Kevin Woo is a 47-year-old software engineer earning $50,000 per year. Kevin wants to retire in 20 years when he is 67. Kevin expects to live for 13 more years after he retires. Kevin also expects his expenses to be about the same as they are now after he retires. He estimates that, along with his other sources of income and assets, by then, 100% of his current income will be necessary to support the lifestyle he desires. Kevin saves and invests but is pretty sure he should be saving more now to meet tomorrow's retirement goals. Using this information and the information in the following tables, complete the worksheet to determine if Kevin's current plan will enable him to reach his goals. Assume a 3% return and growth rate (adjusted for inflation, on all savings and investments. Round your answers to the nearest dollar. Enter zero (0) in any rows for which there is no figure. Any Social Security retirement benefits or pension payments are annual amounts. Savings & Investments - Current Balances Amounts that Kevin already has available in today's dollars: Employer savings plans: $40,000 IRAs and Keoghs: $5,000 Other investments: $10,000 Home equity (net of possible replacement with new home after retiring): $20,000 Savings & Investments - Current Contributions Kevin saves or invests $1,200 per year. Other Income According to Kevin's most current Social Security statement, his estimated monthly Social Security retirement benefit in today's dollars is $1,600. Kevin's employer does not offer a pension plan. Kevin is enrolled in an employer-sponsored retirement plan. Click here for tables of interest factors Kevin Woo's Numbers 1. ni o Annual income needed at retirement in today's dollars. Estimated Social Security retirement benefit in today's dollars. Estimated employer pension benefit in today's dollars. Total estimated retirement income from Social Security and employer pension in today's dollars. Additional income needed at retirement in today's dollars. Amount Kevin must have at retirement in today's dollars to receive additional annual income in retirement. Amount already available as savings and investments in today's dollars. A. Employer savings plans (such as 401(k), SEP-IRA, profit-sharing) B. IRAs and Keoghs C. Other investments, such as mutual funds, stocks, bonds, real estate, and other assets available for retirement D. Portion of current home equity considered savings, net of cost to replace current home with another home after retirement (optional) E. Total: A through D Future value of current savings/investments at time of retirement. Additional retirement savings and investments needed at time of retirement. Annual savings needed to reach amount in line 9) before retirement. Current annual contribution to savings and investment plans. Additional amount of annual savings that you need to set aside in today's dollars to achieve retirement goal (in line 1). 8. 10
