use worksheet 8.1 Henry Martin, 41 is a recently divorced father of two children
ID: 2728116 • Letter: U
Question
use worksheet 8.1 Henry Martin, 41 is a recently divorced father of two children, ages 8 and 5. he currently earns $95,000 a year as an operations manager for a utility company. the divorce settlement requires him to ay $1,500 a month in child support in $400 a month in alimony to his ex wife. she currently earns $35,000 a year as a school teacher. henr is now rentingan apartment, and the divorce settlement left him with about $100,000 in savings and retirement benefits. his employer provides a $75,000 life insurance policy. henrys ex wife is currently the benificiary listed on the policy.
Explanation / Answer
Annual income - Henry $95,000 Child support expense (1,500) Ex wife alimony (400) savings and retirement benefits $100,000 LIC - of employment $75,000 Step : - Financial needs of Henry Martin Assumption as to annual annual expense of Henry Since the question is silent about Henry's annual expense - $20000 Annual living expense and other needs $16,000 Child support expense $1,500 Ex wife alimony $400 Total annual Expense $17,900 Annual expense $95,000 Less : - Total annula expense $17,900 Surplus $77,100 Estimated life span - of Henry 85 years assumed age of retitrement 60 years Balance no. years - without salary income 25 years Funds available savings and retirememnt benefits $100,000 LIC - of employement $75,000 $175,000 Total annual Expense $17,900 Annual expense for 25 years - (*21900*25) $447,500 Extra funds required - ( 447500 - 175000 ) $272,500 Henry should have extra LIC / Endowment policy for $272,500 However we have assumed the annual expense of henry - requirement of LIC policy would vary depending on henry's annula expense
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