Achieve in retirement to maintain their goal with inflation

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Ken is 29, makes $28,000 per year has a 401(k) with $25,000 in it and is putting $200 per month into it with a $50 company match. Estimate that with normal raises and retirement at 64 He will receive $18,000 in social security in today’s dollars. He expects to earn 7.5% on the 401(k). Sandy is 28 years old, earns $25,000 per year also just started a 403(b) putting $50 per month into it and also expects to earn 7.5%. She is a teacher, having taught for the last 4 years, and has a pension of 2% of her highest salary during retirement. She expects that figure to be $59,000 when Ken retires. They want to retire when Ken is 64 and travel and would like to have $70,000 a year in today’s dollars at retirement. Inflation is running at 2%, and you should plan to age 100 for both. How much will they need at retirement? Can they reach their goal, if not what should they do? What rate of return will they have to achieve in retirement to maintain their goal with inflation?

Reference no: EM131572715

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