Background Information:

John and Asha Patel would like to retire at age 65. They expect their living expenses in the first year of retirement to be equivalent to 70% of their current earned income (as adjusted for inflation). They assume their life expectancy in retirement will be in 30 years. They consulted the Social Security Administration website and determined their monthy retirement benefits at FRA would be $2,100 (in today's dollars) for John and $2,600 (in today's dollars) for Asha.

Johns current salary: $102,000

Ashas current salary: $80,000

Total Investments: $808,000

Total liquid assets: $47,000

Question:

The Patels are looking to retire at age 65, as described in detail in the RETIREMENT INFORMATION section of the case study. What balance do they need on the first day of retirement to support this goal, taking their Social Security benefit into account? Assume a 7% investment return on their retirement portfolio before they retire and a 5% return after they retire, and that inflation will average 3% for their entire lives. Please include your calculator steps and inputs in your answer.