Question

In: Accounting

Ann E. Belle is age 45 and plans to retire in 20 years (at age 65)....

Ann E. Belle is age 45 and plans to retire in 20 years (at age 65). She has retirement savings in a mutual fund account, which has a current balance of $150,000 (Ann does not plan to add any additional money to this account).  Also, Ann opened a 401K retirement account with her new employer and will contribute $15,000 per year into her 401K until retirement.  

  • If Ann’s mutual fund account grows at an annual rate of 8.0% how much money will Ann have in her mutual fund account at age 65?  
  • If Ann’s 401K account grows at an annual rate of 8.0% per year, how much money will Ann have in her 401K account at age 65?
  • What is the total investment balance of Ann’s retirement account at the age of 65?
  • At retirement, Ann plans take the investment balance from her mutual fund account and the balance from her 401K account and combine them into an IRA account.  To minimize risk, her IRA account will invest in more conservative securities.  As a result, Ann anticipates her annual IRA returns to be about 5.0% during retirement.   While in retirement, Susan plans to withdraw $100,000 per year from her IRA account over the next 25 years.  Is this possible? Explain why or why not?

Solutions

Expert Solution

Detailed workings are as follows:

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Ann E. Belle is age 45 and plans to retire in 20 years (at age 65)....
Ann E. Belle is age 45 and plans to retire in 20 years (at age 65). She has retirement savings in a mutual fund account, which has a current balance of $150,000 (Ann does not plan to add any additional money to this account). Also, Ann opened a 401K retirement account with her new employer and will contribute $15,000 per year into her 401K until retirement. solve question algebraically and show work. 1.)If Ann’s 401K account grows at an annual...
1. George is currently 30 years old, plans to retire at the age of 65 and...
1. George is currently 30 years old, plans to retire at the age of 65 and to live to the age of 85. His labor income is $25,000 per year, and he intends to maintain a constant level of real consumption spending over the next 55 years. Assume no taxes, no growth in real salary, and a real interest rate of 3% per year. a. What is the value of George’s human capital? b. What is his permanent income? c....
Rick is currently 35 years old. He plans to retire at age 65 and hopes to...
Rick is currently 35 years old. He plans to retire at age 65 and hopes to live to age 85. His labour income is $50,000 per year, and he intends to maintain a constant level of real consumption spending over the next 50 years. Assuming a real interest rate of 3% per year, no taxes, and no growth in real labour income, what is the value of Rick’s human capital? ****I would like this broken down step by step, and...
You are 30 years old and want to retire at the age of age 65 and...
You are 30 years old and want to retire at the age of age 65 and expect to live another 25 years. On the day you retire, you want to have $900,000 in your retirement savings account. a) If you invest monthly starting one month from today and your investment earns 6.0 percent per year, How much money do you need to invest every month until you retire? b) You're retired with $900,000 and you have 25 more years. You...
Marcia, age 56, is starting to think about retirement. She plans to retire at age 65...
Marcia, age 56, is starting to think about retirement. She plans to retire at age 65 and she expects to liver to age 90. She estimates that she will need $50,000 per year, before tax in retirement to give her the lifestyle she wants. She will receive a non-indexed pension of $25,000 a year plus a combined $12,000 per year in CPP and OAS retirement income. She currently has $70,000 in her RRSP. For planning purposes, Marcia is using a...
Cathy Kung, 25, plans to retire at the age of 65. She estimates that she will...
Cathy Kung, 25, plans to retire at the age of 65. She estimates that she will need $50,000 in the first year of her retirement, and this post-retirement expenditure will increase at the rate of inflation of 2% per year. Based on her family history, she does not expect to live beyond the age of 90. After retirement, she will invest her money in bank deposits with an expected rate of return of 4% per year. Her post-retirement marginal tax...
Cathy Kung, 25, plans to retire at the age of 65. She estimates that she will...
Cathy Kung, 25, plans to retire at the age of 65. She estimates that she will need $50,000 in the first year of her retirement, and this post-retirement expenditure will increase at the rate of inflation of 2% per year. Based on her family history, she does not expect to live beyond the age of 90. After retirement, she will invest her money in bank deposits with an expected rate of return of 4% per year. Her post-retirement marginal tax...
Ms. Smith plans to retire in 25 years (she will be 65). The IRS longevity table...
Ms. Smith plans to retire in 25 years (she will be 65). The IRS longevity table forecasts that Ms. Smith will live to be 85 years old. Ms. Smith is expected to have 20 years in retirement. Ms. Smith needs to be able to withdraw $60,000 annually (end of each year) from her retirement investment account before the balance is fully used. This plus her $35,000 annually in social security benefits will serve her needs (she believes). During her 20...
Today is Sofia’s 35th birthday. She plans to retire in 32 years at the age of...
Today is Sofia’s 35th birthday. She plans to retire in 32 years at the age of 67, with expected life expectancy of 30 years after that. To maintain her life style, she thinks she will have to withdraw $8,000 from retirement account at the beginning of each month during retirement. Meanwhile, she plans to donate $100 to charity starting on her 70th birthday, and the monthly payment will continue till she passes away. In addition, she would like to establish...
A friend wants to retire in 30 years when he is 65. At age 35, he...
A friend wants to retire in 30 years when he is 65. At age 35, he can invest $500/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $1,500/month to catch up, earning the same 6% per year. He feels that by investing over twice as much for half as many years (15 instead of 30 years) he will have more. A. What is the future value of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT