Continuing Case $65.$ Retirement Income Forecast

$100$ points

References

Jamie Lee and Ross, now $57$ and still very active, have plenty of time on their hands now that the triplets are away at college. They both realized that time has just flown by; over twenty$-$four years have passed since they married!

Looking back over the past years, they realized that they have worked hard in their careers, Jamie Lee as the proprietor of a cupcake caf$$ and Ross, self$-$employed as a web$-$page designer. They have enjoyed raising their family and strived to be financially sound as they are looking to retirement that is just around the corner. They saved regularly and invested wisely over the years. They rebounded nicely from the economic crisis over the past few years, as they watched their investments closely and adjusted their strategies when they felt it necessary. They purchase vehicles with cash and do not carry credit card balances, choosing instead to use them for convenience only. The triplets are pursuing their master's degrees and have tuition covered through work$/$study programs at the university.

Jamie Lee and Ross are just a few short years from realizing their goals of retiring at $65$ and purchasing a home at the beach!

They are reviewing their financial situation to ensure they will be ready for retirement. They anticipate being able to live comfortably with $80\%$ of their current expenses. The rate of return on their investments until they retire is $5\%.$ They expect this percentage to drop to $4\%$ after retirement. Use this information, along with Exhibit $1-$A$.$ Exhibit $1-$B$,$ and the information provided below to determine the annual deposit amount Jamie Lee and Ross will need to make until they retire in order to make up the shortfall between their estimated expenses and income needed during retirement. Each answer must have a value for the assignment to be complete. Enter $"0"$ for any unused categories.

Current Expense Amounts $($Jamie Lee and Ross Combined$)$

Fixed expenses: $$4,500$ per month

Variable expenses: $$2,400$ per month

Estimated Income Amounts $($Jamie Lee and Ross Combined$)$

Social Security: $$2,550$ per month

Current IRA balance$-$ $$83,000$

Estimated IRA withdrawal: $$250$ per month

Other investments: $$33,900$ per year

Estimated Annual Retirement Living Expenses

Estimated annual living expenses if retiring today

Number of years until retirement

Expected annual rate of return before retirement

Future value $($use Exhibit $1-$A$)$

Projected annual retirement living expenses, adjusted for inflation

Projected annual retirement living expenses, adjusted for inflation

$($A$)$