Create an estimate of your future annual earnings

Reference no: EM131134402

Retirement Planning

This is the first of three parts of a retirement planning exercise that gives you an opportunity to employ time value of money principles to prepare for retirement. This assignment should be prepared as a memo.

Demographics and justifications:

• Assume you are beginning full time work this year.

• State the age at which you plan on retiring. How many years do you have to accumulate the dollars necessary to commence retirement?

• Report the age at which you expect to die and how much money (if any) you want to have upon death to leave to someone or some organization. How many years will you be spending money in retirement?

• Show these assumptions and their justifications on your spreadsheet.

Expected Retirement Spending: (Use a spreadsheet to make this easier)

• Create an annual expense budget for your needs in your first year of retirement using today's dollars. For example, you may have no mortgage payment due in retirement. Note that if you retire prior to being eligible for Medicare (age 65 under current law), you will also need to budget for medical insurance. There are sources online available to help you find an estimate of this. Recognize that this figure could vary widely based on your future health.

• Note that it is not necessary to establish a budget that varies from month to month. The focus of this assignment is your annual needs rather than your expected monthly cash flows.

• Using your estimate of expenses in today's dollars, the number of years before retirement and a rate of inflation assumption of 2.1%, report how much money you expect to spend in your each year of retirement in future dollars. Remember to continue to adjust for inflation to account for the impact of inflation during retirement.

Earnings and Savings Behavior:

Create an estimate of your future annual earnings in a spreadsheet, reporting the following assumptions:

• Your actual current retirement savings
• Average annual salary growth rate
• The percentage of salary you expect to contribute each year between now and retirement toward work-sponsored retirement accounts (e.g., 401(k)), including the assumed employer contribution percentage. This can vary from year to year if you wish, either increasing or decreasing over time.

If you do not use a linear salary growth rate, please bold the figures that use a different assumption. For example, if you give yourself a flat $10,000 raise at age 30 because you predict a promotion that year, bold the salary of the year in which the $10,000 raise applies. If you see yourself leaving the workforce to return to school, bold the reduced student salary you expect during those years.

Attachment:- Retirement_Assignment_Template.xlsx

Reference no: EM131134402

Questions Cloud

The board of directors is considering either a stock : The board of directors is considering either a stock split or a stock dividend.They understand that total stockholders' equity will remain the same under either action.

Probability of expected profits and the variance of profits : Stringerbelltx: A woman in a highland village in the Andes knits sweaters and sells them for export. She also takes care of her family and helps farm the family land; therefore, the amount of time she can devote to knitting is random. The probability..

Use equation editor to write mathematical expressions : To determine if two equations form lines that are perpendicular without graphing, you need to compare the slopes of the two lines. If they are indeed perpendicular, the slope of one line will be the negative reciprocal of the slope of the second line..

Write an assignment paper on childhood obesity legislation : Write an Assignment paper on Childhood obesity legislation- What is the health problem being addressed?- What is the underlying biological process of the health problem?

Create an estimate of your future annual earnings : Create an estimate of your future annual earnings in a spreadsheet, reporting the following assumptions your actual current retirement savings and average annual salary growth rate.

What can we infer about the behavior of prices over time : Will output vary or stay fixed in the long run? Suppose the aggregate demand curve were to remain fixed: What can we infer about the behavior of prices over time?

What is an output gap in this hypothetical economy : What is an output gap in this hypothetical economy? Based on your estimate of the output gap, would you expect the unemployment level to be higher or lower than usual?

Calculate the cast distance of the rod : Calculate the spring energy stored (in ft·lbf) in the rod just prior to release of the bait as a function of the bend in the rod (an expert caster will create maximum deflection in the rod).

Explain the principles of structural analysis : Explain the principles of structural analysis - Determine the compressive stress in the column and what is the necessity of using this factor while designing and On what parameters does this factor depend on?

User Account

All Pages