Molly Lincoln, a 25-year-old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,000 per year for her retirement fund and assumes that she'll retire at age 65.

1. How much will Molly have accumulated when she turns 65 if she invests in equities and earns 8 percent on average? Round your answer to the nearest dollar. $
2. Molly is urging her friend, Isaac Stein, to start his plan right away, too, because he's 35. What would his nest egg amount to if he invested in the same manner as Molly and he, too, retires at age 65? Round your answer to the nearest dollar. Nest egg amount at 4% = $ Nest egg amount at 8% = $ Comment on your findings.

3. USE WORKSHEET 14.1 Georgia and Jude Sullivan determine how much they need to retire early in about 20 years. Both have promising careers, and both make good money. As a result, they're willing to put aside whatever is necessary to achieve a comfortable lifestyle in retirement. Their current level of household expenditures (excluding savings) is around $85,000 a year, and they expect to spend even more in retirement; they think they'll need about 125% of that amount. (Note: 125% equals a multiplier factor of 1.25). They estimate that their Social Security benefits will amount to $25,000 a year in today's dollars and they'll receive another $37,000 annually from their company pension plans. Georgia and Jude feel that future inflation will amount to about 3% a year, and they think they'll be able to earn about 6% on their investments before retirement and about 4% afterward.

   1. find out how big Sullivans' investment nest egg will have to be. Round your answer to the nearest dollar.$_____ 2.How much they'll have to save annually to accumulate the needed amount within the next 20 years. Round your answer to the nearest dollar. $______

BS ws_14.1 [Compatibility Mode] - Excel X Ashley Carter & Share File Home Insert Page Layout Formulas Data Review View Tell me what you want to do... Split 1 View Side by Side Ruler Formula Bar Hide EDI Synchronous Scrolling Normal Page Break Page Custom Gridlines Headings Zoom 100% Zoom to New Arrange Freeze Preview Layout Views Selection Window All Panes Unhide EG Reset Window Position Workbook Views Show Zoom Window 3 Macros Switch Windows Macros S50 X H 1 K L M N P R 5 T U V W X Y Z AA AB AC AD AE AF AG S AB C D E F G 18 II. Estimated Income in Retirement: 20 E. Social security, annual income 22 F. Company/employer pension plans, annual amounts 24 G. Other sources, annual amounts 26 H. Total annual income (E+F+G) 2B 1. Additional required income, or annual shortfall (D-H) S 5 $ 1.000 s 98 30 III. Inflation Factor: 32 1. Expected average annual rate of inflation over the period to retirement 34 K. Inflation factor in Appendix A): Based on 0 years to 35 retirement (A) and an expected average 36 annual rate of inflation () of 096 3B L Size of inflation-adjusted annual shortfall (1 x K) 39 40 IV Funding the shortfall: 42 M. Anticipated return on assets held after retirement 44 N. Amount of retirement funds required-size of nest egg (LEM) 46 O. Expected rate of return on investments prior to retirement 45 P. Compound interest factor in Appendix B): 49 Based on O years to retirement (A) and an expected rate of return 50 on investments of 0% 52 52 Q. Annual savings required to fund retirement nest egg (N:P) 35 54 Note: Parts I and II are prepared in terms of current today's dollars. 55 56 57 58 59 60 61 62 63 64 0.000 0 s ws 14.1 + Ready @ 65% I Type here to search j e E OM Ana 12:11 AM 8/20/2020