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Jordan, age 42, currently earns $150,000. Her wage replacement ratio is determined to be 80...

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Finance

Jordan, age 42, currently earns $150,000. Her wage replacement ratio is determined to be 80 percent. She expects that inflation will average 5 percent for her entire life expectancy. She expects to earn 9.5 percent on her investments and retire at age 65 age, possibly living to age 90. She has sent for and received her Social Security benefit statement, which indicated that her Social Security retirement benefit in todays dollars is $15,000 per year. Calculate Jordans capital needed at retirement age 65 and the amount Jordan must save at the end of each year, assuming she has no current savings accumulated for retirement.

  1. Solve using the Annuity Method
  2. Solve using the Purchasing Power Preservation Model


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