Hannah Cuttner is a 25-year-old software engineer earning $30,000 per year. Hannah wants to retire in 40 years when she is 65. Hannah expects to live for 20 more years after she retires.

Hannah also expects her expenses to be about the same as they are now after she retires. She estimates that, along with her other sources of income and assets, by then, 100% of her current income will be necessary to support the lifestyle she desires. Hannah saves and invests but is pretty sure she should be saving more now to meet tomorrows retirement goals.

Using this information and the information in the following tables, complete the worksheet to determine if Hannahs current plan will enable her to reach her goals. Assume a 5% return and growth rate (adjusted for inflation) on all savings and investments. Round your answers to the nearest dollar. Enter zero (0) in any rows for which there is no figure. Any Social Security retirement benefits or pension payments are annual amounts.

Savings & Investments Current Balances

Amounts that Hannah already has available in todays dollars:

	Employer savings plans: $2,000
	IRAs and Keoghs: $0
	Other investments: $3,000
	Home equity (net of possible replacement with new home after retiring): $0

Savings & Investments Current Contributions

Hannah saves or invests $300 per year.

Other Income

According to Hannahs most current Social Security statement, her estimated monthly Social Security retirement benefit in todays dollars is $1,200. Hannahs employer does not offer a pension plan. Hannah is enrolled in an employer-sponsored retirement plan.

Interest Factors Future Value of a Single Amount

Interest Factors Future Value of an Annuity

Interest Factors Present Value of an Annuity

Years	2%	3%	4%	5%
10	1.2190	1.3439	1.4802	1.6289
11	1.2434	1.3842	1.5395	1.7103
12	1.2682	1.4258	1.6010	1.7959
13	1.2936	1.4685	1.6651	1.8856
14	1.3195	1.5126	1.7317	1.9799
15	1.3459	1.5580	1.8009	2.0789
16	1.3728	1.6047	1.8730	2.1829
17	1.4002	1.6528	1.9479	2.2920
18	1.4280	1.7024	2.0258	2.4066
19	1.4568	1.7535	2.1068	2.5270
20	1.4859	1.8061	2.1911	2.6533
30	1.8114	2.4273	3.2434	4.3219
40	2.2080	3.2620	4.8010	7.0400

		Hannah CuttnersNumbers
1.	Annual income needed at retirement in todays dollars.	$
2.	Estimated Social Security retirement benefit in todays dollars.	$
3.	Estimated employer pension benefit in todays dollars.	$
4.	Total estimated retirement income from Social Security and employer pension in todays dollars.	$
5.	Additional income needed at retirement in todays dollars.	$
6.	Amount Hannah must have at retirement in todays dollars to receive additional annual income in retirement.	$
7.	Amount already available as savings and investments in todays dollars.
	A. Employer savings plans (such as 401(k), SEP-IRA, profit-sharing)	$
	B. IRAs and Keoghs	$
	C. Other investments, such as mutual funds, stocks, bonds, real estate, and other assets available for retirement	$
	D. Portion of current home equity considered savings, net of cost to replace current home with another home after retirement (optional)	$
	E. Total: A through D	$
8.	Future value of current savings/investments at time of retirement.	$
9.	Additional retirement savings and investments needed at time of retirement.	$
10.	Annual savings needed (to reach amount in line 9) before retirement.	$
11.	Current annual contribution to savings and investment plans.	$
12.	Additional amount of annual savings that you need to set aside in todays dollars to achieve retirement goal (in line 1).	$