Financial Analysis (Module 14)

Financial Analysis

Introduction

The following paper discussed about the elements that are necessary for the saving that need for the retirement plan. There is also calculation given along with the brief discussion of the elements. For the determination of the annual retirement plan there are five commonly used methods that are discussed below.

Discussion

There are many elements that help in the determination of the saving money every month in order to make sure the happy and the relaxed retirement. Following are the some of the steps that helps in the determination of saving that should be created for the relaxed retirement.

Determination of required Annual Retirement Income

On the basis of the annual payroll of an individual the money that is required for the living expense of individual should be estimated. Individual will want to factor in salary increase between now and then. If individual is young or just started the career even if in the initial stage of the career, prediction of future income is necessary. After the future salary is estimated, it is better to multiply it by 80%.

For instance if the salary is 26000 annually and individual is forty years of age and the retirement plan for the age of 67, and it is expected that the salary will be increased by 4 % each year.

If 26000 are multiplied by 0.04 then it will be 72000 along with increase in the salary for the next twenty seven years and then multiply it by 0.8, the percentage equals to the 57600 which indicates that there should be at least 57600 should be saved.

Estimation of Social Security Benefits

Social Security benefits are an important element for the retirement income. The social taxes are being paid by the social security taxes throughout the years of the working and it also become eligible ...