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A RETIREMENT PLANNING MINI-CASE
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A RETIREMENT PLANNING MINI-CASE
Peter and Ann Mayfield, both age 52, recently sought your help in
planning their financial future. Peter is the
Anytown, Anystate, city manager. His wife is active in many civic
organizations but not employed outside of
the home. They live at 123 Maple Street, in Anytown. They have been
married for slightly more than 25
years.
Their two children, Nick and Nedra, have both moved away from
home and started their own families. In
fact, Nick and his wife have two children, Lisa and Timmy, ages 3
and 2, respectively. Table VI.17 presents
additional information about the Mayfields. Additional Personal
Information Global Assumptions (Valid unless otherwise Specified in
Certain Instances)
Inflation: 3%
All income and expense figures are given in today’s dollars.
Federal marginal tax bracket: 25%
State marginal tax bracket: 4.5%
Any qualified plan or IRA contribution growth rates are assumed to
stop at the federally mandated
limit unless otherwise restricted.
All nominal rates of return are pretax returns.
They are currently qualified for Social Security benefits. Income
Issues
Peter currently earns $90,000 per year and expects his salary to
increase at 3% per year until retirement. As
shown in Table VI.18, Peter contributes 10% of his salary to his
employer-sponsored 403(b) plan. He
receives a 33% match from the city. Ann and Peter are covered by an
employer-sponsored health care plan,
which has a premium of only $50 per month and is paid for directly