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.
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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
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
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
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 8 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education