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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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