ESSAY: Retirement Plan Selection

A new employee joins your company at age 24 making $40,000 per year. Currently, banks are paying 5% interest on saving accounts, and the rate of return on the company stock is 4% per year. During benefits enrollment, the employee stated that she would like to retire at age 60 with 3 million dollars in her retirement account.

Compare the following retirement options for this particular employee in 1,050 to 1,400 words:

403B
401K
Pension
Annuities
IRA
Estate planning
Determine which retirement option(s) you would choose if you were this employee.

Assess the factors that this employee should consider when selecting a retirement plan.

Format your paper consistent with APA guidelines.

ANSWER

Retirement Plan Selection

Introduction

This paper discusses the selection of a suitable retirement plan based on the needs and benefits of a 24-year-old employee who has just joined a company that is paying her a yearly income of $40000. It is also imperative to note that the banks are paying 5 percent on savings account per year and the rate of return on the company stock is 4 per cent annually. The employee in this case study intends to retire at the age of 60 years with an expected pension of about $ 3 million. This paper considers different retirement plans ….

Retirement Plans

401(K)

When you calculate the total earnings of the thirty-six years that the employee will be attached to the company and his total savings, it is clear that the overall profits from the retirement plan will be $237,809 U.S dollars. Moreover, the 401(k) retirement plan will not allow the employee enough flexibility. It is also clear that in the context of the pension scheme, based on her $40,000 annual salary…

IRA

With respect to the IRA retirement plan, the employee based on the IRA calculator will be required to contribute an initial amount of $5,500 with her annual income of $40,000. With the projection of the employee retiring at 60, the …

Annuities

Based on the annuity payment retirement plan, the total savings of the employee based on the provided formula p=r (PV)/1-(1+r) ^-r will not hit the intended target of three million….

Estate Planning

In the context of the estate planning, one is not able to determine the total amount that the employee would have accumulated by the time she retires because the value and returns that she will earn depend on the value of ….

Case Study Discussion The retirement schemes and plans that have been adopted for this case are pension schemes and 403B. Based on the information provided on the fact that the employees intend to have saved up to $3 million in her retirement account, it is essential for her to use pension schemes because they allow her the flexibility to choose what amount she is willing to contribute towards the program to help her achieve and facilitate her goals before she can retire at 6o years. A pension sche…