Ask Question
30 July, 09:43

Margaret, a 35-year-old client who earns $70,000 a year, pays 7.65% of her gross pay in Social Security payroll taxes, spends14% on a 30-year mortgage, and saves 8% of her annual gross income. Assume that Margaret wants to maintain her exact pre-retirement lifestyle. Calculate Margaret's wage replacement ratio using the top-down approach (round to the nearest %) and using pre-tax dollars.

+3
Answers (1)
  1. 30 July, 10:10
    0
    84.35%

    Explanation:

    The computation of Margaret's wage replacement ratio using the top-down approach is shown below:

    = 100 - Social Security payroll tax rate - saving rate

    = 100 - 7.65% - 8%

    = 84.35%

    For determining Margaret's wage replacement ratio, we subtract the Social Security payroll tax rate and the saving rate from the percentage value i. e 100 so that the accurate ratio can come.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Margaret, a 35-year-old client who earns $70,000 a year, pays 7.65% of her gross pay in Social Security payroll taxes, spends14% on a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers