Question
Jamie Winters is 40 years old and has never been married. Jamie currently earns $100,000 as an employee and has managed to save $100,000 towards
Jamie Winters is 40 years old and has never been married. Jamie currently earns $100,000 as an employee and has managed to save $100,000 towards his retirement goal. He is currently saving $5,000 per year in his 401(k) plan. His employers plan calls for a 50% match for contributions up to an employee elective deferral of 6%.
Jamies primary goal, for this example, is to retire at age 62 with an 80% wage replacement ratio, including his social security benefit which is projected to be $30,000 in todays dollars at normal retirement age of 67. He wants to plan for a life expectancy to age 95.
General inflation is expected to average 3% annually for the foreseeable future. Jamie expects his investment portfolio to produce an after-tax rate of return of 8.5%. Jamies marginal income tax rate is 25%.
what will be the amount of Jamies need at age 62 when he retires?
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