400 120.797 154.760 259.052 337.870 The impact of the inflation factor Continuing their worksheet, they consult a friend, economics professor Dr. Garcia, who believes that they can expect the average annual inflation rate to be 5%, possibly 6% tops Complete the following table by calculating inflation-adjusted annual shortfall for Ryan and Rebecca at 5% Then recalculate the shortfall based on the top rate provided by Dr. Garcia Interest rate (Percent) 5 Inflation-adjusted annual shortfall (Dollars) Funding the shortfall In additon to determining a realistic inflation rate, Ryan and Rebecca talked to their financial advisor to understand rates of return now and after they reach retirement. First, their advisor projects that in 35 years, they can realistically earn 5% on their nest egg Second, he recommends an Investment vehicle that is earning 6% annually Complete the following table ning the Inmation-adjusted annual shortfall at 5% as previously calculated Interest rate (Percent) Amount of retirement funds required (Dollars) Description Amount of retirement fund required Annual savings required to fund nest ego