Control of retirement investing

Assignment Help Corporate Finance

Reference no: EM1344201

Part 1

At the retirement planning meeting held recently, Richard and Monica were in agreement that they were well short of the money they needed for retirement at Richard's age 65. Monica said she was thinking of handling investments herself. Richard said he wanted to do it and thought that savings outside the pension given current lower tax rates for capital gains and dividends made sense.

1. Explain what do you think Monica's idea of taking control of retirement investing?

2. Explain what is your opinion of Richard's contention that saving outside the pension was best?

3. What are their alternatives in covering the shortfall in annual retirement savings?

4. What are your recommendations?

Part 2

Brad and Barbara also attended the meeting. They said they were too young to start saving for retirement. Retirement seemed "hundreds of years" away and they wanted to have fun today. They would have plenty of time to save for retirement when they were in their 50s.

1. How do you feel about their beliefs?

2. Explain the disadvantages of their approach.

3. Suppose they wanted to have $1 million accumulated in 40 years. Indicate how much money would have to be saved each year if they started now. Assume that the money would be accumulated in personal accounts and earn 6 percent a year after taxes.

Reference no: EM1344201

Questions Cloud

How would you design a specific customized compensation : How would you design a specific customized compensation plan for Agent-Principal (owners, managers also workers) which would address both increased productivity also decreased turnover.

Evaluate the ear for each investment choice : You have found three investment choices for a one-year deposit: 10.5% APR compunded monthly,

Sirius-xm radio potential merger : What do you think of the potential merger with Sirius and XM radio? Do you think they will be successful? Do you have any monopoly concerns?

Find value of the stock and expected price : A company paid a dividend of 1.80 per share but the dividend is expected to increase to 4 percent per year. The risk free rate is 6% and the market risk premium is 5 percent.

Control of retirement investing : Explain what do you think Monica's idea of taking control of retirement investing and explain what is your opinion of Richard's contention that saving outside the pension was best?

Mergers and team building : You've just been part of merger. You've each been chosen to head up your department and merge the two groups into a self-directed work team.

Compute the resulting equilibrium price quantity combination : Compute the resulting equilibrium price quantity combination for every industry. Illustrate your answer with a suitable graph.

Finding instruction format for indirect addressing : Determine the instruction format, considering that there is no bit for indirect addressing.

Find initial offering price : What would the initial offering price for the following bonds (suppose semiannual compounding)?

User Account

All Pages