You will earn money each year off your tax-deferred retirement accounts without having to pay taxes until the funds are withdrawn. True O False
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- You estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?Russell and Charmin have current living expenses of $66,260 a year. Estimate the present value amount of income they will need to maintain their level of living in retirement. Assume an average tax rate of 11 percent and a(n) 74 percent income replacement ratio. The estimated present value amount of income they will need to maintain their level of living in retirement is?Having just inherited a large sum of money, you are trying to determine how much you should save for retirement and how much you can spend now. For retirement, you will deposit today (January 1, 2016) a lump sum in a bank account paying 10 percent compounded annually. You don’t plan on touching this deposit until you retire in five years (January 1, 2021), and you plan on living for 20 additional years. During your retirement, you would like to receive a payment of $50,000 on the first day of each year, with the first payment on January 1, 2021, and the last payment on January 1, 2041. Complicating this objective is your desire to have one final three-year fling during which time you’d like to track down all the original cast members of Hey Dude and Saved by the Bell and get their autographs. To finance this, you want to receive $250,000 on January 1, 2036, and nothing on January 1, 2037, and January 1, 2038, because you will be on the road. In addition, after you pass on (January 1,…
- Q4. You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn an annual rate of return of 9.75 percent and make no additional contributions, what will your account be worth when you retire in 45 years?You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.Imagine your uncle is currently earning $200,000 pa and is about to retire. What percent of his current income will Social Security pay?
- Suppose you are in the 35% tax bracket (because you make $210,000) and have $6000 to put into a retirement account. How much tax do you pay on the $6000 this year if you put the money into a Traditional IRA? $Your parents are planning to save for their retirement. A retirement plan is a financial arrangement made by an individual, employees/employers, insurance companies, and other institutions to replace employment income upon retirement. They target to accumulate P5000,000 in 10 years. To do this, they want to set aside a portion of their salaries and contribute monthly for their retirement funds. How much should they contribute per month if they have a chance to invest in an annuity that earns 5% compounded quarterly.Lifetime savings accounts, known as LSAS, allow people to invest after-tax money without being taxed on any of the gains. If an engineer invests $14,000 now and $14,000 each year for the next 11 years, how much will be in the account immediately after the last deposit, provided the account grows by 11% per year? After the last deposit, the balance in the account will be $
- The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) > Answer is complete but not entirely correct. 20-year consumption stream (assuming monthly payouts) $ 27,462.69The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) b. What will be your 20-year retirement consumption stream if you choose to save in a Roth IRA? (Round your answers to 2 decimal place.)The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) 20-year consumption stream (assuming monthly payouts) _________________ b. What will be your 20-year retirement consumption stream if you choose to save in a Roth IRA? (Round your answers to 2 decimal place.) 20-year consumption stream (assuming monthly payouts)_________________