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 4%. They expect this percentage to drop to 3% 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: $5,000/month Variable expenses: $2,900/month Estimated Income Amounts (Jamie Lee and Ross Combined) Social Security: $3,050/month Current IRA balance: $88,000 Estimated IRA withdrawal: $250/month Other investments: $36,400/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) X Projected annual retirement living expenses, adjusted for inflation (A) (Round your final answer to nearest whole number.) Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income (B) (Round your final answer to nearest whole number.) Needed investment fund after retirement (A - B) (C) (Round your final answer to nearest whole number.) Number of years until retirement Expected annual rate of return before retirement Future value for a series of deposits (use Exhibit 1-B) (D) Annual deposit to achieve needed investment fund (C/D) (Roundrrrotr final answer to two decimal places.) Exhibit 1-B Future Value (Compounded Sum) of $1 Paid In t the End of Each Period for a Given Number of Time Periods (an Annuity) Period 1% 2% 3% 5% 6% 7% 9% 11% 4% 8% 10% 1 1 1 201 202 203 205 206 205 209 207 21 211 3.31 3.08 3.091 3.153 3,184 3.278 3 03 3 122 3.210 3.246 3.342 4.122 4.184 4.31 4.375 4.506 4.573 4.64 4 4.0E 4.246 4.44 4 71 5867 6 228 5.101 5 204 6300 5416 5526 5 637 575 5 985 106 6.152 6.633 7.913 F 6.308 6 468 6.802 6.975 7.155 7.336 7.523 7.716 7 806 9.48 7 214 7.434 7.662 8.142 8.394 8.654 8.923 9.2 9.783 11.020 11.050 8 206 503 8.092 9.214 9.549 9.097 10.26 10.637 11.436 0 158 11 027 11 9/8 12488 13 021 13 5/9 14 164 9 369 10 583 49 10 95 12.578 13.181 14 487 15.193 10 10.462 1 464 12.006 13 816 15 937 16 722 11.567 12.800 13.486 14.207 16.645 17 56 18.531 1: 12.169 4.97 15.784 19.561 20 141 12 683 18 977 1: 13.412 14 192 15 026 15917 16 87 17 898 21 394 22713 14.6 13 13.809 15.618 16.627 17 713 18.882 20.141 21.495 22.953 24.523 26.212 14 14.947 15.974 17.086 18.292 19.599 21.015 22.56 24.215 26.019 27.975 30.095 15 16.097 17.293 18 500 20.024 21.579 23.276 25.129 27.152 29.361 31.772 34.405 23.65 18 639 21.825 25.672 30.324 39.19 11 17 218 D 157 27 888 33 003 35 9C 20.012 1.762 28.213 36.974 11 18 43 23 608 25.84 30.84 33 75 40 545 44,501 1.301 16 19.615 21.412 23.414 25.645 28.132 0.90 33.990 37 45 45.599 50.306 46 018 19 20 811 22 841 25 117 27.671 30 530 33 76 37 379 41446 51 159 66 939 20 22.019 24.297 26.87 29.778 33.066 5.786 40.990 45.762 51.16 57.275 64.203 25 28.243 32.03 6.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 114.413 34.785 40 560 47.575 56.005 G6430 79.050 94.461 113.203 6.300 164.494 199.021 219 057 AL 48 886 60 402 5 40 so 026 120 8 154 76: 199.635 337 882 412 583 581.826 84.579 112.797 152.667 573.77 815.084 50 64.463 209.348 290.336 406.529 1163.909 1663.771 Perlod 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 1 1 1 1 1 1 1 2.17 22 2 12 2.13 2.14 2 15 2,16 2.18 2.19 2 25 2.3 S 99 3.505 3 530 364 3.374 3.407 3.44 3.473 3.572 3.606 813 4.85 4.993 5.06 5368 6.187 1779 4.921 514 5215 5.291 5766 7 442 6.353 648 6 61 6742 6 877 7014 7 154 7 297 8 207 a043 9.207 9.93 11.259 12.756 3.115 8.323 8.536 8.754 8.977 9 442 9.683 10.089 10.405 10.73 11.067 11.414 11 77 12.142 12.523 12.916 15.073 17.583 12.3 12.757 13.233 13.727 14.24 14.773 15.327 15.902 16.499 19.842 23.850 14 776 15 416 16 085 16 786 17.519 18.285 19 086 19 923 20 799 25 802 32015 24.709 10 17.549 18.42 19.337 20.304 21.321 2 39 23.521 25.969 33 253 42.619 1: 20.655 21.814 23.045 25.733 30 404 32.15 42 566 56 405 24 349 27.2 28 755 13 24 133 25.65 27 27 29 002 30 85 2 824 34 931 37.18 39 581 54 200 74 327 34.352 48.497 13 28.029 29.985 32.089 35.785 40 12 218 45.244 58 7E 97.625 32.393 37.581 40.605 43.672 59.196 127.913 14 34.883 4Y.103 50.818 54.841 86.949 167.206 15 37.20 40417 43.842 47.58 51.66 56.11 60.065 G261 72.035 109 607 55.717 16 42.753 46672 50.98 60 925 66649 72939 79.85 87 442 138.109 218.472 11 48.884 53.739 9.118 65.075 71.673 78.979 87.058 95.022 105.931 173.636 285.014 55 75 61.725 93.406 115.266 28 117 371.518 16 8.304 75.836 84.141 103.74 218.045 70 740 78 969 483 973 19 a 44 88212 98 603 110 28 123 414 139 166 154 74 273 556 72.052 80 947 102.444 165.418 630.165 20 91.025 115.38 130,033 146.628 86.688 342.945 181.87 133.334 155.62 212.793 249.214 292.105 342.603 402.042 471.981 1054.791 2348.803 241.333 293 199 356 707 434 745 530 312 647 439 790.948 966.712 1181.082 3227.174 0729.985 AL 767 081 1013 /04 1342.025 1779 09 2360 75/ 3134 522 4163 213 5629 829 7343 858 30088 650 120392 883 2400,018 3459.507 4994.521 7217 716 10435.649 15089.502 21813.094 31515.336 45497.191 280255 693 1659760 743 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) X Projected annual retirement living expenses, adjusted for inflation (A) (Round your final answer to nearest whole number.) Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income (B) (Round your final answer to nearest whole number.) Needed investment fund after retirement (A - B) (C) (Round your final answer to nearest whole number.) Number of years until retirement Expected annual rate of return before retirement Future value for a series of deposits (use Exhibit 1-B) (D) Annual deposit to achieve needed investment fund (C/D) (Roundrrrotr final answer to two decimal places.) Exhibit 1-B Future Value (Compounded Sum) of $1 Paid In t the End of Each Period for a Given Number of Time Periods (an Annuity) Period 1% 2% 3% 5% 6% 7% 9% 11% 4% 8% 10% 1 1 1 201 202 203 205 206 205 209 207 21 211 3.31 3.08 3.091 3.153 3,184 3.278 3 03 3 122 3.210 3.246 3.342 4.122 4.184 4.31 4.375 4.506 4.573 4.64 4 4.0E 4.246 4.44 4 71 5867 6 228 5.101 5 204 6300 5416 5526 5 637 575 5 985 106 6.152 6.633 7.913 F 6.308 6 468 6.802 6.975 7.155 7.336 7.523 7.716 7 806 9.48 7 214 7.434 7.662 8.142 8.394 8.654 8.923 9.2 9.783 11.020 11.050 8 206 503 8.092 9.214 9.549 9.097 10.26 10.637 11.436 0 158 11 027 11 9/8 12488 13 021 13 5/9 14 164 9 369 10 583 49 10 95 12.578 