INDIVIDUAL RETIREMENT PLAN

Individual Retirement Plan



Individual Retirement Plan

Introduction

The study is related to the retirement plan of Olivia Johnson who is a married person and owns a home. Olivia Johnson is a college graduate and is working as the financial analyst. At present, she is 25 years of age and intends to get retire at the age of 65 years, her monthly salary $ 60000. Olivia Johnson believes that she should have retirement plan as it is important to think about the financial planning of the future.

Discussion

For an individual, it is important to plan its retirement as it helps the individual in living a prosperous live after the retirement. In the case of Olivia Johnson, she wants to plan her retirement with the aim of pay off her debts that has been borrowed by her and build an emergency fund for herself. In addition to this, she also wants to set retirement fund that can be useful after her retirement at the age of 65 years.

Assess Where She is Now Financially and Determine Where She Want to Be

Net Worth Statement of Olivia Johnson

Assets

Liabilities and Equity

L:iquid Assets

 

Liabilities

 

Insurance

$ 155

Federal tax

$ 50

Pets

$ 180

State tax

$ 50

Total Liquid Assets

$ 335

Local Tax

$ 50

Personal Use Assets

 

Other tax

$ 50

Mortgage or rent

$ 1,000

Personal loan

$ 89

Phone

$ 100

Student

$ 34

Electricity

$ 56

Credit card

$ 236

Gas

$ 28

Other

$ 54

Water and sewer

$ 8

Mortgage

$ 1,000

Cable

$ 34

Total Liabilities

$ 613

Waste removal

$ 10

 

 

Total Personal use assets

$ 1,236

Net Worth Summary

 

Investment Assets

 

 

 

Retirement account

$ 967

Assets

$ 3,724

Investment account

$ 206

less: Liabilities

$ 613

Other Investment

$ 980

 

 

Total Investment Assets

$ 2,153

Equals Net Worth

$ 3,111

 

 

 

 

Total Assets

$ 3,724

Equity

$ 3,724

Debt to Income Ratio of Olivia Johnson

Debt to Income Ratio

=

$ 613

=

0.61

$ 60000

Cash Flow Analysis

Cash Flow Statement of Olivia Johnson

Inflow

Monthly Income

$ 60,000

Cash from loan

$ 413

Net Inflow

$ 60,413

Out Flow

Taxes

$ 200

Gifts and donations

$ 54

Legal

$ 268

Entertainment

$ 463

Transportation

$ 1,229

Insurance

$ 155

Food

$ 132

Pets

$ 180

Personal Care

$ 340

Net Outflow

$ 3,021

Net Cash Flow

$ 57,392

Investment

Future Value

=

PMT

(((1+0.05)^40-1)/0.05)

Future Value

=

60000

(((1+0.05)^40-1)/0.05)

Future Value

=

6000

120.7997742

Future Value

=

$ 724799

The above values based on the future value annuity shows that the Olivia Johnson needs to have $ 724799 for the retirement. This amount will help the Olivia Johnson to live a prosperous live after the retirement.

Investments Portfolio

 

Retirement account

$ 967

Investment account

$ 206

Other

$ 980

Total

$ 2,153

In relation to the investment strategies, the above table is showing that the Olivia Johnson will have to invest in the above accounts so that she will get return from her investments. In addition to this, as different as the various types of securities are the investment strategies that can track an investor with the purchase of securities. With regard to the duration, an investment may be short ...