Brent and Sharon want to retire in $15$ years and want to make sure they are on track for a comfortable lifestyle. They currently make $$140,000$ per year in gross income. They pay FICA $($payroll$)$ taxes of $$10,600$; a monthly mortgage payment of $$950$ per month and will be paid off in $10$ more years. They eat lunch out at work often which runs $$1,300$ per year. They currently save $$12,000$ per year. Brent has a defined benefit pension plan at work that will pay him $$2,000($in today$$s dollars$)$ each month and

adjusts for inflation each year.

Step $1$: What is their current annual wage replacement need for retirement in today$$s dollars?

a$.)$ $$116,100$

b$.)$ $$92,100$

c$.)$ $$104,700$

d$.)$ $$92,700$

e$.)$ Some other amount. $($indicate the amount here $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_)$

Answer $\_\_\_\_\_\_\_$

Step $2$:

Assume the current wage replacement need is $$100,000,$ and not the amount calculated from step $1.$What is their annual retirement need when they start retirement $15$ years from now? In other wordshow much will they need to withdraw from their retirement account each year to fund their retirement

$15$ years from now? Assume inflation averages $2\mathrm{.}5\%$ per year.

a$.)$ $$141,817$

b$.)$ $$107,058$

c$.)$ $$89,968$

d$.)$ $$144,830$

e$.)$ $$137,472$

Answer $\_\_\_\_\_\_\_$

Step $3$:

Assume they will need $$120,000$ to maintain their existing lifestyle when they retire per year. In addition, assume inflation averages $2\mathrm{.}5\%$ and their investment rate of return is $9\%$ per year, and they expect to live $25$ years in retirement. How much will they need in their retirement accounts when they retire in $15$ years from now?

a$.)$ $$1,485,466$

b$.)$ $$1,139,902$

c$.)$ $$1,284,793$

d$.)$ $$1,579,666$

e$.)$ $$1,212,188$

Answer $\_\_\_\_\_\_\_$

Step $4$:

Assume they have already saved $$300,000$ in their retirement accounts, and they have a goal of having an account balance of $$1,500,000$ when they retire. How much more do they need to save on an annual basis $($at the end of each year$)$ to reach their goal?

a$.)$ $$1,871$

b$.)$ $$13,870$

c$.)$ $$7,919$

d$.)$ $$15,369$

e$.)$ $$10,781$

Answer $\_\_\_\_\_\_\_$