1. Your friend Manuel is 20 years old and wants to begin taking steps to prepare for retirement right now. Manuel has a limited budget that does not allow a maximum contribution to a defined contribution plan, but he thinks he can save $5,500 per year into a plan. Which retirement plan type would you recommend that he utilize based on his limited income and contributions? How much could the account be worth if he continues contributing until he reaches age 65?

2. For the final calculation, lets go beyond this chart instead, utilize one of the retirement calculator websites provided in this module (or find an alternative one that you prefer instead), and determine how much you need to be saving annually to reach your savings goals and your ideal retirement age.

   1. Please explain which calculator website you selected, and the information you provided to create your calculation.

   2. What did you find interesting about this retirement savings calculator simulation? Anything stand out to you that you may or may not have considered previously?

   3. What are you hoping to start implementing or adjust in your current retirement savings plan?

Calculate Retirement Savings Goals Savings Rate for Various Retirement Needs and Starting Ages - The chart below provides examples of required retirement saving rate, or percentage of your income, that you need to put aside for retirement. Required Retirement Savings Rate to Reach Amount Needed at Average Career Retirement Income Retirement Goal Start Saving at Start Saving at Start Saving at Age 25 Age 35 Age 45 $178,250 $23,000 7.2% 12.7% 24.7% $537,500 $50,000 10.0% 17.6% 34.3% $936,000 $78,000 11.2% 19.7% 38.3% $1,620,000 $120,000 12.6% 22.1% 43.0% If you expect to have average career earnings of about $78,000 and plan to start saving for retirement at age 25, you will need to save approximately a little more than 11% of your income until age 65 to reach your retirement goal. However, if you wait to start saving for retirement until age 45, then you will need to make up the difference by saving more than 38% of your annual income until age 65. If you want to retire early, start saving at age 25 but use a savings rate as if you were starting at age 35. Calculate Retirement Savings Goals Savings Rate for Various Retirement Needs and Starting Ages - The chart below provides examples of required retirement saving rate, or percentage of your income, that you need to put aside for retirement. Required Retirement Savings Rate to Reach Amount Needed at Average Career Retirement Income Retirement Goal Start Saving at Start Saving at Start Saving at Age 25 Age 35 Age 45 $178,250 $23,000 7.2% 12.7% 24.7% $537,500 $50,000 10.0% 17.6% 34.3% $936,000 $78,000 11.2% 19.7% 38.3% $1,620,000 $120,000 12.6% 22.1% 43.0% If you expect to have average career earnings of about $78,000 and plan to start saving for retirement at age 25, you will need to save approximately a little more than 11% of your income until age 65 to reach your retirement goal. However, if you wait to start saving for retirement until age 45, then you will need to make up the difference by saving more than 38% of your annual income until age 65. If you want to retire early, start saving at age 25 but use a savings rate as if you were starting at age 35