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Seetion 7: Retirement Planning (16 points) Please use the following information to calculate annual savings needed for Ene and niy to meet their retirement goals and make recommendations to Erie and Kathy.
1. Eric contributes $6,900 annually to his 401(K) and his employer’s plan calls for a 50% match for contributions up to an employee elective deferral of 6%.
2. Katny contributes $3,750 to her 401(K) plan and her employer matches Si for every SI she contributed, up to 6% of her salary.
3. Eric wants to retire at age 65 and hopes to have a 95% wage replacement ratio and live until 90.
4. Kathy wants to retire at age 63 and hopes to have a 95% wage replacement ratio and live until 90.
5. Eric’s social security benefit at full retirement age is estimated as $30,000 and Kathy’s social security benefit at full retirement age is $20,000.
6. They expect to carn an annual return of 10% on their investment and their salary is expected to increase at the general inflation rate of 3%.
7. At age 63, social security benefit will be reduced to 75% of full retirement benefits. At age 65, social security benefit will be reduced to 86.67% of full retirement benefits. Get Finance homework help today