Apply What You've Learned $-$ Retirement Planning

Scenario: You and your spouse are both $40$ years old. You earn $$75,000$ and your spouse earns $$55,000$ per year. You estimate you can live

comfortably on a minimum of $70\%$ of your combined salaries in retirement, but hope to achieve more than that. You both plan to retire at age $62$ and

move to a warmer climate. You've changed jobs three times already in your career.

With your first employer, you are vested in a defined$-$benefit plan with a fixed monthly payment of $$315$ if you begin taking benefits at age $62.$ With

your second employer, you had a $401(k)$ that you rolled into an IRA that is now valued at $$25,000.$ With your current employer, you have a $401(k)$

that is valued at $$15,000.$ Your spouse has a $401(k)$ that is currently worth $$16,500.$ You assume you will both live $20$ years beyond retirement.

Your current expectation is that together, you and your spouse, will require a minimum annual income of

$\_$ in retirement $($in today's

dollars$).$

For individuals born in $1960$ or later, the full$-$benefit retirement age is

years of age. If you and your spouse decide to retire prior to this

age, your basic retirement benefit will be permanently

z by

per year for each year that you retire early. This means that if

you elect to retire before the full$-$benefit retirement age, you and your spouse will lose a total of

of your expected Social Security benefits.

Use the table below to estimate your and your spouse's expected annual Social Security benefits.

Given the data in the table above, if you and your spouse retire at your full$-$benefit age, you should expect to receive

your spouse should expect to receive

each year. This would result in a combined annual Social Security benefit income of

However, if you and your spouse elected to retire at age $62,$ then your and your spouse's expected Social Security benefits will be

and

$,$ respectively. Your combined Social Security retirement income is expected to total

According to the terms of your defined$-$benefit retirement account, you expect to receive a total income of

$.$ per year, which is equal to

of your minimum annual retirement income.

You and your spouse's combined IRA and $401($k$)$ accounts are currently worth

$.$ Assuming that you and your spouse both retire at age

$62,$ these three accounts will need to generate

of additional income each year to achieve your desired minimum annual retirement

income.