The smiths had 110000 in savings at age 51 they had a

Reference no: EM13395827

When completing the assignment, show all of your calculations along with explanations and provide complete and concise answers to the written portions of the assignment.

The smiths had $110,000 in savings at age 51. They had a desired retirement age of 65. They want to fund through age 92. Assume a 4 percent inflation rate and a 5 percent after-tax rate for investment both pre- and postretirement. They have household income of $140,000, which is increasing at the rate of inflation. Their expenditures including taxes are $125,000 a year. They estimate that in retirement they will receive $28,000 a year together in Social Security and Mr. Smith will receive a $12,000-a-year pension, both in today%u2019s dollars. Their retirement expenditures would be $90,000 a year in today%u2019s dollars.

1. Calculate:

a. The lump sum needed at retirement.
b. Current assets available at retirement
c. Yearly savings needed
d. The difference between needs and resources.

2. Analysis:

a. Is their retirement plan achievable as is?
b. If not, what are the alternatives that could help reconcile needs and resources?
c. What is your recommendation?

Reference no: EM13395827

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