Richard Bucket has just been offered early retirement. His wife, Hyacinth, is ecstatic. But this, of course, changes their original retirement plans. The Buckets (be careful to remember that Hyacinth pronounces it "Bouquet!") have come to meet with you, their financial planner, to review their retirement goals and plans.

Richard presently earns $100,000 (after taxes) per year as a senior public servant, and Hyacinth does not work. They also have a son, Sheridan, who is in college, but is in no hurry to complete his degree. They pay $5,000 per year toward his education, and $500 per month in an allowance. Sheridan *should* graduate in two years, but that is uncertain. Their mortgage payment is $1000 per month, and they have 36 months left to pay it off. Their other living expenses (utilities, groceries, gas, eating out, etc.) come to about $2,750 in an average month. In addition, Hyancinth has a habit of putting on expensive candlelight suppers -- drives Richard crazy, but she's not about to stop any time soon. Hyacinth spends about $750 per month on candlelight suppers. Everything else goes into retirement savings, which is invested in a conservative bond fund expected to earn 4% annually over a long period of time.

Now that Richard is retiring, Hyacinth has big plans: in addition to maintaining their current lifestyle, Hyacinth would like to take a week-long cruise on the QE2 each year. (For the sake of this case, we'll just assume it's still in service.) Hyacinth figures that the cost of such a cruise is about $4,000 per trip; but Richard suspects that it is closer to $8,000 after factoring in food and other expenses.

Richard is currently 61 years old, and he expects his retirement to begin in exactly 12 months, on his 62nd birthday. Being the conservative planner that you are, you plan for him and Hyacinth to live to 100. (By the way, she's exactly the same age...how convenient.) Hyacinth has made it very clear that she want to leave an inheritance to support Sheridan. She would really like to leave a fund that provides $2,000 per month in terms of today's dollars, to be invested in a portfolio with an expected return of 6%, and the payments should grow with inflation in order to preserve Sheridan's purchasing power. Speaking of which, it is very important to Richard and Hyacinth that their purchasing power be preserved in retirement as well.

Prices are generally expected to grow at a 3% rate annually for the rest of eternity. Assume that the Buckets' fall in the 24% tax bracket during retirement.

Richard and Hyacinth currently have $1M in retirement savings, and $10,000 in bank savings earning basically 0% interest. Other than their mortgage, they do not have any debt.

How much do the Buckets ("Bouquets") need on the day they retire based on their goals and these financial assumptions? Do they currently have enough? If not, how much do they need to save each month for the next 12 months until Richard retires? Is this amount feasible? Based on all this, what recommendations would you make to Richard and Hyacinth?