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The Johnson's are each 35 years old and to this point have saved a combined $100,000 for retirement. Their desire is to retire 25 years
The Johnson's are each 35 years old and to this point have saved a combined $100,000 for retirement. Their desire is to retire 25 years from now and given current IRS longevity tables expect to live approximately 30 years during their retirement phase of life. They expect to need to draw approximately $100,000 (in total) from their retirement account during each of the 30 years in retirement. Up until the starting point of retirement ( 25 years from now) they plan to invest annually, and the expectation is that they will earn a 7% annual rate of return on invested monies. Once they reach retirement ( 25 years from now) the expectation is that they will reallocate their invested funds to be more cautious and thus the average annual rate of return is expected to be 4%. The plan is that at the end of their retirement phase of life the withdrawals will have depleted their account balance. A number of estimates need to be made These include (but may not be limited to) the amount needed in the retirement account when retirement begins and the amount of annual contributions to be made to the retirement fund. Remember to be well rounded with your response
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