None The Suarezes are looking to retire at age 66, as described in detail in the RETIREMENTINFORMATION section of the case study. What balance do they need on the first day ofretirement to support this goal, taking their Social Security benefit into account? Assume a7% investment return on their retirement portfolio before they retire and a 5% return afterthey retire, and that inflation will average 3% for their entire lives. Assume that SocialSecurity benefits will adjust annually by the inflation rate.Please include your calculator steps and inputs in your answer.David & Sofia, both age 40.David & Sofia's life expectancy in retirement is 30 yearsReal rate of return before retirement is 4% (7% -3% = 4%).Real rate of return after retirement is 2% (5% -3% = 2%).David & Sofia combined annual salaryDavid & Sofia 70% of current earned income=$182,000.$182,000 X 70%=$127,400.David & Sofia combined monthly/annual social security benefit=1$4,700 X 12 =$56,400.

Conclusion: David and Sofia need approximately $4,408,399.76 in their retirement account by the time…

Answered: The Suarezes are looking to retire at…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 43P

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