Bob is 37 years old and is an account manager with a large telecom company. He’s...

Bob is 37 years old and is an account manager with a large telecom company. He’s been dragging his feet with his retirement plan, opting instead for expensive trips to Vegas and Aspen. He’s decided it’s time to get serious about saving for his retirement. He plans to retire at age 67 and travel the world. Because of this plan, he figures he needs approximately $70,000/year in retirement. His grandfather lived until he was 86 and his dad is in perfect health at age 70, therefore Bob figures he should plan to be around until he’s 90. So far, he has $11,000 saved for retirement and because of his aggressive investment philosophy, is planning for a return on all his investments before retirement of 8%. Following retirement he will invest more conservatively and will plan for a 5% return on investments. His company’s retirement plan is defined contribution, so he doesn’t plan on getting a pension. He is not counting on social security to be around, so he isn’t including that in his plan. Thus, his entire retirement will be funded on his own savings.

2) How much money will Bob need during retirement based on his calculations?

3) How much will Bob need to save each year to be ready for retirement at age 67?

Expert Solution

Bob need $ 70000 per year for 23 years (90 - 67) after his retirement for travel
He will earn 5% return on his investment after his retirement
we will use 5% PV factor for deriving Investment value at the time of retirement
Below is the gross amount required at the time of retirement value he needed to get $ 70000 per year after his retirement

n	I = 0.05	Retuns per year	Value of investment at the time of retirement
1	0.952380952	$ 70,000.00	$ 66,666.67
2	0.907029478	$ 70,000.00	$ 63,492.06
3	0.863837599	$ 70,000.00	$ 60,468.63
4	0.822702475	$ 70,000.00	$ 57,589.17
5	0.783526166	$ 70,000.00	$ 54,846.83
6	0.746215397	$ 70,000.00	$ 52,235.08
7	0.71068133	$ 70,000.00	$ 49,747.69
8	0.676839362	$ 70,000.00	$ 47,378.76
9	0.644608916	$ 70,000.00	$ 45,122.62
10	0.613913254	$ 70,000.00	$ 42,973.93
11	0.584679289	$ 70,000.00	$ 40,927.55
12	0.556837418	$ 70,000.00	$ 38,978.62
13	0.530321351	$ 70,000.00	$ 37,122.49
14	0.505067953	$ 70,000.00	$ 35,354.76
15	0.481017098	$ 70,000.00	$ 33,671.20
16	0.458111522	$ 70,000.00	$ 32,067.81
17	0.436296688	$ 70,000.00	$ 30,540.77
18	0.415520655	$ 70,000.00	$ 29,086.45
19	0.395733957	$ 70,000.00	$ 27,701.38
20	0.376889483	$ 70,000.00	$ 26,382.26
21	0.358942365	$ 70,000.00	$ 25,125.97
22	0.341849871	$ 70,000.00	$ 23,929.49
23	0.325571306	$ 70,000.00	$ 22,789.99
Total amount required at retirement			$ 9,44,200.17

Bob already have $ 11000 savings for retirement which will grow at 8% for 30 years i.e. till his retirement

i.e.	= $ 11,000.00 x annuity for n=30, i=8%
=	$ 1,10,689.23

Net amount required at the time of retirement will be
=	944,200.171884504 - 110,689.225779807
=	$ 8,33,510.95

He will earn 8% return on his investment till his retirement
Calculation of amount that need to be invest per year till retirement by bob

Invesment amount =		Amount required at the time of retirement
		Cumulative annuity factor for i= 8%, n= 30
	=	$ 8,33,510.95
		122.3520854	(see note for annuity factor)
	=	$ 6,812.40

A ) Bob need $ 944,200.17 at the time of retirement based on his calculations

B ) Bob need to save $ 6,812.40 each year to get ready fo retirement

Note :
30 years of investment (i.e. age of retirement less current age)

FUTURE VALUE OF $1
n	0.08
1	1.086217443
2	1.1664
3	1.259712
4	1.36048896
5	1.469328077
6	1.586874323
7	1.713824269
8	1.85093021
9	1.999004627
10	2.158924997
11	2.331638997
12	2.518170117
13	2.719623726
14	2.937193624
15	3.172169114
16	3.425942643
17	3.700018055
18	3.996019499
19	4.315701059
20	4.660957144
21	5.033833715
22	5.436540413
23	5.871463646
24	6.341180737
25	6.848475196
26	7.396353212
27	7.988061469
28	8.627106386
29	9.317274897
30	10.06265689
Cumulative annuity factor	122.4320854

jeff jeffy answered 1 year ago

Case Study 1 – Bob and Communication Barriers Bob is a 25-year old manager at a...

Case Study 1 – Bob and Communication Barriers Bob is a 25-year old manager at a newly opened fast food restaurant. Bob is very keen to play his role and he loves his job. Bob is responsible for supervising and managing all employees under his supervision. The Employees range in age from 16 to 55 years. In addition, the employees come from diverse cultural and ethnic backgrounds. For many, English is not their primary language. Bob is exposed to food...

Doug, 60 years old, has a long history of smoking. He’s had a “cold” for several...

Doug, 60 years old, has a long history of smoking. He’s had a “cold” for several days, but now is feeling worse with a temperature up to 103O F and “rusty” sputum. Upon exam, he has wheezing with crackles and rhonchi in the lower lungs. 1 Describe what you expect to see in a Gram stain of his sputum. 2 Fully describe how this disease can be prevented. 3 Name two other microbes commonly causing pneumonia for which there is...

Being a first line manager of telecom Company, you are required to make a proposal for...

Being a first line manager of telecom Company, you are required to make a proposal for purchasing six new 1300cc cars for office use. Elaborate, with working, the steps you will follow to take rational decision for purchasing the most suitable cars.

Zool 3303 Pathophysiology Mystery Disease Context John is 14 years old white male. He’s taken to...

Zool 3303 Pathophysiology Mystery Disease Context John is 14 years old white male. He’s taken to the doctor’s office by his mother. He tried to play baseball at 10 years old but his coordination was not good, he gets tired very quickly, and his leg muscle aches. . He has been growing very fast over the last year or so, and he was wearing size 12 shoe, but without putting on muscle weight like his brother did at that age....

Assistant Project Manager Jim Rains was 26 years old, newly hired at a large commercial construction...

Assistant Project Manager Jim Rains was 26 years old, newly hired at a large commercial construction company, and was assigned to work on a $34 million dollar university classroom project in the southeast United States. Upon arriving on the job site, Jim was introduced to head superintendent Bob Moore who had been with the firm for 25 years. Bob was an exceptionally proficient organiser and was often requested by clients for the supervision of their construction projects. As the project...

Imagine you work for a large service provider (e.g., a telecom company). Discuss the importance of...

Imagine you work for a large service provider (e.g., a telecom company). Discuss the importance of information security, considering that a good percentage of your sales force, service people, and managers work remotely at least part of the time.

A manager is working in a Telecom company, what legal-political and economic factors he needs to...

A manager is working in a Telecom company, what legal-political and economic factors he needs to be aware of, in managing globally?

Mr. Donald Heffernan, a 35 years old account manager At Wells Fargo has gross annual income...

Mr. Donald Heffernan, a 35 years old account manager At Wells Fargo has gross annual income after all deductibles of $85,000. Mrs. Heffernan quit her job at Walmart to take care of their twin kids, Luke and Christine. So Mr. Heffernan is the only income earner at his house hold. Mr. Heffernan is filing income using the following “Married filing jointly” tax rate schedule. Taxable income over Not over Tax rate $0 18,450 10% 18,451 74,900 15% 74,901 151,200 25%...

23-year-old Josh has been suffering from extreme psoriasis for eight years. He’s tried all sorts of...

23-year-old Josh has been suffering from extreme psoriasis for eight years. He’s tried all sorts of creams to no avail but has found that sunlight has a positive effect. Pixie warns against over-exposure to sunlight and suggests Josh stops smoking and cuts down on alcohol. If he does this he might be eligible for biological treatment, in which medication is administered to attack psoriasis from inside his body, rather than applying ointments and creams externally. Cyclosporin, a potent drug, has...

For the last eight years, Bob Hartley and his family have lived in a large Victorian...

For the last eight years, Bob Hartley and his family have lived in a large Victorian house in Vermont. At the beginning of the current year, Bob and his wife decided to convert the house into a bed and breakfast. The family, including the two children and the dog, move into the basement which accounts for 30% of the square footage of the house. The basement has two bedrooms, two bathrooms, a den and a small kitchen. The upper two...

Question