1. Jasmine is 53-years old and earns $115,000 annually as an employee of a marketing company (subject to FICA taxes of 7.65%). She saves 12% of her annual gross income for retirement. Jasmine will pay off her mortgage by the time she retires; her monthly payment is $1,950.21. She would like to assume the same level of Federal and State income taxes in retirement that she has today. Calculate Jasmine's wage replacement ratio using all available information provided to you—round to the nearest %.

a.    60%

b.    68%

c.    80%

d.    88%

2. Parker is 50 and wants to retire in 15 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 95. He currently has a salary of $120,000 and expects that he will need about 65% of that amount annually at the beginning of each year if he were retired. He can earn 9 percent in his portfolio while he is working. However, he expects that he will only earn 7 percent in his portfolio during retirement. He expects inflation to continue at 3 percent. Parker currently has $350,000 invested for his retirement. His Social Security benefit in today’s dollars is $30,000 per year at normal age retirement of age 67. His Social Security benefit will be reduced by 6 2/3 percent for each year he begins collecting before full age retirement. How much does he need to save at the end of each year to meet his retirement goals (assume he does not wish to leave a financial legacy)?

a.    $2,465

b.    $2,987

c.    $4,975

d.    $6,855