A RETIREMENT PLANNING MINI-CASE / TUTORIALOUTLET DOT COM A RETIREMENT PLANNING MINI-CASE / TUTORIALOUTLET D | Page 4

the earliest possible date.
Retirement age for full Social Security benefits is age 66.
Their individual life expectancies are 95 years of age.
In the event of the death of one spouse, the surviving spouse is
eligible to receive $16,500 per year
starting at age 60 from Social Security.
At age 62, Peter’s annual Social Security benefit will be $17,950 in
today’s dollars; Ann is eligible
to receive a survivor benefit equal to $8,367.
At age 66, Peter’s annual Social Security benefit will be $24,420 in
today’s dollars; Ann is eligible to receive one-half of this amount.
At age 70, Peter’s annual Social Security benefit will be $32,900 in
today’s dollars; Ann is eligible
to receive a survivor benefit.
They would like to replace $90,000 in yearly income, in today’s
pretax dollars, on their first day of
retirement. (Note that this figure is different from the assumption they
want to use for insurance
planning purposes.)
Ann is the beneficiary of Peter’s qualified retirement plan assets.
For retirement planning purposes only, they believe that they can earn
a 7.6% rate of return prior to
retirement and a 5% rate of return after retirement.
Inflation before and after retirement is expected to be 3%.
Peter’s salary will increase at the rate of inflation.
All annual retirement savings will increase by the rate of inflation
(3%) prior to retirement.
The Mayfields are willing to assume that they will remain in the same
marginal tax bracket after
they retire.
All nonretirement assets are owned as JTWROS at this time. Estate
Information and Planning Issues
Final funeral, burial, and medical expenses for life insurance and
estate planning purposes will be
$12,000 each.
Estate administration costs are anticipated to be $1,500, and executor
fees will be approximately