Giuseppe & Giuseppina wish to retire at age 69. Assume that they were both born on January 1st. They are both 40 years old. You meet them at your office and find out the following information.

Giuseppe & Giuseppina have a combined gross income of $125,000 (2018). They expect their income to grow at a constant rate of 3.5% until retirement. Their combined expenses starting in 2018 are $120,000 and are expected to increase by 3.5% per year. Giuseppina is expected to start collecting on her pension at age 65 even though she plans to work until 69. The amount she collects will be $30,000 and will grow per annum at 3.5%. Giuseppe has no pension but contributes to a 401K. He has already $23,750 (beginning of the year) in his 401k account and expects it to grow at an annual rate of 5% until retirement. His employer contributes $5,000 every year (end-of-year). In addition, they both put in the maximum permissible amount into their respective ROTH IRA accounts beginning today. ($5,500 at beginning of year until age 49 & $6,500 thereafter)

1. What are their savings at retirement?
2. What are their total liquid assets at retirement?
3. What is the maximum $ amount that they could spend per annum (include COLA) and retire with $0 in liquid assets? (Exclude associated penalties but assume 5% on carryover deficits)
4. If the clients were spending 150,000, what rate of return would they need to realize on their ROTH accounts in order to retire with $0 in liquid assets?

Income Growth Rate	3.5%
Guiseppina's Pension Growth Rate	3.5%
Expenses Growth Rate	3.5%
401K Pension Growth Rate	5.0%
Pension Contributions	$ 5,000
ROTH IRA Contributions (until 49)	$ 5,500
ROTH IRA Contributions (50 and over)	$ 6,500
ROTH Growth Rate	5%
Expected Outflows until Retirement	$ 120,000
Savings Growth Rate	5.00%
Average Tax Rate	20%