Tom, a government employee, has a defined benefit pension.He has worked for his employer for 35 years before retiring at age 65.His final salary was $85,000
Calculate how much of his final preretirement income a standard defined benefit pension plan would replace.
Using the formula given in the chapter, Tom's pension would equal:
0.02 × 35 × $85,000 = $59,500.
This would replace $59,500/$85,000 = 0.70 or 70 percent of his preretirement income.
A-head: INVESTMENT ACCOUNTS
Concept: Retirement savings plans
You might also like to view...
When an economy produces more houses and fewer typewriters, it is answering the ________ part of one of the two big economic questions
A) "what" B) "how" C) "where" D) "for whom"
Occupational licensing is an example of an entry barrier that improves a country's standard of living
Indicate whether the statement is true or false
A bank has no excess reserves and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves will now be
A) -$5,000. B) -$1,000. C) $1,000. D) $5,000.
The Saturn Corporation (once a division of GM) was permanently closed in 2009 . What went wrong with Saturn?
a. Saturn's cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars. b. Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. c. Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM. d. Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Cadillac. e. all of the above