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3 June, 02:49

Lori, a self-employed pediatrician, currently earns $200,000 annually. Lori has been able to save 15%of her annual Schedule C net income. Assume that Lori paid $19,000 in social security taxes, and that she plans to pay off her mortgage at retirement, thereby relieving her of her only debt. Lori presently pays $4, 333.33 per month toward the mortgage. Based on the information provided herein, what do you expect Lori's wage replacement ratio to be at retirement?

41.0%.

49.5%.

59.0%.

67.0%.

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  1. 3 June, 03:33
    0
    49.5%.

    Explanation:

    % of salary towards social security tax = (19000/200,000) * 100

    = 9.5%

    % of savings = 15%

    Yearly mortgage payments = 4333.33*12

    = 52000

    % of mortgage payments = (52000/200,000) * 100

    = 26%

    Replacement ratio = 100% - (9.5% + 15% + 26%)

    = 49.5%

    Therefore, You would expect Lori's wage replacement ratio to be 49.5% at retirement.
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