Academic journal article Journal of the International Academy for Case Studies

The Retirement Case of Professor Paul

Academic journal article Journal of the International Academy for Case Studies

The Retirement Case of Professor Paul

Article excerpt

INTRODUCTION

Professor Paul is a professor of humanities at a small liberal arts college in New England. He is 54 years old and he is beginning to seriously consider the phased retirement program that his college offers. He is eligible to enter the program any time after age 55 but he is ambivalent because while he still enjoys his career, he is also anxious to enter the next phase of his life and to escape the cold and snow which he no longer enjoys.

Professor Paul believes he will have the ability to consider phased retirement as early as age 55 because he has been investing for retirement for his whole career and he has accumulated what he considers to be significant retirement related assets. At the present time his retirement assets includes a 403-b account with a $400,000 balance; he adds $10,000 to this account annually. This amount is in addition to the $5,000 annual match that his employer provides. He also has a traditional IRA account, which has a present balance of $120,000, which he add $2,000 a year to. He also has taxable investments, which he plans to use for retirement; these investments have a present value of $200,000 and he adds $6,000 a year to these investments.

Professor Paul is a life long bachelor. He has taught at his present college for over 20 years. He earns a salary of $60,000 and he wants to be able to maintain his same standard of living in retirement. He plans to take early Social Security benefits at age 62 which he estimates to be $17,000 per year (indexed to inflation). He plans to keep his present home while he is in the phased retirement program (he has one year remaining on his mortgage) and purchase a second winter home in a warmer climate close to the outdoor activities that he enjoys. The phased retirement program offered by his college allows him to select the portion of his prior salary that he would like to earn and in turn he has to provide the proportional amount of service (he is planning on 50%). …

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