Residence

Current value $550K; Balance on 30 year mortgage at 5.5% $260,514; Land value $150K; Monthly payment (P&I) $1703.37; Owned home for 8 years; Not qualify for refi until Mr Young in new job 1 year

Insurance

Life - No life insurance; Mr Young expects $50K group term from new employer

Health Covered under Mr Young employer plan; Cost $1K/month for family

Disability No disability; Mr Young will be covered for LTD provided by employer at 65% of gross pay

Homeowner HO3 with open perils and replacement value; $250 deductible; Dwelling covered $300K with 80/20 coinsurance clause; Premium $2400/year

Auto - $250 deductible; 100/300/50; Premium $1800/year

Assets

Bank account $28K JT

Inherited portfolio $200K H

Brokerage account $67K W

401K $32K JT

Residence $550K JT

Auto 1 $40K W

Auto 2 $25K JT

HH Items $150K JT

Liabilities

Mortgage $260514 JT

Other Financial

Annual contributions to 401K $17500

SS Taxes $7115

Federal WH $10384

State WH $3715

Property tax $3000

Tuition to preschool $15K

Utilities $2400

Entertainment $7500

Cable $1200

Clothing $2000

Auto maint/gas $3000

Food $9600

Investments

Investment portfolio $200K

Brokerage account includes gifts from Mrs Youngs father invested in money market account at 0% earnings

401K from Mr Youngs prior job invested in index fund

Economic Info

Inflation averages 3% for last 20 years and expected to continue at 3%

Bank lending rates: 15 year 3.25%; 30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage

Expected rate of return 8.5%

Want to plan for early retirement (100& WRR, excluding trust income) at age 62. Mr Young to save $17500/yr in 401K with an employer match of $6K. Expect to live to age 90. Do not include SS benefits in planning.

Want to be debt free at retirement

5 Calculate the PV of the Youngs retirement needs at age 62 (nominal $) & calculate the PV of the Youngs retirement needs now at age 36 (real $ in todays $)