Calculation of Annual Savings Needed to Meet a Retirement Goal

Nicci Denny, age $42,$ single, and from Lansing, Michigan, is trying to estimate the amount she needs to save annually to meet her retirement needs. Nicci currently earns $$80,000$ per year. She expects to need $90$ percent of her current salary to live on at retirement. Nicci anticipates receiving about $$2,450$ per month in Social Security benefits at age $67.$ Using the Run the Numbers worksheet on page $539,$ answer the following questions.

$($a$)$

What annual income would Nicci need for retirement?

$($b$)$

What would her annual expected Social Security benefit be$?$

$($c$)$

Nicci expects to receive $$1,500$ per month from her defined$-$benefit pension at work. What is her annual benefit?

$($d$)$

How much annual retirement income will she need from her retirement funds?

$($e$)$

How much will Nicci need to save by retirement in today$$s dollars if she plans to retire at age $67$ and live to age $92,$ like her mother?

$($f$)$

Nicci currently has $$15,000$ in a Roth IRA. Assuming a growth rate of $8$ percent, what will be the value of her Roth IRA when she retires? $($Hint: Don$$t take out income taxes.$)$

$($g$)$

How much additional money will she still need to save for retirement?

$($h$)$

What is the amount she needs to save each year to reach this goal?