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    Retirement Plan Inputs

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    api-645059243
    The document outlines a retirement plan for someone who is currently 20 years old and plans to retire at 65. It provides details on their current age and retirement age, household income, current and planned annual retirement savings, expected income increases, years of retirement, and expected returns on investments before and during retirement. Based on these inputs, it estimates that the person will have $183,573 in last year income before retirement and will need around $91,786 annually in retirement expenditures. Their ending retirement balance is projected to be $0.

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    Retirement Plan Inputs

    Uploaded by

    api-645059243
    27 views3 pages
    The document outlines a retirement plan for someone who is currently 20 years old and plans to retire at 65. It provides details on their current age and retirement age, household income, current and planned annual retirement savings, expected income increases, years of retirement, and expected returns on investments before and during retirement. Based on these inputs, it estimates that the person will have $183,573 in last year income before retirement and will need around $91,786 annually in retirement expenditures. Their ending retirement balance is projected to be $0.

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    The document outlines a retirement plan for someone who is currently 20 years old and plans to retire at 65. It provides details on their current age and retirement age, household income, current and planned annual retirement savings, expected income increases, years of retirement, and expected returns on investments before and during retirement. Based on these inputs, it estimates that the person will have $183,573 in last year income before retirement and will need around $91,786 annually in retirement expenditures. Their ending retirement balance is projected to be $0.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views3 pages

    Retirement Plan Inputs

    Uploaded by

    api-645059243
    The document outlines a retirement plan for someone who is currently 20 years old and plans to retire at 65. It provides details on their current age and retirement age, household income, current and planned annual retirement savings, expected income increases, years of retirement, and expected returns on investments before and during retirement. Based on these inputs, it estimates that the person will have $183,573 in last year income before retirement and will need around $91,786 annually in retirement expenditures. Their ending retirement balance is projected to be $0.

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    You are on page 1of 3

    B1

    Retirement Plan Inputs


    Current age 20
    Age of retirement 65

    Household income $50,000

    Current retirement
    $0
    savings

    Annual retirement
    12% ($6,000)
    savings

    Expected income
    3%
    increase

    Years of retirement
    30
    income

    Income required at
    50%
    retirement
    Investment Returns and Inflation
    Rate of return before
    7%
    retirement

    Rate of return during


    3%
    retirement

    Expected inflation
    3%
    rate
    Result Summary
    Years until
    45
    retirement

    Your last year's


    $183,573
    income

    Estimated annual
    retirement $91,786
    expenditures

    Your ending balance $0


    1. With inflation rising, I’ll have to put more of my income into retirement to meet the necessary
    requirements to building my retirement fund; This will reflect on my expenditures as well. As
    prices go up, I must make sure that I can deal with the changes from inflation to expenses so I
    can continue to put forward a portion of my income into my retirement fund. Some of the
    expenses that will increase from inflation are taxes, gas, medical, food, housing, and utilities.
    2. My expenditures during my retirement will begin to differ as my life changes over time. A few
    Expenses that will decrease over time will be mortgage payments and car payments which will
    hopefully all be paid off before then, the same will go for any kids I might have, since all of them
    will be grown up and moved out. As for increase on expenses, entertainment will be an increase
    since I’ll want to have some fun during my retirement, medical expenses will increase as my
    body begins to deteriorate from old age, and an increase in spending money on hobbies that I
    now or will have in the later future.
    3. Thinking about how much I might spend in retirement is a big deal for my planning. I must
    consider things like healthcare, daily living costs, and what I want to do for fun. It's like putting
    together a puzzle of my future expenses. I need to make sure I'm saving enough and investing
    smartly. I also must think about prices going up over time. By keeping an eye on all these factors
    and adjusting my plans as needed, I'm working towards a retirement that fits my lifestyle and
    won't leave me stressed about money.

    B2

    Monthly Income - $146,772.00

    Monthly Expense - $87,324.00


    B3

    Dealing with a 3% inflation rate while working means your money's buying power is slowly
    shrinking. Even with a 3% pay raise, everything gets more expensive, making it crucial to plan smartly.
    With a retirement plan, I must take into account my health and my expenses since they can change over
    the span of 30 years. I must work around my budget and expenses, including any inconvenient hiccups
    along the way to make sure my retirement will keep me covered for the rest of my life.

    If inflation continues its 3% rate of increase, my retirement savings will need to be actively
    managed during my 30 years of retirement. My expenses as of right now are around $7,277 and my
    income is $12,132 meaning my income overage is $4,954 the first year and decreases by 3% annually for
    17 years. At year 17, my income and inflated expenses meet each other at $144k. This leaves 13 years of
    expenses inflating higher than my monthly income.

    As a result, I will need to save the extra income overage during the first 17 years of my
    retirement. If I put it in a traditional bank account, I will have saved $518k. During the final 13 years of
    my retirement, I will be able to draw from this account the necessary funds to eliminate the delta
    between my expenses and income. After 13 years, I will have withdrawn only $418k, leaving $100k
    positive balance.
    It is extremely important that I account for inflation during both working years and retirement
    years. I will also need to actively manage my budget, income, and expenditures to make sure that I save
    enough for retirement, and still be able to enjoy an active lifestyle until I retire.

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