How much money will they need to have in their retirement

Assignment Help Financial Management
Reference no: EM132031599

Tom and Debbie are starting to take their retirement planning seriously. They are both 46 and plan to retire in 20 years at the age of 66. They expect to live 15 years in retirement (a life expectancy of 81). Between their 401k and IRA accounts they currently have $67,966 in retirement savings.

They currently have a combined income of $88,000 per year and expect to be able to live comfortably in retirement with 80% of their current purchasing power. They expect inflation to be 2% per year for the rest of their lives.

They also expect to earn 11.0% per year (the average return on Blue Chip stocks) on their investments, both now and in retirement. Conduct an analysis of their retirement planning needs and provide them with a professionally written letter.

In the letter and attached schedules provide information that answers the following questions. Please include a description of the relevant assumptions and any explanatory comments that make the results easier to understand.

Assuming they will continue to earn 11.0% on their investments, how much money will they need to have in their retirement accounts when they retire so that it will provide the fifteen years of income? (note: at the end of the 15 years the account balance should be zero.)

Reference no: EM132031599

Questions Cloud

What is toms dollar-weighted average return on investment : In this year his portfolio returns 2%. What is Tom's dollar-weighted average return on his investments?
How much will the building be worth at the end of the year : How much will the building be worth at the end of the 20th year if his expectations are correct?
Combustion of what volume of ethane : The combustion of what volume of ethane (C2H6), meaured at 23.0 degrees Celsius. and 752 mmHg
What cost of capital was the market using to price the stock : If the stock price today is $50 today (which includes the value of the dividend to be paid today), what cost of capital was the market using to price the stock?
How much money will they need to have in their retirement : They currently have a combined income of $88,000 per year and expect to be able to live comfortably in retirement with 80% of their current purchasing power.
What is his wavelength at this speed : A sprinter must average 24.0 mi/h to win a 100-m dash in 9.30 s. What is his wavelength at this speed if his mass is 84.5 kg?
Measured atmospheric pressure in inches : The weather stations give the atmospheric pressure in inches of Hg. What is your measured atmospheric pressure in inches Hg start with 871.7mmg
Prepare journal entries for all dates : Prepare journal entries for all dates. Use straight-line amortization. When computing amortization, round your monthly amortization amount to the nearest cent
What does toms example demonstrate : Tom bought a ten-year bond with annual coupons of 10% and a face value of $ 1,000 at a YTM of 10%.

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