Pre-tax basis in order to meet retirement savings goal

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Reference no: EM131924639

Bob and Martha, a married couple, are both 42 years old and want to retire when they reach age 65. After careful calculation, they have determined they could live comfortably on $65,000 a year in today’s dollars when they retire. They are eligible to receive $2,000 in combined monthly Social Security benefits and $1,600 combined monthly income from their company pensions. They are comfortable assuming an inflation rate of 3%, an after-tax rate of return of 5% on their invested assets, and a life expectancy to age 90. Their combined federal and state income tax bracket is 33%. Using the example from the module reading and lecture, approximately how much do they need to invest by the end of each month on a pre-tax basis in order to meet their retirement savings goal? Carry real return to nearest hundredth.

Reference no: EM131924639

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