(8)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.

(9)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 Question 8).

Michael and Michelle Williams January 1 . 201 'I Cash/cash equivalents Current liabilities Checking account IT $2.500 Credit card balances S 550 Money market accou nt3 JT 5,000 Auto loan (Audi) 25,000 (1.75% interest rate) Auto loan (Toyota) 18,000 Total cash/cash equivalents $7,500 Total current liabilities $43,550 Invested assets Long-term liabilitles CD JT $15,000 Home mortgage $225,000 Section 401 (k) plan H 10,000 Student loans 50.500 Cash value of life insurance W 6.000 Coin collection H 10,000 Total long-term liabllitles $275,500 Total investments $41,000 Personal use assets Net worth $73,950 House (appraised 7/01/10)" IT $275,000 Auto (Toyota) JT 22.500 Auto (Audi) JT 47,000 Total personal use $344,500 Total assets $393,000 Total llabillties and net worth $393,000 Note to nancial statements 'Assels are stated at fair marketvalue. 2Llabilitles are stated at principal only and are all jolnt obligations except the student loans which belong to MId-Iael. 3The money market account Is currently serving as their emergency fund. 'Land value was determined to be 550,000 and the home value $225,000. Replacement value of the home Is also 5225.000, Title deslgnallons JT = Join! tenancy with rlght of survivorshlp H = Husband's separate property W = Wlfe's separate property The Williamses primarily use cash, check, and debit cards for personal expenditures. STATEMENT OF CASH FLOWS Michael and Michelle Williams For the Year Ended December 31 , 2010 CASH INFLOWS SalaryMichael $170, 000 Gift from Michael '5 parents 20,000 Michelle's selfemployment income 4,000 interest 900 Total inflows $194,900 CASH OUTFLOWS Section 4010:) plan savings 5 11,900 Mortgage payment 20,700 Property taxes (residence) I 1,800 FICA and self-employment tax 9,021 Federal income tax withholding 68,000 State income tax with holding 6,734 Utilities 3,980 Disability insurance premium 900 Homeowners insurance 2,000 Auto notes 10,739 Auto expense and maintenance 1,200 Auto insurance 2,400 Housekeeping service 2,400 Educational loan repayment 6,915 Clothing and dry cieaning 5,600 Food 5,750 Entertainment 3,970 Miscellaneous 5,998 Total outflows $170,057 Discretionary cash flow ' $ 24,843 \