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Planning for Retirement: Calculating Needs

Summary of Steps. Estimate income you need to meet goalsEstimate your retirement incomeCompute your inflated-adjusted annual shortfallDetermine annual or monthly savings to meet retirement needStart saving!. Future Retirement Needs. 100% v. 70%-90% of current living expenses?Use projected

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Planning for Retirement: Calculating Needs

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    1. Chapter 14 Planning for Retirement: Calculating Needs

    2. Summary of Steps Estimate income you need to meet goals Estimate your retirement income Compute your inflated-adjusted annual shortfall Determine annual or monthly savings to meet retirement need Start saving!

    3. Future Retirement Needs 100% v. 70%-90% of current living expenses? Use projected living expenses?

    4. Future Retirement Needs

    5. Summary of Steps Estimate income you need to meet goals Estimate your retirement income Compute your inflated-adjusted annual shortfall Determine annual or monthly savings to meet retirement need Start saving!

    6. Social Security? Employer pensions? Other sources? Estimated Income in Retirement

    7. Estimate Social Security Income http://www.ssa.gov/estimator/ 30% reduction in benefits if retire at age 62 8% increase in benefits for every year you postpone retirement after age 67 and until age 70 Earnings test: Lose $1 of every $2 you earn over $14,160 (2011) when you retire early After-tax computation

    8. Employer-provided Pension Income Defined benefit typically formula-based (Boeing example) Defined contribution depends on Amount contributed annually Number of years of contribution Employer matching Performance of investments

    9. Statements (assumed rate of return) If you continue to contribute as you have, you may expect monthly income of $2,355 If you increase your contributions by $200 per month, you may expect monthly income of $2,570 Integrated pension plans Employer-provided Pension Income

    10. Estimate Other Income Windfall income, such as an inheritance from your gozillionaire Aunt Mildred

    11. Estimated Income in Retirement

    12. Summary of Steps Estimate income you need to meet goals Estimate your retirement income Compute your inflated-adjusted annual shortfall Determine annual or monthly savings to meet retirement need Start saving!

    13. Inflation-adjusted Shortfall

    14. Summary of Steps Estimate income you need to meet goals Estimate your retirement income Compute your inflated-adjusted annual shortfall Determine annual or monthly savings to meet retirement need Start saving!

    15. Nest Egg and Savings

    16. Summary of Steps Estimate income you need to meet goals Estimate your retirement income Compute your inflated-adjusted annual shortfall Determine annual or monthly savings to meet retirement need Start saving!

    17. Questions?

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