Question
I work 60 hours a week for 17 dollars an hour. You can make up the rest. YOUR ESTIMATE/BEST GUESS: I intend to withdraw $
I work 60 hours a week for 17 dollars an hour. You can make up the rest.
YOUR ESTIMATE/BEST GUESS: I intend to withdraw $ at the END of each year from my
retirement account to support my lifestyle.
Input how much you think you need to live comfortably in your retirement years. To help you with your
estimate, experts estimate you should plan to live on approximately 70% of your ending salary in your
retirement years in order to maintain your standard of living. (Assume no pension or Social Security benefits.)
5. When I retire, my goal is to have saved $_______________________ in a retirement account. I believe these
funds will be sufficient to maintain my desired lifestyle through my retirement years. One approach is to take
your figure from #4 and multiply it by 20 years, assuming a 20 year retirement. There are no wrong answers
here. Input this figure BEFORE you calculate anything on the Excel template. Just take a guess. What do you
think is a reasonable amount to have as your nest egg on the day you retire (age 65 in this example) that
would support the annuity withdrawal from the previous question.
6. Based on my total retirement savings from question #5, assuming those funds are invested at 5% compounded
annually, I am able to withdraw $______________ from my retirement fund each year over the next 20 years.
Show all inputs below. Compute with the financial calculator (solve for PMT).
INPUTS: N =
I/Y =
FV =
PV =
PMT =
7. In order to meet your retirement goals (withdrawing an annuity stream for 20 years) from question #4, how
much would you need to have in your retirement account at age 65? In other words, based on the amount of
the annuity from question #4, the total retirement savings account must have an actual balance of
$______________ in the account on the day of retirement at age 65 assuming a rate of 5% compounded
anually. This is a present value of annuity calculation (CPT PV). (Show all inputs below.)
INPUTS: N =
I/Y =
FV =
PV =
PMT =
8. Review your answers from questions #4-#7. This is just the off the cuff approach to retirement planning. How
close were you to reality? What conclusions can you draw based on your estimates and how they compare to
your calculations in #6 & #7?
____________________________________________________________________________________
____________________________________________________________________________________
Now lets take a more analytical approach to retirement planning:
9. INPUT INTO TEMPLATE: It is imperative that the figures below match your BLUE figures on the Excel template,
including the EARLY SAVINGS.
I hope to have $___________________ of retirement savings in the bank by age 30.
(EARLY SAVINGS ON TEMPLATE)
I hope to earn $___________________ per year when Im 30.
I hope to earn $___________________ per year when Im 40.
I hope to earn $___________________ per year when Im 50.
I hope to earn $___________________ per year when Im 60.
10. I PROMISE that I WILL SAVE 15% of that salary each year, and I expect to retire at age 65.
11. If my life expectancy is age 85, my retirement years will total ________.
12. SHOW WORK IN THE TEMPLATE: Assume I invest 15% of my salary annually based upon the above salaries at a
savings rate of 6.5% compounded annually. At retirement age, my nest egg (including the retirement funds I
had saved by age 30) would total:
$_______________________ (from Excel template)
13. SHOW WORK IN THE TEMPLATE: Based on the amount of funds in your retirement account (question #12), how
much can you withdraw each year during retirement? In other words, what is your annual annuity that you will
be able to live on to support your lifestyle?
$_______________________ (transfer the value from the COMPUTE box on the Excel template here which you
are to solve using your financial calculator. It should be very similar to the other boxed values computed using
the interest factor and formula.)
14. With a disciplined savings plan I know I can meet my long-term financial goals: TRUE/FALSE
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