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    ms. awesome needs $1,000,000 upon retirement in 7 years to live comfortably. she can invest $100,000 a year to her retirement. what interest rate would her investment need to earn in order for her to meet her goals?

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    Retirement Planning: The Ultimate Guide for 2022

    CNBC offers winning strategies from top financial experts to help you attain your retirement goals during uncertain times.

    INVEST IN YOU: READY. SET. GROW.

    The ultimate retirement planning guide for 2022

    The ultimate retirement planning guide for 2022

    UPDATED TUE, JAN 18 2022

    Bryan Borzykowski @BBORZYKO WATCH LIVE

    GOOD FORRetail InvestorsFinancial AdvisorsRetirement Planners

    27 min read

    Retirement 101

    Table Of Contents

    Josephine Flood | CNBC

    On the surface, retirement planning hasn’t changed all that much over the years. You work, you save and then you retire. But while the mechanics may be the same, today’s savers are facing some challenges that previous generations didn’t have to worry about.

    First of all, life expectancy is longer, which means you’ll need your money to last longer – potentially into your 90s. Bond yields are also much lower than they used to be, which means you can’t buy a few fixed income instruments and earn a double-digit return. Then there is the health crisis due to the coronavirus pandemic.

    This is compounded by the fact that more companies are moving away from defined benefit pensions —which guaranteed you a certain amount of money in your golden years — to defined contribution plans, which are more subject to market ups and downs.

    So, how can you have the retirement you’ve always wanted? After all, retirees want to experience all the things they couldn’t do when they were too busy working. Exotic travel vacations, marathon running, novel writing, spending more time with friends and family — the possibilities are almost endless. There are several steps, which we explain in this retirement guide, from budgeting and setting goals to choosing the right retirement savings account that will help you map out a plan that’s right for you.

    How to read this guide

    This guide lays out steps to focus on to get you working on retirement planning. Follow along from start to finish, or jump to the section(s) you want to learn more about.

    Josephine Flood | CNBC

    How much do you need to save for retirement?

    One of the hardest parts about preparing for retirement is thinking about life as a 70-something. A lot of people get so overwhelmed about saving for an unknown future, that they end up not saving anything at all. Thankfully, planning for retirement is not overly onerous, but you will need a road map — one that can evolve over time — to keep you on track.

    The first place to start is to think about what your life might look like in retirement. Sit down with a pen and paper and write down your retirement goals.

    Then think about how much everything will cost. We don’t know what prices will be like in the future, and in recent years inflation has run below the Fed’s benchmark of 2%, but the average inflation rate in the U.S. over the past century (1913-2013) was 3.22%. So plan for higher prices in the decades ahead. You’ll also want to factor in your day-to-day expenses, like housing costs, food and health care. Remember, some of the costly expenses you have now, such as a mortgage or childcare costs, will no longer exist, which could result in a decrease in your overall expenses as you near retirement.

    Next, add up all the income you might receive in your post-working years. Factor in pension income if you have one, social security payments and any other dollars, such as rental income from a property, that may come your way. Match up revenue and expenses and you’ll get a good idea of what you’ll need to set aside for every year of your retirement.

    Here are some things you should factor into your calculations:

    ●      Housing costs, including rent or a mortgage, heating, water and maintenance

    ●      Health-care costs (Fidelity estimates that the average couple will need $295,000 in today’s dollars for medical expenses in retirement, excluding long-term care.)

    ●      Day-to-day living, such as food, clothing, transportation

    ●      Entertainment, including restaurants, movies, plays

    ●      Travel, including flights, hotels, gas if driving

    ●      Possible life insurance

    What’s the magic number to hit for a golden retirement?

    Over the years, finance experts have said that people need to save $1 million — that’s recently climbed to $2 million as the cost of living and age demographics have changed. Some advise that you need to save 80% to 90% of your annual pre-retirement income, or that you need to save 12 times your pre-retirement salary. Those numbers and formulas can be a guide, but they’re not gospel — everyone’s situation will be different.

    How to start saving for retirement

    While starting early is always important – even $25 a month in your 20s is helpful – it’s OK to set money aside for more immediate needs first and then start tackling retirement in your late 30s and early 40s. However, you don’t want to wait much beyond that because you’ll need time to put money into a retirement account for that money to grow. The longer you wait the more you’ll have to sock away yearly making the challenge a lot more difficult.

    WATCH NOW VIDEO02:26

    How to make a budget

    Things to keep in mind when getting started

    Create a Budget

    This is your current budget, which takes into account all of your present-day income and expenses. While you should have some idea as to what you’ll need to save per month based on your retirement goals, you also need to make sure that you have that money to save. It’s a good idea to put retirement savings as a line item in your budget, just like food and shelter costs, so that you can set aside those funds every month.