13.181 14 487 15.193 10 10.462 1 464 12.006 13 816 15 937 16 722 11.567 12.800 13.486 14.207 16.645 17 56 18.531 1: 12.169 4.97 15.784 19.561 20 141 12 683 18 977 1: 13.412 14 192 15 026 15917 16 87 17 898 21 394 22713 14.6 13 13.809 15.618 16.627 17 713 18.882 20.141 21.495 22.953 24.523 26.212 14 14.947 15.974 17.086 18.292 19.599 21.015 22.56 24.215 26.019 27.975 30.095 15 16.097 17.293 18 500 20.024 21.579 23.276 25.129 27.152 29.361 31.772 34.405 23.65 18 639 21.825 25.672 30.324 39.19 11 17 218 D 157 27 888 33 003 35 9C 20.012 1.762 28.213 36.974 11 18 43 23 608 25.84 30.84 33 75 40 545 44,501 1.301 16 19.615 21.412 23.414 25.645 28.132 0.90 33.990 37 45 45.599 50.306 46 018 19 20 811 22 841 25 117 27.671 30 530 33 76 37 379 41446 51 159 66 939 20 22.019 24.297 26.87 29.778 33.066 5.786 40.990 45.762 51.16 57.275 64.203 25 28.243 32.03 6.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 114.413 34.785 40 560 47.575 56.005 G6430 79.050 94.461 113.203 6.300 164.494 199.021 219 057 AL 48 886 60 402 5 40 so 026 120 8 154 76: 199.635 337 882 412 583 581.826 84.579 112.797 152.667 573.77 815.084 50 64.463 209.348 290.336 406.529 1163.909 1663.771 Perlod 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 1 1 1 1 1 1 1 2.17 22 2 12 2.13 2.14 2 15 2,16 2.18 2.19 2 25 2.3 S 99 3.505 3 530 364 3.374 3.407 3.44 3.473 3.572 3.606 813 4.85 4.993 5.06 5368 6.187 1779 4.921 514 5215 5.291 5766 7 442 6.353 648 6 61 6742 6 877 7014 7 154 7 297 8 207 a043 9.207 9.93 11.259 12.756 3.115 8.323 8.536 8.754 8.977 9 442 9.683 10.089 10.405 10.73 11.067 11.414 11 77 12.142 12.523 12.916 15.073 17.583 12.3 12.757 13.233 13.727 14.24 14.773 15.327 15.902 16.499 19.842 23.850 14 776 15 416 16 085 16 786 17.519 18.285 19 086 19 923 20 799 25 802 32015 24.709 10 17.549 18.42 19.337 20.304 21.321 2 39 23.521 25.969 33 253 42.619 1: 20.655 21.814 23.045 25.733 30 404 32.15 42 566 56 405 24 349 27.2 28 755 13 24 133 25.65 27 27 29 002 30 85 2 824 34 931 37.18 39 581 54 200 74 327 34.352 48.497 13 28.029 29.985 32.089 35.785 40 12 218 45.244 58 7E 97.625 32.393 37.581 40.605 43.672 59.196 127.913 14 34.883 4Y.103 50.818 54.841 86.949 167.206 15 37.20 40417 43.842 47.58 51.66 56.11 60.065 G261 72.035 109 607 55.717 16 42.753 46672 50.98 60 925 66649 72939 79.85 87 442 138.109 218.472 11 48.884 53.739 9.118 65.075 71.673 78.979 87.058 95.022 105.931 173.636 285.014 55 75 61.725 93.406 115.266 28 117 371.518 16 8.304 75.836 84.141 103.74 218.045 70 740 78 969 483 973 19 a 44 88212 98 603 110 28 123 414 139 166 154 74 273 556 72.052 80 947 102.444 165.418 630.165 20 91.025 115.38 130,033 146.628 86.688 342.945 181.87 133.334 155.62 212.793 249.214 292.105 342.603 402.042 471.981 1054.791 2348.803 241.333 293 199 356 707 434 745 530 312 647 439 790.948 966.712 1181.082 3227.174 0729.985 AL 767 081 1013 /04 1342.025 1779 09 2360 75/ 3134 522 4163 213 5629 829 7343 858 30088 650 120392 883 2400,018 3459.507 4994.521 7217 716 10435.649 15089.502 21813.094 31515.336 45497.191 280255 693 1659760 743
