Bob's Retirement Case.docx - Data Analytics Exercise X Prepared by Honeylyn Bravo Karen Calangi Shinia Wolfe 200432796 200451641 200438496 Prepared for

Bob's Retirement Case.docx - Data Analytics Exercise X...

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Data Analytics Exercise X Prepared by Honeylyn Bravo, Karen Calangi, Shinia Wolfe 200432796, 200451641, 200438496 Prepared for Dong Ye CMIS2250 Section A05 Date of Submission: Tuesday, August 11, 2020 Northern Alberta Institute of Technology
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1. Explore the mess A. What do we know? i. Bob Davidson; 46 years old ii. Bob, professor iii. Bob daughter; Sue iv. Daughter, 6 years old v. Bob married vi. Wife, Margaret vii. Margaret, 40 years old viii. Margaret, potter ix. Margaret, earns no appreciable income x. Margaret, married previously xi. Margaret, had various jobs prior to being married to Bob xii. Margaret, had jobs involving software programming and customer support xiii. Grandfather, died at 42 xiv. Father, died 58 xv. Both died from cancer though unrelated instances xvi. Bob has excellent health xvii. Bob runs and skis xviii. No inherited diseases in the family (except glaucoma) xix. Bob cholesterol last count was 190 xx. 9-month salary is currently $95,000 1. With additional 10% into retirement fund 2. Additional 2 months of his regularly salary for his research 3. College doesn’t pay retirement benefits on additional research money xxi. Worked at college for 12 years xxii. Salary has increased by 4 – 15% per year 1. Doesn’t expect this to increase in future due to faculty salaries being subject to severe compression xxiii. Additional income; $10,000 – 20,000 per year from consulting, executive education and other activities xxiv. Bob, is currently setting aside $7,500 per year (before tax) 1. The max he can contribute is $10,000; this limit rises with inflation 2. If he were to increase savings toward retirement, he’d have to invest after-tax dollars 3. All retirement savings are invested TIAA-CREF xxv. As by law, he has contributed to social security xxvi. Has had problems with social security trust xxvii. Bob is uncertain the level of benefits he will receive upon retirement from social security trust xxviii. Bob’s TIAA-CREF holdings is currently $137,000 1. Invested 20% in TIAA long term bond fund 2. invested 80% in Global Equity Fund Honeylyn Bravo, Karen Calangi, Shinia Wolfe
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a. Global Equity fund is invested roughly 40% in US equities and 60% non-U.S. equities b. With new contributions are allocated in these same proportions xxix. Net worth consists of: 1. Retirement assets 2. Home (purchase price $140,000 in 1987; current equity is $40,000) 3. Rainy-day fund; $50,000 (invested in short term money market mutual fund with fidelity investments) 4. Fidelity Growth and Income Fund; $24,000, for his daughter’s college tuition 5. Term Life Insurance policy; $580,000 a. No asset value b. Pays its face value (plus inflation) as long as he pays premiums 6. No outstanding debt in addition to mortgage, besides monthly credit card charges xxx. If he dies while insured; proceeds of life insurance are tax free and given to his wife xxxi. If he dies before retirement, retirement assets go tax free to wife as well xxxii. Retirement assets can be converted into annuities without any immediate taxation 1. The monthly income from the annuities is then taxed as ordinary income xxxiii. Bob’s mother; 72, xxxiv. Bob’s mother, good health, xxxv. Bobs mother, retired xxxvi.
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