One of the long term goals of all people that work for a living is to save money for retirement. Retirement planning can be defined as the process of determining retirement income goals and the actions and decisions necessary to achieve those goals (Investopedia, 2012)…
My plan is to work in the private industry for 40 years to then retire. Retirement is very important because it represents the golden years of a person’s life. People expect to enjoy retirement with their love ones. In order to truly enjoy retirement it is important to be financially independent. I will graduate at 25 years of age. The average salary I expect to earn during my career will be approximately $50,000. A retirement calculator on the CNN Money website was used to estimate my retirement goal. My retirement goal is to save $500,000. My expected retirement age is 65 years of age. I estimated my life expectance at 78 years since that is the average life expectancy in the United States (CultureGrams, 2012). My expected pension income and social security income are $1000 each. Based on these variables the retirement calculator gave the following output. Your Results You will need a total of $1.7 million ($496,418 in today's dollars) to retire at 65 years old (Cnn, 2012). The second tool available at the CNN website was an asset allocation display. I stated that I needed the money in 20+ years. I selected that I was willing to take a reasonable amount of risk. I stated I could not afford to miss my target and during market sell-offs I see an opportunity to buy more stock. The result of the calculator is illustrated below: Suggested allocation: (Cnn, 2012). The suggested allocation provided by the CNN calculator provides a list of potential allocation of assets. My plan to save $500,000 by retirement age can be achieved if I implement a proactive saving strategy that uses a wide arrangement of investment and retirement tools. Three retirement instruments that I plan of use as part of my diversified portfolio are IRA, Roth IRA, and 401k plans. An IRA is a retirement savings account that allows taxpayer to save money without paying taxes for the income placed in the IRA account. Money placed in an IRA account accumulates interests every year. The money cannot be taken out of the IRA account until retirement age reaches. Bottom of Form A Roth IRA is, “An individual retirement plan that bears many similarities to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free” (Investopedia, 2012). A 401k plan is a company sponsored retirement plan that allows individuals to set aside tax-deferred income towards retirement. There are other financial instruments that can be used to save money towards retirement. One of the most popular forms of investments is common stocks. Common stocks give investors ownership in a publicly traded company. The investors that keep stocks for a long time earn dividends from common stock as well as a capital gain once the investment is sold. The safest type of stock that an investor can choose is blue chip stocks. A blue chip stock is a stock issued by a well known company with an established record of making money and paying dividends (Teweles, Bradley, Teweles, 1992). An example of a blue chip stock is Microsoft. Due to the risk associated with penny stocks and foreign stocks I will stay away from these two types of stocks in order to minimize the risk of the portfolio. Another good investment instrument that is often chosen by investors is corporate bonds. Corporate bonds pay the investor the coupon rate on a yearly or biannual basis. The principal of the bond is paid at maturity age. Most bonds are of $1000 denominations. A portion of my retirement ...
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(Retirement Planning Assignment Example | Topics and Well Written Essays - 750 Words)
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My intended career is marketing and my target is to get a remuneration package of ?67,000. The core skills in the workplace that I will focus on include: communications the written and the verbal, vital and innovative thinking, team building and cooperation, listening, problem solving, decision making and interpersonal skills.
Unfortunately the social security system in the U.S. is bankrupt. Young people today are going to receive a much smaller social security pension than the retirees of today. It is very important for people to plan for their retirement. There are a variety of investment instruments that can be used by people to accumulate wealth over their lifetime.
Depending on the objective of the individual, an appropriate personal retirement plan can help the individual to balance current and future consumption by determining amount of current investible funds that is available and vesting them in retirement accounts (Purdue University, 2009, p.18).
Family limited partnership is used as an efficient strategy of minimizing estate tax since it enables transfer of share across generations more easily and at lower rates of taxation as it would have been with partnership holdings. FLP should not be confused with conventional trust because members actually own shares to the business.
a) The total wealth portfolio of the couple is as follows: David has 80,000 held in a building society 30 day notice account. Given an 8% annual return, he gets to earn 6,400 annually from this investment. He has 760,000 invested in equity unit trusts which earns annually.
People, therefore, should not be forced to retire since it is clear that people no longer comfortably enjoy their social security. Generally, people do work to cope with the ever rising cost of living come. The cost of living has increased at an incredible rate, but the wage rates have not increased accordingly.
A pension is amount of money in which one pays or is deducted in order for them to have an income after reaching the age of retirement where they do not have to work. There various ways of calculating the
Moreover, business knowledge in a given environment influences the ability of the business to design strategies that would make the company competitive. For instance, the knowledge of the company’s competitors is critical in designing
The availability of guidance to the pre-retirees at this stage is wanting. The liberation stage is marked by the first day of retirement. Also referred to as the honeymoon stage, it lasts for about a year (Schieber, 2012).