CALCULATING ANNUAL INVESTMENT TO MEET RETIREMENT GOAL: Use worksheet 14.1 to help:

Greg and Theresa Stoddard who'd like to retire while they're still relatively young- in about 20 years. Both have promising careers, and both make good money. As a result, they're willing to put aside whatever is necessary to achieve a comfortable lifestyle in retirement. Their current level of household expenditures (excluding savings) is around $75,000 a year, and they expect to spend even more in retirement; they think they'll need about 125% of that amount. (Note; 125% equals a multiplier factor of 1.25). They estimare that their Social Security benefits will amount of $20,000 a year in today's dollars and that they'll recieve anoter $35,000 annually from their company pension plans. Greg and Theresa feel that future inflation will amount to about 3% a year, and they think they'll be able to earn 6% on their investments before retirement and about 4% afterward.

Use worksheet 14.1 to find out how big the Stoddard's investment nest egg will have to be and how much they'll have to save annually to accumulate the needed amount within the next 20 years.

NOTE:Attached is Worksheet 14.1