Question

The Johnson's earned $50,000 the year before they retired. They plan on living on 80 percent of this income during retirement. If their Social Security check is for $1,200 per month, how much additional income per year do they need?

$____ per year.

Answer 1

First, we need to calculate 80% of what they earned before:
50,000 * 0.80 = 40,000 per year

Social Security = 1200 a month x 12 months ( 1 year) = 14,400 per year

Additional income = 40,000 - 14,400 = $25,600 per year

Answer 2

80% of 50,000 is 40,0000 (amount they need to live)
1,200 x 12 = 14,400.
difference = 21,600