08/25/97 TABLE: A Financial Analysis for Working Parents

Return to main story

A Financial Analysis for Working Parents

The numbers in these worksheets are based on a suburban married professional couple working in New York City with a child under age 3, a 30-year $200,000 mortgage at 7.5%, and separate 401(k) plans. He Works, She Stays Home GROSS INCOME (HUSBAND) $80,000 MINUS 401(K) CONTRIBUTION: -8,000 ADJUSTED GROSS INCOME (AGI) 72,000 MINUS TAXES: FEDERAL -5,883 STATE & LOCAL -2,891 FICA -5,215 TOTAL TAXES* -13,989 WHAT'S LEFT 58, 011 PLUS PRETAX VALUE OF 401(K) SAVINGS** 10,893 TOTAL 68,904 *The taxes are based on a taxable income of $39,222, which results after deductions of $14,937 for mortgage interest, $7,000 for real estate taxes, and $2,891 for state and local taxes, plus three exemptions worth $7,950. **Assuming a 10% annual contribution, 8% annual return, and 50% employer match He Works, She Works GROSS INCOME (HUSBAND) 80,000 (WIFE) 70,000 TOTAL GROSS INCOME 150,000 MINUS 401(K) CONTRIBUTIONS: HIS -8,000 HERS -7,000 ADJUSTED GROSS INCOME (AGI): 135,000 MINUS TAXES* FEDERAL -21,931 DEPENDENT-CARE EXPENSE CREDIT 480 STATE & LOCAL -8,075 FICA -10,285 TOTAL TAXES: -39,811 *The taxes are based on a taxable income of $97,452, which results after deductions of $14,937 for mortgage interest, $7,000 for real estate taxes, and $8,075 for state and local taxes, plus three exemptions worth $7,950. AFTER-TAX INCOME 95,189 MINUS ADDITIONAL EXPENSES CHILD CARE ($400/WEEK) -20,800 PAYROLL TAXES FOR NANNY -2,444 COMMUTING** -2,160 LUNCHES OUT ($7/DAY)** -1,680 DRY CLEANING ($50/MONTH)** -550 TAKE-OUT DINNER ($50/WEEK)** -2,400 HOUSE CLEANING ($50/WEEK) -2,600 TOTAL EXPENSES: -32,634 WHAT'S LEFT 62,555 PLUS PRETAX VALUE OF 401(K) SAVINGS*** 23,343 TOTAL 85.898 **Based on a 52-week year--minus 2 weeks of vacation and 10 holidays ***Assuming a 10% annual contribution, 8% annual return, and 50% employer match DATA: PRICE WATERHOUSE PERSONAL FINANCIAL SERVICES

Return to main story