Mr Young has a job currently making $93,000 per year and Mrs.young is unemployed.

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Youngs want to plan for early retirement (100% wage replacement ratio, excluding the trust income) at age 62, as they want to spend the autumn of their lives together traveling and visiting friends and family. Alan plans to save $18,000 per year in a 401(k) plan starting this year and to have an employer match of $6,000. They expect to live to age 90. As neither of the Youngs currently have 40 quarters of Social Security earnings and because they are planning to retire at age 62, they do not want to include any Social Security retirement benefits in their planning. Step 1: Calculate Youngs' annual retirement needs in today's dollars Needs at Retirement (age 62) Current income Wage replacement ratio Needs in today's dollars Step 2: Calculate the present value of the Youngs' retirement needs now at age 36. Step 2-1 Step 2-2 N FV. 262 i N FV PMT PMT i PV 262 PV 236 = PV of the Youngs' retirement needs: Recommendations: Youngs want to plan for early retirement (100% wage replacement ratio, excluding the trust income) at age 62, as they want to spend the autumn of their lives together traveling and visiting friends and family. Alan plans to save $18,000 per year in a 401(k) plan starting this year and to have an employer match of $6,000. They expect to live to age 90. As neither of the Youngs currently have 40 quarters of Social Security earnings and because they are planning to retire at age 62, they do not want to include any Social Security retirement benefits in their planning. Step 1: Calculate Youngs' annual retirement needs in today's dollars Needs at Retirement (age 62) Current income Wage replacement ratio Needs in today's dollars Step 2: Calculate the present value of the Youngs' retirement needs now at age 36. Step 2-1 Step 2-2 N FV. 262 i N FV PMT PMT i PV 262 PV 236 = PV of the Youngs' retirement needs: Recommendations