1.Jasmine is 53-years old and earns \$115,000 a year. She saves 12% of her annual gross income for retirement. Jasmine will pay off her mortgage by the time she retires. Her monthly payment is \$1,950.21. Calculate Jasmin’s wage replacement ratio using the top-down approach (round to the nearest %) and using pre-tax dollars. Assume that she wants to maintain her lifestyle.

a.60%

b.68%

c.80%

d.88%

2.Ralph, a 40-year-old nurse who earns \$80,000 a year, saves 14% of his annual gross income. Assume that Ralph wants to maintain his exact pre-retirement lifestyle. Calculate Ralph’s wage replacement ratio using the top-down approach (round to the nearest %) and using pre-tax dollars.

a.70%

b.78%

c.86%

d.92%

3.Colin is 40 years old and wants to retire in 27 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 95. He currently has a salary of \$150,000 and expects that he will need about 75% of that amount annually if he were retired. He can earn 8 percent from his portfolio and expects inflation to continue at 3 percent. Some years ago, he worked for the government and expects to receive an annuity that will pay him \$20,000 in todays dollars per year beginning at age 67. The annuity includes a cost of living adjustment, which is equal to inflation. Colin currently has \$200,000 invested for his retirement. His Social Security benefit in today’s dollars is \$30,000 per year at normal age retirement of age 67. How much does he need to accumulate at age 67 exclusive of his pension and Social Security benefits?

a.\$2.1 million

b.\$2.2 million

c.\$2.8 million

d.\$2.9 million

4.Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of \$100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to continue at 3%. Jordan currently has \$325,000 invested for his retirement. His Social Security benefit in today’s dollars is \$30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals?

a.\$6,245

b.\$7,659

c.\$8,432

d.\$9,252

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