Using the template provided, calculate Caleb’s annual retirement income for Low Return, Medium Return and Hight Return

Finance by Geoffrey

Celisteela Moonn met one of SchoolStreet’s clients, Caleb Jamal, to discuss his retirement income.

Moonn plans to invest Caleb’s money in a risky portfolio that might have a long-run low return of 1.0%, medium return of 5.0%, and a high return of 12.0%.

Caleb asked Moonn what would be his annual retirement income in the low, medium, and high return scenarios when saving with a taxable plan, a traditional IRA or 401(k) plan, or a Roth IRA or 401(k) plan?

Caleb provided following info to SchoolStreet:

  • Age 25 years
  • Expect to earn a constant salary of $50,000.
  • Planning to retire at age 65 and expects to live at age 85.
  • Caleb saves at a 10.0% rate.
  • Current tax rate is 18.0% and Caleb expects his retirement years tax rate to be 23.0%.
  • Using the template provided, calculate Caleb’s annual retirement income for Low Return, Medium Return and Hight Return for
  • Taxable Investment
  • Traditional IRA or 401(k)
  • Roth IRA or 401(k)