The purpose of this exercise is to help you understand how much money you will need at retirement to maintain a reasonable standard of living, taking into account Social Security payments, a company retirement plan and personal savings.

• Go to Social Security Life Expectancy (https://www.ssa.gov/oact/STATS/table4c6.html) and take a look at the “how long you can expect to live”. Remember this estimate is based on current longevity and advances in longevity that is known to be occurring. Your higher educational status, your income potential and medical advances during your career are likely to extend the time you will live. Find your age and then add the number in the column labeled “Life Expectancy” to your current age to determine how long you might live.
• Then go to Quick Calculator (https://www.ssa.gov/OACT/quickcalc/). The Quick Calculator is just that, it provides a quick estimate of what you may expect to get from Social Security when you retire. Enter your date of birth. You must be at least age 22 to use the calculator. If you are not yet 22 assume that you were born in 1995 or before. Then enter the earnings you might expect to receive in your first year of professional work. Then your future retirement date (remember, you can get reduced payments at 62, full payments at 67, and increased payments if you retire after that, with the maximum occurring at age 70). Lastly, check the box for “inflated (future) dollars”. Then click on submit request.
• You now have your baseline data: how long you have to live after you retire, when you will retire, and your Social Security income. Next we will determine how much you will need from other sources.
• Go to Choose to Save® (http://www.choosetosave.org/ballpark/index.cfm?fa=interactive). This will provide you with the amount you need to save to reach some specified replacement income. In the current work environment, most employers provide a 401(k) and we will assume that is the retirement plan you will participate in. Typically, in a 401(k) plan the company makes a 50% matching contribution on the first 5% of your salary you put in these tax-deferred plans. If you make a 5% savings contribution on a $60,000 salary, you would put in $3,000 and the company would contribute half of that, or $1,500. The money would go into an investment fund where it would grow until you retire or reach age 70, when required distributions begin.

For questions 1, 2 and 3, enter your age, the salary you would expect in first year of employment and when (age) you would like to retire.

For 4, 5, 6 and 7, enter how much of your last year of working pay, in a percentage, will you need to retire comfortably? Then enter when you think you might pass away and what you think cost of goods and services (inflation) will increase until your retirement and how you think your pay will grow from when you start working until your retirement.

For 8 and 9, how much your will earn on your savings while invested both before you retire and after you retire.

For 10, the answer is no.

For 11, 12, 13 and 14 input "0".

For 15 input any savings you currently have as of today.

For 16 enter the Social Security amount calculated from the Quick Calculator.

Then click on submit and you will see what you need to save to reach your retirement goal. You should see a “replacement ratio”, the “percentage of salary you need to save” and a “dollar amount you will need to save annually”.

Questions to answer for Exercise 2

Answer the following questions.

• How long will you live, when will you retire, what is your expected Social Security benefit and how much do you have to save?
• How do you feel about how long you will live during retirement given your preferred retirement age and your anticipated life expectancy? Explain why.
• What is your reaction to the amount you need to save for retirement to maintain your standard of living? Explain why.
• How good an investment are your contributions to Social Security? Consider that you currently pay 6.2% of your pay up to $127,200 and your employer pays the same amount. So, if you make $100,000, a total of $12,400 goes into the Social Security Trust Fund. Is that a good use of you and your employer’s money? Do you believe Social Security will be there when you retire? Explain why or why not?
• How can you improve you own personal financial security in retirement?
• Provide three examples/ideas how HR can work with employees to make sure they understand the need to save and invest?

CourseLover

(12)

Status NEW Posted 16 Jul 2017 01:07 PM My Price 10.00

----------- He-----------llo----------- Si-----------r/M-----------ada-----------m -----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------. P-----------lea-----------se -----------pin-----------g m-----------e o-----------n c-----------hat----------- I -----------am -----------onl-----------ine----------- or----------- in-----------box----------- me----------- a -----------mes-----------sag-----------e I----------- wi-----------ll

Not Rated(0)

• Buy Answer