- Tax Planning
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Introduction
- Describe How Retirement Planning Fits into Your Personal Financial Plan
- Understand the Principles of Successful Retirement Planning
- Describe Payout Options Available at Retirement
- Explain the Steps of Successful Retirement Planning
- Understand One Method of Monitoring Your Retirement Planning Progress
- Summary
- Assignments
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
Case Study #2 Answers
Calculations
Are they on track? You can’t tell until you calculate their ratios
Current Salary Savings Debt Age 45 $82,000 $115,000 $150,000
Ratios Current Recommended Savings ratio 1.40 ($115/82) > 3.0 Debt ratio 1.83 ($150/82) < 1.0
Application:
They are way behind on their savings and debt goals for retirement. They need to increase their savings to a minimum of 20 percent.
- They have too little savings and too much debt.
- They need to save an even bigger percentage of their salary (I suggest 20 percent).
- They need to work harder if retirement is really a goal.
- They may need to sell assets to reduce debt.
- They may need to downsize.
- They need to begin saving a larger percentage of their income!
As another tool, you can look at Learning Tool 25—Retirement Planning Forecasts Ratios which may be useful given different financial situations and goals.
