Joan and Joe, both 45, have one child starting her 2nd year in college. Tuition is $13,000/year. Their goals are to pay for tuition and fund their retirement. Currently, the balance in his pension plan is $70,000. He puts $8,000 per year into it from pre-tax money plus his employer's match (100%). It is earning an average of 5% per year. In addition, they have $10,000 of non-retirement money in mutual funds. At this point, they want to evaluate their retirement plans and determine how much they will have for retirement at age 65. Their financial data is: 

Monthly net income $7,500 

Living expenses $3,500 

Assets $305,000 (their home's value, excludes investments) 

Liabilities $105,000 (all mortgage, maturing in 15 years) 

 

a. How should they pay the tuition? 

 b. How much can they put away for retirement using post-tax money? 

 c. At age 63, how much should they have in the pension plan account? In the non-retirement account?