year tor the neat 30 years. He plativ an pot enehalf of his money in a mutual fand contaieing shorks aed the oifter ofe-baif in o metual fund containing bunde. grows at 10\%, jer year, and his boed fund rries at 67 per jur. 45000+5% of 45000=445000+2250(7) 10%=55500 f10\% of 50005=14+280 and wasts to find the inceme he noedt at ant 67 we hive the aame parchaning pewer at in Section (a) 1.) 3. 1. has cead newypaper articles etating that 5ecial Scourity beactits will be reatuced in the yearn aheal. Afier scame thought, he decides in he ocoscrvative and asmime that Social Socurity will pay oerly the first 530 ixid of the ansal incere he sects at ate 67. Mind the tcmainisg income he will necd brginaiffe at age b7. 4. Li docides to plan funding for his tetiremest for 20 yein, from ages 67 to 87 . If funds earti 8. compounded ansually, find the perseat valos of the ansual incone that he needs at 67 based oe the income from gurt 3, above. 5. Will his expected savings fund his tetirenacer? 6. What could go wrong with his pilant? INVESTIGATE There is soine discwsice about the ability of Social Securing to piry retiremeat beaefies. Do you think Social Secunty =all be around to hele yeu duriag yout retirencent? What pernett of your retirement peeds do you think Social Secarty will pay? Try to suppert your views with recent anicles from newspapers, maeariter, or the Weeld Wide Wat Case Study //chll eq 452 FINANCIAL PLANNING At age 37, Paul Li decides to plan for his retirement at age 67. He currently has a net worth of about 545.000 including the equity in his horge He assumes that his employer will contribute $3500 to his retirement plan at the end of each year for the next 30 years. He plans to pot onehalf of his money in a mutual fund containing haif of his money in a mutual fund containing containing bonds: 1. Estimate Li's net worth at age 67 if his net worth grows at 5% per year, his stock fand grows at 10% per year, and his bond fund grows at 6% per year. 45000+5% of 45000=445000+2250 (T7) 1. 1160650147+24,59750,5565 is amazed that he will be able to aceumulate over $600,000. However, he knows that 2. Li is amazed that he will be able to aceumulate over $600,000. However, he knows that inflation will increase his cost of living significantly in 30 years. He atsumes 3% inflation $40,000 today. (Hint; Look at inflation in Section 10.2 and use the compound interest table in Section 10.1.) 3. Li has read newspaper articles stating that Social Security benefits will be reduced in the 2. years ahead. After some thought, he decides to be conservative and assume that Social Security will pay only the first $30.000 of the annual income he necds at age 67 . Find the remaining income he will need beginning at age 67 . 34 4. Li decides to plan funding for his retirement for 20 years, from ages 67 to 87 . If funds eam 8% compounded annually, find the present value of the anneal income that he needs at 67 based on the income from part 3, above. 5. Will his expected savings fund his retirement? 5. raw 6. What could go wrong with his plans? year tor the neat 30 years. He plativ an pot enehalf of his money in a mutual fand contaieing shorks aed the oifter ofe-baif in o metual fund containing bunde. grows at 10\%, jer year, and his boed fund rries at 67 per jur. 45000+5% of 45000=445000+2250(7) 10%=55500 f10\% of 50005=14+280 and wasts to find the inceme he noedt at ant 67 we hive the aame parchaning pewer at in Section (a) 1.) 3. 1. has cead newypaper articles etating that 5ecial Scourity beactits will be reatuced in the yearn aheal. Afier scame thought, he decides in he ocoscrvative and asmime that Social Socurity will pay oerly the first 530 ixid of the ansal incere he sects at ate 67. Mind the tcmainisg income he will necd brginaiffe at age b7. 4. Li docides to plan funding for his tetiremest for 20 yein, from ages 67 to 87 . If funds earti 8. compounded ansually, find the perseat valos of the ansual incone that he needs at 67 based oe the income from gurt 3, above. 5. Will his expected savings fund his tetirenacer? 6. What could go wrong with his pilant? INVESTIGATE There is soine discwsice about the ability of Social Securing to piry retiremeat beaefies. Do you think Social Secunty =all be around to hele yeu duriag yout retirencent? What pernett of your retirement peeds do you think Social Secarty will pay? Try to suppert your views with recent anicles from newspapers, maeariter, or the Weeld Wide Wat Case Study //chll eq 452 FINANCIAL PLANNING At age 37, Paul Li decides to plan for his retirement at age 67. He currently has a net worth of about 545.000 including the equity in his horge He assumes that his employer will contribute $3500 to his retirement plan at the end of each year for the next 30 years. He plans to pot onehalf of his money in a mutual fund containing haif of his money in a mutual fund containing containing bonds: 1. Estimate Li's net worth at age 67 if his net worth grows at 5% per year, his stock fand grows at 10% per year, and his bond fund grows at 6% per year. 45000+5% of 45000=445000+2250 (T7) 1. 1160650147+24,59750,5565 is amazed that he will be able to aceumulate over $600,000. However, he knows that 2. Li is amazed that he will be able to aceumulate over $600,000. However, he knows that inflation will increase his cost of living significantly in 30 years. He atsumes 3% inflation $40,000 today. (Hint; Look at inflation in Section 10.2 and use the compound interest table in Section 10.1.) 3. Li has read newspaper articles stating that Social Security benefits will be reduced in the 2. years ahead. After some thought, he decides to be conservative and assume that Social Security will pay only the first $30.000 of the annual income he necds at age 67 . Find the remaining income he will need beginning at age 67 . 34 4. Li decides to plan funding for his retirement for 20 years, from ages 67 to 87 . If funds eam 8% compounded annually, find the present value of the anneal income that he needs at 67 based on the income from part 3, above. 5. Will his expected savings fund his retirement? 5. raw 6. What could go wrong with his plans