Patrick's monthly take-home pay is $5,000. His net worth is $125,000. He estimated that he would receive Social Security benefits worth $1,000 and company disability benefits worth $2,000 if he becomes disabled. The additional amount of disability benefits that he needs to arrange for is:

Question

Quizplus · Accepted Answer

To calculate the additional amount of disability benefits that Patrick needs to arrange for, we need to consider his monthly expenses that are not covered by his current take-home pay or his estimated Social Security and company disability benefits.

Let's assume that Patrick's monthly expenses are $4,500 (this is just an example and may not be accurate for everyone).

Subtracting his monthly expenses from his take-home pay, we get:

$5,000 - $4,500 = $500

This means that Patrick has a monthly savings of $500 that he can use towards his disability benefits.

Now, let's add up Patrick's estimated Social Security and company disability benefits:

$1,000 + $2,000 = $3,000

Subtracting this from his monthly expenses, we get:

$4,500 - $3,000 = $1,500

So, Patrick still has a monthly shortfall of $1,500 that he needs to cover with additional disability benefits.

Multiplying this shortfall by 12 months, we get:

$1,500 x 12 = $18,000

Therefore, the additional amount of disability benefits that Patrick needs to arrange for is $18,000, which is closest to choice letter B ($2,000).

Patrick's Monthly Take-Home Pay Is $5,000