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 (A) Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income (B) \begin{tabular}{|l|} \hline \\ \hline \hline \\ \hline \hline \end{tabular} Annual shortfall of income after retirement (A - B) (C) Expected years in retirement Expected annual rate of return before retirement \begin{tabular}{l} \hline \\ $30 \end{tabular} Expected annual rate of return on invested funds after retirement $3 Future value factor for a series of deposits (use Exhibit 1-B) (D) Annual deposit required to accumulate the amount needed Exhibit 1-A Future Value (Compounded Sum) of $1 after a Given Number of Time Periods 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 3%. They expect this percentage to drop to 2% 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: $3,700 per month Variable expenses: $2,700 per month Estimated Income Amounts (Jamie Lee and Ross Combined) Social Security: $2,800 per month Current IRA balance: $96,000 Estimated IRA withdrawal: $200 per month Other investments: $29,900 per year Exhibit 1-B Future Value (Compounded Sum) of \$1 Paid In at the End of Each Period for a Given Number of Time Periods (an Annuity) \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Period & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% \\ \hline 1 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 \\ \hline 2 & 2.010 & 2.020 & 2.030 & 2.040 & 2.050 & 2.060 & 2.070 & 2.080 & 2.090 & 2.100 & 2.110 \\ \hline 3 & 3.030 & 3.060 & 3.091 & 3.122 & 3.153 & 3.184 & 3.215 & 3.246 & 3.278 & 3.310 & 3.342 \\ \hline 4 & 4.060 & 4.122 & 4.184 & 4.246 & 4.310 & 4.375 & 4.440 & 4.506 & 4.573 & 4.641 & 4.710 \\ \hline 5 & 5.101 & 5.204 & 5.309 & 5.416 & 5.526 & 5.637 & 5.751 & 5.867 & 5.985 & 6.105 & 6.228 \\ \hline 6 & 6.152 & 6.308 & 6.468 & 6.633 & 6.802 & 6.975 & 7.153 & 7.336 & 7.523 & 7.716 & 7.913 \\ \hline 7 & 7.214 & 7.434 & 7.662 & 7.898 & 8.142 & 8.394 & 8.654 & 8.923 & 9.200 & 9.487 & 9.783 \\ \hline 8 & 8.286 & 8.583 & 8.892 & 9.214 & 9.549 & 9.897 & 10.260 & 10.637 & 11.028 & 11.436 & 11.859 \\ \hline 9 & 9.369 & 9.755 & 10.159 & 10.583 & 11.027 & 11.491 & 11.978 & 12.488 & 13.021 & 13.579 & 14.164 \\ \hline 10 & 10.462 & 10.950 & 11.464 & 12.006 & 12.578 & 13.181 & 13.816 & 14.487 & 15.193 & 15.937 & 16.722 \\ \hline 11 & 11.567 & 12.169 & 12.808 & 13.486 & 14.207 & 14.972 & 15.784 & 16.645 & 17.560 & 18.531 & 19.561 \\ \hline 12 & 12.683 & 13.412 & 14.192 & 15.026 & 15.917 & 16.870 & 17.888 & 18.977 & 20.141 & 21.384 & 22.713 \\ \hline 13 & 13.809 & 14.680 & 15.618 & 16.627 & 17.713 & 18.882 & 20.141 & 21.495 & 22.953 & 24.523 & 26.212 \\ \hline 14 & 14.947 & 15.974 & 17.086 & 18.292 & 19.599 & 21.015 & 22.550 & 24.215 & 26.019 & 27.975 & 30.095 \\ \hline 15 & 16.097 & 17.293 & 18.599 & 20.024 & 21.579 & 23.276 & 25.129 & 27.152 & 29.361 & 31.772 & 34.405 \\ \hline 16 & 17.258 & 18.639 & 20.157 & 21.825 & 23.657 & 25.673 & 27.888 & 30.324 & 33.003 & 35.950 & 39.190 \\ \hline 17 & 18.430 & 20.012 & 21.762 & 23.698 & 25.840 & 28.213 & 30.840 & 33.750 & 36.974 & 40.545 & 44.501 \\ \hline 18 & 19.615 & 21.412 & 23.414 & 25.645 & 28.132 & 30.906 & 33.999 & 37.450 & 41.301 & 45.599 & 50.396 \\ \hline 19 & 20.811 & 22.841 & 25.117 & 27.671 & 30.539 & 33.760 & 37.379 & 41.446 & 46.018 & 51.159 & 56.939 \\ \hline 20 & 22.019 & 24.297 & 26.870 & 29.778 & 33.066 & 36.786 & 40.995 & 45.762 & 51.160 & 57.275 & 64.203 \\ \hline 25 & 28.243 & 32.030 & 36.459 & 41.646 & 47.727 & 54.865 & 63.249 & 73.106 & 84.701 & 98.347 & 114.413 \\ \hline 30 & 34.785 & 40.568 & 47.575 & 56.085 & 66.439 & 79.058 & 94.461 & 113.283 & 136.308 & 164.494 & 199.021 \\ \hline 40 & 48.886 & 60.402 & 75.401 & 95.026 & 120.800 & 154.762 & 199.635 & 259.057 & 337.882 & 442.593 & 581.826 \\ \hline 50 & 64.463 & 84.579 & 112.797 & 152.667 & 209.348 & 290.336 & 406.529 & 573.770 & 815.084 & 1,163.909 & 1,668.771 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Period & 12% & 13% & 14% & 15% & 16% & 17% & 18% & 19% & 20% & 25% & 30% \\ \hline 1 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 & 1.000 \\ \hline 2 & 2.120 & 2.130 & 2.140 & 2.150 & 2.160 & 2.170 & 2.180 & 2.190 & 2.200 & 2.250 & 2.300 \\ \hline 3 & 3.374 & 3.407 & 3.440 & 3.473 & 3.506 & 3.539 & 3.572 & 3.606 & 3.640 & 3.813 & 3.990 \\ \hline 4 & 4.779 & 4.850 & 4.921 & 4.993 & 5.066 & 5.141 & 5.215 & 5.291 & 5.368 & 5.766 & 6.187 \\ \hline 5 & 6.353 & 6.480 & 6.610 & 6.742 & 6.877 & 7.014 & 7.154 & 7.297 & 7.442 & 8.207 & 9.043 \\ \hline 6 & 8.115 & 8.323 & 8.536 & 8.754 & 8.977 & 9.207 & 9.442 & 9.683 & 9.930 & 11.259 & 12.756 \\ \hline 7 & 10.089 & 10.405 & 10.730 & 11.067 & 11.414 & 11.772 & 12.142 & 12.523 & 12.916 & 15.073 & 17.583 \\ \hline 8 & 12.300 & 12.757 & 13.233 & 13.727 & 14.240 & 14.773 & 15.327 & 15.902 & 16.499 & 19.842 & 23.858 \\ \hline 9 & 14.776 & 15.416 & 16.085 & 16.786 & 17.519 & 18.285 & 19.086 & 19.923 & 20.799 & 25.802 & 32.015 \\ \hline 10 & 17.549 & 18.420 & 19.337 & 20.304 & 21.321 & 22.393 & 23.521 & 24.709 & 25.959 & 33.253 & 42.619 \\ \hline 11 & 20.655 & 21.814 & 23.045 & 24.349 & 25.733 & 27.200 & 28.755 & 30.404 & 32.150 & 42.566 & 56.405 \\ \hline 12 & 24.133 & 25.650 & 27.271 & 29.002 & 30.850 & 32.824 & 34.931 & 37.180 & 39.581 & 54.208 & 74.327 \\ \hline 13 & 28.029 & 29.985 & 32.089 & 34.352 & 36.786 & 39.404 & 42.219 & 45.244 & 48.497 & 68.760 & 97.625 \\ \hline 14 & 32.393 & 34.883 & 37.581 & 40.505 & 43.672 & 47.103 & 50.818 & 54.841 & 59.196 & 86.949 & 127.913 \\ \hline 15 & 37.280 & 40.417 & 43.842 & 47.580 & 51.660 & 56.110 & 60.965 & 66.261 & 72.035 & 109.687 & 167.286 \\ \hline 16 & 42.753 & 46.672 & 50.980 & 55.717 & 60.925 & 66.649 & 72.939 & 79.850 & 87.442 & 138.109 & 218.472 \\ \hline 17 & 48.884 & 53.739 & 59.118 & 65.075 & 71.673 & 78.979 & 87.068 & 96.022 & 105.931 & 173.636 & 285.014 \\ \hline 18 & 55.750 & 61.725 & 68.394 & 75.836 & 84.141 & 93.406 & 103.740 & 115.266 & 128.117 & 218.045 & 371.518 \\ \hline 19 & 63.440 & 70.749 & 78.969 & 88.212 & 98.603 & 110.285 & 123.414 & 138.166 & 154.740 & 273.556 & 483.973 \\ \hline 20 & 72.052 & 80.947 & 91.025 & 102.444 & 115.380 & 130.033 & 146.628 & 165.418 & 186.688 & 342.945 & 630.165 \\ \hline 25 & 133.334 & 155.620 & 181.871 & 212.793 & 249.214 & 292.105 & 342.603 & 402.042 & 471.981 & 1,054.791 & 2,348.803 \\ \hline 30 & 241.333 & 293.199 & 356.787 & 434.745 & 530.312 & 647.439 & 790.948 & 966.712 & 1,181.882 & 3,227.174 & 8,729.985 \\ \hline 40 & 767.091 & 1,013.704 & 1,342.025 & 1,779.090 & 2,360.757 & 3,134.522 & 4,163.213 & 5,529.829 & 7,343.858 & 30,088.655 & 120,392.883 \\ \hline 50 & 2,400.018 & 3,459.507 & 4,994.521 & 7,217.716 & 10,435.649 & 15,089.502 & 21,813.094 & 31,515.340 & 45,497.191 & 280,255.693 & 1,659,760.743 \\ \hline \end{tabular}