    Source : www.cnbc.com

    Fin 301 Exam Review Part 2 Flashcards

    Start studying Fin 301 Exam Review Part 2. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

    Fin 301 Exam Review Part 2

    5.0 1 Review

    If you are selling a stock, which of the following bid prices is the most attractive?

    Click card to see definition 👆

    40.60-41.05 40.62-41.07 40.61-41.06 40.67-41.12 Correct 40.64-41.01

    Click again to see term 👆

    Ms. Awesome needs $1,000,000 upon retirement in 15 years to live comfortably. She can invest $40,000 a year to her retirement. What interest rate would her investment need to earn in order for her to meet her goals?

    Click card to see definition 👆

    6.9% Correct 2.7% 7.9% 16.9%

    This plan is not feasible

    Click again to see term 👆

    1/28 Created by alline_mcdonald6

    Terms in this set (28)

    If you are selling a stock, which of the following bid prices is the most attractive?

    40.60-41.05 40.62-41.07 40.61-41.06 40.67-41.12 Correct 40.64-41.01

    Ms. Awesome needs $1,000,000 upon retirement in 15 years to live comfortably. She can invest $40,000 a year to her retirement. What interest rate would her investment need to earn in order for her to meet her goals?

    6.9% Correct 2.7% 7.9% 16.9%

    This plan is not feasible

    Suppose your investment returns are taxed at a 25% rate. If you invest $10,000 today and expect to earn a rate of return of 4%, what will your investment be worth in 10 years?

    $13,439.44 Correct $14,802.44 $11,046.22 $10,400.00 $10,300.00

    What interest rate would you have to earn if you wanted to triple an investment in 20 years?

    10.0% 15.6% 20.0% 4.4% 5.6% Correct

    If you plan to save $15,000 every year for retirement for 20 years. Assuming that you earn a 7% return on your investment, compounded annually, how much money will you have when you retire?

    $300,000 $321,000 $629,932 $614,932 Correct $657,978

    Ana has a goal to buy a $1.3 million beach house in 10 years. If she expects to make a 7% annual return, how much does she need to invest today to buy her beach house in 10 years?

    $620,921.32 $660,854.08 Correct $120,900.00 $390,000.00 $762,523.94

    Which will be worth more in 15 years:

    $150 invested today at a rate of 9%

    $12 invested every year at a rate of 11%

    The $150 invested today will be worth $133.51 more in 15 years (CORRECT)

    The $12 invested every year will be worth $133.51 more in 15 years

    The $150 invested today will be worth $546.37 more in 15 years

    The $12 invested every year will be worth $546.37 more in 15 years

    Both will be worth the same in 15 years

    What is your ending balance using compound interest of an investment of $1,550 with an interest rate of 6.0% after 10 years?

    $2,775.81 Correct $2,480.00 $16,340.00 $5,745.34 $5087.64

    You plan to invest $15,000 in a Roth IRA (tax free). You expect to earn 10% per year. How much money will you have at age 50 if you are 40? (rounded to the nearest number)

    $15,737 $56,189 $80,000 $85,600 $38,906 Correct

    Given the following information, calculate Dragon Fund's alpha:

    T-Bill Return: 4% S&P 500 Return: 9% Beta: 1.40

    Beginning Fund Value: $1,000

    Ending Fund Value: $1,150

    -1.60% 9.40% 11.00% 6.00% 4.00% Correct

    Given the following information, calculate the firm's beta:

    Expected Return: 12%

    Risk-free Rate: 5% Market Return: 10%

    Market Risk Premium: 5%

    0.70 1.10 1.65 1.40 Correct 1.30

    An investor will receive an 11-year annuity of $10,100 per year. If the annual interest rate is 2.5%, what is the present value of this annuity?

    $85,994 $145,773 $113,878 $96,094 Correct $111,100

    Peter makes a payment of $57,500 a year on his house. At the end of 23 years, he's paid off his initial $735,000 loan. What was his approximate annual interest rate?

    5.32% 5.58% Correct 5.80% 6.78% 79.93%

    Your friend wants to borrow $5,500 from you and gives you three options for repayment. Assuming a discount rate of 4.5%, which of the following options should you choose?

    Option A: $1,600 a year for the next 4 years

    Option B: $7,000 lump sum paid 3 years from now

    Option C: $750 a year for the next 10 years

    Option A because it is the highest net present value

    Option B because it is the highest net present value(CORRECT)

    You are indifferent because they all have the same net present value

    You should not lend the money because all options are negative NPV investments

    Option C because it is the highest net present value

    Your Aunt needs $30,000 in 5 years. Her investment will return 7.5%. How much money does she need to invest today to reach her goal?

    $27,907 $15,732 $6,000 $5,165 $20,897 Correct

    Big Corp. borrows $300 million at a rate of 9.0% to finance a new plant. They will fully repay the loan with annual payments in 10 years. How much will they pay in total over the 10 years to repay the loan in full?

