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 masters 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: $4,000/month

Variable expenses: $3,000/month

Estimated Income Amounts (Jamie Lee and Ross Combined)

Social Security: $2,050/month

Current IRA balance: $99,000

Estimated IRA withdrawal: $500/month

Other investments: $31,400/year

A 8 $ 3 x (A) $ 0 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 Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income Annual shortfall of income after retirement (A - B) Expected years in retirement Expected annual rate of return before retirement Expected annual rate of return on invested funds after retirement Future value factor for a series of deposits (use Exhibit 1-B) Annual deposit required to accumulate the amount needed $ 0 (B) (C) - $ 30 A 3 2 (D) D Exhibit 1 - A Future Value(Compounded Sum of $1 after Glven Number of Time Parede Period 5 6 2 2 1 2 3 13 1714 2008 15 2010 281 315 340 21 22:57 295 3 4.1 22 2010 27 166172 2053 38 4056 13% 17% 25 sos 1 3 0 . 5 31 0 0 0 2.2 2.1 2.2 6 7 3 239 351 35 8 6:15 10. 5552 to 10 13 ST 15 15 Exhibit 1-B Future Value(Compounded Sum of seid in at the End of Bach Perfod for a lon Number of Time Periods (an Annuity) Period 4 . 201 20200 201 21 32 33 34 5065 2.300 16 cart 72 74 76 12 20780 7 . D.MD 970015000 1.98 12.40 3.00 3570 S6 11 30 22 22 0 2015 26 24 SS 10 24 . 20 TTT Period 1 1 1 1 1 + 11 1 23 2 213 22 4.77 506 14 sa ne TITAN 7 10 14 14 2015 14 2085 13 14 2:00 SON 01 TO 0:41 ST2 907 218 10.94 910 50 107 50 15000 454 A 8 $ 3 x (A) $ 0 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 Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income Annual shortfall of income after retirement (A - B) Expected years in retirement Expected annual rate of return before retirement Expected annual rate of return on invested funds after retirement Future value factor for a series of deposits (use Exhibit 1-B) Annual deposit required to accumulate the amount needed $ 0 (B) (C) - $ 30 A 3 2 (D) D Exhibit 1 - A Future Value(Compounded Sum of $1 after Glven Number of Time Parede Period 5 6 2 2 1 2 3 13 1714 2008 15 2010 281 315 340 21 22:57 295 3 4.1 22 2010 27 166172 2053 38 4056 13% 17% 25 sos 1 3 0 . 5 31 0 0 0 2.2 2.1 2.2 6 7 3 239 351 35 8 6:15 10. 5552 to 10 13 ST 15 15 Exhibit 1-B Future Value(Compounded Sum of seid in at the End of Bach Perfod for a lon Number of Time Periods (an Annuity) Period 4 . 201 20200 201 21 32 33 34 5065 2.300 16 cart 72 74 76 12 20780 7 . D.MD 970015000 1.98 12.40 3.00 3570 S6 11 30 22 22 0 2015 26 24 SS 10 24 . 20 TTT Period 1 1 1 1 1 + 11 1 23 2 213 22 4.77 506 14 sa ne TITAN 7 10 14 14 2015 14 2085 13 14 2:00 SON 01 TO 0:41 ST2 907 218 10.94 910 50 107 50 15000 454