Summer 2008 Independent Learning @ WLC
Instructor: Dr Jack Kapoor
Assignment #4 Individual Investment Plan
Dawn M Russo
To begin assignment four, I created three long-term financial goals: 1. Emergency Fund: 6 months to 1 year of gross income.
2. College Funding: Two children, ages 6 and 11 years old.
3. Retirement Plan: Including provisions for the possible Social Security program end.
I chose to focus on the retirement plan goal and consider the potential for income loss if the SS program does “go under” in 2014. Per the Social Security Administration’s own prediction, their allocation for these benefits will be zero in the year 2014. As the “Baby Boomers” retire, it will take approximately two worker’s income reductions to support every one “Baby Boomer.” I began by determining the amount of money I would need to live comfortable after retirement. This I concluded by using a calculator provided by KJE Computer Solutions, LLC. I entered my current household income yearly, the age at which I would retire and at what percentage I would like make income contributions. They formulated the remaining factors and made suggestions as to which options I should increase to formulate a plan that met my goals. I had to increase my income contributions, lower the amount I projected for living expenses, and increase the current rate of return. I reduced the rate of salary increase in figuring the amounts if there was no Social Security benefits to allow for a larger gap in the total amount. The final figures that I came up with were:
a. $5135.00 or 8.27% contributions made from income yearly b. 10.23% current rate of return/yr c. 8 % rate of return in retirement/yr d. 4% estimated salary increases (3% salary increase w/SS)/yr e. 3.1% inflation rate /yr f. $ 905,551 at 65 years old (923,363 at 65 with SS) g. $66,820.00 Social