    $710,209,102 $46,746,027 $327,000,000 $934,920,539

    $467,460,270 Correct

    Rachel will inherit a lump sum amount of $990,000 that is payable in 10 years. The current rate of return is 7.5%. What is the present value of the lump sum?

    Source : quizlet.com

    Online Retirement Calculator: Plan your retirement in India

    Use Scripbox's Online Retirement Calculator to find how much corpus you require to maintain a comfortable retired life in India.

    Retirement Calculator

    Retirement is an age that is meant to be peaceful and hassle-free. Nothing can and should spoil retirement for anyone. Not even finances. Hence retirement planning becomes essential right from the age one starts working. The earlier one plans for retirement, the better are the chances to accumulate the needed corpus. A retirement calculator is a tool that helps in planning retirement in a simple and easy way.

    What is a Retirement Calculator?

    A Retirement calculator is an online tool that helps in determining the retirement corpus. It is better to start planning the retirement funds needed for a stress-free lifestyle post-retirement and start investing in it. The retirement calculator helps in figuring out how much one needs to grow their wealth before retiring.

    Retirement requires a combination of Personal and Financial Planning. Personal planning determines satisfaction during retired life, while financial planning helps in budgeting income and expenses based on the personal plan.

    Personal Planning can be done by answering a fundamental yet powerful question yourself. ‘How would you want to spend time during your retirement?’

    While financial planning will help estimate whether one has adequate retirement funds to achieve the kind of retirement that they are envisioning. Mostly, income during retirement would be either through government pensions or employment-related sources or personal investments.

    All this is easier said than done. Therefore, Retirement Calculator India makes it easy for investors to determine their retirement corpus and start investing in it.

    How does a Retirement Calculator help in planning your retirement?

    Scripbox’s Retirement Calculator helps in understanding how much one would need to ensure an adequate amount for effective retirement planning. However, the retirement calculator online requires specific details to calculate the retirement corpus.

    Basic details such as present age, retirement age, and life expectancy are required to project the expenses and the duration of investments.

    The calculator also requires monthly expenses such as utility bills, house rent, driver/maid/ cook salaries, maintenance, fuel, leisure, medicines, etc. It determines the future value of these expenses. Using the inflation rate, the calculator estimates the future value of the costs.

    Personal details such as marital status, dependents, city of residence, habits are also captured in estimating the retirement corpus. These details help in understanding the family status and design the plan accordingly.

    Current investments are also assessed to understand how much more needs to be invested to attain financial independence during retirement.

    Based on the above details, the retirement calculator online determines the retirement corpus. Scripbox’s Retirement Calculator India doesn’t end here; it also advises a suitable plan to make investments to achieve the corpus over the years.

    How to use Scripbox’s Retirement Calculator Online?

    Scripbox’s Retirement Calculator online is an intuitive tool. Also, it allows investors to try various permutations and combinations to determine their retirement corpus. It is available online for free. Let us see how one can use the retirement calculator online to maintain a comfortable retired life in India.

    Step 1: Enter Your Current Age

    These help in planning investments. In other words, a retirement fund would vary from person to person. For example, an investor starting their retirement savings at 30 years may have a more aggressive portfolio. While an investor beginning at 45 years is likely to have a less aggressive portfolio. Therefore, the corpus is determined by knowing your current age.

    Step 2: Enter Retirement Age

    Provide the age at which you want to retire. Your retirement age and your current age will help in determining the period available for building your retirement corpus. For example- if you are starting very early at an age of 20 years and you wish to retire at the age of 60 years then you have 40 years to build your retirement corpus. On the other hand, if you start at an age of 35 years then you will have 25 years to build your corpus for a retirement age of 60 years. Hence, the gap between the current age and retirement age plays a vital role in retirement planning.

    Step 3: Enter I Want to Plan for Age

    Provide the age for which you wish to plan your retirement. This is a common mistake made by many investors. Many investors consider just the retirement age and forget about the life span after retirement during which you will not be earning a substantial income. Your ‘Plan For Age’ is the number of years after retirement. Let’s say you wish to retire at 60 years but you wish to plan your investment for 20 years after retirement. The longer the period after retirement the higher the investment and corpus you need to build for your retirement.

    Step 4: Enter Current Monthly Expenses

    Your current monthly expenses will define your lifestyle and accordingly how much amount you will need post retirement to maintain your lifestyle. Due to inflation and reducing purchasing power of money these expenses will become costlier over a period of time. It determines the future value of these expenses and future cost of living. Hence, the calculator will account for these expenses, the yearly rising inflation, and your standard of living. Identify expenses, such as house rent, bills, salaries to household help, fuel, maintenance, medicines, etc.

    Source : scripbox.com

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    James 11 month ago
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