Answers $-$ Part One

Target Withdrawal Rate

Budget

Answers $-$ Part Two & Three

Accessibility: Good to go

$27C$

Rain

SearchFor the first part, you will use the following assumptions:

You are $30$ years old and have just completed your MSBA program through Great Learning.

You are considering an attractive offer for a new post$-$MSBA job.

Here are the details of the offer:

Salary: $$110,000$

Retirement Benefits: $401($k$)$ plan with a $3\%$ match

Part One:

If you save $15\%$ of your salary each year, how much money would you have when you turn $65,$ assuming you earn a $7\%$ annual return on your investments$($hint: be sure to include the employer match in addition to your personal savings$)?$

During retirement, your return drops to $5\%$ annually as you decide to invest more conservatively to protect your principal. How much could you spend each year and not have your money run out before age $95?$

Review the strategies discussed in the U$.$S$.$ News and World Report article.

a$.$ Using the $4\%$ withdrawal rate from the article and an assumed $2\mathrm{.}5\%$ inflation level, use the results from part $1$ to complete the $$Target Withdrawal Rate$$ worksheet to determine how much you will be able to distribute each year during retirement by following the principles in the article.

b$.$Then, use the results from your calculation in question $1$ in the $$BlackRock LifePath Spending Tool$$ to determine the range of acceptable annual withdrawals that you could take in retirement using this tool. Post a screenshot of your results to the Excel solution file where indicated.

c$.$Why does this answer differ from the answer you arrived at in question $2?$ Which solution is more useful as you consider living in retirement? Why$($hint: consider the impact of inflation during your $30-$year retirement$)?$

Using the concepts in the $$Vanguard Advisor$$s Alpha$$ article, explain whether you would use an advisor to assist you as you save for retirement. Would an advisor be of value? Why or why not?

Part Two:

Create a monthly budget based on your projected cost of living and $$110,000$ salary from age $30-65($if you prefer not to share real numbers, feel free to adjust your numbers, but keep them realistic$).$

Using the expenses determined in the above monthly budget, calculate the amount you would be able to save each year and use that amount to answer question #$1-2$from Part One$($i$.$e$.$substitute the calculated amount from your budget for the $15\%$ savings amount in Question #$1$ of Part One$)$

Part Three:

Assuming you have a retirement savings goal of $$3$ million at age $65,$ how much would you need to save monthly to meet that goal if you can earn a $7\%$ annual return on your investments$($assume you have nothing saved today and $35$ years until retirement$)?$ Solve the problems in the provided Excel template, showing your work and making sure you completely answer Question #$4$ in the textbox provided$\mathrm{.}4$ Year in Retirement

$5,1$

$6,2$

$277$

$\begin{array}{cc}7& 3\\ 8& 4\end{array}$

$8999106$

$106$

$117128$

$139$

$1410$

$1511$

$1612$

$1713$

$18141814$

$\begin{array}{cc}18& 14\\ 19& 15\end{array}$

$2016$

$20162117$

$2218$

$\begin{array}{cc}2218& ?\\ 23& 19\end{array}$

$$