John, age 42, has come to you for help in planning his retirement. He works for one of the big 8 accounting firms as a financial planner for their high net worth clients, where he earns $240,000. Alex would like to retire at age 67. He has consistently earned 8.5% on his investments and inflation has averaged 2%. Assuming he is expected to live until age 93 and he has a wage replacement ratio of 65%, how much will Alex need to have accumulated as of the day he retires to adequately provide for his retirement lifestyle?

Step 1: What is the present value of John's needs for retirement income? $?

Step 2: What is the FV of Alex's retirement income needs when he begins retirement? Begin/End? N? I? PV? PMT? FV? Step 3: How many dollars should he have in his accounts when he retires to provide the necessary income? Begin/End? N? I? PV? PMT? FV?