Stacy, a self-employed accountant, currently earns $100,000 annually. Stacy has been able to save 18% of her annual Schedule C net income. Assume that Stacy paid $11,000 in Social Security taxes, and that she plans to pay off her mortgage at retirement, thereby relieving her of her only debt. Stacy presently pays $1,500 per month toward the mortgage. Based on the information provided herein, what do you expect Stacy's wage replacement ratio to be at retirement?

Question

Jane Neal

Business

14 November, 11:33

Stacy, a self-employed accountant, currently earns $100,000 annually. Stacy has been able to save 18% of her annual Schedule C net income. Assume that Stacy paid $11,000 in Social Security taxes, and that she plans to pay off her mortgage at retirement, thereby relieving her of her only debt. Stacy presently pays $1,500 per month toward the mortgage. Based on the information provided herein, what do you expect Stacy's wage replacement ratio to be at retirement?

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Answers (1)

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Brylee Burke · Answer 1

Wage Replacement Ratio = $53,000 / $100,000 = 53%

Explanation:

Total Mortgages = $1,500 x 12 = $18,000

Dollar Value Percentage

Salary $100,000 100%

Less: Self-Employment Taxes (11,000) (11%)

Less: Savings (18,000) (18%)

Less: Mortgage Payments (18,000) (18%)

$ 53,000 53%

Wage Replacement Ratio = $53,000 / $100,000 = 53%