### Option 2 Description

For this project, you will plan for your retirement income, based on your career and some simplified assumptions about investing.

This project will consist of a 3-4 page (double-spaced) written report in which you answer the questions below, and explain all of your answers fully. The answer to each question will be a description and, in most cases, a calculation. Please carefully label the question numbers in your project submission. Together these will describe how you plan to save for retirement.

In order to complete this project, you will need to use sources, likely from the internet. If you use a source, you must cite it by providing the URL of the website or the name of whatever other source you use (book, article, etc). I am not picky about citation style, but you need to avoid plagiarism. Please attach a list of sources used to the end of your project. This does not count towards the 3-4 page count.

### Option 2 Specific Directions and Questions

- First, pick a career that you hope to have after you graduate from WOU. (Of course, you may not be sure about what you want to do. For the purposes of this project, you need to pick something specific, even if you’re not 100% sure you’re actually going to pursue it.) Once you have your career, look up at least three sources online for the annual salary for that career. List those numbers, and provide links to those sources in the Source List. If you use non-internet sources (such as a personal connection), please include these in your Source list as well. From here:
- Calculate your expected average salary by adding up the three salaries you found, and then dividing it by 3. Call this number A .
- Calculate your monthly income by computing A÷12 .
- Calculate your monthly retirement contribution, which we will assume is 10% of your monthly income. (See Chapter 6 for for a review of percents if you need to). Call this number pymt0. This is the amount that you will contribute to your retirement saving each month while you are working.

- Pick the length of career you’d like to have (in years). In general, this will be dependent upon your age and other factors, and is likely to be between 20 and 50 years. Call the length of your career in years
*t*, and clearly indicate the value of*t*that you are using in your project. You can explain why you picked this number if you’d like. - Assuming that you use an ordinary annuity with an interest rate of 6%, and the values of pymt0and t, along with n=12, find the
*balance*of an ordinary annuity with these characteristics at the end of your career. Make sure to clearly indicate this value in your project, and show your work to get this value. - Next, find 50% of your monthly income during your career, which you can calculate by dividing A by 24. (You can double check this calculation by calculating your average monthly income by 2, which should give you the same answer.) This will stand for your retirement income, and we’ll call it
*pymtr*. The assumption is that you’ll get at least some assistance from other sources, such as Social Security or a pension. And in general, people spend less money during retirement than when they are working. So we’ll assume that your desired retirement income is 50% of your working income. - Now, we’ll assume that you want to have a retirement account for 30 years with 4.8% interest. So, you’ll perform a payout annuity calculation with t=30,r=4.8%,pymt=pymtr and n=12. The answer P will tell you how much money you need to have saved up for retirement to live comfortably for the next 30 years!
- Write a 100-200 reflection on your work in this project. In your reflection, answer the following questions:
- Compare the balance found in the part (4) above with the principal found in part (6) above. Which one is higher? Based on these calculations, will you have enough money or not?
- Why did you pick the career that you did?
- After performing these calculations, how do you feel about your choices? Do you think the assumptions made in this project fit your personal circumstances? Why or why not?

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