Troy and Kristy Reynolds (both currently age 56) have determined that they will require retirement income equal to $93,000 in today's dollars, based on their current income. They plan to retire in 8 years and wish to assume an after-tax return on their investments, prior to retirement, of 8% They plan to readjust their assets after retirement and believe that their net return will drop to 6%. Troy's parents are both in their late eighties, and Kristy's parents are in their seventies, Troy and Kristy assume that retirement will last for 30 years and inflation will average 2%. No using Excel. I. What is the amount of capital Troy and Kristy need to save by the start of retirement to support their income needs throughout retirement.? (Use Annuity Method) II. How much will Troy and Kristy need to save each year to fund their retirement goal? (Use Annuity Method) III. Assume that Troy and Kristy are unable to meet their retirement funding needs. What is the best alternative you would advise? Increase the risk in their portfolios, higher risk means higher returns and this will help them accumulate more for their retirement. Decrease the amount they are planning to live on in retirement Work longer before they retire Take out a loan from the bank and invest the money for retirement.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter15: Choice Of Business Entity—other Considerations

Section: Chapter Questions

Problem 94TPC

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Troy and Kristy Reynolds (both currently age 56) have determined that they will require retirement income equal to $93,000 in today's dollars, based on their current income. They plan to retire in 8 years and wish to assume an after-tax return on their investments, prior to retirement, of 8% They plan to readjust their assets after retirement and believe that their net return will drop to 6%. Troy's parents are both in their late eighties, and Kristy's parents are in their seventies, Troy and Kristy assume that retirement will last for 30 years and inflation will average 2%. No using Excel.

I. What is the amount of capital Troy and Kristy need to save by the start of retirement to support their income needs throughout retirement.? (Use Annuity Method)

II. How much will Troy and Kristy need to save each year to fund their retirement goal? (Use Annuity Method)

III. Assume that Troy and Kristy are unable to meet their retirement funding needs. What is the best alternative you would advise?

Increase the risk in their portfolios, higher risk means higher returns and this will help them accumulate more for their retirement.
Decrease the amount they are planning to live on in retirement
Work longer before they retire
Take out a loan from the bank and invest the money for retirement.

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