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CHAPTER 14

Table 14.1 Jeff and Mary Client

Date

  • I.

    Estimated Household Expenditures in Retirement

    • A.

      Number of years until retirement

    • B.

      Current level of household expenditures

C. Estimated retirement expenses (as a percentage of current)

10 $72,000 100%

II

D. Estimated retirement expenses (B C) . Estimated Retirement Income

$72,000

    • E.

      Social Security income — annually

    • F.

      Expected pension income — annually

    • G.

      Other income

    • H.

      Total annual retirement income (E + F + G)

    • I.

      Excess (shortfall) of income

  • III.

    Inflation

    • J.

      Estimated inflation rate

    • K.

      Inflation factor

    • L.

      Inflation-adjusted shortfall (if necessary)

  • IV.

    Funding the Shortfall

    • M.

      Anticipated rate of return on assets during retirement

    • N.

      Required amount needed (L/M)

    • O.

      Anticipated rate of return on assets before retirement

    • P.

      Compound interest factor

    • Q.

      Annual savings required to fund retirement

$15,000 $0 $0 $15,000 ($57,000)

5% 1.629 $92,853

10% $928,530 8%

14.487 $64,094

  • *

    This is Jeff’s and Mary’s worksheet, which shows how much money they will need to

fund their retirement. You may easily substitute your figures for theirs to come up with the amount of money you need to save for your retirement. This example is a one-time-only chart. Throughout your lifetime, these figures will need to be updated and reanalyzed.

There are many different types of accounts that you can use to help accumulate your retirement nest egg. The most common are employer- sponsored retirement accounts, such as 401(k)s, 403(b)s ,and 457 plans. There are retirement plans that are designed for self-employed people,

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