ACT 4494Retirement project (Chapter 13)
Name ____________________________________________________________________________
As a responsible adult, you need to start planning for retirement. Choose a work sponsored retirement
vehicle (plan), and plan to maximize contributions to that plan. Explain your employer’s plan and how it
works. For example, many employers use a 401(k) plan for their employees. How does a 401(k) plan
work? What is a standard retirement plan for CPA firms to offer to their employees? In addition, choose a
non-work-related retirement vehicle (like an IRA) to invest in. Plan to maximize your contributions, in
every possible way.
Most retirement plans allow participants to choose their own investments. What investments are you
going to use: mutual funds, stocks, bonds? What is your expected rate of return on your investments?
Again, research the subject and use reasonable rates to calculate your returns. The rate of return must be
reasonable; a 20% return every year is not reasonable!
Predict how your retirement plan will provide for you in retirement. At what age can you retire, and what
will be your estimated annual income? For how many years? Will you need a second job? If so, what will
it be?
You all have the skills to do this, using the time value of money and present and future value of payments
and/or annuities and lump sums. If you are stuck on this part, see your intermediate or introductory
financial accounting text for assistance. There are also retirement calculators online that you may utilize.
If you do, be sure to cite the website.
REQUIRED:
1. A clearly stated plan for retirement investing, including investment strategy (all stocks, all
bonds?), amount per pay period invested, term in years, value in the end, and annual payments to
you after retirement, and your age at retirement. Why did you choose the investments and
methods you used?
2. Be sure to include retirement savings from work and non-work sources. Use realistic assumptions
in your interest rate and investment horizon. Include any other sums that you may receive to
supplement your retirement, including social security. Do some research to find a reasonable
estimate of amounts you will receive.
3. Document the formulas or calculators you used to arrive at your answer, and any information
sources you used, including people you talked to. Include links to websites where applicable.
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