Question

1. How old are you now? I am 22 years old now. I plan on retiring at the age of 65.

Based on the assumption that I will live until the age of 90, I will need $75,000 per year.

Calculate the present value of the money you will need for retirement.

1. Choose two rates of return you would like to investigate. Chose a lower, conservative number, such as the current 3 year CD rate and chose a higher, more aggressive number, such as rate of stock return. You can choose whatever you want, but justify your answer.

2. Include assumptions for your future pension (give info on how calculated such as SURS website, etc.). Subtract future pension flow from the Future Value needed in first year of retirement.

3. Include assumptions for Social Security. Do NOT just say there will be no Social Security. Get into the Social Security website and figure what your SS would be at retirement. Subtract future Social Security flow from the Future Value needed in first year of retirement.

4. Include your spouse in your calculations. It would be a good idea to include columns in your spreadsheet for both you and your spouse, since you will each have different pensions, Social Security, etc.

5. After you have set up the income flows from pensions and Social Security, you will have the amount of money you still need per year. If you are VERY fortunate, you will have enough pension and Social Security to cover your annual income/expense needs.

6. But most of you will need to save up a nest egg to use as an income flow over the years you retire.

Answer the Following Questions:

1. Are you surprised by the number?

2. Do you think you will be ready for retirement?

Show your use of financial analysis. Use facts!

1. Does this project include Social Security?

2. Does it include pensions?

3. Include descriptions on techniques you will use to save for retirement such as increasing your savings rates when you receive promotions and raises.

4. Include techniques such as increasing savings after children are out of the house, or out of college, etc.

Answer 1

Question 1:

You will lead a retirement life from 65 to 90. Number of years in retirement = 90-65 = 25 years

Total capital needed for retirement = 75,000*25 = $1,875,000

You are now 22 years, number of years for retirement = 65-22 = 43 years

Present value of money that you will need for retirement = Retirement capital/(1+r)^n. Here, we do not have the interest rate given, so we assume its 6% ( We assume you use a combination o debt and stock equity to get an average return of 6%).

Present value of money that you will need for retirement = 1,875,000/1.06^43 = $153,055.54

Note: We have answered one full quetsion. Kindly note only one full question will be answered at a time. Kindly post other questions seperately for experts to answer.