Assignment 5.5 - Retirement Calculator Analysis Jayma Acres
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Indiana Wesleyan University, Marion *
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301
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Finance
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Jan 9, 2024
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docx
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Retirement Calculator Analysis
Answer the following questions using
Schwab’s Retirement Calculator
:
1.
How much money are you currently saving for retirement each month and how did you decide on
this amount?
*If you are not currently saving for retirement, what is your plan to be financially
ready for retirement?
Currently, I try to save about $20 per month to put towards my retirement. I have and IRA account
that my employer matches 2% of, which will eventually increase my savings overtime. I am only able
to save this amount due to keeping up with payments on rent and saving up to pay off school for
each payment period.
2.
The retirement calculator asks you for your investment style on a scale of low risk to high risk.
Which did you pick and why?
Be sure to give examples of the types of investment vehicles are you
currently using.
*If you are not current save for retirement, which level risk are you planning to use
when you do start saving and why?
I chose in the middle of low and high risk, which is moderate investment. My current investments
only include my IRA provided to me by my employer. This is not to say that it is a low risk or high-risk
investment by itself, but I do plan to invest money into stocks in the future, which are very high risk
investments.
3.
The retirement calculator asks you to estimate how much your annual retirement spending will be.
How much did you estimate that you would need per year?
What do you expect your level of debt
and lifestyle to look like once you retire?
*If you are not currently savings for retirement, how much
money do you think you’ll need to live on per year and why?
With my level of a predicted debt-free future, I estimated my annual retirement spending to be
$23,000. This is very subject to change, based on life decisions I make down the road, including
future investments I intend to contribute to.
4.
Ultimately, the importance of the calculator is to see if you will have enough to retire.
Did the
calculator estimate that you will have enough to retire?
No matter your answer, what adjustments
do you plan to make for the future based on the results of this quiz?
Unfortunately, no, the calculator estimated at this time I would not have enough to retire. The numbers I
input are going to change eventually. As of right now, I make around $28,000 per year at my job. After I
graduate, my degree will open more possibilities for a job I want, and in turn, provide me with a larger
source of income. Adjustments with spending habits are always in need of improvement, but I have full
confidence that the factors in my retirement savings will change.
Reflection Questions:
1.
Section 7.3a talks about an investment hierarchy.
Which level do you find yourself in and why? Be
sure to give examples of why you find yourself in that level.
In the investment hierarchy, I would say I am definitely in level 2, slowly building to level 3. As of
right now, I am living debt-free by keeping up with all major purchases like student loans and credit
cards. So, I continue to build up my short-term savings in order to reach the level 3 goal of
purchasing a house, as I am renting my living space as of right now.
2.
Section 7.4 talks about alternatives for savings and investing.
Which savings and investing vehicles
are you currently using?
In 5 years, which savings and investing vehicle(s) do you plan to implement
and how do you plan to make that happen?
The saving and investing vehicle I am currently using would be mutual funds. The long-term
investment of an IRA in mutual funds does not nessicarlity match up with the investment hierarchy I
am in, but my investment choice is one I made for my future. Within the next 5 years, I hope to be
investing in stocks and bonds. I would like to be entitled to a portion of profit from my investments,
and putting money to stocks is a good way to do so, even with the risks it comes with.
3.
Chapter 2.1 of the textbook focuses on emotions that come with managing money.
Since this is the
final week of the course, you have probably experienced a myriad of emotions while focusing on the
various financial topics each week.
Overall, how are you doing emotionally and why?
Be sure to
think about topics studied in prior weeks or this one and give examples.
Emotionally and mentally, I think I have been tried in my thoughts of the future. Ultimately, I know
God’s plan for me is solid and I will always trust in Him, but I have been slightly stressed for the
future. I am doing well on my way to financial freedom, but with the discussions of saving and
investing this week, I have been slightly on edge. My savings are looking a little bleak, but what I
have to remember is that the money I work for goes to pay off bills so that I can live debt free. I
really enjoyed learning what I did on this course, and I also very much appreciate this question!
4.
Christians are known by their love and generosity toward others.
Giving is an important aspect of
living a faith filled life.
How do you determine how much money you plan to give away versus how
much money you keep and save?
Right now, the money I give away is mainly to my community and hometown. My dad is on Columbia
Township Fire Department as a volunteer firefighter, and I donate some of my money to them
whenever I can. I also love to give my time to them; I volunteer at events held like the huge pancake
breakfast we have yearly. In the future, I plan to gauge the money I save versus what I give away by
what I feel is God’s way of telling me to do so. I do love helping others in any way I can, so when I
have the opportunity to give away money, I most certainly will.
5.
You have studied several financial topics in this course.
Based on your current financial situation,
which topic was the most impactful for you and how do you plan to use the information from this
course to help you improve in that area?
I really enjoyed learning about saving and investing. Although I said this has been the most stressful
topic, it has also been the most helpful. The investment hierarchy is a great way to track progress
and improvement in financial decisions. There is deeper information in each level, but the climb to
the point where individuals consider financial freedom is crucial and a great way to track that.
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