6. Retirement Planning for Jennifer and Lennon.

Jenifer is an early bird for everything. She starts to contribute $1,000 to her own 401(K) plan right after she joined company A.E. Corp (at the age of 30). Jenifer's colleague, Lennon, is a late bird for everything. He decides to enjoy his life before he turns 45 and then contributes to his 401(K). Over a coffee break, he learns that Jenifer contributes $1,000 per month now. He figured that if he can contribute $2,000 every month starting from age 45 he would have contributed the same amount as Jenifer when they turn 60 years old (he thought they will both contribute a total of $360,000 = 1000 * 30 *12 also = 2000 *15 *12). In this way, he can lead a pretty decent life style before he turns 45 and have the same amount of retirement funds as Jenifer. After his quick calculation, he decides to persuade Jenifer to do the same. 1) If you were Jenifer, do you agree with Lennon? What seems to be the most important factor to determine the end balance in the retirement plan? 3) What other factors are also important with a 401(K) plan? 4) How can you guide your clients like Jennifer and Lennon to make sound financial decisions to optimize their retirement investments? What should you do differently?