Reference no: EM131604441

Don and Joyce are 36 years old. Don makes $38,000 per year and Joyce makes $33,000. Don has a 401(k) and Joyce has a pension. Don is saving $200 per month and has a $200 match. Don currently has $23,000 in that 401(k). They would like to retire at 63 years old and plan to age 100. They want to retire debt-free with 125% of their annual salaries adjusted for inflation, which is estimated at 2.0%. Raises are expected to match inflation. You estimate Don’s social security at age 65 to be $32,000 and Joyce’s at $28,000. Social Security increases at 7.5% for each year of delay to age 70. Don has JP Morgan as the manager of his 401(k). Don has the following in his 401(k): Equal percentages of: JGVRX, OGVCX, and JIVMX, and has averaged 9.82% over the last 5 years. Joyce has found that she should estimate her pension at 1.75% of her highest salary for every year of service and she currently has 5 years of service. At retirement, they would like to withdraw $110,000 to build their dream giant anteater farm. In addition, at death they would like to leave $75,000 for the care of their anteaters and $7,500 per year for their favorite charity, “Save Pangolins.” They own their home with an original mortgage of $495,000, a 6.35% interest rate, and exactly 28 years of payments left. What would you recommend to reach their goals now and in retirement? Be sure to explain all options. Would you recommend any additional goals? Keep it SMART. What changes should they make now to their portfolios? How does the risk return relationship of your suggested changes compare to the existing portfolios? What recommendations do you have for their portfolios in retirement? Be sure to include any assumptions made or information received from the client. Please inform the clients of their current situation, future goals, and recommendations to achieve those goals. Remember to explain how you reach your conclusions and recommendations.