Sangi Uptay is 40 years old and single. He wants to retire at age 62 with replacing 80% of his current wage. He earn $100,000 as an employee and to date has put aside $100,000 for his retirement goal. He currently saves $5,000 per year in his 401(k) plan. His employer matches 50% for contributions up the the employee’s elective deferral of 6%. Sangi plans to draw Social Security at age 62. His primary insurance amount at full retirement age is equal to $30,000 per year. He wants to plan for a life expectancy to 95. Sangi is comfortable with a 3% inflation assumption and a return on his investments to average 8.5% annually

10) Calculate Sangi’s income need at retirement in present dollars? (Wage Replacement)

a. $59,000

b. $80,000

c. $50,000

d. $100,000

11) Determine the lump-sum amount the Sungi will need at the beginning of retirement at age 62. Round I to nearest hundredth. Round amounts to nearest dollar. (Calculation of Lump Sum Needed at Retirement- PVAD)

a. $1,829,461

b. $113,050

c. $2,374,098

d. $943,618

12) What would Sangi’s Social Security benefit be if he plans on drawing when retires (assume he retires in his birthday month? Disregard any COLAs.

a. $30,000

b. $37,791

c. $21,000

d. $22,500

13) How much more does Sangi need to save at the end of each year to meet his savings target?

a. 20,795

b. 41,860

c. 32,425

d. Sangi doesn’t need to a save anymore, he is on target