Current pension plan portfolio investment mix

Assignment Help Financial Management
Reference no: EM131964161

Prof. Business realizes she is entering the last third of her career and is considering retirement in 12 years. She is in a self-managed defined contribution pension plan and through automatic payroll deduction and University matching both based on mandated percentages of her salary $1250/month is currently deposited into her pension plan. Due to the lack of recent raises at her public university, she doesn’t plan on these monthly contributions increasing much if any over the next 12 years.

Prof. Business currently has $500,000 in her pension plan account and is some what concerned if this along with her mandated future $1250 monthly deposits will adequately fund her retirement in 12 years. She is considering supplementing her pension plan by having automatic additional monthly deposits deducted into a 403c retirement plan which is like a 401k plan for employees of non-profit organizations like public universities. She is comfortable that this 403c plan since it has the same investment management companies and investment options as her current pension plan and it also has a Roth option where she won’t get a tax break for her deposits but her retirement withdrawals will be tax free. Prof. Business has a monthly deposit amount in mind, but wants your help in trying to figure out if this amount will be adequate. Given her current pension plan portfolio investment mix, she estimates a nominal annual expected return of 7.2% which translates to a 0.6% monthly expected return.

1. Prof. Business is considering having $900/month, which is about 10% of her monthly gross (pre-tax) salary deducted and deposited into the 403c for the next 12 years. This is addition to the $500,000 already in her pension plan today and the estimated $1250 monthly deposits into her current pension plan. What is the expected total value of Prof. Business’ retirement accounts after making end of the month deposits of $2150 for 10 years on top of her current retirement savings of $500,000 at her expected monthly return?

Reference no: EM131964161

Questions Cloud

Finances assets entirely with common stock : what is difference between CC's expected ROE if it finances these assets with 55% debt versus its expected ROE if it finances assets entirely with common stock?
What is portfolio dollar return and percentage return : What is your portfolio dollar return and percentage return?
Countries without child labor laws : Should MNCs Avoid DFI in Countries without Child Labor Laws?
Advantages and disadvantages of financial ratios : What are the Advantages and Disadvantages of Financial Ratios? What are some problems with ROE?
Current pension plan portfolio investment mix : Given her current pension plan portfolio investment mix, she estimates a nominal annual expected return of 7.2% which translates to 0.6% monthly expected return
Personal and enterprise risk comprehensive risk management : Traditional risk management has unlimited-scope to pure loss exposure including property, liability. personal and enterprise risk comprehensive risk management
What is the total value of the bank portfolio : If the bank hedges the futures contract, what is the total value of the bank’s portfolio?
Explain the two main types of trades : Can you explain the two main types of trades he could establish that are related to chemical sector bonds, including the mechanics and pros/cons of each?
Colleagues in the equity capital markets division : You are brought “over the wall” to discuss a potential $800 million block trade with your colleagues in the Equity Capital Markets division

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd