In his internationally acclaimed and best-selling book “The Automatic
Millionaire”, David Bach shares the true story of an average American
couple – he is a low-level manager, she is a beautician – whose joint
income never exceeds $55,000 a year; but yet who are somehow manage to
own two homes debt-free, put two kids through college, and retire at 55
with more than $1 million in saving. Jim and Sue McIntyre identified
early on the power of saving and compounding that saving over a 30-year
period. But forfeiting a single latte (coffee) each day would save
$35/week, or $1,885 per year. If one was able to yield a 10% annual
return, in 40 years, their savings would be $948,611. Could you save
like the McIntyres? If not a latte, perhaps giving up a different habit
or luxury such as one less purse, one less round of golf, one less
massage, or one less energy drink?
Revisit your findings from the Week
Two Assignment paper. Given the Social Security projections, and the
impact inflation has on your spending-ability; reevaluate your
retirement requirements. Set a retirement savings goal that will
complement your future SSI benefits. Click on the Adirondack Bank
calculator using the URL https://www.adirondackbank.com/Financial-Calculators.aspx (Links to an external site.)
(scroll down to the INVESTMENT CALCULATOR and click on SIMPLE SAVINGS GOAL CALCULATOR)
You can leave the AMOUNT field empty
You can show 0 for your current savings
In the regular deposit … consider
what you could save in a MONTH. For example, $20/day would be $600 per
month. ENTER 600 into the Regular Deposit Amount
In the number of months… start at 360 (or 30 years)
Assume an annual interest rate of 10%
Leave the income tax rate empty … as you can deal with taxes when you begin to withdraw.
Click on the CALCULATE button
If you followed these instructions, your savings would be in excess of $1,356,000.
Now, revisit and adjust to your own
saving goals, current savings, and months to save (i.e., 40 years would
be 480 months). Imagine if your employee offered payroll deduction, and
would agree to automatically withdraw money into a pre-tax saving
account (such as a 401K). Also, imagine that for every dollar you
invest, the employer would match your investment. Describe how that
benefit would boost your retirement savings.
Using the aforementioned “Guidelines
for Writing Papers”, write a 3-5 academic paper that answers the
challenge of this Week 8 assignment, including presenting your
retirement plan, and the impact an employee-sponsored retirement plan
would augment your ability to meet your goals. Finally, include your
position on whether your goal is achievable, with an automatic
withdrawal in place. And if that automatic saving deduction was not in
place, do you have the discipline to follow through on your savings?