Question

Jon, age 48, earns $65,000 per year from his employer. Jon saves $15,000 per year for retirement and pays $12,000 per year for his home mortgage. Given this information and considering that Jon will have eliminated his mortgage debt before retirement, what is Jon's expected wage replacement ratio during retirement?

Answer 1

50.81%

Step-by-step explanation:

Wage replacement ratio is used to determine how much money an individual will need in retirement, tool for estimating retirement income needs.

Figures given:

Salary:$65,000 per year

Savings: $15000

Mortgage:$12,000

Solution

Salary: $65,000 ---⇒100%

Saving:$15000 --⇒23.8%

Tax:$4972.50 --⇒7.65%

Mortgage: $12,000 --⇒18.476%

$33027.50 = 50.81%