Reference no: EM133090028

Question - Troy and Kristy Reynolds (both currently 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 that inflation will average 2%.

 1. How much income will Troy and Kristy need in their first year of retirement?

2. What is the amount of capital necessary at the start of retirement t support their income needs throughout retirement?

3. For purposes of Social Security retirement benefits, the Reynolds reach full-retirement age at age 67. Their full benefit is expected to be $30,000 in today's dollars. If the Reynolds decided to factor in Social Security and begin taking Social Security benefits when they retire at age 64, how much personal capital would they need to accumulate at retirement?

4. If the Reynolds wanted to leave a specific bequest to their favorite charity (Wounded Warrior Project) in the amount of $2 million (actual donation at death), how much additional capital would they need to have accumulated at the time they retire at age 64?