In order to vest in the pension plan, June must work at her job for 10 years and contribute 2% of her salary to the pension fund. If she does works at least 10 years, she will receive a percentage of the last year before she retires salary. Assume the amount she receives each year in retirement is 40% of her final salary and is guaranteed to be paid out each year until death. If she does not stay the full 10 years, she will be refunded the amount she has contributed, plus 1% interest.

Alternatively, she can contribute 5% of her salary into a 401 (k) plan and the employer will match it with 5% of her salary (i.e. she puts in $1, the employer also puts in $1). There is no vesting period in order to receive this matching and she can walk away with the full amount if she ever decides to leave. There are three different investment options a safe investment that cannot go down in value and generates a 3% return annually, a passive market index that moves up and down with the S&P500, and actively managed mutual fund that holds a mix of stocks and bonds.

1) What information would you need from June in order to give her sound advice? Please write a memo to her as if she is a client of a financial planner. Outline the pros and cons of each type of investment and what she should consider before making a decision. Include graphics to show how amounts accumulate over time.