Question

2.) Margaret a 35 year old client who earns $ 45,000 a year pays 7.65%
of her gross pay in social security payroll taxes and saves 8% of her annual gross income. Assume that Margaret wants to maintain her exact pre retirement lifecycle.calcualte Margaret’s wage replacement ratio using the top down approach round to the nearest % and using pre tax dollars.

a.)70%
b.)80%
c.)84%
d.)90%


5.) Tiffany a self employed dentist currently earns $ 100,000 per year.
Tiffany has always been self proclaimed saver and saves 25% per year of her schedule C net income. Assume tiffany paid $ 13,000 in social security taxes. Tiffany plans to pay off her home mortgage. What do you expect Tiffany’s wage replacement ratio to be at retirement based on the above information ?

a.)37.00%
b.)59.70%
c.)65.30%
d.)84.70%


7.) Contributing $ 1,500 to his retirement fund at the end of each year beginning at age 18,through age 50,with an average annual return of 12%,how much does Juan have in his retirement account at this time to use toward a possible early retirement?

a.)$ 346,766.42
b.)$399,987.65
c.)$457,271.58
d.)$541,890.55


8.)Steve and Roslyn are retiring together today and they wish to receive $ 40,000 of income(in the equivalent of today’s dollars) at the beginning of each year from their portfolio. They assume inflation will be 4 % and they expect to realize an after tax return of 8%.Based on life expectancies, they estimate their retirement period to be about 30 years. They want to know how much they should have in their fund today.

a.) $698,457.24
b.) $728,299.37
c.) $731,894.20
d.) $813,529.88


9.)Tyrone age 25 expects to retire at the age of 60.He expects to live until the age 90.He anticipates needing $ 45,000 per year in todays dollars during retirement. Tyrone can earn 12% rate of return and he expects inflation to be 4%How much must Tyrone save at the beginning of each year, to meet his retirement goal?

a.)$ 3,908.76
b.)$4,585.46
c.)$4,879.29
d.)$5,132.33


10.)Roy and Barbara are near retirement .They have a joint life expectancy of 25 years in retirement. Barbara anticipates their annual income in retirement will need to increase each year at the rate of inflation, which they assume is 4%.based on the assumption that their first year retirement need, beginning on the first day of retirement, for annual income will be $ 85,000 of which they have $ 37,500 available from other sources, and an annual after tax rate of return of 6.5%,calculate the total amount that needs to be in place when Roy and Barbara begin their retirement .

a.)$743,590,43
b.)$859,906.74
c.)$892,478.21
d.)$906,131.31


13.) Kwame and Omarosa both the age 40 have $ 80,000 of combined retirement assets. They both expect to retire at the age of 65 with a life expectancy of 100 years old. They expect to earn 10% on the assets within their retirement accounts before retirement and 8% during their retirement. If they did not make any additional contributions to their account and they receive a fixed monthly annuity benefit for life, what is the monthly benefit (annuity due)amount will receive during retirement.

a.)$ 4,775.30
b.)$ 4,984.20
c.)$ 6,115.60
d.)$ 6,156.37


15.)Bowie ,age 52,has come to you for help in planning his retirement.
He works for a bank, where he earns $ 60,000.Bowie would like to retire at age 62.He has consistently earned 8% on his investments and inflation has averaged 3 % .Assuming he is expected to live until age 95 and he has a wage replacement ratio of 80%,how much will Bowie need to have accumulated as of the day he retires to adequately provide for his retirement lifestyle?

a.)$726.217.09
b.)$784,314.45
c.)$1,050,813.28
d.)$1,101,823.40


16.)Assuming the same facts as question 15 approximately how much must Bowie save at the end of each year,from now until retirement to provide him with the necessary capital balance assuming he has a zero balance today?

a.)$67,163.98
b.)$70,424.36
c.)$72,537.10
d.)$76,058.31


17.)Utilizing the facts given in question 15 how much more will Bowie need at retirement to have the same amount at his death as he will have (calculated in # 15) at his retirement?

a.)$82,897.54
b.)$86,921.67
c.)$109,496.29
d.)$ 230,545.40

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