Question
2. Bob and Mary expect to have $300,000 in retirement funds when they retire in 15 years (assuming a 7% investment return rate on current
2. Bob and Mary expect to have $300,000 in retirement funds when they retire in 15 years (assuming a 7% investment return rate on current assets). When they retire, they expect to need $22,000 annually which will increase with inflation (3%). They can make 8.5% after-tax return on their money. They expect their joint life expectancy to be 21 years after retirement. What would you tell them? Select the correct answer and show all of your work.
a. They are okay. The $300,000 will exceed their needs by more than $10,000
b. They are deficient. The $300,000 will be underfunded by almost $27,000
c. They need to increase their preretirement investment return rate from 7% to 7.12% to meet their goal
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