Question
George (age 44) Contributes $1,625 to his 401(k) each month Employer matches 100% of the first 3% and 50% of the next 2% of Georges
George (age 44)
Contributes $1,625 to his 401(k) each month
Employer matches 100% of the first 3% and 50% of the next 2% of Georges salary
Would like to retire at age 67
Social Security benefit estimate in todays dollars is $2,050/month at age 67
Jane (age 44)
Contributes $7,750 per year to a Simplified Employee Pension (SEP) plan
Would like to retire at the same time as George
Social Security benefit estimate in todays dollars in $1,725/month at age 67
George and Jane would like to have $125,000/year (in todays dollars) at retirement
The Jetsons expect inflation to average 3% per year during their lifetime
George and Jane each expect to live to age 95
They expect their invested money to average a 9% per year return during their lifetime
Georges 401(k) balance is $625,000
Janes SEP balance is $95,000
Investment account balance is $45,000
Bank CD balance is $75,000 (at 1.5% interest)
A) Using the Annuity Method and only retirement account assets, will their current retirement account assets and contributions meet their retirement needs? Using calculations, show and explain your answer to the couple.
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