Jill is 40 Has income of 120K Calculates a war of 66.67% (use 2/3rds) Plans on retiring at 63 Expects to live to 87 Has 50k in current savings Invests 50% in the stock market Once retired plans on investing 100% bonds A) Preliminaries: 1) What is Jill's rWLE? [Remaining work life expectancy, aka t1] 2) What is Jill's RLE? (Retirement life expectancy, aka t2) 3) What is Jill's expected rate of return while working and saving {r1} 4) What is Jili's expected rate of return while retired {r2} B) Retirement needs 1) What would Jill need if retiring right now? 2) What would Jill need in future dollars when retiring? 3) What total retirement savings would be needed at the start of retirement to have this as an annuity paying the exact same amount each year for all of retirement? 4) What total retirement savings would be needed at the start of retirement to have this as an annulty due paying the exact same amount each year for all of retirement? 5) What total retirement savings would be needed at the start of retirement to have this as an annuity growing 3% per year for all of retirement? \{Not this is not an annuity due\} 6) What total retirement savings would be needed at the start of retirement to have this as an annuity due growing 3% per year for all of retirement? \{Note this is growing and an annuity due. Easiest to calculate growing and then make the annuity due adjustment) C) Percentage withdrawals 1) What is the percentage of retirement savings withdrawn in first year, using a straight annuity? (This is just B2/B3\} 2) What is the percentage of retirement savings withdrawn in first year, using an annuity due? [This is just B2/B4] 3) What is the percentage of retirement savings withdrawn in first year, using a growing annuity? [This is just B2/BS ] 4) What is the percentage of retirement savings withdrawn in first year, using a growing annuity due? [This is just B2/B6] D) Existing savings: 1) What will the current 50k savings grow into by the start of retirement 2) Using your answer in B6 (growing annuity due), how much more would Jill need to have at the start of retirement. (This is just asking B6-A1] E) Savings for retirement 1) What annual savings as a constant annuity invested through Jill's working years as specified above will result in a future value equal to that found in D2 above? 2) What initial savings as a growing by 2% annulty invested through Jill's working years as specified above will result in a future value equal to that found in D2 above? F) Savings Percentage 1) What is the initial savings as a percentage of the initial income for E1? [E1/1ncome] 2) What is the initial savings as a percentage of the initial income for E1? (E1/Income] Jill is 40 Has income of 120K Calculates a war of 66.67% (use 2/3rds) Plans on retiring at 63 Expects to live to 87 Has 50k in current savings Invests 50% in the stock market Once retired plans on investing 100% bonds A) Preliminaries: 1) What is Jill's rWLE? [Remaining work life expectancy, aka t1] 2) What is Jill's RLE? (Retirement life expectancy, aka t2) 3) What is Jill's expected rate of return while working and saving {r1} 4) What is Jili's expected rate of return while retired {r2} B) Retirement needs 1) What would Jill need if retiring right now? 2) What would Jill need in future dollars when retiring? 3) What total retirement savings would be needed at the start of retirement to have this as an annuity paying the exact same amount each year for all of retirement? 4) What total retirement savings would be needed at the start of retirement to have this as an annulty due paying the exact same amount each year for all of retirement? 5) What total retirement savings would be needed at the start of retirement to have this as an annuity growing 3% per year for all of retirement? \{Not this is not an annuity due\} 6) What total retirement savings would be needed at the start of retirement to have this as an annuity due growing 3% per year for all of retirement? \{Note this is growing and an annuity due. Easiest to calculate growing and then make the annuity due adjustment) C) Percentage withdrawals 1) What is the percentage of retirement savings withdrawn in first year, using a straight annuity? (This is just B2/B3\} 2) What is the percentage of retirement savings withdrawn in first year, using an annuity due? [This is just B2/B4] 3) What is the percentage of retirement savings withdrawn in first year, using a growing annuity? [This is just B2/BS ] 4) What is the percentage of retirement savings withdrawn in first year, using a growing annuity due? [This is just B2/B6] D) Existing savings: 1) What will the current 50k savings grow into by the start of retirement 2) Using your answer in B6 (growing annuity due), how much more would Jill need to have at the start of retirement. (This is just asking B6-A1] E) Savings for retirement 1) What annual savings as a constant annuity invested through Jill's working years as specified above will result in a future value equal to that found in D2 above? 2) What initial savings as a growing by 2% annulty invested through Jill's working years as specified above will result in a future value equal to that found in D2 above? F) Savings Percentage 1) What is the initial savings as a percentage of the initial income for E1? [E1/1ncome] 2) What is the initial savings as a percentage of the initial income for E1? (E1/Income]
