Post date: Mar 21, 2013 3:2:48 PM

Case Problem 2

Joe Henderson has recently begun to save for his retirement. He already has $25,000 in savings and is able to save $3,000 a year this year. Joe is currently 50 years old and expects to retire when he is 65 years old. Joe estimates that he will need $3,100 a month in after-tax income from his retirement plan during retirement to meet his financial goals. Joe is currently in the 25% tax bracket and expects to be in a 15% tax bracket when he retires. Joe will be investing his savings in a tax deferred investment that will earn 17% while he is working. At retirement he will shift his retirement savings into a lower risk category of assets that yield 9% annually.

1.Use the Retirement Income Calculator to determine how much money Joe will have saved if he continues to put $3,000 a year into his retirement account for the next fifteen years.

2.

Joe expects to live for 35 years after he retires. Use the Retirement Income Calculator to determine what his after-tax monthly income during retirement will be if Joe continues to put $3,000 a year into his retirement account for the next fifteen years.

3.