Comparative Income - Essay Example

The variances reflected the amount that needed to be earmarked for the vacation in Hawaii, the life insurance of children, and the funds needed for the Christmas vacation, as identified under financial goals (Part 1). When these were not yet reflected in the Income and Expenses Statement for September, there was a surplus of $750. However, given that additional savings were needed for the planned expenses, no surplus was therefore reflected for October.
Discuss what you learned about the budgeting process from this exercise and whether you feel you need to make any adjustments to your monthly budget.
I realized that to finance planned vacations and other financial needs, the family needs to earmark an exact amount per month to save for these projected expenses. As shown from our comparative income and expense statements, the additional savings wiped out any surplus previously reflected. In this regard, in order to have a surplus amount, we should review some financial accounts and make little adjustments to our monthly budget. The budget for food allowance, transportation, and miscellaneous could be adjusted to give way for surplus in the future statements.
B. Retirement Savings Needs
In estimating the retirement savings needs, quick response to the Ballpark Estimate indicates that “Based on the assumptions you entered, you have now saved enough to allow you to replace 6 percent of your final wages (this includes income from Social Security). The percentage of total salary you will need to save from now until retirement age to achieve your desired income replacement rate is 140 percent. The dollar amount you will need to save this year is $46,924” (Choose to Save, 2011).
Information from the Social Security Online indicated that for Retirement, “Your estimated monthly benefit amount, beginning at age 62 and 1 month in 2040, is $2,729.00. For your estimate, we assumed future increases in prices or earnings” (Social Security Online, 2011).
This information indicates that I need to earmark more funds for savings for my retirement. At the current monthly salary being received, the projected monthly benefit from Social Security is only $2,729, which is below what I currently receive from my salary. Given that I do not need to support our children at that age, I still need to support and sustain daily living needs, including health and medications.
The goals have stayed the same except that I opted to add a retirement fund to increase the potential amount that is required to be earmarked for one’s retirement needs. As I learned from the lessons on retirement savings needs within the life expectancy that I learned from Part III (using the website Living to 100, after answering the questions indicated in the calculator to determine the life expectancy, the results revealed that my calculated life expectancy is 88 years which is well above the life expectancies of my parents (Living to 100, 2011)), I realized that there is a substantial amount that needed to be saved to support and sustain future retirement requirements, that could not be addressed solely from monthly benefits to be given by the Social Security. Read More