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%.

Question

Business

Haley May

19 September, 17:50

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%.

+5

Answers (1)

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Kasen Jarvis · Answer 1

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.